Prathamik Krishipattin Sahakari Sangh Niyamit, Hunnur V. ITO, Bijapur

ITA 1276/BANG/2013

• Counselvise Citation: [2014] 120 COUNSELVISE.COM (IT) 7044 (ITAT-BANGALORE)
• Duration Of Justice: 1 year(s) 1 month(s) 15 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 10-10-2014
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: C
• Next Hearing Date: 01-10-2014
• Assessment Year: 2009-2010
• Appeal Filed On: 26-08-2013
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: DR K SHANKAR PRASAD JT
• Assessee Lawyers: S RAMASUBRAMANIAN
• Keywords: Opportunity of being heard; Additional evidence

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL C BENCH : BANGALORE BEFORE SHRI N.V. VASUDEVAN, JUDICIAL MEMBER AND SHRI JASON P. BOAZ, ACCOUNTANT MEMBER ITA NOS.1276 TO 1278/BANG/ 2013 ASSESSMENT YEAR : 2009-10 PRATHAMIK KRISHI PATTIN SAHAKARI SANGH NIYAMITH, (1) HUNNUR. PAN : AAAAP 4685K (2) HIREPADASALAGI. PAN : AAAAP 4686L (3) CHIKKAPADSALAGI. PAN : AAAAP 4603K JAMKHANDI TALUK, BAGALKOT DIST. VS. THE INCOME TAX OFFICER, WARD 2, BIJAPUR. APPELLANT RESPONDENT APPELLANT BY : SHRI S. RAMASUBRAMANIAN, C.A. RESPONDENT BY : DR. K. SHANKAR PRASAD, JT. CIT(DR) DATE OF HEARING : 01.10.2014 DATE OF PRONOUNCEMENT : 10.10.2014 O R D E R PER N.V. VASUDEVAN, JUDICIAL MEMBER THESE ARE APPEALS BY THREE ASSESSEES AGAINST THE SEPARATE ORDERS, ALL DATED 20.5.2013 OF THE CIT(APPEALS), BELGAUM RE LATING TO ASSESSMENT YEAR 2009-10. ITA NOS. 1276 TO 1278/BANG/2013 PAGE 2 OF 6 2. THE GROUNDS RAISED BY THE ASSESSEES IN ALL THES E APPEALS ARE IDENTICAL. FOR THE PURPOSE OF EASY REFERENCE, WE R EPRODUCE THE EFFECTIVE GROUNDS RAISED BY THE ASSESSEE IN ITA NO.1276/BANG/ 2013:- 2. THAT THE LEARNED LOWER AUTHORITIES ERRED IN LAW AND ON FACTS IN DENYING DEDUCTION OF RS.1,35,473 U/S. 80P(2)(A) OF THE ACT. 3. THAT THE LEARNED LOWER AUTHORITIES ERRED IN LAW AND ON FACTS IN HOLDING THAT THE INTEREST RECEIVED FROM THE MEMB ER IS NOT ATTRIBUTABLE TO THE APPELLANTS BUSINESS OF PROVIDI NG CREDIT FACILITIES TO ITS MEMBERS. 4. THAT THE LEARNED LOWER AUTHORITIES ERRED IN LAW AND ON FACTS IN ASSESSING INTEREST RECEIVED FRO THE MEMBER OF TH E APPELLANT UNDER THE HEAD INCOME FROM OTHER SOURCES. 3. THE AFORESAID GROUNDS RAISED BY THE ASSESSEES AR ISE OUT OF IDENTICAL FACTS AND CIRCUMSTANCES. THE ASSESSEES IN ALL THES E THREE APPEALS ARE CO- OPERATIVE SOCIETIES ENGAGED IN PROVIDING CREDIT FAC ILITIES AND AGRICULTURAL INPUTS TO ITS MEMBERS. DURING THE PREVIOUS YEAR R ELEVANT TO A.Y. 2009-10, THE ASSESSEE IN ITA NOS.1276 TO 1278/BANG/2013 RECE IVED SUMS OF RS.8,65,479, RS.3,96,767 AND RS.11,03,220 RESPECTIV ELY AS INTEREST FROM DEPOSITS MADE BY THESE ASSESSEES IN JAMKHANDI SUGAR S LTD. THE ASSESSEE CLAIMED DEDUCTION OF THE AFORESAID INTERES T INCOME WHILE COMPUTING ITS TOTAL INCOME U/S. 80P(2)(A)(I) OF THE ACT. UNDER THE AFORESAID PROVISIONS, IN THE CASE OF AN ASSESSEE WHICH IS A C O-OPERATIVE SOCIETY, IF THE GROSS TOTAL INCOME INCLUDES ANY INCOME FROM CAR RYING ON OF THE BUSINESS OF BANKING OR PROVIDING CREDIT FACILITIES TO ITS MEMBERS, WHOLE OF THE AMOUNT OF PROFITS AND GAINS OF BUSINESS ATTRIBU TABLE TO THE AFORESAID ITA NOS. 1276 TO 1278/BANG/2013 PAGE 3 OF 6 ACTIVITIES, SHALL BE ALLOWED AS A DEDUCTION. THE A SSESSING OFFICER DENIED THE BENEFIT OF DEDUCTION CLAIMED BY THE ASSESSEE ON THE GROUND THAT EARNING INTEREST ON DEPOSITS CANNOT BE SAID TO BE A TTRIBUTED TO THE ASSESSEES BUSINESS OF PROVIDING CREDIT FACILITIES TO ITS MEMBERS. ACCORDING TO THE AO, INVESTMENT WAS MADE WITH AN INTENTION TO EARN INTEREST AND THEREFORE INCOME IS ASSESSABLE UNDER THE HEAD INCO ME FROM OTHER SOURCES. CONSEQUENTLY DEDUCTION BY THE ASSESSEE W AS DISALLOWED BY THE AO. 4. ON APPEAL BY THE ASSESSEE, THE LD. CIT(APPEALS) CONFIRMED THE ORDER OF THE AO. WHILE UPHOLDING THE ORDER OF THE AO, THE CIT(A) RELIED ON THE DECISION OF THE HONBLE HIGH COURT OF KARNATAKA IN THE CASE OF TOTGARS CO-OPERATIVE SALE SOCIETY LTD. . ITO, 322 ITR 272 ( KAR) , WHEREIN IT WAS HELD THAT INTEREST EARNED FROM DEPOSITS ON S URPLUS FUNDS CANNOT BE SAID TO BE INCOME DERIVED FROM THE BUSINESS OF PROV IDING CREDIT FACILITIES TO MEMBERS. 5. AGGRIEVED BY THE ORDER OF THE CIT(APPEALS), THE ASSESSEES HAVE PREFERRED THE PRESENT APPEALS BEFORE THE TRIBUNAL. 6. THE SUBMISSION OF THE LD. COUNSEL FOR THE ASSESS EE BEFORE US WAS THAT:- (I) JAMKHANDI SUGARS LTD. WHOM ALL THE THREE ASSESS EES MADE DEPOSITS WHICH YIELDED INTEREST INCOME IN QUESTION WAS MEMBER OF THE ITA NOS. 1276 TO 1278/BANG/2013 PAGE 4 OF 6 ASSESSEES SOCIETY. IN SUPPORT OF THE AFORESAID ST AND, AN APPLICATION FOR ADDITIONAL EVIDENCE WAS FILED IN ALL THE THREE CASE S BEFORE US. ADDITIONAL EVIDENCE IS IN THE FORM OF CONFIRMATION FROM THE AS SESSEES THAT JAMKHANDI SUGARS LTD. IS A MEMBER OF THE RESPECTIVE ASSESSEES SOCIETY, BESIDES AN EXTRACT OF LIST OF MEMBERS OF EACH OF THE SOCIETIES . IN OUR VIEW, THE ADDITIONAL EVIDENCE IS FOUND TO BE REQUIRED FOR PRO PER ADJUDICATION OF THE ISSUE INVOLVED IN THE APPEALS; (II) PLACING OF DEPOSITS WITH A MEMBER OF THE SOCIE TY WAS IN THE NATURE OF PROVIDING CREDIT FACILITIES TO MEMBERS AND THEREFOR E THE ASSESSEES WERE ENTITLED TO DEDUCTION UNDER THE SECOND PART OF 80P( 2)(A)(I) OF THE ACT VIZ., PROVIDING CREDIT FACILITIES TO ITS MEMBERS; AND (III) THE DECISION RENDERED IN THE CASE OF TOTGARS CO-OPERATIVE SALE SOCIETY LTD. (SUPRA) WAS NOT APPLICABLE TO THE FACTS OF THE PRESENT CAS ES, AS THE INTEREST IN THAT CASE WAS EARNED ON DEPOSITS WITH BANKS. 7. IN THE LIGHT OF ABOVE SUBMISSIONS, THE LD. COUNS EL FOR THE ASSESSEE MADE A PRAYER THAT ADDITIONAL EVIDENCE SOUGHT TO BE FILED BEFORE US BE ADMITTED FOR ADJUDICATION AND THE ASSESSING OFFICER BE DIRECTED TO DECIDE THE FOLLOWING QUESTIONS:- (1) AS TO WHETHER, JAMKHANDI SUGARS LTD. WAS A MEMB ER OF THE ASSESSEES SOCIETY? (2) WHETHER PLACING OF DEPOSITS AND EARNING INTER EST THEREON WITH JAMKHANDI SUGARS LTD., CAN BE SAID TO BE PROFI TS AND ITA NOS. 1276 TO 1278/BANG/2013 PAGE 5 OF 6 GAINS OF BUSINESS ATTRIBUTABLE TO BUSINESS OF PROVI DING CREDIT FACILITIES? (3) WHETHER FACTS IN THE CASE OF TOTGARS CO-OPERATIVE SALE SOCIETY LTD. (SUPRA) AND RATIO LAID DOWN THEREIN WILL BE APPLICABLE TO THE FACTS OF THE ASSESSEES CASE? 8. THE LD. DR RELIED ON THE ORDER OF THE LOWER AUTH ORITIES. 9. WE HAVE GIVEN A CAREFUL CONSIDERATION TO THE RIV AL SUBMISSIONS AND ARE OF THE VIEW THAT THE ISSUE RAISED BEFORE US WAS NOT CONSIDERED IN PROPER PERSPECTIVE EITHER BY THE AO OR THE CIT(APPEALS). WE THEREFORE DEEM IT FIT AND PROPER TO REMAND THE ISSUE TO THE ASSESSING OFF ICER FOR FRESH CONSIDERATION. THE AO WILL CONSIDER THE ISSUE AS S ET OUT IN THE EARLIER PART OF THIS ORDER IN THE SET ASIDE PROCEEDINGS, AFTER A FFORDING OPPORTUNITY OF BEING HEARD TO THE ASSESSEE. 10. FOR STATISTICAL PURPOSES, THE APPEALS BY THE AS SESSEE ARE TREATED AS ALLOWED . PRONOUNCED IN THE OPEN COURT ON THIS 10 TH DAY OF OCTOBER , 2014 . SD/- SD/- ( JASON P. BOAZ ) ( N.V. VASUDEVA N ) ACCOUNTANT MEMBER JUDICIAL MEMBE R BANGALORE, DATED, THE 10 TH OCTOBER , 2014 . /D S/ ITA NOS. 1276 TO 1278/BANG/2013 PAGE 6 OF 6 COPY TO: 1. APPELLANT 2. RESPONDENT 3. CIT 4. CIT(A) 5. DR, ITAT, BANGALORE. 6. GUARD FILE BY ORDER ASSISTANT REGISTRAR / SENIOR PRIVATE SECRETARY ITAT, BANGALORE.