M/s. Manjunatheshwara Credit Co-operative Society Limited, Bangalore V. Income Tax Officer, Ward- 6(2)(2), Bangalore

ITA 1712/BANG/2019

• Counselvise Citation: [2019] 116 COUNSELVISE.COM (IT) 0363 (ITAT-BANGALORE)
• Duration Of Justice: 1 month(s) 6 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 06-09-2019
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: A
• Assessment Year: 2016-2017
• Appeal Filed On: 31-07-2019
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: GANESH R G
• Assessee Lawyers: CHAITANYA V MUDRABETTU
• Keywords: Opportunity of being heard; Set aside

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL SMC A BENCH : BANGALORE BEFORE SHRI N.V. VASUDEVAN, VICE PRESIDENT ITA NO. 1 7 12/ BANG / 2019 ASSESSMENT YEAR : 2016 - 17 M/S. MANJUNATHESHWARA CREDIT CO-OPERATIVE SOCIETY LTD., NO.20, 3 RD MAIN, 2 ND BLOCK, RING ROAD, NANDINI LAYOUT, BENGALURU 560 096. P AN: AAKAS 1721M VS. THE INCOME TAX OFFICER, WARD 6(2)(2), BANGALORE. APP ELLANT RESPONDENT APP ELLANT BY : SHRI CHAITANYA V. MUDRABETTU, ADVO CATE RESPONDENT BY : SHRI GANESH R.G. , STANDING COUNSEL DATE O F HEARING : 0 4 .09.2019 DATE OF PRONOUNCEMENT : 0 6 .09.2019 O R D E R THIS APPEAL BY THE ASSESSEE IS AGAINST THE ORD ER DATED 23.05.2019 OF THE CIT(APPEALS), BENGALURU-6, BENGALURU RELATIN G TO ASSESSMENT YEAR 2016-17. 2. THE ASSESSEE IS A CREDIT CO-OPERATIVE SOCIETY. TH E ASSESSEE EARNED INTEREST ON INVESTMENT OF SURPLUS FUNDS OF R S.9,16,743 COMPRISING OF THE FOLLOWING:- SL. NO. NAME OF THE BANK AMOUNT OF INTEREST 1 BR&BDCC BANK 1,97,459 2. JANATA SEVA COOPERATIVE BANK 2,74,341 3 . CITI ZEN COOPERATIVE BANK 3,41,777 4 APEX COOPERATIVE BANK 1,03,166 TOTAL 9,16,743 ITA NO. 1912/BANG/2019 PAGE 2 OF 4 3. THE ASSESSEE CLAIMED THAT THE AFORESAID SUM WAS ELI GIBLE FOR DEDUCTION U/S. 80P(2)(A) OR 80P2(D) OF THE INCOME-T AX ACT, 1961 [THE ACT]. THE AO TOOK THE VIEW THAT THE AFORESAID IN TEREST INCOME IS IN THE NATURE OF INCOME FROM OTHER SOURCES AND THEREFORE T HE DEDUCTION CLAIMED CANNOT BE ALLOWED. IN DOING SO, THE AO FOLLOWED TH E DECISION OF THE HONBLE SUPREME COURT IN THE CASE OF PCIT VS. TOTGARS CO-OPERATIVE SALE SOCIETY LTD., 83 TAXMANN.COM 140 WHEREIN IT WAS HELD THAT INTEREST INCOME EARNED ON DEPOSITS HAD TO BE REGARDED AS INCOME FR OM OTHER SOURCES. SINCE INTEREST INCOME WAS NOT INCOME DERIVED FROM T HE BUSINESS OF CO- OPERATIVE SOCIETY, THE DEDUCTION CLAIMED BY THE ASS ESEE WAS NOT ALLOWED. 4. ON APPEAL, THE CIT(APPEALS) CONFIRMED THE ORDER OF AO. HENCE THIS APPEAL BY THE ASSESSEE BEFORE THE TRIBUNAL. 5. IT WAS SUBMITTED BY ID. AR OF ASSESSEE THAT THE ID. CIT(A) HAS FOLLOWED THE JUDGMENT OF HON'BLE KARNATAKA HIGH COU RT DATED 16.06.2017 RENDERED IN THE CASE OF PCIT AND ANOTHER VS. TOTAGARS CO-OPERATIVE SALE SOCIETY AS REPORTED IN 395 ITR 611 (KARN) . HE SUBMITTED THAT THE FACTS OF THIS CASE ARE DIFFERENT AND THEREFORE, THIS JUDGMEN T IS NOT APPLICABLE IN THE PRESENT CASE. HE SUBMITTED THAT IN THE PRESENT CASE , ANOTHER JUDGMENT OF HON'BLE KARNATAKA HIGH COURT RENDERED IN THE CASE O F T UMKUR MERCHANTS SOUHARDA CREDIT COOPERATIVE LTD. VS. ITO AS REPORTE D IN 230 TAXMAN 309 IS APPLICABLE AND THEREFORE, THE MATTER SHOULD BE R ESTORED BACK TO AO OR CIT FOR A FRESH DECISION BY FOLLOWING THIS JUDGMENT . AT THIS JUNCTURE, THE BENCH PUT FORTH A QUERY REGARDING THE FACTS OF THE PRESENT CASE BECAUSE THE DECISIONS OF HON'BLE KARNATAKA HIGH COURT RENDE RED IN BOTH THESE CASES CITED ABOVE ARE ON THE SAME LINES, BUT THE CO NCLUSION IS DIFFERENT ON DIFFERENT FACTS. THE BENCH POINTED OUT THAT IN THE CASE OF PCIT AND ANOTHER VS. TOTAGARS CO-OPERATIVE SALE SOCIETY(SUPRA) , THE MONEY DEPOSITED IN BANK WAS OUT OF LIABILITY OF THE ASSESSEE AND IN TH E CASE OF TUMKUR MERCHANTS SOUHARDA CREDIT COOPERATIVE LTD. VS. ITO( SUPRA) , THE MONEY ITA NO. 1912/BANG/2019 PAGE 3 OF 4 DEPOSITED IN BANK WAS NOT OUT OF LIABILITY, BUT OUT OF ASSESSEE'S OWN FUNDS AND THEREFORE THIS DECISION IS IN FAVOUR OF THE ASS ESSEE. THEREFORE, IF THE FACTS OF THE PRESENT CASE ARE SIMILAR TO THAT OF TH E FACTS IN THE CASE OF PCIT AND ANOTHER VS. TOTAGARS CO-OPERATIVE SALE SOCIETY (SUPRA) , THEN THE ISSUE SHOULD BE DECIDED AGAINST THE ASSESSEE, BUT I F THE FACTS OF THE ASSESSEE ARE SIMILAR TO THAT OF TUMKUR MERCHANTS SOUHARDA CREDIT COOPERATIVE LTD. VS. ITO (SUPRA) , THEN THE ISSUE IS TO BE DECIDED IN FAVOUR OF THE ASSESSEE. IN REPLY, IT WAS SUBMITTED BY ID. AR OF ASSESSEE THAT THE FACTS ARE NOT READILY AVAILABLE AND THEREFORE, THE MATTER MAY BE RESTORED BACK TO THE FILE OF CIT(A) FOR FRESH DECISION AFTER EXAMINING THE FACTS OF THE PRESENT CASE IN THE LIGHT OF THESE TWO JUDGMENTS OF HON'BLE KARNATAKA HIGH COURT. THE ID. DR OF REVENUE ALSO AGREED TO THIS PR OPOSITION PUT FORWARD BY THE ID. AR OF ASSESSEE. 6. I HAVE CONSIDERED THE RIVAL SUBMISSIONS AND I FEEL IT PROPER THAT THE MATTER SHOULD GO BACK TO THE FILE OF CIT(APPEALS) F OR FRESH DECISION AFTER EXAMINING THE FACTS OF THE PRESENT CASE IN THE LIGH T OF THESE TWO JUDGMENTS RENDERED IN THE CASE OF PCIT AND ANOTHER VS. TOTAGARS CO-OPERATIVE SALE SOCIETY(SUPRA) AND TUMKUR MERCHANTS SOUHARDA CREDIT COOPERATIVE LTD. VS. ITO(SUPRA) . IF IT IS FOUND THAT THE FACTS OF THE PRESENT CAS E ARE IN LINE WITH THE FACTS OF THE PCIT AND ANOTHER VS. TOTAGARS CO-OPERATIVE SALE SOCIETY(SUPRA) THEN THE ISSUE MAY BE DECIDED AGAINST THE ASSESSEE AND IF THE FACTS OF THE PRESENT CASE ARE IN LINE WITH THE FACTS OF THE CASE OF TUMKUR MERCHANTS SOUHARDA CREDIT COOPERATIVE LTD. VS. ITO( SUPRA) THEN THE ISSUE MAY BE DECIDED IN FAVOUR OF THE ASSESSEE. ACCORDIN GLY, I SET ASIDE THE ORDER OF THE CIT(APPEALS) AND RESTORE THE ISSUE BAC K TO THE CIT(A) FOR FRESH DECISION IN ACCORDANCE WITH THE LAW IN THE LIGHT OF ABOVE DISCUSSION AFTER PROVIDING ADEQUATE OPPORTUNITY OF BEING HEARD TO BO TH SIDES. ITA NO. 1912/BANG/2019 PAGE 4 OF 4 7. IN THE RESULT, THE APPEAL BY THE ASSESSEE IS ALLOW ED FOR STATISTICAL PURPOSES. PRONOUNCED IN THE OPEN COURT ON THIS 6 TH DAY OF SEPTEMBER, 2019. SD/- ( N.V. VASUDEVAN ) VICE PRESIDENT BANGALORE, DATED, THE 6 TH SEPTEMBER, 2019. / DESAI SMURTHY / COPY TO: 1. APPELLAN T 2. RESPONDENT 3. C IT 4. CIT(A) 5. DR, I TAT, BANGALORE. 6. GUARD FIL E BY ORDER ASSISTANT REGISTRAR, ITAT, BANGALORE.