Bijapur Co-op Credit Society Ltd, Vijayapur V. Income-Tax Officer, Vijayapur

ITA 1314/BANG/2016

• Counselvise Citation: [2018] 118 COUNSELVISE.COM (IT) 8224 (ITAT-BANGALORE)
• Duration Of Justice: 2 year(s) 5 month(s) 19 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 31-12-2018
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: C
• Assessment Year: 2012-2013
• Appeal Filed On: 11-07-2016
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Assessee Lawyers: S RAMASUBRAMANIAN
• Keywords: Tax effect
• Section: 80P

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL B BENCH : BANGALORE BEFORE SHRI ARUN KUMAR GARODIA, ACCOUNTANT MEMBER A ND SHRI LALIET KUMAR, JUDICIAL MEMBER APPEAL NO. APPELLANT ASSESSMENT YEAR RESPONDENT ITA NO. 1306/BANG/2016 THE INCOME TAX OFFICER, WARD -1, VIJAYAPUR. 2012-13 M/S. THE BIJAPUR CO- OPERATIVE CREDIT SOCIETY LTD., SRI. SIDDESHWAR FRONT ROAD, VIJAYAPUR. PAN: AAAAT9969J ITA NO. 1314/BANG/2016 M/S. BIJAPUR CO-OP CREDIT SOCIETY LTD., SHREE SIDDESHWAR FRONT ROAD, YARANAL BUILDING, VIJAYAPUR. PAN: AAAAT9969J THE INCOME TAX OFFICER, WARD -1, VIJAYAPUR. ITA NO. 1134/BANG/2017 M/S. NAVAKARNATAKA SOUHARDA CREDIT CO-OP LTD., SHREE BUILDING, PATEL NAGAR, 4 TH WARD, HOSPET 583 201. PAN: AAATN4550G THE INCOME TAX OFFICER, WARD 1, HOSPET. ASSESSEE BY : SHRI S. RAMASUBRAMANIAN, CA RE VENUE BY : SHRI R.N. SIDDAPPAJI, ADDL. CIT (DR) DATE OF HEARING : 27 . 1 1 .2018 DATE OF PRONOUNCEMENT : 31 . 1 2 .2018 O R D E R PER SHRI A.K. GARODIA, ACCOUNTANT MEMBER OUT OF THIS BUNCH OF THREE APPEALS, THERE ARE TWO C ROSS APPEALS IN RESPECT OF THE BIJAPUR CO-OPERATIVE CREDIT SOCIETY LTD. AND TH ERE IS ONE APPEAL OF ASSESSEE IN THE CASE OF M/S. NAVAKARNATAKA SOUHARDA CREDIT CO-OP LTD. VS. ITO IN ITA NO. 1134/BANG/2017. ALL THESE APPEALS W ERE HEARD TOGETHER AND ARE BEING DISPOSED OF BY WAY OF THIS COMMON ORDER F OR THE SAKE OF CONVENIENCE. ITA NOS. 1306 & 1314/BANG/2016 & 1134/BANG/2017 PAGE 2 OF 6 2. THE GROUNDS RAISED BY THE ASSESSEE IN ITA NO. 13 14/BANG/2016 ARE AS UNDER. 1. THAT THE ORDER OF THE LEARNED COMMISSIONER OF IN COME TAX (APPEALS) IS PREJUDICIAL TO THE INTERESTS OF THE AP PELLANT, IS BAD AND ERRONEOUS IN LAW AND AGAINST THE FACTS AND CIRCUMST ANCES OF THE CASE. 2. THAT THE LEARNED COMMISSIONER OF INCOME TAX (APP EALS) ERRED IN LAW AND ON FACTS IN NOT ALLOWING THE INTEREST INCOM E OF RS.4,82,337/- AS DEDUCTION U/S. 80P(2)(A)(I) OF THE ACT. 3. THAT THE LEARNED COMMISSIONER OF INCOME TAX (APP EALS) ERRED IN LAW AND ON FACTS IN HOLDING THAT THE INTEREST INCOM E IS NOT ATTRIBUTABLE TO THE ACTIVITY OF PROVIDING CREDIT FACILITIES TO I TS MEMBERS. 4. THAT THE LEARNED COMMISSIONER OF INCOME TAX (APP EALS) ERRED IN LAW IN NOT FOLLOWING THE DECISION OF THE JURISDICTI ONAL HIGH COURT. EACH OF THE ABOVE GROUND IS WITHOUT PREJUDICE TO ON E ANOTHER AND THE APPELLANT CRAVES THE LEAVE OF THE HON'BLE INCOME TA X APPELLATE TRIBUNAL, BANGALORE TO ADD, DELETE, AMEND OR MODIFY OTHERWISE ANY OF THE GROUND EITHER BEFORE THE HEARING OR AT THE TIME OF HEARING THIS APPEAL. 3. THE GROUNDS RAISED BY THE ASSESSEE IN ITA NO. 11 34/BANG/2017 ARE AS UNDER. 1. THAT THE ORDER OF THE LEARNED COMMISSIONER OF IN COME TAX (APPEALS) IN SO FAR IT IS PREJUDICIAL TO THE INTERE STS OF THE APPELLANT, IS BAD AND ERRONEOUS IN LAW AND AGAINST THE FACTS AND CIRCUMSTANCES OF THE CASE. 2. THAT THE LEARNED COMMISSIONER OF INCOME TAX (APP EALS) ERRED IN LAW AND ON FACTS IN NOT ALLOWING THE INTEREST INCOM E OF RS. 14,90,058/- AS DEDUCTION U/S. 80P(2)(A)(I) OF THE ACT. 3. THAT THE LEARNED COMMISSIONER OF INCOME TAX (APP EALS) ERRED IN IN NOT APPRECIATING THE FACT THAT THE INVESTMENTS MADE IN VARIOUS BANKS ARE OUT OF SURPLUS FUNDS LIKE RESERVE FUNDS, SHARE CAPITAL AND PROFITS OF THE APPELLANT. 4. WITHOUT PREJUDICE TO THE ABOVE GROUNDS, THE LEAR NED COMMISSIONER OF INCOME TAX (APPEALS) ERRED IN LAW AND ON FACTS I N DENYING DEDUCTION U/S. 80P(2)(D) OF THE ACT TO THE EXTENT O F RS.14,90,058/- BEING THE INTEREST EARNED FROM THE DEPOSITS MADE IN THE CO-OPERATIVE BANKS EVEN THOUGH THE CO-OPERATIVE BANKS ARE ALSO C O-OPERATIVE SOCIETIES ENGAGED IN THE BUSINESS OF BANKING. EACH OF THE ABOVE GROUNDS IS WITHOUT PREJUDICE TO O NE ANOTHER, THE APPELLANT SEEKS THE LEAVE OF THE HONBLE INCOME TAX APPELLATE TRIBUNAL (BANGALORE) TO ADD, DELETE, AMEND OR OTHER WISE MODIFY ONE ITA NOS. 1306 & 1314/BANG/2016 & 1134/BANG/2017 PAGE 3 OF 6 OR OTHER GROUNDS OF APPEAL EITHER BEFORE OR AT THE TIME OF HEARING OF THIS APPEAL. 4. THE GROUNDS RAISED BY THE REVENUE IN ITA NO. 130 6/BANG/2016 ARE AS UNDER. 1. THE LEARNED CIT(APPEALS) ERRED IN LAW AND ON FAC TS IN NOT APPRECIATING THE FACT THAT THE ASSESSEE IS A CO-OPE RATIVE SOCIETY WHICH FULFILLS ALL THE THREE CONDITIONS OF BEING HELD A P RIMARY CO-OPERATIVE BANK AS GIVEN IN SECTION 5(CCV) OF THE BANKING REGU LATION ACT, 1949. 2. THE LEARNED CIT(APPEALS) ERRED IN LAW AND ON FAC TS IN NOT APPRECIATING THE DEFINITION OF A CO-OPERATIVE BANK WHICH AS PER EXPLANATION BELOW SECTION 80P(4) 'THE CO-OPERATIVE BANK' SHALL HAVE THE MEANING ASSIGNED TO IT IN PART-V OF THE BANKING REGULATION ACT, 1949. 3. THE LEARNED CIT(APPEALS) ERRED IN LAW AND ON FAC TS IN NOT APPRECIATING THE FACT THAT THE ASSESSEE SOCIETY BEI NG A CREDIT CO- OPERATIVE SOCIETY ENGAGED IN BANKING BUSINESS IS A PRIMARY CO- OPERATIVE BANK WITHIN THE DEFINITION OF SECTION 5(C CV) OF THE BANKING REGULATION ACT, 1949 AND AS SUCH, NOT ELIGIBLE FOR DEDUCTION UNDER SECTION 80P(2)(A)(I) OF THE I.T. ACT, 1961. 5. AT THE VERY OUTSET, IT WAS SUBMITTED BY LD. AR O F ASSESSEE THAT IN THE APPEAL OF THE REVENUE IN ITA NO. 1306/BANG/2016, THE TAX E FFECT IS BELOW RS. 20 LAKHS AND THEREFORE, THIS APPEAL OF REVENUE IS NOT MAINTAINABLE BECAUSE OF LOW TAX EFFECT. REGARDING THE COMPUTATION OF TAX E FFECT, IT WAS POINTED OUT BY LD. AR OF ASSESSEE THAT AS PER RETURN OF INCOME FILED BY ASSESSEE, THE ASSESSEE HAD DECLARED NIL INCOME AND IN THE ASSESSM ENT ORDER, THE ASSESSED INCOME IS RS. 42,98,396/- AND THEREFORE, T HE TAX EFFECT IN THE PRESENT CASE IS BOUND TO BE BELOW RS. 20 LAKHS. TH E LD. DR OF REVENUE HAD NOTHING TO SAY. 6. IN VIEW OF ABOVE FACTS AND AS PER RECENT CBDT IN STRUCTIONS AS PER CIRCULAR NO. 3/2018 DATED 11.07.2018, THIS APPEAL OF THE REV ENUE IS NOT MAINTAINABLE BECAUSE OF LOW TAX EFFECT AND THE SAME IS DISMISSED ACCORDINGLY. 7. IN THE RESULT, THE APPEAL FILED BY THE REVENUE I S DISMISSED. 8. NOW WE TAKE UP THE APPEAL OF THE ASSESSEE IN THE SAME CASE I.E. ITA NO. 1314/BANG/2016 IN THE CASE OF M/S. BIJAPUR CO-OP CR EDIT SOCIETY LTD. VS. ITO. THE LD. AR OF ASSESSEE DRAWN OUR ATTENTION TO PARA NO. 10.3 OF THE ORDER OF CIT(A) AND POINTED OUT THAT IN THIS PARA, THE CIT(A) HAS GONE ON THIS BASIS THAT THE DEPOSIT IN BANK IS LONG TERM BY WAY OF TERM DEPOSIT AND THEREFORE, ANY SUCH INTEREST ON TERM DEPOSIT IS NOT ELIGIBLE FOR DEDUCTION U/S. ITA NOS. 1306 & 1314/BANG/2016 & 1134/BANG/2017 PAGE 4 OF 6 80P OF IT ACT. HE SUBMITTED THAT WHETHER THE DEPOS IT IS FOR SHORT TERM OR LONG TERM, IT IS NOT IMPORTANT AND THE SOURCES OF D EPOSIT IS IMPORTANT. HE PLACED RELIANCE ON JUDGEMENT OF HON'BLE KARNATAKA H IGH COURT RENDERED IN THE CASE OF TUMKUR MERCHANTS SOUHARDA CREDIT COOPER ATIVE LTD. VS. ITO AS REPORTED IN 230 TAXMAN 309 AND SUBMITTED THAT AS PE R THIS JUDGEMENT, IT WAS HELD BY HON'BLE KARNATAKA HIGH COURT THAT THE A MOUNT DEPOSITED IN BANK IS OUT OF ASSESSEES OWN FUNDS AND NOT OUT OF LIABILITY OF THE ASSESSEE AND THE SAME IS ELIGIBLE FOR DEDUCTION U/S. 80P OF IT ACT. AS AGAINST THIS, THE LD. DR OF REVENUE PLACED RELIANCE ON THE JUDGEMENT OF HON'BLE KARNATAKA HIGH COURT RENDERED IN THE CASE OF PCIT AND ANOTHER VS. TOTAGARS CO- OPERATIVE SALE SOCIETY LTD. AS REPORTED IN 395 ITR 611 (KARN). AT THIS JUNCTURE, THE BENCH POINTED OUT THAT IN BOTH THESE CASES, ALTHOGH THE ULTIMATE DECISION OF HON'BLE KARNATAKA HIGH COURT I S DIFFERENT BUT THERE IS NO CONTRADICTION IN THESE TWO JUDGEMENTS OF HON'BLE KA RNATAKA HIGH COURT. THE BENCH POINTED OUT THAT IN THE CASE OF PCIT AND ANOTHER VS. TOTAGARS CO-OPERATIVE SALE SOCIETY LTD. (SUPRA), IT WAS FOUN D THAT THE MONEY DEPOSITED IN BANK WAS OUT OF LIABILITY OF THE ASSES SEE AND NOT OUT OF ASSESSEES OWN FUNDS AND THEREFORE, THE ISSUE WAS D ECIDED AGAINST THE ASSESSEE. IN THE CASE OF TUMKUR MERCHANTS SOUHARDA CREDIT COOPERATIVE LTD. VS. ITO (SUPRA), IT WAS FOUND THAT THE MONEY D EPOSITED IN BANK WAS OUT OF ASSESSEES OWN FUNDS AND NOT OUT OF LIABILITY OF THE ASSESSEE AND THEREFORE, THE ISSUE WAS DECIDED IN FAVOUR OF THE A SSESSEE. THE BENCH OBSERVED THAT UNDER THESE FACTS, THE MATTER SHOULD GO BACK TO THE FILE OF AO FOR FRESH DECISION AFTER EXAMINING THE FACTS OF PRE SENT CASE IN THE LIGHT THESE TWO JUDGEMENTS OF HON'BLE KARNATAKA HIGH COURT. IN REPLY, BOTH SIDES AGREED TO THIS PROPOSITION PUT FORWARD BY THE BENCH . 9. WE HAVE CONSIDERED THE RIVAL SUBMISSIONS AND IN VIEW OF THE ABOVE DISCUSSION, WE FEEL IT PROPER TO RESTORE THE MATTER BACK TO THE FILE OF AO FOR FRESH DECISION AFTER EXAMINING THE FACTS OF PRESENT CASE IN THE LIGHT OF THESE TWO JUDGEMENTS OF HON'BLE KARNATAKA HIGH COURT REND ERED IN THE CASE OF PCIT AND ANOTHER VS. TOTAGARS CO-OPERATIVE SALE SOC IETY LTD. (SUPRA) AND TUMKUR MERCHANTS SOUHARDA CREDIT COOPERATIVE LTD. V S. ITO (SUPRA). WE ALSO HOLD THAT IF IT IS FOUND THAT THE FACTS OF PRE SENT CASE ARE IN LINE WITH THE ITA NOS. 1306 & 1314/BANG/2016 & 1134/BANG/2017 PAGE 5 OF 6 FACTS IN THE CASE OF PCIT AND ANOTHER VS. TOTAGARS CO-OPERATIVE SALE SOCIETY LTD. (SUPRA) THEN THE ISSUE SHOULD BE DECID ED AGAINST THE ASSESSEE AND IF THE FACTS OF THE PRESENT CASE ARE IN LINE WI TH THE FACTS IN THE CASE OF TUMKUR MERCHANTS SOUHARDA CREDIT COOPERATIVE LTD. V S. ITO (SUPRA) THEN THE ISSUE SHOULD BE DECIDED IN FAVOUR OF THE ASSESS EE. NEEDLESS TO SAY, REASONABLE OPPORTUNITY SHOULD BE PROVIDED TO ASSESS EE. 10. IN THE RESULT, THE APPEAL FILED BY THE ASSESSEE IS ALLOWED FOR STATISTICAL PURPOSES. 11. NOW WE TAKE UP THE APPEAL OF THE ASSESSEE IN TH E CASE OF M/S. NAVAKARNATAKA SOUHARDA CREDIT CO-OP LTD. IN ITA NO. 1134/BANG/2017. IT WAS SUBMITTED BY LD. AR OF ASSESSEE THAT IN THIS CA SE, THE ISSUE SHOULD GO BACK TO THE FILE OF AO FOR EXAMINING THE FACTS OF P RESENT CASE IN THE LIGHT OF THESE TWO JUDGEMENT OF HON'BLE KARNATAKA HIGH COURT RENDERED IN THE CASE OF PCIT AND ANOTHER VS. TOTAGARS CO-OPERATIVE SALE SOCIETY LTD. (SUPRA) AND TUMKUR MERCHANTS SOUHARDA CREDIT COOPERATIVE LT D. VS. ITO (SUPRA). THE LD. DR OF REVENUE SUPPORTED THE ORDER OF CIT(A) AND RELIANCE WAS PLACED BY HIM ON THE JUDGEMENT OF HON'BLE KARNATAKA HIGH COURT RENDERED IN THE CASE OF PCIT AND ANOTHER VS. TOTAGARS CO-OPE RATIVE SALE SOCIETY LTD. (SUPRA) AND ALSO THE JUDGEMENT OF HONBLE APEX COURT RENDERED IN THE CASE OF TOTGARS COOPERATIVE SALES SOCIETY LTD. VS. ITO AS REPORTED IN 322 ITR 283 (SC). 12. WE HAVE CONSIDERED THE RIVAL SUBMISSIONS AND IN VIEW OF THE FACTS OF PRESENT CASE, WE FEEL IT PROPER THAT THE MATTER SHO ULD GO BACK TO THE FILE OF AO FOR FRESH DECISION AFTER EXAMINING THE FACTS OF THE PRESENT CASE IN THE LIGHT OF THESE TWO JUDGEMENTS OF HON'BLE KARNATAKA HIGH COURT RENDERED IN THE CASE OF PCIT AND ANOTHER VS. TOTAGARS CO-OPERAT IVE SALE SOCIETY LTD. (SUPRA) AND TUMKUR MERCHANTS SOUHARDA CREDIT COOPER ATIVE LTD. VS. ITO (SUPRA) AND ALSO THE JUDGEMENT OF HONBLE APEX COUR T RENDERED IN THE CASE OF TOTGARS COOPERATIVE SALES SOCIETY LTD. VS. ITO ( SUPRA). WE ALSO HOLD THAT IF IT IS FOUND THAT THE FACTS OF PRESENT CASE ARE IN LINE WITH THE FACTS IN THE CASE OF PCIT AND ANOTHER VS. TOTAGARS CO-OPERATIVE SALE SOCIETY LTD. ITA NOS. 1306 & 1314/BANG/2016 & 1134/BANG/2017 PAGE 6 OF 6 (SUPRA) THEN THE ISSUE SHOULD BE DECIDED AGAINST TH E ASSESSEE AND IF THE FACTS OF THE PRESENT CASE ARE IN LINE WITH THE FACT S IN THE CASE OF TUMKUR MERCHANTS SOUHARDA CREDIT COOPERATIVE LTD. VS. ITO (SUPRA) THEN THE ISSUE SHOULD BE DECIDED IN FAVOUR OF THE ASSESSEE. NEEDL ESS TO SAY, REASONABLE OPPORTUNITY SHOULD BE PROVIDED TO ASSESSEE. 13. IN THE RESULT, THIS APPEAL FILED BY THE ASSESSE E IS ALLOWED FOR STATISTICAL PURPOSES. 14. IN THE COMBINED RESULT, THE APPEAL OF THE REVEN UE IS DISMISSED AND BOTH THE APPEALS OF THE ASSESSEE ARE ALLOWED FOR STATISTICAL PURPOSES. ORDER PRONOUNCED IN THE OPEN COURT ON THE DATE MENT IONED ON THE CAPTION PAGE. SD/- SD/- (LALIET KUMAR) (ARUN KUMAR GARODIA) JUDICIAL MEMBER ACCOUNTANT MEMBER BANGALORE, DATED, THE 31 ST DECEMBER, 2018. /MS/ COPY TO: 1. APPELLANT 4. CIT(A) 2. RESPONDENT 5. DR, ITAT, BANGALORE 3. CIT 6. GUARD FILE BY ORDER ASSISTANT REGISTRAR, INCOME TAX APPELLATE TRIBUNAL, BANGALORE.