Income Tax Officer, Haveri V. M/s.Ameen Urban Co-Operative Society Ltd., Haveri

ITA 143/BANG/2017

• Counselvise Citation: [2017] 128 COUNSELVISE.COM (IT) 5330 (ITAT-BANGALORE)
• Duration Of Justice: 4 month(s) 6 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 26-05-2017
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: A
• Assessment Year: 2014-2015
• Appeal Filed On: 19-01-2017
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Assessee Lawyers: SACHIN BASAVARAJ PATIL
• Keywords: Question of law; Tax effect

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL SMC-A BENCH : BANGALORE BEFORE SHRI SUNIL KUMAR YADAV, JUDICIAL MEMBER ITA NO.142 & 143/BANG/2017 ASSESSMENT YEAR : 2013-14, 2014-15 THE INCOME TAX OFFICER, WARD - 2, HAVERI. VS. M/S. AMEEN URBAN CO-OP CREDIT SOCIETY LTD., SAVANUR, DIST. HAVERI. PAN : A A C AA 3086H APPELLANT RESPONDENT REVENUE BY : SHRI. AR. V. SREENIVASAN, JCIT ASSESSEE BY : SHRI. SACHIN BASAVARAJ PATIL, CA DATE OF HEARING : 02 . 0 3 .201 7 DATE OF PRONOUNCEMENT : 26.05.2017 O R D E R PER SUNIL KUMAR YADAV, JUDICIAL MEMBER THIS APPEAL IS PREFERRED BY THE REVENUE AGAINST TH E ORDER OF CIT(A), INTERALIA, ON THE FOLLOWING GROUND: 1. THE ORDER OF THE CIT(A), DAVANGERE, IS OPPOSED TO T HE LAW AND NOT ON THE FACTS AND CIRCUMSTANCES OF THE CASE. ITA NO. 142 & 143/BANG/2017 PAGE 2 OF 7 2. WHETHER THE CIT(A), DAVANGERE IS RIGHT IN GRANTING RELIEF TO THE ASSESSEE ON THE ADDITION MADE ON ACCOUNT OF INT EREST EARNED FROM NON-MEMBERS OF THE SOCIETY U/S 80P(2)(A)(I) OF THE INCOME-TAX ACT, 1961. 3. THE CIT(A), DAVANAGER T E, ERRED IN DELETING THE ADDITIONS MADE U/S.80P(2)(A)(I) BY DECIDING THE CO- OPERATIVE SOCIETIES ARE DISTINCT FROM COOPERATIVE B ANKS AND DEDUCTION U/S 80P(2)(A)(I) IS APPLICABLE TO CO-OPER ATIVE SOCIETIES AS WELL AS DEDUCTION U/S 80P(2)(D). ON SI MILAR ISSUES, SLP FILED IN SUPREME COURT IN THE CASE OF S RI BILURU GURUBASAVA PATTINA SAHAKARI SANGHA NIYAMITHA, BAGAL KOT AND ALSO IN THE CASE OF M/S HONNALI URBAN CO-OPERAT IVE SOCIETY, HONNALI. 4. FOR THESE REASONS THE ORDER OF THE CIT(A) MAY BE RE VERSED AND THAT OF THE AO MAY BE RESTORED. 5. FOR THESE AND OTHER GROUNDS THAT MAY BE URGED UPON, THE ORDER OF THE CIT(A) MAY BE REVERSED AND THAT ASSESSMENT O RDER BE RESTORED. 6. THE APPELLANT CRAVES LEAVE TO ADD, ALTER, AMEND OR DELETE ANY OTHER GROUNDS ON OR BEFORE HEARING OF THE APPEA L. DECISION BY THE CIT ON THE SCRUTINY REPORT : A ISSUE WISE DECISION OF THE CIT, AS TO WHETHER APP EAL IS TO BE FILED OR NOT, MAY BE RECORDED WITH REASONS; KEEPING IN VIEW THE LINE OF ARGUMENT THE DR IS EXPECTED TO TAKE BEFORE ITAT AT THE TIME OF HEARING: FURTHER APPEAL BEFORE THE ITAT IS CONSIDERED NECESS ARY ON THIS ISSUE, FOR THE FOLLOWING REASONS: THE CIT(A) HAS DELETED THE ADDITIONS MADE ON ACCOUN T OF THE DISALLOWANCE CLAIMED U/S. 80P(2)(A)(I) AGGREGATING TO RS.85,128/-. THE CIT(A) RELIED ON THE DECISION OF H ON'BLE HIGH COURT OF KARNATAKA IN THE CASE OF TUMKUR MERCHANTS SOUHARDHA CREDIT CO-OP LTD VS. ITO [ITA NO.307 OF 2014] DATED : 28.10.2014 AND ITA NO. 142 & 143/BANG/2017 PAGE 3 OF 7 HELD THAT THE ASSESSEE IS ENTITLED TO CLAIM DEDUCTI ON U/S 80P(2)(A) OF THE ENTIRE INCOME WHICH HAS ARRIVED IN THE COURSE O F BANKING BUSINESS. IN THE ABOVE REFERRED CASE, THE DECISION WAS NOT AC CEPTED AND FURTHER APPEAL I WAS NOT FILED ONLY ON THE LOWE R TAX EFFECT. ON SIMILAR ISSUE, IN THE CASE OF CIT VS SRI BILURU GUR UBASAVA PATTINA SAHAKARI SANGHA NIYAMITHA, BAGALKOT SLP WAS FILED A ND ADMITTED IN SUPREME COURT (SLP NO. 9958 OF 2015). SINCE THE ISS UE HAS NOT REACHED ITS LOGICAL END, THE FILING OF THE FURTHER APPEAL IS CONSIDERED NECESSARY. FURTHER, THE SECTION 80P(2)(A)(I) CLEARLY MANDATES THAT (A) THE ASSESSEE SHOULD BE CO-OP CREDIT SOCIETY AND (B) THE ASSESSEE SHOULD BE ENGAGED IN THE ACTIVITY OF PROVIDING CREDIT FACI LITY TO ITS MEMBERS. HERE, IN THE PRESENT CASE, THE ASSESSEE IS A CO-OP SOCIETY ENGAGED IN THE ACTIVITY OF PROVIDING CREDIT FACILITY TO ITS ME MBERS ALSO MADE TRANSACTIONS WITH NON MEMBERS. THE HON'BLE CIT(A) W HILE COMING TO THE CONCLUSION HAS RELIED ON THE ORDER OF HON'BLE KARNATAKA HIGH COURT'S DECISION IN THE CASE OF TUMK UR MERCHANTS SOUHARDA CREDIT CO-OP LTD. HOWEVER, IT IS OBSERVED IN THE ENTIRE ORDER THERE IS NO DISCUSSION ABOUT NON-MEMBER TRANS ACTIONS. IT IS AN UNDISPUTED FACT THAT THE NATIONALIZED AND CO-OP BANKS ARE NOT THE MEMBERS OF THE SOCIETY. SECTION 80P(2)(A)(I) ALLOWA BLE/APPLICABLE ONLY IN RESPECT OF THE SOCIETIES WHO ARE DEALING WI TH THE MEMBERS AND DOES NOT MANDATE TO ALLOW DEDUCTION IN RESPECT OF N ON MEMBERS. HENCE, THE HON'BLE CIT(A) ERRED IN COMING TO CONCLUSION THAT, THE SECTION 80P(2) DOES NOT MANDATE THAT THE INCOME NEE DS TO BE EARNED ONLY FROM MEMBERS. SINCE THE QUESTION OF LAW IS INV OLVED IN THIS CASE AND ALSO THE ISSUE HAS NOT REACHED ITS LO GICAL END, THE FILING OF THE FURTHER APPEAL IS CONSIDERED NECESSAR Y. IN VIEW OF THE ABOVE, THE DECISION OF THE CIT (APPE AL) ALLOWING THE ASSESSEE'S APPEAL ON THIS ISSUE IS NOT ACCEPTAB LE AND FILING OF SECOND APPEAL IS SUGGESTED ON THIS ISSUE. AGGREGATE TAX EFFECT ON ISSUES PROPOSED TO BE CONTESTED IN THE ITAT RS.1,18,721/- ITA NO. 142 & 143/BANG/2017 PAGE 4 OF 7 B. GROUNDS OF APPEAL TO BE RAISED BEFORE THE ITAT M AY BE FRAMED IN RESPECT OF THE ISSUES NOT ACCEPTED BY THE CIT. GROUNDS OF APPEAL 1. THE ORDER OF THE CIT(A), DAVANGERE, IS OPPOSED T O THE LAW AND NOT ON THE FACTS AND CIRCUMSTANCES OF THE CASE. 2. WHETHER THE CIT(A), DAVANGERE IS RIGHT IN GRANTI NG RELIEF TO THE ASSESSEE ON THE ADDITION MADE ON ACCOUNT OF INT EREST EARNED FROM NON-MEMBERS OF THE SOCIETY U/S 80P(2)(A)(I) OF THE INCOME-TAX ACT, 1961. 3. THE CIT(A), DAVANAGERE, ERRED IN DELETING THE ADDITIONS MADE U/S.80P(2)(A)(I) BY DECIDING THE CO- OPERATIVE SOCIETIES ARE DISTINCT FROM COOPERATIVE B ANKS AND DEDUCTION U/S 80P(2)(A)(I) IS APPLICABLE TO CO-OPER ATIVE SOCIETIES AS WELL AS DEDUCTION U/S 80P(2)(D). ON SI MILAR ISSUES, SLP FILED IN SUPREME COURT IN THE CASE OF S RI BILURU GURUBASAVA PATTINA SAHAKARI SANGHA NIYAMITHA, BAGAL KOT AND ALSO IN THE CASE OF M/S HONNALI URBAN CO-OPERAT IVE SOCIETY, HONNALI. 4. FOR THESE REASONS THE ORDER OF THE CIT(A) MAY BE REVERSED AND THAT OF THE AO MAY BE RESTORED. 5. FOR THESE AND OTHER GROUNDS THAT MAY BE URGED UP ON, THE ORDER OF THE CIT(A) MAY BE REVERSED AND THAT ASSESS MENT ORDER BE RESTORED. 6. THE APPELLANT CRAVES LEAVE TO ADD, ALTER, AMEND OR DELETE ANY OTHER GROUNDS ON OR BEFORE HEARING OF THE APPEA L. IN CASE OF A COMBINED ORDER OR ORDER IN A GROUP CASE, INVOLVING MORE THAN ONE ASSESSEE FALLING UNDER JURISDICTION O F DIFFERENT CSIT, THE CIT SHALL COMMUNICATE THE STAND TAKEN ON COMMON ISSUES TO THE CIT HAVING JURISDICTION OVER OTHER CA SE(S). N.A ITA NO. 142 & 143/BANG/2017 PAGE 5 OF 7 8. CATEGORIZATION OF FINAL DECISION BY CIT A. THE APPEAL IS NOT TO BE FILED (I) AS THE ORDER IS ACCEPTABLE ON MERITS, OR (II) EVEN THOUGH THE ORDER IS NOT ACCEPTABLE, APPEAL IS NOT BEING FILED ONLY ON THE CONSIDERATION THAT THE TAX EFFECT IS LESS THAN THE LIMIT PRESCRIBED IN CBDTS INSTRUCTION ON MONETA RY LIMITS. B. APPEAL IS TO BE FILED ON THE GROUNDS OF APPEAL F RAMED ABOVE (I) AS THE ORDER IS NOT ACCEPTABLE ON MERITS, OR (II) THOUGH TAX EFFECT IS BELOW THE PRESCRIBED LIMIT, TH E CASE FALLS UNDER THE EXCEPTIONS (TO BE SPECIFIED) OF THE INSTRUCTION OF CBDT ON MONETARY LIMITS. NA (III) AUTHORISATION UNDER SECTION 253(2) OF THE I.T. ACT IS ISSUED SEPARATELY. APPEAL TO BE FILED ACCORDINGLY. 2. DURING THE COURSE OF HEARING, THE LEARNED COUNSEL F OR THE ASSESSEE INVITED OUR ATTENTION TO THE ORDER OF THE CIT(A) WITH THE SUBMISSION THAT CIT(A) HAS ADJUDICATED THE ISSUE FO LLOWING THE JUDGMENT OF THE JURISDICTIONAL HIGH COURT IN THE CA SE OF TUMKUR MERCHANTS SOUHARDA CREDIT COOPERATIVE LTD., VS ITO, SHRI. BILURU GURUBASAVA SAHAKARI SANGH NIYAMIT, BAGALKOTE AND BE LGAUM MERCHANTS CO-OP CREDIT SOCIETY LTD., VS. CIT. BESI DES CIT(A) HAS ALSO FOLLOWED THE OTHER JUDGMENTS OF DIFFERENT HIGH COURTS IN THIS ITA NO. 142 & 143/BANG/2017 PAGE 6 OF 7 REGARD. SINCE THE CIT(A) HAS DECIDED THE ISSUE IN THE LIGHT OF THE JUDGMENT OF JURISDICTIONAL HIGH COURT, NO INTERFERE NCE THEREIN IS CALLED FOR. 3. THE LEARNED DR, ON THE OTHER HAND, HAS SUBMITTED THAT THE AO WHILE MAKING THE DISALLOWANCE OF THE DEDUCTION UNDE R SECTION 80P, HAS TAKEN INTO ACCOUNT THE DISTINGUISHED FACTS AND THE BYE LAWS OF THE COOPERATIVE SOCIETIES. SINCE THE ASSESSEE WAS ENGA GED IN BANKING ACTIVITIES, THE AO DISALLOWED THE DEDUCTION CLAIMED UNDER SECTION 80P(2)(A)(I) OF THE INCOME TAX ACT. 4. HAVING CAREFULLY EXAMINED THE ORDERS OF THE AUTH ORITIES BELOW, IN THE LIGHT OF RIVAL SUBMISSIONS, WE FIND THAT THE ASSESSEE IS A COOPERATIVE SOCIETY REGISTERED UNDER COOPERATIVE SO CIETIES ACT WHICH CLAIMED DEDUCTION UNDER SECTION 80P ON AN INCOME BY WAY OF INTEREST EARNED FROM ITS MEMBERS ON THE LOAN ADVANCED TO THE M. THE AO DENIED THE DEDUCTION UNDER SECTION 80P(2)(A)(I) OF THE ACT CLAIMED BY THE ASSESSEE ON THE GROUND THAT THE ASSESSEE IS ENG AGED IN BANKING ACTIVITIES. BUT THE CIT(A) RE-EXAMINED THE CLAIM O F THE ASSESSEE IN THE LIGHT OF THE JUDGMENT OF JURISDICTIONAL HIGH COURT AS WELL AS JUDGMENTS OF HONBLE GUJARAT HIGH COURT AND WAS OF THE VIEW T HAT THE ASSESSEES ITA NO. 142 & 143/BANG/2017 PAGE 7 OF 7 INCOME EARNED IN THE COURSE OF PROVIDING CREDIT FAC ILITIES TO ITS MEMBERS IS ELIGIBLE FOR DEDUCTION UNDER SECTION 80P (2)(A)(I) OF THE ACT. DURING THE COURSE OF HEARING, THE LEARNED DR COULD NOT SPECIFICALLY POINT OUT ANY SPECIFIC DEFECT IN THE ORDER OF THE C IT(A). SINCE THE CIT(A) DECIDED THE ISSUE FOLLOWING THE JUDGMENT OF HONBLE JURISDICTIONAL HIGH COURT, I FIND NO INFIRMITY THER EIN. ACCORDINGLY, I CONFIRM HIS ORDER. 5. IN THE RESULT, THE APPEAL OF THE REVENUE STAND D ISMISSED. PRONOUNCED IN THE OPEN COURT ON 26 TH MAY, 2017. SD/- ( SUNIL KUMAR YADAV ) JUDICIAL MEMBER BANGALORE. DATED: 26 TH MAY, 2017. /NSHYLU/* COPY TO: 1. APPELLANTS 2. RESPONDENT 3. CIT 4. CIT(A) 5. DR, ITAT, BANGALORE. 6. GUARD FILE BY ORDER ASSISTANT REGISTRAR, ITAT, BANGALORE.