M/s CBS Pattina Sahakari Niyamitha , Gangavathi V. Income Tax Officer WArd-1 , Koppala

ITA 1580/BANG/2018

• Counselvise Citation: [2018] 125 COUNSELVISE.COM (IT) 1420 (ITAT-BANGALORE)
• Duration Of Justice: 3 month(s) 27 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 07-09-2018
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: A
• Assessment Year: 2014-2015
• Appeal Filed On: 11-05-2018
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: SIDDAPP A JI R N
• Assessee Lawyers: R E BALASUBRAMANYAM

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL A BENCH : BANGALORE BEFORE SHRI N.V. VASUDEVAN, JUDICIAL MEMBER AND SHRI ARUN KUMAR GARODIA, ACCOUNTANT MEMBER ITA NO. 1580 /BANG/201 8 ASSESSMENT YEAR : 2014 - 15 M/S. CBS PATTINA SOUHARDA SAHAKARI NIYAMITHA, CBS COMPLEX, GANGAVATHI. KOPPAL DIST. 583 227. PAN: AAAJC0301L VS. THE INCOME TAX OFFICER, WARD 1, KOPPALA. APPELLANT RESPONDENT ASSESSEE BY : SHRI R.E. BALASUBRAMANYAM, CA RE VENUE BY : SHRI SIDDAPPAJI R.N., ADDL. CIT(DR) DATE OF HEARING : 05. 0 9 .2018 DATE OF PRONOUNCEMENT : 07 . 0 9 .2018 O R D E R PER SHRI A.K. GARODIA, ACCOUNTANT MEMBER THIS APPEAL IS FILED BY THE ASSESSEE AND THE SAME I S DIRECTED AGAINST THE ORDER OF LD. CIT(A), GULBARGA DATED 28.02.2018 FOR ASSESSMEN T YEAR 2014-15. 2. THE GROUNDS RAISED BY THE ASSESSEEARE AS UNDER. THE APPELLANT OBJECTS TO THE ORDER OF THE LD.CIT(A) ON THE FOLLOWING GROUNDS THAT: 1. THE IMPUGNED ORDER IS OPPOSED TO FACTS AND LAW I N SO FAR AS IT IS PREJUDICIAL TO THE INTERESTS OF THE APPELLANT. 2. THE LD.CIT(A) ERRED IN DENYING THE DEDUCTION UND ER SECTION 80P(2) OF THE INCOME TAX ACT IN RESPECT OF INTEREST INCOME RECEIVED FROM VARIOUS BANKS AND IN DOING SO A) THE LD.CIT(A) FAILED TO APPRECIATE THAT THE INTE REST INCOME FROM OTHER BANKS ARE ATTRIBUTABLE TO PROFITS AND GAINS O F THE BUSINESS OF EXTENDING CREDIT FACILITIES TO APPELLANT'S MEMBERS. B) THE LD.CIT(A) FAILED TO APPRECIATE THAT THE BUSI NESS OF THE APPELLANT CONSISTS ENTIRELY OF EXTENDING CREDIT FAC ILITIES ONLY TO ITS ITA NO. 1580/BANG/2018 PAGE 2 OF 4 MEMBERS AND THE INTEREST INCOME FROM VARIOUS BANKS AROSE ONLY ON ACCOUNT OF KEEPING THE SURPLUS FUNDS FOR THE TIME B EING IN ANTICIPATION OF LENDING THE SAME TO THE MEMBERS AS THERE WERE NO READY BORROWERS FOR THE SAID AMOUNT. 3. THE LD.CIT(A) FAILED TO APPRECIATE THE FACT THAT THE APPELLANT HAS ONLY ORDINARY MEMBERS AND NO NOMINAL MEMBERS AND DU RING THE NORMAL COURSE OF ITS BUSINESS HAS ONLY DEALT WITH I TS OWN MEMBERS AND NOT WITH ANY NOMINAL MEMBERS AS PER THE DECISION OF THE HONOURABLE SUPREME COURT IN THE CITIZEN CO-OPERATIVE SOCIETY L IMITED. 4. WITHOUT PREJUDICE TO GROUND NO.2 AND AS AN ALTER NATE PLEA THE APPELLANT FURTHER SUBMITS THAT IN RESPECT OF THE IN COME EARNED FROM THE CO-OPERATIVE BANKS IT IS ENTITLED FOR DEDUCTION U/S 80P (2) (D) OF THE ACT INASMUCH AS THE CO-OPERATIVE BANKS ARE ALSO CO- OPERATIVE SOCIETIES AS PER SECTION 2(B1) OF KARNATAKA CO-OPER ATIVE SOCIETIES ACT, 1959. 5. FOR THESE AND SUCH OTHER GROUNDS THAT MAY BE ADD UCED IN TIME TO TIME, IT IS REQUESTED THAT THE HON'BLE ITAT TO CANC EL THE ADDITION MADE BY THE ASSESSING OFFICER AND ALLOW DEDUCTION UNDER SECTION 80P(2) OF THE ACT. 6. THE APPELLANT PRAYS FOR LEAVE TO ADD, MODIFY, DE LETE OR INTRODUCE ADDITIONAL GROUNDS OF APPEAL AT ANY TIME BEFORE THE APPEAL IS DISPOSED OFF. 3. AT THE VERY OUTSET, IT WAS POINTED OUT BY THE BE NCH THAT IN THE PRESENT CASE, THE ASSESSEE IS A SOUHARDA CREDIT CO-OPERATIVE LTD. AND THE TRIBUNAL HAS TAKEN A VIEW IN THE CASE OF M/S. UDAYA SOUHARDA CREDIT CO-O PERATIVE SOCIETY LTD. VS. ITO IN ITA NO. 2831/BANG/2017 DATED 17.08.2018 WHER EIN IT WAS HELD THAT NO ASSESSEE CAN CLAIM TO BE A CO-OPERATIVE SOCIETY IN THE ABSENCE OF PROPER REGISTRATION UNDER THE CO-OPERATIVE SOCIETIES ACT. THE TRIBUNAL ALSO HELD THAT IF THE CREATION OF CO-OPERATIVE SOCIETY UNDER THE CO-O PERATIVE SOCIETIES ACT IS DOUBTFUL, THE CLAIM OF DEDUCTION U/S. 80P CANNOT BE ALLOWED. IN THAT CASE, THE MATTER WAS RESTORED BACK TO THE FILE OF AO TO EXAMI NE VARIOUS ASPECTS AFTER MAKING NECESSARY ENQUIRY AND INVESTIGATION AND THEN PASSING A REASONED ORDER. PARA 13 OF THIS TRIBUNAL ORDER IS RELEVANT WHICH IS REPRODUCED HEREINBELOW FOR READY REFERENCE. 13. WE HAVE ALSO CAREFULLY PERUSED THE CAUSE TITLE IN THE ASSESSMENT ORDER AND IN THE CAUSE TITLE OF THE ASSESSMENT ORDE R, WE FIND THAT ASSESSMENT ORDER WAS PASSED IN THE NAME OF UDAYA SO UHARDA CREDIT CO-OPERATIVE SOCIETY LTD., WHEREAS NO CERTIFICATE O F REGISTRATION WAS PLACED BEFORE US IN THE NAME OF UDAYA SOUHARDHA CRE DIT CO- OPERATIVE SOCIETY LTD. THEREFORE, WE ARE UNABLE TO UNDERSTAND HOW ITA NO. 1580/BANG/2018 PAGE 3 OF 4 THE ASSESSEE CAN CLAIM IT TO BE THE CO-OPERATIVE SO CIETY IN THE ABSENCE OF PROPER REGISTRATION UNDER THE KARNATAKA CO-OPERA TIVE SOCIETIES ACT. CREATION OF CO-OPERATIVE SOCIETY UNDER THE CO- OPERATIVE SOCIETIES ACT IS DOUBTFUL. THUS THE CLAIM OF DEDUCT ION UNDER SECTION 80P CANNOT BE ALLOWED. AS PER THE PROVISIONS OF SEC TION 80P OF THE ACT, DEDUCTION CAN ONLY BE ALLOWED TO THE CO-OPERAT IVE SOCIETIES REGISTERED UNDER THE CO-OPERATIVE SOCIETIES ACT. WI THOUT A PROPER REGISTRATION UNDER CO-OPERATIVE SOCIETIES ACT, NOBO DY CAN CLAIM IT TO BE CO-OPERATIVE SOCIETY AS THE ACTIVITIES OF THE CO -OPERATIVE SOCIETIES ARE TO BE CONTROLLED UNDER THE CO-OPERATIVE SOCIETI ES ACT THROUGH REGISTRAR OF THE COOPERATIVE SOCIETIES. SINCE ALL T HESE NEW POINTS HAVE BEEN RAISED DURING THE COURSE OF HEARING BEFOR E US AND ACCORDING TO US ALL THESE POINTS GOES TO THE ROOT O F THE CASE, WE ARE OF THE VIEW THAT PROPER ADJUDICATION OF THE ISSUES IS REQUIRED BY THE AO. WE ACCORDINGLY SET ASIDE THE ORDER OF THE CIT (A) A ND RESTORE THE MATTER TO THE AO TO REEXAMINE ALL THESE ASPECTS BY MAKING NECESSARY ENQUIRY AND INVESTIGATION AND ALSO BY PASSING A REA SONED ORDER IN THIS REGARD. SINCE WE HAVE RESTORED THE MATTER TO T HE AO, WE FIND NO JUSTIFICATION TO ADJUDICATE THE ISSUE RAISED ON MER IT. ACCORDINGLY, ORDER OF THE CIT (A) IS SET ASIDE AND MATTER IS RES TORED TO THE AO FOR ADJUDICATION OF THE IMPUGNED ISSUE IN TERMS INDICAT ED ABOVE. 4. THE BENCH POINTED OUT THAT IN THE PRESENT CASE A LSO, NO CERTIFICATE OF REGISTRATION WAS PLACED BEFORE US IN THE NAME OF PR ESENT ASSESSEE M/S. CBS PATTINA SOUHARDA SAHAKARI NIYAMITHA AND THEREFORE, THE BENCH PUT FORWARD A PROPOSITION THAT RESPECTFULLY FOLLOWING THIS TRIBUN AL ORDER, IN THE PRESENT CASE ALSO, THE MATTER SHOULD BE RESTORED TO AO FOR FRESH DECISION WITH SIMILAR DIRECTIONS. IN REPLY, BOTH SIDES AGREED TO THIS PRO POSITION PUT FORWARD BY THE BENCH. HENCE, WE SET ASIDE THE ORDER OF LD. CIT (A) AND RESTORE THE MATTER BACK TO THE FILE OF AO WITH THE SAME DIRECTIONS AS WERE GIVEN BY TRIBUNAL IN THAT CASE AS PER PARA 13 OF THAT TRIBUNAL ORDER REPRODUCED AB OVE. WE ALSO HOLD THAT IN VIEW OF THIS DECISION, NO ADJUDICATION ON MERIT IS CALLED FOR AT THE PRESENT STAGE. 5. IN THE RESULT, THE APPEAL FILED BY THE ASSESSEE IS ALLOWED FOR STATISTICAL PURPOSES. ORDER PRONOUNCED IN THE OPEN COURT ON THE DATE MENTIONED ON THE CAPTION PAG E. SD/- SD/- (N.V. VASUDEVAN) (ARUN KUMAR GARODIA) JUDICIAL MEMBER ACCOUNTANT MEMBER BANGALORE, DATED, THE 07 TH SEPTEMBER, 2018. /MS/ ITA NO. 1580/BANG/2018 PAGE 4 OF 4 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.