M/s Sri Arya Vysya Sri Rama Sahakara Sangha Niyamitha , Shivamogga V. The Income Tax Officer Ward-1 , Shivamogga

ITA 1955/BANG/2018

• Counselvise Citation: [2018] 125 COUNSELVISE.COM (IT) 7707 (ITAT-BANGALORE)
• Duration Of Justice: 1 month(s) 7 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 13-07-2018
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: C
• Assessment Year: 2012-2013
• Appeal Filed On: 06-06-2018
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: S VENKATESH
• Keywords: Opportunity of being heard; Condonation of delay
• Section: 234B

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL SMC-C BENCH : BANGALORE BEFORE SHRI ARUN KUMAR GARODIA, ACCOUNTANT MEMBER ITA NO. 19 55 / BANG/201 8 ASSESSMENT YEAR : 20 1 2 - 1 3 M/S. SRI ARYA VYSYA SRI RAMA SAHAKARA SANGHA NIYAMITHA, KUVEMPU ROAD, SHIVAMOGGA 577 201. PAN: AACAA2170L VS. THE INCOME TAX OFFICER, WARD 1, SHIVAMOGGA. APPELLANT RESPONDENT APPELLANT BY : SHRI RAVI SHANKAR, A DVOCATE RESPONDENT BY : SHRI S. VENKATESH, JCIT (DR) DATE OF HEARING : 0 5 .0 7 .2018 DATE OF PRONOUNCEMENT : 13 .0 7 .2018 O R D E R PER SHRI A.K. GARODIA, ACCOUNTANT MEMBER THIS APPEAL IS FILED BY THE ASSESSEE WHICH IS DIREC TED AGAINST THE ORDER OF LD. CIT (A), DAVANGERE DATED 30.06.2017 FOR ASSESSM ENT YEAR 2012-13. 2. THE GROUNDS RAISED BY THE ASSESSEE ARE AS UNDER. 1. THE ORDERS OF THE AUTHORITIES BELOW IN SO FAR AS THEY ARE AGAINST THE APPELLANT ARE OPPOSED TO LAW, EQUITY, WEIGHT OF EVIDENCE, PROBABILITIES, FACTS AND CIRCUMSTANCES OF THE CASE. 2. THE LEARNED CIT[A] IS NOT JUSTIFIED IN HOLDING T HAT THE APPELLANT WAS NOT ENTITLED TO DEDUCTION IN RESPECT OF THE INT EREST EARNED FROM INVESTMENTS IN SCHEDULE BANKS HOLDING THAT THE SAME HAS TO BE ASSESSED UNDER THE HEAD 'OTHER SOURCES' THAT WAS NO T ENTITLED TO DEDUCTION U/S. 80P[2][D] OF THE ACT UNDER THE FACTS AND IN THE CIRCUMSTANCES OF THE APPELLANT'S CASE. 2.1 THE LEARNED CIT [A] OUGHT TO HAVE APPRECIATED T HAT THE APPELLANT HAD CLAIMED DEDUCTION U/S.80P [2] [A] [I] OF THE I. T.ACT, IN RESPECT OF THE AFORESAID INTEREST INCOME AND THE SAME COULD NO T BE DENIED ON THE GROUND THAT THE SAID INTEREST WAS EARNED BY SCHEDUL E BANKS WITHOUT APPRECIATING THAT THE APPELLANT HAD PLACED ITS OWN FUNDS BY WAY OF INVESTMENT AND THE SAME WAS LIABLE FOR ASSESSMENT A S PART OF INCOME ITA NO.1955/BANG/2018 PAGE 2 OF 4 FROM BUSINESS ITSELF. 3. THE LEARNED CIT[A] IS NOT JUSTIFIED IN HOLDING T HAT THE INTEREST INCOME AND DIVIDEND INCOME EARNED IN DEPOSIT INVEST MENT IN SCHEDULE BANKS AND COOPERATIVE BANKS WAS LIABLE TO BE TAXED UNDER THE HEAD INCOME FROM OTHER SOURCES UNDER THE FACTS AND IN TH E CIRCUMSTANCES OF THE APPELLANT'S CASE. 4. WITHOUT PREJUDICE TO THE ABOVE, THE LEARNED CIT [A] OUGHT TO HAVE APPRECIATED THAT THE GROSS INTEREST EARNED BY THE A PPELLANT CANNOT BE REGARDED AS INCOME WITHOUT ALLOWING PROPORTIONATE E XPENSES INCURRED BY THE APPELLANT UNDER THE FACTS AND IN THE CIRCUMS TANCES OF THE APPELLANT'S CASE. 5. WITHOUT PREJUDICE TO THE RIGHT TO SEEK WAIVER WI TH THE HON'BLE CCIT/DG, THE APPELLANT DENIES ITSELF LIABLE TO BE C HARGED TO INTEREST U/S. 234B AND 234C OF THE ACT, WHICH UNDER THE FACT S AND IN THE CIRCUMSTANCES OF THE APPELLANT'S CASE DESERVES TO B E CANCELLED. 5. FOR THE ABOVE AND OTHER GROUNDS THAT MAY BE URGE D AT THE TIME OF HEARING OF THE APPEAL, YOUR APPELLANT HUMBLY PRAYS THAT THE APPEAL MAY BE ALLOWED AND JUSTICE RENDERED AND THE APPELLA NT MAY BE AWARDED COSTS IN PROSECUTING THE APPEAL AND ALSO OR DER FOR THE REFUND OF THE INSTITUTION FEES AS PART OF THE COSTS. 3. THIS APPEAL IS FILED BY THE ASSESSEE AFTER A DEL AY OF 269 DAYS. THE ASSESSEE HAS FILED AN APPLICATION FOR CONDONATION OF DELAY A LONG WITH AN AFFIDAVIT IN WHICH IT HAS BEEN STATED THAT AS PER THE ORDER OF CIT(A), CERTAIN RELIEF WERE ALLOWED BY CIT(A) AND IT WAS ADVISED BY LD. AR OF ASSESSEE THA T THE ASSESSEE SHOULD WAIT FOR THE ORDER GIVING EFFECT TO THE ORDER OF CIT(A) BEFORE TAKING ANY FURTHER ACTION AND ORDER GIVING EFFECT TO THE ORDER OF CIT(A) WAS NOT PASSED BY THE AO AND FOR THIS REASON, THERE WAS DELAY IN FILING THE APPEAL B EFORE TRIBUNAL AND SUBSEQUENTLY THE ASSESSEE APPROACHED SOME OTHER CHA RTERED ACCOUNTANTS I.E. S. VENKATESAN & CO., CHARTERED ACCOUNTANTS, BANGALO RE FOR ADVICE IN ANOTHER MATTER AND THERE, THE ASSESSEE DISCUSSED WITH HIM A BOUT THIS MATTER ALSO AND THEN THE ASSESSEE WAS ADVISED THAT THE ASSESSEE SHO ULD NOT WAIT FOR APPEAL EFFECT ORDER AND SHOULD FILE THE APPEAL BEFORE THE TRIBUNAL. IT WAS SUBMITTED BY LD. AR OF ASSESSEE THAT AFTER SUCH ADVICE OF S. VEN KATESAN & CO., THE APPEAL WAS FILED BEFORE TRIBUNAL AND UNDER THESE FACTS, TH E DELAY SHOULD BE CONDONED. CONSIDERING THESE FACTS OF PRESENT CASE, THE DELAY IS CONDONED AND THE APPEAL IS ADMITTED. ITA NO.1955/BANG/2018 PAGE 3 OF 4 4. REGARDING THE MERIT OF THE APPEAL, IT WAS SUBMIT TED BY LD. AR OF ASSESSEE THAT THE ONLY ISSUE IN DISPUTE IS REGARDING ALLOWABILITY OF DEDUCTION TO ASSESSEE U/S. 80P[2][A][I] IN RESPECT OF INTEREST INCOME FROM BAN K. HE SUBMITTED THAT THE AUTHORITIES BELOW HAS FOLLOWED THE JUDGEMENT OF HON 'BLE KARNATAKA HIGH COURT RENDERED IN THE CASE OF PCIT AND ANOTHER VS. TOTAGA RS CO-OPERATIVE SALE SOCIETY LTD. AS REPORTED IN 395 ITR 611 (KARN) AND THE JUDGMENT OF HONBLE APEX COURT RENDERED IN THE CASE OF TOTGARS COOPERAT IVE SALES SOCIETY LTD. VS. ITO AS REPORTED IN 322 ITR 283 (SC). BUT IN THE PR ESENT CASE, THE JUDGEMENT OF HON'BLE KARNATAKA HIGH COURT RENDERED IN THE CASE O F TUMKUR MERCHANTS SOUHARDA CREDIT COOPERATIVE LTD. VS. ITO AS REPORTE D IN 230 TAXMAN 309 IS APPLICABLE. HE ALSO PLACED RELIANCE ON A RECENT JU DGMENT OF HON'BLE KARNATAKA HIGH COURT RENDERED IN THE CASE OF LALITAMBA PATTIN A SOUHARDA SAHAKARI NIYAMITHA VS. ITO AS REPORTED IN 166 DTR 400. HE S UBMITTED A COPY OF THIS JUDGEMENT OF HON'BLE KARNATAKA HIGH COURT AND POINT ED OUT THAT IN THIS CASE, THE HON'BLE KARNATAKA HIGH COURT HAS DULY CONSIDERE D BOTH THE JUDGEMENTS OF HON'BLE KARNATAKA HIGH COURT AND SUPREME COURT REND ERED IN THE CASE OF TOTGARS COOPERATIVE SALES SOCIETY LTD. (SUPRA). BU T HON'BLE KARNATAKA HIGH COURT IN THIS CASE HAS FOLLOWED THE RECENT JUDGMENT OF HON'BLE KARNATAKA HIGH COURT RENDERED IN THE CASE OF TUMKUR MERCHANTS SOUH ARDA CREDIT COOPERATIVE LTD. VS. ITO (SUPRA). AT THIS JUNCTURE, THE BENCH POINTED OUT THAT THERE IS NO CONFLICT IN THE JUDGEMENT OF HON'BLE KARNATAKA HIGH COURT RENDERED IN THE CASE OF TUMKUR MERCHANTS SOUHARDA CREDIT COOPERATIVE LTD . VS. ITO (SUPRA) AND TWO JUDGEMENTS OF HON'BLE KARNATAKA HIGH COURT AND HONBLE APEX COURT RENDERED IN THE CASE OF TOTGARS CO-OPERATIVE SALES SOCIETY LTD. (SUPRA) BUT THE ULTIMATE CONCLUSION IS DIFFERENT BECAUSE IN THE CAS E OF TOTGARS CO-OPERATIVE SALES SOCIETY LTD. (SUPRA), IT WAS FOUND THAT THE M ONEY DEPOSITED IN BANK WAS OUT OF LIABILITY OF THE ASSESSEE WHEREAS IN THE CAS E OF TUMKUR MERCHANTS SOUHARDA CREDIT COOPERATIVE LTD. VS. ITO (SUPRA), T HE MONEY DEPOSITED IN BANK WAS OUT OF ASSESSEES OWN FUNDS AND NOT OUT OF LIABILITY OF THE ASSESSEE. THE BENCH WANTED TO KNOW ABOUT THE FACTUAL POSITION IN THE PRESENT CASE AND WHAT IS THE FINDING OF AUTHORITIES BELOW REGARDING THIS FACTUAL ASPECT. IN REPLY, IT WAS SUBMITTED BY LD. AR OF ASSESSEE THAT THE FACTS OF PRESENT CASE ARE IN LINE WITH THE FACTS IN THE CASE OF TUMKUR MERCHANTS SOUH ARDA CREDIT COOPERATIVE ITA NO.1955/BANG/2018 PAGE 4 OF 4 LTD. VS. ITO (SUPRA) BUT THERE IS NO FINDING OF ANY OF THE AUTHORITIES BELOW ON THIS FACTUAL ASPECT AND THEREFORE, THE MATTER MAY B E RESTORED BACK TO THE FILE OF AO FOR FRESH DECISION BY EXAMINING THE FACTS OF PRE SENT CASE IN LIGHT OF BOTH THESE JUDGMENTS OF HON'BLE KARNATAKA HIGH COURT REN DERED IN THE CASE OF TUMKUR MERCHANTS SOUHARDA CREDIT COOPERATIVE LTD. V S. ITO (SUPRA) AND TOTGARS CO-OPERATIVE SALES SOCIETY LTD. (SUPRA). T HE LD. DR OF REVENUE SUPPORTED THE ORDERS OF AUTHORITIES BELOW. 5. I HAVE CONSIDERED THE RIVAL SUBMISSIONS. IN VIE W OF THE ABOVE DISCUSSION, I FEEL IT PROPER TO SET ASIDE THE ORDER OF CIT(A) AND REST ORE THE MATTER BACK TO THE FILE OF AO FOR FRESH DECISION AFTER EXAMINING THE FACTS OF THE PRESENT CASE IN THE LIGHT OF THESE TWO JUDGEMENTS OF HON'BLE KARNATAKA HIGH C OURT RENDERED IN THE CASE OF TUMKUR MERCHANTS SOUHARDA CREDIT COOPERATIVE LTD . VS. ITO (SUPRA) AND PCIT AND ANOTHER VS. TOTAGARS CO-OPERATIVE SALE SOC IETY LTD. (SUPRA) AFTER PROVIDING ADEQUATE OPPORTUNITY OF BEING HEARD TO TH E ASSESSEE. I ORDER ACCORDINGLY. 6. IN THE RESULT, THE APPEAL FILED BY THE ASSESSEE STANDS 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 13 TH JULY, 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.