Pune Zilla Nagari Sahakari Banks Association, Pune V. Asst. Comm. of Income-tax, Pune

ITA 1716/PUN/2011

• Counselvise Citation: [2012] 119 COUNSELVISE.COM (IT) 9897 (ITAT-PUNE)
• Duration Of Justice: 9 month(s) 25 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 25-10-2012
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: SMC
• Assessment Year: 2006-2007
• Appeal Filed On: 30-12-2011
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: S K SINGH; VINITA MENON
• Assessee Lawyers: S P JOSHI
• Keywords: Opportunity of being heard

Judgement Text

1 IN THE INCOME TAX APPELLATE TRIBUNAL SMC BENCH, PUNE BEFORE SHRI R.K. PANDA, ACCOUNTANT MEMBER ITA NO.1716/PN/2011 (ASSESSMENT YEAR 2006-07) PUNE ZILLA NAGARI SAHAKARI BANKS ASSOCIATION, 49/1, RUTURANG SANKU, ARANESHWAR CORNER, PUNE SATARA ROAD, PUNE-411009. PAN NO. AAAAP3649R .. APPELLANT VS. ASST. COMMISSIONER OF INCOME TAX, CIRCLE-4, C/O. INCOME TAX OFFICES, PMT BUILDING, SWARGATE, PUNE. .. RESPONDENT ASSESSEE BY : SRI S.P. JOSHI DEPARTMENT BY : SRI S.K. SINGH & SMT. VINITA MEN ON DATE OF HEARING : 25 -10-2012 DATE OF PRONOUNCEMENT : 25 -10-2012 ORDER PER R.K. PANDA, AM : THIS APPEAL FILED BY THE ASSESSEE IS DIRECTED AGAIN ST THE ORDER DATED 28-09- 2011 OF THE CIT(A)-II, PUNE RELATING TO ASSESSMENT YEAR 2006-07. 2. FACTS OF THE CASE, IN BRIEF, ARE THAT THE ASSESS EE IS A COOPERATIVE SOCIETY REGISTERED UNDER THE MAHARASTRA COOPERATIVE SOCIETI ES ACT, 1960. THE SOCIETY EXISTS AND WORKS FOR ITS MEMBERS, WHO ARE THE URBAN COOPERATIVE BANKS IN PUNE DISTRICT. DURING THE COURSE OF ASSESSMENT PROCEEDI NGS THE AO NOTED THAT THE ASSESSEE HAS SHOWN SURPLUS OF RS.24,00,486/- AS PER INCOME AND EXPENDITURE ACCOUNT OUT OF WHICH A DEDUCTION OF RS.21,89,623/- HAS BEEN CLAIMED AS EXEMPT U/S.80P(2)(D) BEING INTEREST OF DEPOSIT WITH COOPER ATIVE BANK. THE BALANCE AMOUNT OF RS.2,10,863/- HAS BEEN CLAIMED BY THE ASSESSEE A S DEDUCTION U/S.44A ON PRINCIPLE OF MUTUALITY. THE AO FOLLOWING THE ORDER S IN CASE OF THE ASSESSEE FOR A.Y. 2003-04 AND 2004-05 WHICH HAS BEEN UPHELD BY T HE CIT(A) DISALLOWED THE CLAIM OF DEDUCTION U/S.80P(2)(D) AMOUNTING TO RS.2, 10,863/-. 2 3. IN APPEAL SINCE NOBODY APPEARED BEFORE HIM THE L EARNED CIT(A) FOLLOWING THE ORDERS OF HIS PREDECESSOR FOR A.Y. 2003-04 AND 2004-05 UPHELD THE ACTION OF THE AO IN DISALLOWING THE CLAIM OF DEDUCTION U/S.80 P(2)(D) OF THE INCOME TAX ACT. AGGRIEVED WITH SUCH ORDER OF THE CIT(A) THE ASSESSE E IS IN APPEAL BEFORE THE TRIBUNAL WITH THE FOLLOWING GROUNDS : 1. THE LD. CIT(A) ERRED IN CONFIRMING THE AOS ACT ION IN REJECTING THE EXEMPTION OF INCOME OF RS.2,10,863/- CLAIMED ON THE BASIS OF PRI NCIPLES OF MUTUALITY. 2. THE LD. CIT(A) EVEN WHEN DECIDING THE APPEAL EX PARTE ON MERITS, OUGHT TO HAVE GIVEN DIRECTION TO THE AO TO VERIFY THE CLAIM FOR E XEMPTION OF THE INCOME ON THE BASIS OF PRINCIPLES OF MUTUALITY, FOLLOWING THE ITAT, PUNES ORDERS PASSED IN ASSESSEES OWN CASE FOR A.YS. 2003-04, 2004-05 AND 2005-06 AND COPIES O F WHICH WERE ENDORSED TO HIM AND THE AO, MUCH BEFORE THE LD. CIT(A) PASSED THE PRESE NT IMPUGNED ORDER. 3. THE APPELLANT PRAYS THAT IN THE PRESENT APPEAL, THE ISSUE OF EXEMPTION OF INCOME IN ASSESSEES CASE MAY KINDLY BE RESTORED TO THE FI LE OF THE ASSESSING OFFICER WITH DIRECTIONS SIMILAR TO THOSE GIVEN FOR A.YS.2003-04, 2004-05 & 2005-06 IN ASSESSEES OWN CASE. 4. AFTER HEARING BOTH THE SIDES, I FIND THE TRIBUNA L IN ASSESSEES OWN CASE FOR A.Y. 2003-04 VIDE ITA NO. 1323/PN/2006 ORDER DATED 22-01-2009 HAS RESTORED THE ISSUE TO THE FILE OF THE AO BY HOLDING AS UNDER : 8. HAVING CONSIDERED THE RIVAL SUBMISSIONS AND HAV ING PERUSED THE MATERIAL ON RECORD, WE ARE OF THE CONSIDERED VIEW THAT THIS MAT TER NEEDS TO BE CONSIDERED AFRESH BY THE AO IN THE LIGHT OF THE CORRECT LEGAL POSITION. THE PRINCIPLES OF MUTUALITY, IN OUR HUMBLE UNDERSTANDING, DO APPLY TO THE INSTITUTIONS WHERE THE ACTIVITIES ARE CARRIED OUT FOR THE MINIMUM BENEFIT AND THE RECEIPT OF INCOME ARE F ROM THE SAME SOURCES WHO ARE PARTICIPANTS IN THE SURPLUS AND DEFACTO OWNER OF SU CH ORGANISATION. THERE WAS INDEED A CONTROVERSY AS TO WHETHER THE PRINCIPLES OF MUTUALI TY WILL APPLY IN THE CASES WHERE THE RECEIPTS ARE ALSO FROM MEMBERS OTHER THAN THE MEMBE RS WHO HAVE DENIED RIGHTS OR PARTICIPATED IN THE SURPLUS OR FOR VOTING PURPOSES BUT IT APPEARS THAT THE HONBLE BOMBAY HIGH COURT IN THE CASE OF WILLINGDON SPORTS CLUB (S UPRA) HAVE LAID THE SAID CONTROVERSY TO REST. THEIR LORDSHIPS IN THEIR DETAILED ORDER O BSERVED THAT MERELY BECAUSE SOME MEMBERS ARE WITHOUT THE RIGHT TO VOTE OR TEMPORARY MEMBERS AND AS LONG AS THE ORGANISATION IS NOT FORMED FOR THE PURPOSES OF EARN ING PROFIT OR FOR THE PURPOSES OF TRADING WITH ITS MEMBERS AND MAKING THE PROFIT THE BENEFIT OF PRINCIPLES OF MUTUALITY WILL BE AVAILABLE. THE ASSESSING OFFICER SHOULD EXAMINE THE MATTER AFRESH IN THE LIGHT OF LEGAL POSITION INCLUDING THE ABOVE JUDGMENTS OF THE HONB LE BOMBAY HIGH COURT. WE DIRECT THE ASSESSING OFFICER TO DECIDE THE MATTER AFRESH A FTER GIVING A FAIR AND REASONABLE OPPORTUNITY OF HEARING TO THE ASSESSEE IN ACCORDANC E WITH LAW AND BY WAY OF A SPEAKING ORDER. THE ASSESSEE IS ALSO DIRECTED TO MAKE SUCH ASSESSEE TO FURNISH THE DETAILS OF SUCH INCOME CORRECTLY. WITH THESE OBSERVATIONS, THE MAT TER STANDS RESTORED TO THE FILE OF THE AO. 5. I FIND FOLLOWING THE ORDER FOR A.Y. 2003-04 THE TRIBUNAL IN ASSESSEES OWN CASE FOR A.Y. 2004-05 AND 2005-06 VIDE ITA NO. 1596 /PN/2007 AND ITA NO. 3 366/PN/2009 ORDER DATED 19-01-2010 HAS ALSO RESTORE D THE ISSUE TO THE FILE OF THE AO FOR FRESH ADJUDICATION. RESPECTFULLY FOLLOWING THE DECISION OF THE TRIBUNAL IN ASSESSEES OWN CASE FOR A.Y. 2003-04, 2004-05 & 200 5-06 AND IN ABSENCE OF ANY CONTRARY MATERIAL BROUGHT TO MY NOTICE BY EITHER SI DE I DEEM IT PROPER TO RESTORE THE ISSUE TO THE FILE OF THE AO TO DECIDE THE ISSUE AFR ESH IN THE LIGHT OF THE DIRECTION OF THE TRIBUNAL IN ASSESSEES OWN CASE FOR THE PRECEDI NG YEARS AND IN ACCORDANCE WITH LAW AFTER GIVING DUE OPPORTUNITY OF BEING HEARD TO THE ASSESSEE. I HOLD AND DIRECT ACCORDINGLY. THE GROUNDS RAISED BY THE ASSESSEE AR E ACCORDINGLY ALLOWED FOR STATISTICAL PURPOSES. 6. IN THE RESULT, THE APPEAL FILED BY THE ASSESSEE IS ALLOWED FOR STATISTICAL PURPOSES. PRONOUNCED IN THE OPEN COURT AT THE TIME OF HEARING ITSELF, I.E. ON 25-10-2012 SD/- (R.K. PANDA) ACCOUNTANT MEMBER PUNE DATED: THE 25 TH OCTOBER 2012 SATISH COPY OF THE ORDER FORWARDED TO : 1. ASSESSEE 2. DEPARTMENT 3. CIT(A)-II, PUNE 4. THE D.R, SMC BENCH, PUNE 5. GUARD FILE BY ORDER // TRUE COPY // SENIOR PRIVATE SECRETARY ITAT, PUNE BENCHES, PUNE