M/s Taluk Agricultural Producers Co-operative Marketing Society Limited , Tumkur V. The Assistant Commissioner of Income Tax Circle-1 , Tumkur

ITA 2251/BANG/2018

• Counselvise Citation: [2018] 125 COUNSELVISE.COM (IT) 1418 (ITAT-BANGALORE)
• Duration Of Justice: 1 month(s) 13 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 07-09-2018
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: A
• Next Hearing Date: 27-08-2018
• Assessment Year: 2015-2016
• Appeal Filed On: 25-07-2018
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: N. SUKUMAR
• Assessee Lawyers: PRATHIK PATIL
• Keywords: Business income; Set aside
• Section: 201; 22

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL SMC-A BENCH : BANGALORE BEFORE SHRI ARUN KUMAR GARODIA, ACCOUNTANT MEMBER ITA NO. 2251 /BANG/201 8 ASSESSMENT YEAR : 201 5 - 1 6 M/S. TALUK AGRICULTURAL PRODUCERS CO-OPERATIVE MARKETING SOCIETY LTD., GUMCHI SQUARE, TUMAKURU 572 101. PAN: AABAT0237C VS. THE ASSISTANT COMMISSIONER OF INCOME TAX, CIRCLE 1, TUMAKURU. APPELLANT RESPONDENT APPELLANT BY : SHRI PRATHIK PATIL, ADVOCATE 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)-7, BANGALORE DATED 20.06.2018 FOR ASS ESSMENT YEAR 2015-16. 2. THE GROUNDS RAISED BY THE ASSESSEE ARE AS UNDER. THE ORDER PASSED BY THE LEARNED COMMISSIONER OF INC OME TAX (APPEALS) IS GROSSLY OPPOSED TO LAW AND FACTS OF TH E CASE. 2. THE LEARNED COMMISSIONER OF INCOME TAX (APPEALS) OUGHT TO HAVE ADJUDICATED THE APPEAL ON ITS MERITS HAVING REGARD TO THE GROUNDS URGED IN APPEAL BY THE APPELLANT, AND PASSED A SPEA KING ORDER ON THE ISSUES CONTESTED IN APPEAL, AND THEREFORE THE IMPUG NED ORDER PASSED BY THE LEARNED COMMISSIONER DOES NOT MEET THE REQUI REMENTS OF SEC.250(6). 3. THE LEARNED COMMISSIONER OF INCOME TAX (APPEALS) WAS IN ERROR IN CONFIRMING THE ORDER OF THE LEARNED ASSESSING OF FICER DISALLOWING THE CLAIM OF DEDUCTION U/S. 80P(2)(D) AS CLAIMED BY THE APPELLANT ON ACCOUNT OF IT BEING ENTITLED TO DO SO. 4. THE LEARNED COMMISSIONER OF INCOME-TAX (APPEALS) OUGHT TO HAVE ITA NO. 2251/BANG/2018 PAGE 2 OF 3 APPRECIATED THAT THE INTEREST DERIVED BY THE APPELL ANT FROM THE DEPOSITS MAINTAINED BY IT WITH THE DCC BANK WAS ON ACCOUNT OF THE STATUTORY RESERVE FUND MANDATORILY REQUIRED TO BE M AINTAINED BY IT IN ACCORDANCE WITH THE PROVISIONS OF SECTION 57(2), 58 OF THE KARNATAKA CO-OPERATIVE SOCIETIES ACT. 1959 R/W. RULE 22 OR TH E KARNATAKA CO- OPERATIVE SOCIETIES RULES, 1960. 5. THE LEARNED COMMISSIONER OF INCOME TAX (APPEALS) WAS IN ERROR IN CONFIRMING THE ACTION OF THE LEARNED ASSESSING O FFICER IN RELYING ON THE DECISION OF THE HON'BLE KARNATAKA HIGH COURT IN THE CASE OF THE TOTAGAR'S CO-OPERATIVE SALE SOCIETY, (ITA NO.100066 OF 2016), WHEN THE FACTS IN THE CASE BEFORE THE KARNATAKA HIGH COU RT, AS WELL AS THE FACTS IN THE CASE BEFORE THE HON'BLE SUPREME COURT IN TOTAGAR'S CO- OPERATIVE SALE SOCIETY LTD. VS. ITO (323 ITR 283) O N WHICH RELIANCE WAS PLACED BY THE HIGH COURT, WERE CLEARLY DISTINGU ISHABLE FROM THE FACTS OF THE PRESENT CASE, IN SO FAR AS WHEREAS IN THE DECIDED CASES, THE INTEREST WAS DERIVED FROM SHORT TERM DEPOSITS CREAT ED OUT OF SURPLUS FUNDS GENERATED DURING THE COURSE OF THE ACTIVITIES , IN THE PRESENT CASE, THE INTEREST WAS DERIVED FROM THE STATUTORY RESERVE FUND REQUIRED TO BE MAINTAINED BY THE APPELLANT SOCIETY AS A PRECONDITI ON FOR CARRYING ON BUSINESS. 6. IT SHOULD HAVE BEEN HELD THAT AS THE MAINTENANCE OF THE DEPOSITS REPRESENTING THE RESERVE FUND WAS A STATUTORY OBLIG ATION CAST UPON THE APPELLANT SOCIETY TO CARRY ON ITS ACTIVITY, ANY INC OME DERIVED THEREFROM WOULD NATURALLY ASSUME THE CHARACTER OF B USINESS INCOME AND BE ENTITLED TO DEDUCTION U/S. 80P(2)(A) OF THE ACT. 7. WITHOUT PREJUDICE, THE LEARNED COMMISSIONER OF I NCOME-TAX (APPEALS) OUGHT TO HAVE HELD THAT THE INTEREST EARN ED ON ITS DEPOSITS WITH THE DISTRICT CO-OPERATIVE BANK WAS STILL DEDUC TIBLE UNDER SEC. 80P(2)(D) OF THE ACT. 8. IN THE ALTERNATIVE, AND WITHOUT PREJUDICE, ASSUM ING WITHOUT ADMITTING THAT THE INTEREST EARNED ON THE DEPOSITS REPRESENTING THE STATUTORY RESERVE FUND WAS DEDUCTIBLE UNDER SEC. 80 P(2),A AND NOT SEC.80P(2)(D) OF THE ACT, THE LEARNED ASSESSING OFF ICER WAS UNDER A BOUNDEN DUTY TO EDUCATE THE APPELLANT REGARDING THE DEDUCTION AVAILABLE IN RESPECT OF SUCH INTEREST WHICH HAD ASS UMED THE CHARACTER OF BUSINESS INCOME U/S. 80P(2)(A) OF THE ACT. 9. THE APPELLANT PRAYS FOR LEAVE OF THIS HON'BLE TR IBUNAL TO ADD TO, TO DELETE FROM AND/OR TO AMEND THE GROUNDS OF APPEAL. 3. AT THE VERY OUTSET, IT WAS POINTED OUT BY THE BE NCH THAT THE ORDER OF CIT(A) IS EX-PARTE QUA THE ASSESSEE. THE BENCH WANTED TO KNO W AS TO HOW MANY OPPORTUNITIES WERE PROVIDED BY CIT (A). IN REPLY, IT WAS SUBMITTED BY LD. AR OF ASSESSEE THAT IT IS NOTED BY CIT (A) IN PARA 2 OF H IS ORDER THAT THE FIRST DATE OF ITA NO. 2251/BANG/2018 PAGE 3 OF 3 HEARING WAS FIXED ON 06.06.2018 AND THE SECOND DATE OF HEARING WAS ON 18.06.2018 AND IN THIS MANNER, ONLY TWO DATES OF HE ARING WERE FIXED BY CIT(A) AND THEREAFTER, THE ORDER WAS PASSED BY HIM ON 20.0 6.2018. UNDER THESE FACTS, I FEEL THAT SUFFICIENT OPPORTUNITY WAS NOT PROVIDED BY CIT(A) AND THEREFORE, I SET ASIDE THE ORDER OF CIT(A) AND RESTORE THE MATTER BA CK TO HIS FILE FOR FRESH DECISION AFTER PROVIDING ADEQUATE OPPORTUNITY OF BE ING HEARD TO BOTH SIDES. IN VIEW OF THIS DECISION, NO ADJUDICATION IS CALLED FO R ON MERIT AT THE PRESENT STAGE. 4. 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.