Sindhudurg Multipurpose Co-op Society Ltd, Belgaum V. ITO Ward 2 Belgaum, Belgaum

ITA 162/PAN/2023

• Counselvise Citation: [2024] 101 COUNSELVISE.COM (IT) 8266 (ITAT-PANAJI)
• Duration Of Justice: 5 month(s) 21 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 12-03-2024
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: DB
• Assessment Year: misc
• Appeal Filed On: 21-09-2023
• Result in Favour of: Matter Remanded
• Court: TRIBUNAL
• Keywords: Deduction Disallowance
• Section: 80P; 2(19)

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL PANAJI BENCH : PANAJI [THROUGH VIRTUAL HEARING AT ITAT : PUNE] BEFORE SHRI SATBEER SINGH GODARA, JUDICIAL MEMBER AND SHRI INTURI RAMA RAO, ACCOUNTANT MEMBER I.T.A.No.162/PAN./2023 Assessment Year 2017-2018 Sindhudurg Multipurpose Co-op Society Ltd., ‘Anand Residency’, 2 nd Cross, Bhagyanagar, Tilakwadi, Belgaum. Karnataka PAN AABAS8513Q vs. The Income Tax Officer, Ward-2, Income Tax Office, Dr. Ambedkar Road, Belgaum. Karnataka. PIN – 590 001 (Appellant) (Respondent) For Assessee : Shri Pramod Vaidhya, Advocate For Revenue : Shri N. Shrikanth Date of Hearing : 12.03.2024 Date of Pronouncement : 13.03.2024 ORDER PER SATBEER SINGH GODARA, J.M. : This assessee’s appeal I.T.A.No.162/PAN./2023, for assessment year 2017-2018, arises against the National Faceless Appeal Centre [in short the “NFAC”] Delhi’s Din and Order No. ITBA/NFAC/S/250/2023-24/1054675610(1), dated 27.07.2023, involving proceedings u/s.143(3) r.w.s.147 of the Income Tax Act, 1961 (in short “the Act”). Heard both the parties. Case files perused. 2. The assessee pleads the following substantive grounds in the instant appeal : 2 ITA.Nos.162 /PAN./2023 1. “The Ld. CIT(A) erred in law in confirming the addition made by A.O by disallowing deduction u/s. 80P of Rs.38,10,130/- on the issue of entitlement of deduction in respect of nominal/ associate members when the issue is decided in favour of the assessee by Hon’ble Supreme Court in the case of Mavilayi Co- operative Bank 431 ITR 1 holding that dealings with nominal and associate members is entitled for deduction u/s.80P of the Act. 2. The CIT(A) erred in not appreciating that – i. The nominal and associate members are as defined in section 2(19) of the Income Tax Act 1961. ii. The governing law i.e. The Karnataka Co-operative Societies Act 1959 and the bye-laws of the assessee society recognize nominal and associate members. iii. Entire business and dealings are done only with the members of the society and there is no business with non members, outsiders or with public at large. iv. SC decision in Citizen’s case is distinguishable on the facts of present case and applicable law. 3. The learned CIT(A) erred in confirming the disallowance of deduction u/s 80P on the ground of nominal and associate members more than 15% of regular members. 4. The learned A.O erred in making addition of Rs.7,39,500/- being amount received from members during demonetization and deposited in the members account with bank authorised to accept demonetized currency.” 3 ITA.Nos.162 /PAN./2023 3. Coming to the first and foremost issue of sec.80P(2)(a)(i) deduction disallowance amounting to Rs.40,18,822/-; the Revenue vehemently argued that both the learned lower authorities have rightly rejected the same after finding that the corresponding income had been derived from nominal members as well as regular members. Mr. Shrikanth sought to buttress the point that the learned lower authorities have rejected the assessee’s claim of the impugned deduction only regarding the nominal members by quoting Citizen Co-op Society Ltd., Hyderabad vs. ACIT in Civil Appeal No.10245 of 2017 [arising out of SLP (C) No.20044 of 2015] dated 08.08.2017. He could hardly dispute hon’ble apex court’s recent landmark decision in Mavilayi Service Co-operative Bank Ltd., vs., CIT [2021] 431 ITR 1 (SC) has settled the issue that such a distinction is not permissible at the Revenue’s behest once it is found that the assessee concerned is followed the rigor of the State Co-operative law in enrolling the twin categories of members as well as deriving income from advances made to them. We thus accept the assessee’s instant first and foremost substantive ground in very terms. 4. Next comes the latter issue of cash deposits addition amounting to Rs.7,39,500/- alleged to have made in both the lower authorities respective findings. The assessee’s only case is that the impugned sum represents the amounts received from members on the day of announcement of demonetization which had been duly credited in their respective accounts. We note in this factual 4 ITA.Nos.162 /PAN./2023 backdrop that the learned CIT(A)'s findings have nowhere examined the assessee’s corresponding reconciliation in the lower appellate proceedings. Faced with the situation, we deem it appropriate to restore the instant latter issue back to NFAC for afresh adjudication as per law, after affording three effective opportunities of hearing subject to the rider that it is the assessee’s sole risk and responsibility to prove his case before the lower appellate authority in consequential proceedings. Ordered accordingly. 5. This assessee’s appeal is allowed for statistical purposes in above terms. Order pronounced in the open Court on 13.03.2024. Sd/ - Sd/- [INTURI RAMA RAO] [SATBEER SINGH GODARA] ACCOUNTANT MEMBER JUDICIAL MEMBER Pune, Dated 13 th March, 2024 VBP/- Copy to 1. The appellant 2. The respondent 3. The Pr. CIT, Panaji concerned. 4. The D.R. ITAT, Panaji Bench, Panaji 5. Guard File. //By Order// //True Copy // Sr. Private Secretary, ITAT, Pune Benches, Pune.