M/s Sangam Credit Co-operative Society Ltd , Bangalore V. Income TAx Officer Ward-3(2)(1), Bangalore

ITA 1411/BANG/2018

• Counselvise Citation: [2018] 121 COUNSELVISE.COM (IT) 4718 (ITAT-BANGALORE)
• Duration Of Justice: 30 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 01-06-2018
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: C
• Assessment Year: 2014-2015
• Appeal Filed On: 02-05-2018
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: DK JHA
• Assessee Lawyers: C V MUDRA B ETTU
• Keywords: Business income

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL SMC-C BENCH : BANGALORE BEFORE SHRI ARUN KUMAR GARODIA, ACCOUNTANT MEMBER A ND SHRI LALIET KUMAR, JUDICIAL MEMBER ITA NO. 1411 / BANG/201 8 ASSESSMENT YEAR : 201 4 - 1 5 M/S. SANGAM CREDIT CO- OPERATIVE SOCIETY LTD., NO. 57, 2 ND CROSS, NAGARBHAVI MAIN ROAD, ANUBHAV NAGAR, BANGALORE 560 072. PAN: AAKAS6987K VS. THE INCOME TAX OFFICER, WARD 3 (2) (1), BANGALORE. APPELLANT RESPONDENT APPELLANT BY : SHRI C.V. MUDRA B ETTU, ADVOCATE RESPONDENT BY : SHRI D.K. JHA, ADDL. CIT (DR) DATE OF HEARING : 22 . 0 5 .2018 DATE OF PRONOUNCEMENT : 01 . 0 6 .2018 O R D E R PER SHRI A.K. GARODIA, ACCOUNTANT MEMBER THIS APPEAL IS FILED BY THE ASSESSEE WHICH IS DIREC TED AGAINST THE ORDER OF LD. CIT (A)-3, BANGALORE DATED 05.03.2018 FOR ASSES SMENT YEAR 2014-15. 2. THE GROUNDS RAISED BY THE ASSESSEE ARE AS UNDER. 1. THE ORDER PASSED BY THE AUTHORITIES BELOW TO THE EXTENT WHICH IS AGAINST TO THE APPELLANT IS BAD IN LAW AND CONTRARY TO THE SETTLED PRINCIPLES OF LAW. 2. THE APPELLANT DENIES ITSELF LIABLE TO BE TAXED O N A TOTAL INCOME OF RS. 10,10,277/- AS ASSESSED BY THE LEARNED ASSESSIN G OFFICER AS AGAINST THE RETURN INCOME OF RS. NIL UNDER THE FACTS AND CI RCUMSTANCES OF THE CASE OF THE APPELLANT. 3. THE CIT(A) AND AO HAS ERRED IN DISALLOWING THE C LAIM OF DEDUCTION OF AN AMOUNT OF RS.10,10,271/- U/S.80P(2)(A)(I) OF THE ACT ON THE FACT AND CIRCUMSTANCES OF THE CASE. 4. THE CIT(A) ERRED IN HOLDING THAT THE APPELLANT H AS INVESTED SURPLUS FUNDS WITH CO-OPERATIVE BANKS AND EARNED INTEREST O N IT IS NOT BUSINESS INCOME CONSEQUENTLY IT IS INCOME FROM OTHE R SOURCES ON THE FACTS AND CIRCUMSTANCES OF THE CASE. ITA NO. 1411/BANG/2018 PAGE 2 OF 4 5. THE CIT(A) FAILED TO APPRECIATE THAT, THE APPELL ANT IS ENTITLE TO CLAIM DEDUCTION U/S. 57 OF THE ACT WHEN THE INTERES T INCOME IS TREATED AS INCOME FROM OTHER SOURCES US/.56 OF THE ACT ON T HE FACTS AND CIRCUMSTANCES OF THE CASE. RELIANCE IS PLACED ON KA RNATAKA HIGH COURT IN ITA NO,100004/2018. 6. THE CIT(A) FAILED TO APPRECIATE THAT ALL CO-OPER ATIVE BANKS ARE CO-OPERATIVE SOCIETIES FIRST AND THEN THEY ARE CONV ERTED TO CO- OPERATIVE BANKS UNDER THE FACTS AND CIRCUMSTANCES O F THE CASE. 7. THE CIT(A) FAILED TO APPRECIATE THAT THE CO-OPER ATIVE SOCIETIES ARE LEGALLY BOUND TO INVEST IN CO-OPERATIVE BANKS UNDER SECTION 58 OF THE KARNATAKA CO-OPERATIVE SOCIETY ACT, UNDER THE FACTS AND CIRCUMSTANCES OF THE CASE. 8. THE APPELLANT CRAVES LEAVE TO ADD, ALTER, DELETE OR SUBSTITUTE ANY OF THE GROUNDS URGED ABOVE. 9. IN VIEW OF THE ABOVE AND THE OTHER GROUNDS THAT MAY BE URGED AT THE TIME OF HEARING OF THE APPEAL, YOUR APPELLANT PRAYS THAT THE APPEAL MAY BE ALLOWED IN THE INTEREST OF EQUITY AND JUSTIC E. 3. IT WAS SUBMITTED BY LD. AR OF ASSESSEE THAT THE LD. CIT(A) HAS CONSIDERED THE JUDGMENT OF HONBLE APEX COURT RENDERED IN THE CASE OF CITIZEN CO OPERATIVE SOCIETY LTD. VS. ACIT AS REPORTED IN 397 ITR 1. IN THIS REGARD, HE DRAWN OUR ATTENTION TO PARA 4.5 OF THE ORDER OF CIT (A). THEN HE SUBMITTED THAT IN PARA 4.6 OF HIS ORDER, LEARNED CIT (A) HELD THAT IN VIEW OF THIS JUDGMENT, THE ASSESSEE IS NOT ELIGIBLE FOR DEDUCTION U/S 80P (2) (A) (I) OF I. T. ACT WITHOUT COMPARING THE FACTS OF THE PRESENT CASE WITH THE FACTS OF THAT CA SE. HE SUBMITTED THAT IN THE FACTS OF THE PRESENT CASE, THIS JUDGMENT IS NOT APP LICABLE IN THE PRESENT CASE AND THE MATTER MAY BE RESTORED TO CIT (A) TO DECIDE THIS ASPECT OF THE MATTER AFRESH BY PASSING A SPEAKING AND REASONED ORDER IN WHICH HE SHOULD COMPARE THE FACTS OF THE PRESENT CASE WITH THE FACTS OF THA T CASE. THEREAFTER, HE SUBMITTED THAT IN PARAS 4.7 TO 4.9 OF HIS ORDER, LE ARNED CIT (A) HAS HELD BY FOLLOWING THE JUDGMENT OF HON'BLE KARNATAKA HIGH CO URT DATED 16.06.2017 RENDERED IN THE CASE OF PCIT AND ANOTHER VS. TOTAGA RS CO-OPERATIVE SALE SOCIETY AS REPORTED IN395 ITR 611 (KARN) THAT THE A SSESSEE IS NOT ELIGIBLE FOR DEDUCTION U/S 80P OF I. T. ACT FOR THIS REASON ALSO . HE SUBMITTED THAT THE FACTS OF THIS CASE ARE DIFFERENT AND THEREFORE, THIS JUDG MENT IS NOT APPLICABLE IN THE PRESENT CASE. HE SUBMITTED THAT IN THE PRESENT CAS E, ANOTHER JUDGMENT OF HON'BLE KARNATAKA HIGH COURT RENDERED IN THE CASE O F TUMKUR MERCHANTS SOUHARDA CREDIT COOPERATIVE LTD. VS. ITO AS REPORTE D IN 230 TAXMAN 309 IS APPLICABLE AND THEREFORE, THE MATTER SHOULD BE REST ORED BACK TO CIT (A) FOR A ITA NO. 1411/BANG/2018 PAGE 3 OF 4 FRESH DECISION BY FOLLOWING THIS JUDGMENT OF HON'BL E KARNATAKA HIGH COURT RENDERED IN THE CASE OF TUMKUR MERCHANTS SOUHARDA C REDIT COOPERATIVE LTD. VS. ITO (SUPRA). AT THIS JUNCTURE, THE BENCH WANTE D TO KNOW REGARDING THE FACTS OF THE PRESENT CASE BECAUSE THE DECISION OF HON'BLE KARNATAKA HIGH COURT RENDERED IN BOTH THESE CASES I.E. PCIT AND ANOTHER VS. TOTAGARS CO-OPERATIVE SALE SOCIETY (SUPRA) AND TUMKUR MERCHANTS SOUHARDA CREDIT COOPERATIVE LTD. VS. ITO (SUPRA) ARE ON THE SAME LINE BUT THE CONCLU SION IS DIFFERENT BECAUSE THE FACTS ARE DIFFERENT. THE BENCH POINTED OUT THAT IN THE CASE OF PCIT AND ANOTHER VS. TOTAGARS CO-OPERATIVE SALE SOCIETY(SUPRA), THE MONEY DEPOSITED IN BANK WAS OUT OF LIABILITY OF THE ASSESSEE AND IN THE CAS E OF TUMKUR MERCHANTS SOUHARDA CREDIT COOPERATIVE LTD. VS. ITO(SUPRA), TH E MONEY DEPOSITED IN BANK WAS NOT OUT OF LIABILITY BUT OUT OF ASSESSEES OWN FUNDS AND THEREFORE, THIS DECISION IS IN FAVOUR OF THE ASSESSEE. THE BENCH P OINTED OUT THAT IF THE FACTS IN THE PRESENT CASE ARE SIMILAR TO THAT OF THE FACTS I N THE CASE OF PCIT AND ANOTHER VS. TOTAGARS CO-OPERATIVE SALE SOCIETY (SUPRA) THEN THE ISSUE SHOULD BE DECIDED AGAINST THE ASSESSEE BUT IF THE FACTS OF TH E PRESENT ASSESSEE ARE SIMILAR TO THAT OF TUMKUR MERCHANTS SOUHARDA CREDIT COOPERATIVE LTD. VS. ITO(SUPRA) THEN THE ISSUE IS TO BE DECIDED IN FAVOU R OF THE ASSESSEE. IN REPLY, IT WAS SUBMITTED BY LD. AR OF ASSESSEE THAT THE FACTS ARE NOT READILY AVAILABLE AND THEREFORE, THE MATTER MAY BE RESTORED BACK TO THE F ILE OF CIT(A) FOR FRESH DECISION AFTER EXAMINING THE FACTS OF THE PRESENT C ASE IN THE LIGHT OF THESE TWO JUDGMENTS OF HON'BLE KARNATAKA HIGH COURT. THE LD. DR OF REVENUE ALSO AGREED TO THIS PROPOSITION PUT FORWARD BY THE LD. A R OF ASSESSEE. 4. WE HAVE CONSIDERED THE RIVAL SUBMISSIONS AND WE FEEL IT PROPER THAT THE MATTER SHOULD GO BACK TO THE FILE OF CIT(A) FOR FRESH DECI SION AFTER EXAMINING THE FACTS OF THE PRESENT CASE FIRST IN THE LIGHT OF THE JUDGM ENT OF HONBLE APEX COURT RENDERED IN THE CASE OF CITIZEN CO OPERATIVE SOCIET Y LTD. VS. ACIT (SUPRA) AND IF IT IS FOUND THAT THE ASSESSEE IS ELIGIBLE FOR DEDUC TION U/S 80P EVEN AFTER CONSIDERING THIS JUDGMENT OF HONBLE APEX COURT, TH AN THE FACTS OF THE PRESENT CASE SHOULD BE EXAMINED IN THE LIGHT OF THESE TWO J UDGMENTS RENDERED IN THE CASE OF PCIT AND ANOTHER VS. TOTAGARS CO-OPERATIVE SALE SOCIETY(SUPRA) AND TUMKUR MERCHANTS SOUHARDA CREDIT COOPERATIVE LTD. V S. ITO(SUPRA) AND IF IT IS ITA NO. 1411/BANG/2018 PAGE 4 OF 4 FOUND THAT THE FACTS OF THE PRESENT CASE ARE IN LIN E WITH THE FACTS OF THE PCIT AND ANOTHER VS. TOTAGARS CO-OPERATIVE SALE SOCIETY( SUPRA) THEN THE ISSUE MAY BE DECIDED AGAINST THE ASSESSEE AND IF THE FACTS OF THE PRESENT CASE ARE IN LINE WITH THE FACTS OF THE CASE OF TUMKUR MERCHANTS SOUH ARDA CREDIT COOPERATIVE LTD. VS. ITO(SUPRA) THEN THE ISSUE MAY BE DECIDED I N FAVOUR OF THE ASSESSEE. THE CIT(A) SHOULD PASS A SPEAKING AND REASONED ORDE R AS PER LAW IN THE LIGHT OF ABOVE DISCUSSION AFTER PROVIDING ADEQUATE OPPORT UNITY OF BEING HEARD TO BOTH SIDES. 5. IN THE RESULT, THE APPEAL FILED BY THE ASSESSEE IS 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 01 ST JUNE, 2018. /MS/ COPY TO: 1. APPELLANT 4. CIT(A) 2. RESPONDENT 5. DR, ITAT, BANGALORE 3. CIT 6. GUARD FILE BY ORDER SENIOR PRIVATE SECRETARY, INCOME TAX APPELLATE TRIBUNAL, BANGALORE.