Sri Gayathri PAttina Souharda Sahakari Niyamitha , Hospet V. The Income Tax Officer Ward-1 , Hospet

ITA 1282/BANG/2017

• Counselvise Citation: [2017] 127 COUNSELVISE.COM (IT) 7245 (ITAT-BANGALORE)
• Duration Of Justice: 5 month(s) 15 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 23-11-2017
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: A
• Assessment Year: 2011-2012
• Appeal Filed On: 08-06-2017
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: VIKAS SURYAWANSHI
• Keywords: Opportunity of being heard; Question of law

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL SMC-A BENCH : BANGALORE BEFORE SHRI SUNIL KUMAR YADAV, JUDICIAL MEMBER ITA NO.1282/BANG/2017 ASSESSMENT YEAR : 2011-12 M/S. SRI GAYATRI PATTINA SOUHARDA SAHAKARI NIYAMITHA, NEAR VENKATESWARA KALYAN MANTAPA, 4 TH WARD, PATEL NAGAR, HOSPET 583 201. PAN : AAAAG2993B VS. THE INCOME TAX OFFICER, WARD - 1, HOSPET. APPELLANT RESPONDENT ASSESSEE BY : SHRI. BALRAM R. RAO, ADVOCATE REVENUE BY : SHRI. VIKAS SURYAWANSHI, ADDL. CIT DATE OF HEARING : 16.11.2017 DATE OF PRONOUNCEMENT : 23 . 11 .201 7 O R D E R PER SUNIL KUMAR YADAV, JUDICIAL MEMBER THIS APPEAL IS PREFERRED BY THE ASSESSEE AGAINST T HE ORDER OF CIT(A), INTERALIA, ON THE FOLLOWING GROUNDS: 1. THE LEARNED CIT (APPEALS) ERRED IN UPHOLDING THE OR DER OF THE ASSESSING OFFICER IN THE MANNER IN WHICH HE DID. 2. THE LEARNED CIT (APPEALS) ERRED IN UPHOLDING AN ADD ITION OF RS. 30,35,512/- BEING INTEREST ON FIXED DEPOSIT AND MISCELLANEOUS INCOME BY RELYING U/S. 80P(2)(D) OF T HE ACT. 3. THE LEARNED CIT (APPEALS) ERRED IN UPHOLDING THE VI EW OF THE AO BY RELYING U/S. 80P(2)(D) OF THE ACT AND WITHOUT CONSIDERING THE PROVISIONS OF THE KARNATAKA SOUHARDASAHAKARI AC T, 1997 AND BY-LAWS OF THE APPELLANT SOCIETY. 4. THE LEARNED CIT (APPEALS) FAILED TO APPRECIATE THE FACT THAT AS PER SEC. 18 OF KASSA ACT, 1997, IT WAS MANDATORY ON THE PART OF THE APPELLANT TO INVEST THE SURPLUS FUNDS IN CO- OPERATIVE ITA NO. 1282/BANG/2017 PAGE 2 OF 4 BANK AND THEREFORE THE APPLICATION OF SEC. 80P(2)(D ) HAS NO BASE AND ASSESSEE IS THEREFORE ELIGIBLE FOR EXEMPTI ON U/S. 80P(2)(A)(1) OF THE ACT. 5. THE LEARNED CIT (APPEALS) ERRED IN NOT CONSIDERING THE JUDGMENT OF UTTARAKHAND HIGH COURT IN THE CASE OF C IT VS. IQBALPUR CO-OPERATIVE CANE DEVELOPMENT UNION LTD., (2009) REPORTED IN 315 ITR 441 (UTTARAKHAND). 6. THE LEARNED CIT (APPEALS) FAILED TO APPRECIATE THE FACT THAT THE APPELLANT SOCIETY IS MAINTAINING SAVING ACCOUNT, CU RRENT ACCOUNT, COLLECTING FIXED DEPOSITS FROM MEMBERS AND LENDING LOANS OUT OF THE DEPOSITS, COLLETING PIGMY DEPOSITS , BUSINESS OF PAWN BROKERS I.E., PROVIDING LOAN ON PLEDGING JEWEL LERY AND ISSUE DEMAND DRAFT, HOWEVER, ARE BEING PROVIDED ONL Y TO THE MEMBERS OF THE SOCIETY NOT TO THE GENERAL PUBLIC. A NY SURPLUS FUNDS ARISING FROM THE SAID ACTIVITIES AND INVESTIN G THE SAME IN CO-OPERATIVE BANK ARE INCIDENTAL TO THE OBJECTS/ AC TIVITIES AND PRINCIPLE OF THE APPELLANT AND VERY MUCH COMES UNDE R THE AMBIT OF SECTION 80P(2)(A)(I) OF THE ACT AND THEREFORE IS ELIGIBLE FOR THE SAID EXEMPTION. 7. THE LEARNED CIT(A) OUGHT TO HAVE APPRECIATED THE FA CT THAT THE AO ERRED BY TREATING MISCELLANEOUS INCOME UNDER THE TAX NET NOT BEING PART OF THE OBJECTIVE AND PRINCIPLE OF AP PELLANT SOCIETY. 8. WITHOUT PREJUDICE, THE CIT(A) ERRED IN UPHOLDING TH AT THE AO WAS JUSTIFIED IN LAW BY BRINGING INTEREST RECEIVED OUT OF SURPLUS FUND INVESTED IN CO-OPERATIVE INCOME DERIVED FROM MISCELLANEOUS ACTIVITIES TO TAX. 9. THE LEARNED CIT(A) FAILED TO APPRECIATE THE FACT TH AT SEC. 80P(2)(A)(I) IS TO BE TREATED AS SEPARATE HEAL OF E XEMPTION WITHOUT BEING INFLUENCED BY OF ANY OTHER CLAUSE OR SUB-CLAUSE AS SECTION 80P IS INTRODUCED WITH A VIEW TO ENCOURA GING AND PROMOTING THE GROWTH OF THE CO-OPERATIVE SECTOR IN THE ECONOMIC LIFE OF THE COUNTRY AND IN PURSUANCE OF TH E DECLARED POLICY OF THE GOVERNMENT. 10. FOR THESE AND OTHER SUCH GROUNDS THAT MAY BE URGED AT THE TIME OF THE HEARING OF THE APPEAL, THE APPELLANT PRAYS T HAT THE APPEAL MAY BE ALLOWED. 2. DURING THE COURSE OF HEARING, THE LEARNED COUNSEL F OR THE ASSESSEE CONTENDED THAT THE ISSUE IS SQUARELY COVERED BY THE ORDERS OF THE TRIBUNAL, THUS THE ISSUE CAN BE SENT BACK TO THE AO TO READJUDICAT E THE ISSUE IN THE LIGHT OF THE JUDGMENT OF JURISDICTIONAL HIGH COURT IN THE CASE O F PR.CIT VS. VIJAY SOUHARDA CREDIT SAHAKARI LTD., IN WHICH THE MATTER HAS BEEN RESTORED BACK TO ITA NO. 1282/BANG/2017 PAGE 3 OF 4 THE FILE OF THE AO IN THE LIGHT OF JUDGMENT OF THE APEX COURT IN THE CASE OF CITIZEN CO-OPERATIVE SOCIETY LIMITED VS. ASSISTANT COMMISSIONER OF INCOME TAX IN CIVIL APPEAL NO.10245/2017 DISPOSED OF ON 08 .08.2017. COPY OF THE JUDGMENT OF THE JURISDICTIONAL HIGH COURT HAS BEEN PLACED ON RECORD. THE LEARNED DR HOWEVER AGREED TO THE PROPOSITION OF THE ASSESSEE. 3. HAVING CAREFULLY EXAMINED THE ORDERS OF THE AUTH ORITIES BELOW IN THE LIGHT OF THE RIVAL SUBMISSION, WE FIND THAT IN IDEN TICAL CIRCUMSTANCES, THE JURISDICTIONAL HIGH COURT HAS RESTORED THE MATTER B ACK TO THE AO TO READJUDICATE THE ISSUE IN THE LIGHT OF THE JUDGMENT OF THE APEX COURT IN THE CASE OF CITIZEN CO-OPERATIVE SOCIETY LIMITED (SUPRA). R ELEVANT OBSERVATION OF THE HONBLE APEX COURT IS EXTRACTED HEREUNDER FOR THE S AKE OF REFERENCE: 6. THE SOLE SUBSTANTIAL QUESTION OF LAW RAISED BY THE APPELLANTS REQUIRES TO BE ANSWERED ON THE DETERMINATION OF THE CRUCIAL QUESTION WHETHER THE RESPONDENT-ASSESSEE IS A CO-OPERATIVE SOCIETY O R A CO-OPERATIVE BANK. IN THE JUDGMENT REFERRED TO BY THE LEARNED COUNSEL FOR THE REVENUE IN THE CITIZEN CO-OPERATIVE SOCIETY LIMITED, SUPRA, A CATEGORICAL FINDING WAS GIVEN BY THE ASSESSING OFFICER THAT THE RESERVE BANK OF INDIA HA S ITSELF CLARIFIED THAT BUSINESS OF THE APPELLANT DOES NOT AMOUNT TO THAT O F A CO-OPERATIVE BANK, THE APPELLANTS THEREFORE WOULD NOT COME WITHIN THE MISC HIEF OF SUB-SECTION (4) OF SECTION 80P. IT WAS HELD THAT THE ACTIVITIES OF TH E APPELLANTS THEREIN WAS TO CATER TWO DISTINCT CATEGORIES OF PEOPLE NAMELY, NOM INAL MEMBERS AND THE ORDINARY MEMBERS. THE ACTIVITIES OF THE ASSESSEE T HEREIN WAS CONSTRUED TO BE FINANCIAL BUSINESS CONTRARY TO THE PROVISIONS OF TH E CO-OPERATIVE SOCIETIES ACT. AS SUCH, IT WAS HELD THAT, THE SAID ASSESSEE WAS NO T ENTITLED TO DEDUCTION UNDER SECTION 80P(2)(A)(I) OF THE ACT. 7. A CURSORY VIEW OF THE ORDER IMPUGNED HEREIN WOU LD INDICATE THAT NO FINDING IS FORTHCOMING REGARDING THE ASPECT OF T HE ACTIVITIES CARRIED OUT BY THE RESPONDENT-ASSESSEE, WHETHER AS A CO-OPERATIVE SOCIETY OR NOT. IN THE ABSENCE OF SUCH FACTUAL FINDING, THE LEGAL PROPOSIT IONS RENDERED BY THE HONBLE APEX COURT CANNOT BE APPLIED. AS SUCH, WE ARE OF T HE CONSIDERED OPINION THAT THE MATTER REQUIRES RECONSIDERATION BY THE ASSESSIN G OFFICER TO THE EFFECT WHETHER THE RESPONDENT-ASSESSEE COMES WITHIN THE RE ALM OF CO-OPERATIVE SOCIETY TO GET ENTITLEMENT OF DEDUCTION UNDER SECTI ON 80P(2)(A)(I) OF THE ACT. ITA NO. 1282/BANG/2017 PAGE 4 OF 4 8. HENCE, WE REMAND THE MATTER TO THE ASSESSING OF FICER TO ANSWER THIS QUESTION AND THEN DECIDE THE MATTER IN THE LIG HT OF THE JUDGMENT OF THE HONBLE APEX COURT IN THE CASE OF CITIZEN CO-OPERAT IVE SOCIETY LIMITED, SUPRA, AS EXPEDITIOUSLY AS POSSIBLE. THUS, WITHOUT RENDER ING ANY FINDING ON THE SUBSTANTIAL QUESTION OF LAW RAISED, ORDER OF THE IN COME TAX APPELLATE TRIBUNAL IMPUGNED HEREIN, IS SET ASIDE. WE DIRECT THE ASSES SING OFFICER TO RECONSIDER THE MATTER IN THE LIGHT OF THE OBSERVATIONS AFORESA ID. 4. IN THE LIGHT OF THE JUDGMENT OF THE JURISDICTION AL HIGH COURT, WE FEEL IT PROPER TO RESTORE THE MATTER TO THE FILE OF THE AO FOR READJUDICATION OF THE ISSUE AFRESH AFTER AFFORDING OPPORTUNITY OF BEING HEARD T O THE ASSESSEE. 5. ACCORDINGLY, WE SET ASIDE THE MATTER OF THE CIT( A) AND RESTORE THE MATTER TO THE AO IN TERMS INDICATED ABOVE. PRONOUNCED IN THE OPEN COURT ON 23 RD NOVEMBER, 2017. SD/- ( SUNIL KUMAR YADAV ) JUDICIAL MEMBER BANGALORE. DATED: 23 RD NOVEMBER, 2017. /NS/* COPY TO: 1. APPELLANTS 2. RESPONDENT 3. CIT 4. CIT(A) 5. DR, ITAT, BANGALORE. 6. GUARD FILE BY ORDER SR. PRIVATE SECRETARY, ITAT, BANGALORE.