M/s. Nikhara Souharda Credit Co-operative Society Ltd., Bengaluru V. Income Tax Officer, Ward-5(2)(5), Bengaluru

ITA 1650/BANG/2018

• Counselvise Citation: [2018] 125 COUNSELVISE.COM (IT) 1422 (ITAT-BANGALORE)
• Duration Of Justice: 3 month(s) 19 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 07-09-2018
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: C
• Assessment Year: 2014-2015
• Appeal Filed On: 18-05-2018
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: N SUKUMAR
• Assessee Lawyers: LOKESH JAIN
• Keywords: Opportunity of being heard

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL SMC-C BENCH : BANGALORE BEFORE SHRI ARUN KUMAR GARODIA, ACCOUNTANT MEMBER ITA NO. 1650 /BANG/201 8 ASSESSMENT YEAR : 201 4 - 1 5 M/S. NIKHARA SOUHARDA CREDIT CO-OPERATIVE SOCIETY LTD., NO. 148/1-1, GROUND FLOOR, 10 TH MAIN, SRINAGAR, BSK 1 ST STAGE, BANGALORE 560 050. PAN: AAATN9165H VS. THE INCOME TAX OFFICER, WARD 5 (2) (5), BANGALORE. APPELLANT RESPONDENT APPELLANT BY : SHRI LOKESH JAIN, CA RESPONDENT BY : SHRI N. SUKUMAR, ADDL. CIT (DR) DATE OF HEARING : 27. 0 8 .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)-5, BANGALORE DATED 26.03.2018 FOR ASS ESSMENT YEAR 2014-15. 2. THE GROUNDS RAISED BY THE ASSESSEE ARE AS UNDER. 1. THE ORDER OF THE LD. COMMISSIONER OF INCOME TAX (APPEALS)('CIT(A)') IS OPPOSED TO LAW, FACTS AND CI RCUMSTANCES OF THE CASE. 2. THE ORDER IS PASSED IN HASTE, WITHOUT PROVIDING SUFFICIENT AND REASONABLE OPPORTUNITY OF BEING HEARD. 3. THE ORDER IS PASSED AGAINST THE PRINCIPLE OF NAT URAL JUSTICE AND THUS LIABLE TO BE QUASHED. 4. THE LD. COMMISSIONER OF INCOME TAX (APPEALS) ('C IT(A)') ERRED IN UPHOLDING THE ORDER OF LD. AO TO TAX THE INCOME OF THE APPELLANT WHICH WAS STRICTLY FALLING UNDER THE PROVISION OF S ECTION 80P(2)(I)(A). 5. THE LD. CIT(A) DURING THE COURSE OF APPELLATE PR OCEEDING HAS ITA NO. 1650/BANG/2018 PAGE 2 OF 4 RELIED ON THE CASE OF CITIZEN CO-OPERATIVE SOCIETY LIMITED VS. ACIT [397 ITR 1 (SC)] WHEREIN THE FACTS OF THE CASE ARE DIFFERENT FROM THE PRESENT CASE. 6. THE LD. CIT(A) & LD. AO DURING THE COURSE OF APP ELLATE PROCEEDINGS HAS FAILED TO TAKE INTO ACCOUNT THE FAC T THAT THE VERY SAME ISSUE IS COVERED BY THE HON'BLE ITAT, BENGALURU IN ITS ORDER ITA NO. 1499/BANG/2012 DATED 11-JUNE-2013 FOR AY 2009-10 IN APPELLANT'S OWN CASE TREATING THE SOCIETY AS CO-OPERATIVE SOCIE TY CARRYING ON THE BUSINESS OF PROVIDING CREDIT FACILITIES TO ITS MEMB ERS AND ALLOWED THE CLAIM OF DEDUCTION U/S 80P(2)(A)(I) OF THE ACT. 7. BOTH LD. CIT(A) & LD. AO HAS FAILED TO COMMENT O N THE ABOVE REFERRED HON'BLE ITAT, BENGALURU ORDER PASSED IN TH E APPELLANT'S OWN CASE. 8. BOTH LD. CIT(A) & LD. AO HAD FAILED TO CONSIDER THAT THE APPELLANT IS NOT CARRYING THE ACTIVITIES OF BANKING BUSINESS AND DO NOT POSSESS A LICENSE FROM RESERVE BANK OF INDIA. 9. THE LD. AO ERRED IN RELYING ON THE DECISION OF H ON'BLE SUPREME COURT IN THE CASE OF TOTGAR'S CO-OP SALE SOCIETY LT D (322 ITR 283 (SC)) WHERE THE FACTS OF THE CASE ARE DIFFERENT FRO M THE PRESENT FACTS OF THE CASE. 10. THE LD. AO AND LD. CIT(A) ERRED IN NOT CONSIDER ING THE PROVISIONS SECTION 18 OF KARNATAKA SOUHARDA SHAKARI ACT, 1997, WHICH CLEARLY STATE THE EXCESS FUND OF THE CO-OPERA TIVE SOCIETY IS TO BE INVESTED IN THE ANY OF THE SECURITIES APPROVED BY T HE GOVERNMENT OR WITH ANY CO-OPERATIVE BANK OR SCHEDULED BANK. THE APPELLANT SEEKS YOUR LEAVE TO ADD, ALTER, AMEND OR DELETE ANY OF THE GROUNDS URGED AT THE TIME OF HEARING. 3. IT WAS SUBMITTED BY LD. AR OF ASSESSEE THAT THE ASSESSEES CLAIM FOR DEDUCTION U/S. 80P (2) IN RESPECT OF INTEREST INCOME SHOULD B E DECIDED IN FAVOUR OF THE ASSESSEE BECAUSE THIS ISSUE IS COVERED IN FAVOUR OF THE ASSESSEE BY THE JUDGEMENT OF HON'BLE KARNATAKA HIGH COURT RENDERED IN THE CASE OF TUMKUR MERCHANTS SOUHARDA CREDIT COOPERATIVE LTD. VS. ITO AS REPORTED IN 230 TAXMAN 309. AT THIS JUNCTURE, THE BENCH POINTED OU T THAT ON THIS ISSUE, THERE IS ONE MORE JUDGMENT OF HON'BLE KARNATAKA HIGH COURT RENDERED IN THE CASE OF PCIT AND ANOTHER VS. TOTAGARS CO-OPERATIVE SALE SOC IETY AS REPORTED IN 395 ITR 611 (KARN). THE BENCH POINTED OUT THAT IN BOTH THESE JUDGEMENTS, THE ULTIMATE CONCLUSION IS DIFFERENT BECAUSE THE FACTS ARE DIFFERENT. THE BENCH ITA NO. 1650/BANG/2018 PAGE 3 OF 4 POINTED OUT THAT IN THE CASE OF TUMKUR MERCHANTS SO UHARDA CREDIT COOPERATIVE LTD. VS. ITO (SUPRA), IT WAS FOUND THAT THE AMOUNT DEPOSITED IN BANK WAS OUT OF ASSESSEES OWN FUNDS AND NOT OUT OF ITS LIABILITY A ND THEREFORE, THIS ISSUE WAS DECIDED IN FAVOUR OF THE ASSESSEE BUT IN THE CASE O F PCIT AND ANOTHER VS. TOTAGARS CO-OPERATIVE SALE SOCIETY (SUPRA), IT WAS FOUND THAT THE AMOUNT DEPOSITED IN BANK WAS OUT OF ASSESSEES LIABILITY A ND NOT OUT OF ASSESSEES OWN FUNDS AND THEREFORE, THIS ISSUE WAS DECIDED AGAINST THE ASSESSEE. THE BENCH OBSERVED THAT THERE IS NO FINDING OF ANY OF THE AUT HORITIES BELOW ON THIS FACTUAL ASPECT AND THEREFORE, IT IS PROPER TO RESTORE BACK THE MATTER TO THE FILE OF CIT(A) FOR FRESH DECISION AFTER EXAMINING THE FACTS OF PRE SENT CASE IN THE LIGHT OF THESE TWO JUDGEMENTS OF HON'BLE KARNATAKA HIGH COURT. TH E LD. AR OF ASSESSEE AGREED TO THIS PROPOSITION PUT FORWARD BY THE BENCH . THE LD. DR OF REVENUE SUBMITTED THAT ON THIS ASPECT, HE IS ALSO IN AGREEM ENT WITH THE PROPOSITION PUT FORWARD BY THE BENCH BUT WHEN THE MATTER IS RESTORE D BACK TO THE FILE OF CIT(A), HE SHOULD BE DIRECTED TO EXAMINE THE APPLICABILITY OF THE JUDGEMENT OF HONBLE APEX COURT RENDERED IN THE CASE OF THE CITIZEN CO-O PERATIVE SOCIETY LTD. VS. ACIT AS REPORTED IN 397 ITR 1 ALSO BECAUSE AS PER P AGE NO. 15 OF THE PAPER BOOK, IT IS SHOWN IN THE INCOME AND EXPENDITURE ACC OUNT OF THE ASSESSEE FOR THE PRESENT YEAR THAT ASSESSEE HAS RECEIVED AN AMOU NT OF RS. 11,700/- TOWARDS NOMINAL MEMBERSHIP FEE AND THEREFORE, IT HAS TO BE SEEN AS TO WHETHER THE FULL AMOUNT OR PART AMOUNT OF INTEREST INCOME FOR WHICH DEDUCTION IS CLAIMED U/S 80P IS EARNED BY THE ASSESSEE FROM THE NOMINAL MEMB ERS OR NOT IN THE PRESENT YEAR AND THEREFORE, THE ISSUE REGARDING THE APPLICA BILITY OF THIS JUDGEMENT OF HONBLE APEX COURT RENDERED IN THE CASE OF THE CITI ZEN CO-OPERATIVE SOCIETY LTD. VS. ACIT (SUPRA) SHOULD ALSO BE EXAMINED BY CI T(A). IN THE REJOINDER, THE LD. AR OF ASSESSEE ALSO AGREED THAT THE CIT (A) MA Y BE DIRECTED TO EXAMINE THE FACTS OF PRESENT CASE IN THE LIGHT OF THIS JUDG EMENT OF HONBLE APEX COURT ALSO. 4. IN VIEW OF THE ABOVE DISCUSSION, I SET ASIDE THE ORDER OF CIT(A) AND RESTORE THE MATTER BACK TO THE FILE OF CIT(A) FOR FRESH DECISIO N AFTER EXAMINING THE FACTS OF PRESENT CASE IN THE LIGHT OF JUDGEMENT OF HONBLE A PEX COURT RENDERED IN THE CASE OF THE CITIZEN CO-OPERATIVE SOCIETY LTD. VS. A CIT (SUPRA) AND THEN ALSO ITA NO. 1650/BANG/2018 PAGE 4 OF 4 EXAMINE THE FACTS OF PRESENT CASE IN THE LIGHT OF T HESE TWO JUDGEMENTS OF HON'BLE KARNATAKA HIGH COURT RENDERED IN THE CASE O F TUMKUR MERCHANTS SOUHARDA CREDIT COOPERATIVE LTD. VS. ITO (SUPRA) AN D PCIT AND ANOTHER VS. TOTAGARS CO-OPERATIVE SALE SOCIETY (SUPRA). THEREA FTER THE CIT(A) SHOULD PASS NECESSARY ORDER AS PER LAW AFTER PROVIDING ADEQUATE OPPORTUNITY 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 DA TE MENTIONED ON THE CAPTION PAGE. SD/- (ARUN KUMAR GARODIA) ACCOUNTANT MEMBER BANGALORE, DATED, THE 07 TH SEPTEMBER, 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.