M/s Karnataka State Government House Building Co-operative Society Ltd , Bangalore V. Income TAx Officer Ward-3(2)(2), Bangalore

ITA 1500/BANG/2018

• Counselvise Citation: [2019] 117 COUNSELVISE.COM (IT) 5979 (ITAT-BANGALORE)
• Duration Of Justice: 11 month(s) 23 day(s)
• Appeal Type: Income Tax (Transfer Pricing) Appeal
• Pronouncement Date: 01-05-2019
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: B
• Assessment Year: 2009-2010
• Appeal Filed On: 08-05-2018
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Keywords: Depreciation; Unabsorbed depreciation

Judgement Text

ITA.1500, 1501/B/18 & ITA.77/B/2019 PAGE - 4 INTEGRA, FOR THE SAID ISSUE HAS BEEN DECIDED BY THE INCOME-TAX APPELLATE TRIBUNAL ITSELF IN DIFFERENT CASES . . .' . NO OTHER BINDING PRECEDENT WAS DISCUSSED IN THE SAID JUDGMEN T. OF COURSE, THE BENCH HAS OBSERVED THAT A CO-OPERATIVE BANK IS A SPECIE OF THE GENUS CO-OPERATIVE SOCIETY, WITH WHIC H WE AGREE, BUT AS FAR AS APPLICABILITY OF SECTION 80P(2) OF TH E ACT IS CONCERNED, THE APPLICABILITY OF THE SUPREME COURT'S DECISION CANNOT BE RESTRICTED ONLY IF THE INCOME WAS TO FALL UNDER SECTION 80P(2)(A) OF THE ACT AND NOT UNDER SECTION 80P(2)(D) OF THE ACT. IT WAS SUBMITTED THAT AS THE ISSUE HAS ALREADY BEE N DECIDED AGAINST THE ASSESSEE, THE LEGAL POSITION MAY KINDLY BE NOTE D AND THE MATTER MAY BE DECIDED IN ACCORDANCE WITH LAW. 06. PER CONTRA THE LD. DR SUBMITTED THAT THE ASSESS EE HAD CONCEDED THAT THE GROUND HAD BEEN DECIDED BY THE HO NBLE JURISDICTIONAL HIGH COURT (SUPRA) THEREFORE NO FURT HER ELABORATION IS REQUIRED FROM THE REVENUES SIDE. 07. WE HAVE HEARD THE RIVAL SUBMISSIONS AND PERUSED THE MATERIAL ON RECORD. THE ISSUE PERTAINS TO ELIGIBILITY OF TH E ASSESSEE FOR CLAIMING THE DEDUCTION U/S.80P2(D), IS SQUARELY COV ERED AGAINST THE ASSESSEE BY THE CATEGORICAL PRONOUNCEMENT IN THE M ATTER OF PR. CIT VERSUS TOTGARS CO-OP SALE SOCIETY [395 ITR 611] , W HEREIN AFTER TAKING INTO ACCOUNT THE JUDGMENT OF THE HONBLE SUP REME COURT IN THE MATTER OF TOTGARS COOPERATIVE SALE SOCIETY V. ITO [322 ITR 283] THE ISSUE WAS DECIDED AGAINST THE ASSESSEE. W E DO NOT FIND ANY REASON TO TAKE A CONTRARY VIEW AND ACCORDINGLY THE GROUND RAISED BY THE ASSESSEE IS DISMISSED. 08. WITH RESPECT OF GROUND NO.5, IT WAS THE CONTENT ION OF THE ASSESSEE THAT THE TERM PROFITS AND GAINS USED IN SECTION 80P(2)(C) ITA.1500, 1501/B/18 & ITA.77/B/2019 PAGE - 3 04. THE CIT (A) AFTER ISSUING THE SHOW-CAUSE NOTICE HAD ALSO DENIED THE DEDUCTION OF RS.50,000/- GIVEN BY THE AO U/S.80P(2)(C). AGGRIEVED BY THE DENIAL OF DEDUCTION BY THE CIT (A) , THE ASSESSEE IS IN APPEAL BEFORE THIS TRIBUNAL. 05. REGARDING GROUND 4 THE LD. AR SUBMITTED THAT CA SE OF THE ASSESSEE IS COVERED BY THE DECISION OF JURISDICTION AL HIGH COURT IN THE MATTER OF PR. CIT . TOTGARS CO-OP SALE SOCIETY [(2017) 392 ITR 74W], WHEREIN AT PARA 10, IT WAS HELD AS UNDER : 10. ADMITTEDLY, THE INTEREST WHICH THE ASSESSEE-RES PONDENT HAD EARNED WAS FROM A CO-OPERATIVE BANK. THEREFORE, ACC ORDING TO SECTION 80P(2)(D) OF THE INCOME-TAX ACT, THE SAID A MOUNT OF INTEREST EARNED FROM A CO-OPERATIVE BANK WOULD BE D EDUCTIBLE FROM THE GROSS INCOME OF THE CO-OPERATIVE SOCIETY I N ORDER TO ASSESS ITS TOTAL INCOME. THEREFORE, THE ASSESSING O FFICER WAS NOT JUSTIFIED IN DENYING THE SAID DEDUCTION TO THE ASSE SSEE- RESPONDENT. IT WAS FAIRLY CONCEDED BY THE LD AR THAT THE ISSUE IN THE PRESENT CASE WAS SUBSEQUENTLY DECIDED BY THE JURISDICTIONAL HIGH COURT IN THE MATTER OF PR. CIT . TOTGARS CO-OP SALE SOCIETY [395 ITR 611] AGAINST THE ASSESSEE , WHEREIN AT PARA 18, IT WAS H ELD AS UNDER : 18. THE CONTENTION OF THE LEARNED COUNSEL FOR THE A SSESSEE THAT A CO-ORDINATE BENCH OF THIS COURT DISMISSED THE REV ENUE'S APPEALS BY REFERRING, BUT NOT APPLYING THE DECISION OF THE HON'BLE SUPREME COURT, WE OBSERVE WITH GREATEST RES PECTS THAT WE DO NOT FIND ANY DETAILED DISCUSSION OF THE FACTS AND LAW PRONOUNCED BY THE HON'BLE SUPREME COURT IN THE CASE OF THE RESPONDENT-ASSESSEE IN THE SAID ORDER PASSED BY THE CO- ORDINATE BENCH AND THEREFORE, WE ARE UNABLE TO FOLL OW THE SAME IN THE FACE OF THE BINDING PRECEDENT LAID DOWN BY THE HON'BLE SUPREME COURT. WE FIND IN PARAGRAPH 8 OF TH E SAID ORDER PASSED BY A CO-ORDINATE BENCH THAT THE LEARNE D JUDGES HAVE OBSERVED THAT 'THE ISSUE WHETHER A CO-OPERATIV E BANK IS CONSIDERED TO BE A CO-OPERATIVE SOCIETY IS NO LONGE R RES ITA.1500, 1501/B/18 & ITA.77/B/2019 PAGE - 5 IS REQUIRED TO BE READ IN THE LIGHT OF THE JUDGMENT OF THE HONBLE SUPREME COURT RENDERED IN THE MATTER OF CIT V. VIRM ANI INDUSTRIES P. LTD [216 ITR 607], WHEREIN THE HONBLE SUPREME C OURT HELD AS UNDER : WE MAY FIRST CONSIDER THE MEANING OF THE EXPRESSION 'PROFITS OR GAINS CHARGEABLE'. ON THE FIRST IMPRESSION, THE SAID EXPRESSION APPEARS TO REFER ONLY TO PROFITS OR GAIN S OF BUSINESS OR PROFESSION CHARGEABLE UNDER SECTION 28. BUT THIS COURT HAS REPEATEDLY HELD THAT THE SAID EXPRESSION IS NOT SO CONFINED AND THAT IT REFERS TO INCOME UNDER ALL THE HEADS OF INC OME SPECIFIED IN SECTION 14. IN JAIPURIA CHINA CLAY MINES (P.) LT D.'S CASE [1966] 59 ITR 555 (SC), THE FACTS WERE THESE : THE TOTAL INCOME OF THE RESPONDENTASSESSEE FOR THE ASSESSMENT YEAR 1 952-53 BEFORE CHARGING DEPRECIATION WAS RS. 14,041. AFTER DEDUCTING DEPRECIATION OF RS. 5,360, THE INCOME-TAX OFFICER C OMPUTED THE PROFIT AT RS. 8,681. AGAINST THIS PROFIT, HE SET OF F THE LOSSES OF AN EARLIER YEAR. HAVING DONE THIS, THE INCOME-TAX O FFICER COMPUTED THE INCOME OF THE ASSESSEE FROM DIVIDENDS AT RS. 2,01,130 AND LEVIED TAX ON IT. THE ASSESSEE CLAIMED THAT THE UNABSORBED DEPRECIATION AGGREGATING TO RS. 76,857 S HOULD BE DEDUCTED FROM THE DIVIDEND AND IF IT IS SO DONE, TH E TOTAL INCOME WOULD GET REDUCED TO RS. 1,32,955. THE INCOM E-TAX OFFICER REJECTED THE CLAIM. WHEN THE MATTER WAS ULT IMATELY CARRIED TO THIS COURT, IT TOOK NOTE OF THE OPENING WORDS OF THE SUB-SECTION, VIZ., 'WHERE, IN THE ASSESSMENT OF THE ASSESSEE OR IF THE ASSESSEE IS A REGISTERED FIRM, IN THE ASSESSMEN T OF ITS PARTNERS, FULL EFFECT CANNOT BE GIVEN TO ANY SUCH A LLOWANCE. . . .' AND HELD ON THAT BASIS THAT THE EXPRESSION 'PROF ITS OR GAINS CHARGEABLE' IN THE SAID SUB-SECTION IS NOT CONFINED TO PROFITS AND GAINS FROM BUSINESS OR PROFESSION BUT TAKES WIT HIN ITS AMBIT ALL HEADS OF INCOME. THIS COURT WAS OF THE OP INION THAT WHILE AMENDING SECTION 10(2)(VI) OF THE INDIAN INCO ME-TAX ACT, 1922, BY THE AMENDMENT ACT 25 OF 1953, PARLIAMENT H AS ACCEPTED THE INTERPRETATION PLACED UPON THE SAID EX PRESSION BY SEVERAL HIGH COURTS TO THE ABOVE EFFECT. IT REFERRE D TO THE DECISIONS OF THE LAHORE HIGH COURT IN KARAM ILAHI MUHAMMAD SHAFI V. CIT [1929] 3 ITC 456, THE MADRAS HIGH COURT IN A. SUPPAN CHETTIAR AND CO. V. CIT [1929] 4 ITC 211, THE EAST PUNJAB HIGH COURT IN LAXMICHAND JAIPORIA S PG. AND WVG. MILLS, IN RE, [1950] 18 ITR 919 AND THE BOMBAY HIGH ITA.1500, 1501/B/18 & ITA.77/B/2019 PAGE - 2 28.11.2018, FOR THE ASSESSMENT YEARS 2009-10, 2013- 14 AND 2015- 16, RESPECTIVELY. 02. THE COMMON GROUNDS OF APPEAL WERE RAISED BY THE ASSESSEE. WE ARE ONLY REPRODUCING THE EFFECTIVE GROUNDS 4 & 5 RAISED BY THE ASSESSEE FOR AY 2009-10 WHICH ARE AS UNDER : 03. THE LD. AR HAS SUBMITTED THAT GROUND NO.1 IS GE NERAL AND GROUND NOS.2 AND 3 ARE NOT PRESSED THEREFORE WE ARE NOT DECIDING GROUND NOS.2 AND 3. 3.1 GROUND 4 PERTAINS TO 80P(2)(D). IN THIS REGAR D, THE LD. AR SUBMITTED THAT THE ASSESSEE IS A HOUSING COOPERATIV E SOCIETY AND FILED RETURN OF INCOME FOR AY 2009-10. THEREAFTER THE AO HAD ISSUED NOTICE U/S.148 OF THE ACT AND IN RESPONSE TH ERETO THE ASSESSEE FILED THE RETURN OF INCOME DECLARING NIL INCOME AFT ER CLAIMING DEDUCTION U/S.80P2(D) OF THE ACT. THE AO CONSIDERI NG THE PROVISION OF SECTION 80P2(D), HAD DISALLOWED THE DE DUCTION CLAIMED BY THE ASSESSEE. FURTHER THE AO HAS ALLOWED THE DE DUCTION OF RS.50,000/- U/S.80P(2)(C) OF THE ACT. AGGRIEVED, A SSESSEE FILED APPEAL BEFORE THE CIT (A). ITA.1500, 1501/B/18 & ITA.77/B/2019 PAGE - 1 IN THE INCOME TAX APPELLATE TRIBUNAL BENGALURU BENCH 'B', BENGALURU BEFORE SHRI. A. K. GARODIA, ACCOUNTANT MEMBER AND SHRI. LALIET KUMAR, JUDICIAL MEMBER I.T.A NOS.1500 & 1501/BANG/2018 (ASSESSMENT YEARS : 2009-10 & ITA.2013-14) I.T.A. NO.77/BANG/2019 (ASSESSMENT YEAR : 2015-16) M/S. KARNATAKA STATE GOVERNMENT HOUSE BUILDING COOPERATIVE SOCIETY LTD, NO.142, VELLAHALU NILAYAM, 8 TH MAIN ROAD, 18 TH CROSS, VIJAYANAGAR, BENGALURU 560 040 .. APPELLANT PAN : AABAK1360M V. INCOME-TAX OFFICER, WARD -3(2)(2), BENGALURU .. RESPONDENT ASSESSEE BY : SHRI. C. SANDEEP, CA REVENUE BY : SHRI. R. N. SIDDAPPAJI, ADDL. CIT HEARD ON : 14.03.2019 PRONOUNCED ON : 22.03.2019 O R D E R PER LALIET KUMAR, JUDICIAL MEMBER : THESE ARE THREE APPEALS FILED BY THE ASSESSEE AGAIN ST THE ORDERS OF THE CIT (A) -3, BENGALURU, DT.13.03.2018, 06.03.2018 AND ITA.1500, 1501/B/18 & ITA.77/B/2019 PAGE - 7 PROVIDED THAT IN THE CASE OF A CO-OPERATIVE SOCIETY FALLING UNDER SUB-CLAUSE (VI) OR SUB-CLAUSE (VII) THE RULES AND BYE-LAWS OF THE S OCIETY RESTRICT THE VOTING RIGHTS TO THE FOLLOWING CLASSES OF ITS MEMBERS, NAM ELY:-- (1) THE INDIVIDUALS WHO CONTRIBUTE THEIR LABOUR OR, AS THE CASE MAY BE, CARRY ON THE FISHING OR ALLIED ACTIVITIES ; (2) THE CO-OPERATIVE CREDIT SOCIETIES WHICH PROVIDE FINANCIAL ASSISTANCE TO THE SOCIETY: (3) THE STATE GOVERNMENT ; (B) IN THE CASE OF A CO-OPERATIVE SOCIETY, BEING A PRIMARY SOCIETY ENGAGED IN SUPPLYING MILK, OILSEEDS, FRUITS OR VEGETABLES RAIS ED OR GROWN BY ITS MEMBERS TO (I) A FEDERAL CO-OPERATIVE SOCIETY, BEING A SOCIETY ENGAGED IN THE BUSINESS OF SUPPLYING MILK, OILSEEDS, FRUITS OR VEGETABLES, AS THE CASE MAY BE ; OR (II) THE GOVERNMENT OR A LOCAL AUTHORITY ; OR (III) A GOVERNMENT COMPANY AS DEFINED IN SECTION 61 7 OF THE COMPANIES ACT, 1956 (1 OF 1956), OR A CORPORATION ESTABLISHED BY O R UNDER A CENTRAL, STATE OR PROVINCIAL ACT (BEING A COMPANY OR CORPORATION ENGA GED IN SUPPLYING MILK, OILSEEDS, FRUITS OR VEGETABLES, AS THE CASE MAY BE, TO THE PUBLIC), THE WHOLE OF THE AMOUNT OF PROFITS AND GAINS OF SUC H BUSINESS ; (C) IN THE CASE OF A CO-OPERATIVE SOCIETY ENGAGED I N ACTIVITIES OTHER THAN THOSE SPECIFIED IN CLAUSE (A) OR CLAUSE (B) (EITHER INDEP ENDENTLY OF, OR IN ADDITION TO, ALL OR ANY OF THE ACTIVITIES SO SPECIFIED), SO MUCH OF ITS PROFITS AND GAINS ATTRIBUTABLE TO SUCH ACTIVITIES AS DOES NOT EXCEED, -- (I) WHERE SUCH CO-OPERATIVE SOCIETY IS A CONSUMERS' CO-OPERATIVE SOCIETY, 2ONE HUNDRED THOUSAND RUPEES ; AND (II) IN ANY OTHER CASE, TWENTY THOUSAND RUPEES. EXPLANATION.--IN THIS CLAUSE, 'CONSUMERS' CO-OPERAT IVE SOCIETY' MEANS A SOCIETY FOR THE BENEFIT OF THE CONSUMERS ; (D) IN RESPECT OF ANY INCOME BY WAY OF INTEREST OR DIVIDENDS DERIVED BY THE CO- OPERATIVE SOCIETY FROM ITS INVESTMENTS WITH ANY OTH ER CO-OPERATIVE SOCIETY, THE WHOLE OF SUCH INCOME ; (E) IN RESPECT OF ANY INCOME DERIVED BY THE CO-OPER ATIVE SOCIETY FROM THE LETTING OF GODOWNS OR WAREHOUSES FOR STORAGE, PROCESSING OR FACILITATING THE MARKETING OF COMMODITIES, THE WHOLE OF SUCH INCOME ; (F) IN THE CASE OF A CO-OPERATIVE SOCIETY, NOT BEIN G A HOUSING SOCIETY OR AN URBAN CONSUMERS' SOCIETY OR A SOCIETY CARRYING ON T RANSPORT BUSINESS OR A SOCIETY ENGAGED IN THE PERFORMANCE OF ANY MANUFACTU RING OPERATIONS WITH THE AID OF POWER, WHERE THE GROSS TOTAL INCOME DOES NOT EXCEED TWENTY THOUSAND RUPEES, THE AMOUNT OF ANY INCOME BY WAY OF INTEREST ON SECURITIES OR ANY INCOME FROM HOUSE PROPERTY CHARGEABLE UNDER SECTION 22. ITA.1500, 1501/B/18 & ITA.77/B/2019 PAGE - 6 COURT IN AMBIKA SILK MILLS CO. LTD. V. CIT [1952] 22 ITR 58 BESIDES THE JUDGMENT OF THE JUDICIAL COMMISSIONER, NAGPUR, IN BALLARPUR COLLIERIES V. CIT [1929] 4 ITC 255 (NAG), INTERPRETING THE SAID EXPRESSION AS COVERING ALL HE ADS OF INCOME..... ON THE BASIS OF THE ABOVE, IT WAS SUBMITTED THAT TH E PROFITS AND GAINS ATTRIBUTABLE TO SUCH ACTIVITIES INCLUDE THE ACTIVIT IES OF THE ASSESSEE AND THE PROFIT EARNED BY THE ASSESSEE FROM SUCH ACT IVITIES. 09. PER CONTRA, THE LD. DR RELIES ON PARAS 4.8 & 4. 9 OF THE ORDER OF THE CIT (A). 10. WE HAVE HEARD THE RIVAL CONTENTIONS AND PERUSED THE MATERIAL ON RECORD. SECTION 80P(2) IS REPRODUCED BELOW : 80P(2) THE SUMS REFERRED TO IN SUB-SECTION (1) SHAL L BE THE FOLLOWING, NAMELY:-- (A) IN THE CASE OF A CO-OPERATIVE SOCIETY ENGAGED I N-- (I) CARRYING ON THE BUSINESS OF BANKING OR PROVIDIN G CREDIT FACILITIES TO ITS MEMBERS, OR (II) A COTTAGE INDUSTRY, OR (III) THE MARKETING OF AGRICULTURAL PRODUCE GROWN B Y ITS MEMBERS, OR (IV) THE PURCHASE OF AGRICULTURAL IMPLEMENTS, SEEDS , LIVESTOCK OR OTHER ARTICLES INTENDED FOR AGRICULTURE FOR THE PURPOSE O F SUPPLYING THEM TO ITS MEMBERS, OR (V) THE PROCESSING, WITHOUT THE AID OF POWER, OF TH E AGRICULTURAL PRODUCE OF ITS MEMBERS, OR (VI) THE COLLECTIVE DISPOSAL OF THE LABOUR OF ITS M EMBERS, OR (VII) FISHING OR ALLIED ACTIVITIES, THAT IS TO SAY, THE CATCHING, CURING, PROCESSING, PRESERVING, STORING OR MARKETING OF FIS H OR THE PURCHASE OF MATERIALS AND EQUIPMENT IN CONNECTION THEREWITH FOR THE PURPOSE OF SUPPLYING THEM TO ITS MEMBERS, THE WHOLE OF THE AMO UNT OF PROFITS AND GAINS OF BUSINESS ATTRIBUTABLE TO ANY ONE OR MORE OF SUCH ACTIVITIES: ITA.1500, 1501/B/18 & ITA.77/B/2019 PAGE - 11 13. IN THE RESULT, ALL THE THREE APPEALS OF THE ASS ESSEE ARE PARTLY ALLOWED AS COMMON GROUNDS OF LAW ARE RAISED BY THE ASSESSEE. ORDER PRONOUNCED IN THE OPEN COURT ON 22 ND DAY OF MARCH,2019. SD/- SD/- (A. K. GARODIA) ( LALIET KUMAR) ACCOUNTANT MEMBER JUDICIAL MEMBER BENGALURU DATED : 22.03.2019 MCN* COPY TO: 1. THE ASSESSEE 2. THE ASSESSING OFFICER 3. THE COMMISSIONER OF INCOME-TAX 4. COMMISSIONER OF INCOME-TAX(A) 5. DR 6. GF, ITAT, BANGALORE BY ORDER ASSISTANT REGISTRAR, ITAT, BENGALURU