M/s Creative Credit Co-operative Society Limited , Bangalore V. Income TAx Officer Ward-3(2)(3), Bangalore

ITA 2282/BANG/2018

• Counselvise Citation: [2018] 125 COUNSELVISE.COM (IT) 1419 (ITAT-BANGALORE)
• Duration Of Justice: 1 month(s) 8 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 07-09-2018
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: B
• Assessment Year: 2015-2016
• Appeal Filed On: 30-07-2018
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: N. SUKUMAR
• Keywords: Opportunity of being heard; Co-operative Credit Society; Set aside
• Section: 80P; 201

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL SMC-B BENCH : BANGALORE BEFORE SHRI ARUN KUMAR GARODIA, ACCOUNTANT MEMBER ITA NO. 2282 /BANG/201 8 ASSESSMENT YEAR : 201 5 - 1 6 M/S. CREATIVE CREDIT CO- OPERATIVE SOCIETY LTD., NO. 32, I-FLOOR, I-MAIN ROAD, MPM LAYOUT, OPPOSITE TO MPM PARK, BANGALORE 560 056. PAN: AABAC0713G VS. THE INCOME TAX OFFICER, WARD 3 (2) (3), BANGALORE. APPELLANT RESPONDENT APPELLANT BY : SHRI G. SATYANARAYANA, 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)-3, BANGALORE DATED 18.05.2018 FOR ASS ESSMENT YEAR 2015-16. 2. THE GROUNDS RAISED BY THE ASSESSEE ARE AS UNDER. 1. THE ORDER OF THE LEARNED CIT (APPEALS) - 3, BANG ALORE IN SO FAR AS IT IS AGAINST THE APPELLANT IS OPPOSED TO LAW, EQUI TY, WEIGHT OF EVIDENCE, PROBABILITIES, FACTS AND CIRCUMSTANCES OF THE CASE. 2. IN THE FACTS AND CIRCUMSTANCES OF THE CASE, THE LEARNEDCIT (APPEALS)-3 ERRED IN ACCEPTING THE CONTENTION OF TH E ASSESSEE THAT THE FACTS OF CASE ARE IDENTICAL TO THAT OF SRI BILURU G URUBASAVA PATTINA SAHAKARI SANGHA NIYAMITA, BAGALKOT (2015). 3. PROFITS ATTRIBUTABLE TO CERTAIN SPECIFIED ACTIVI TIES SECTION 80P(2)(A): CARRYING ON BUSINESS OF BANKING OR PROVIDING CREDIT FACILITIES TO ITS MEMBERS A) NOTE: W.E.F. ASSESSMENT YEAR 2007-09, THE EXEMPT ION SHALL NOT BE AVAILABLE TO CO-OPERATIVE BANKS (FIRST PART) OTHER THAN A PRIMARY ITA NO. 2282/BANG/2018 PAGE 2 OF 4 AGRICULTURAL CREDIT SOCIETY OR A PRIMARY CO-OPERATI VE AGRICULTURAL AND RURAL DEVELOPMENT BANK. (PLD BANKS) HOWEVER, THE DE DUCTION SHALL STILL BE AVAILABLE TO A CO-OPERATIVE SOCIETY WHICH IS ENGAGED IN THE BUSINESS OF PROVIDING CREDIT FACILITIES TO ITS MEMB ERS. THE ASSESSEE IS A CO-OPERATIVE SOCIETY REGISTERED U NDER THE KARNATAKA COOPERATIVE SOCIETIES ACT, 1959 HAVING THE OBJECT O F PROVIDING CREDIT FACILITIES TO ITS MEMBERS. IT IS NOT A BANKING COMP ANY AND ALSO NOT HOLDING LICENSE FROM RBI UNDER BANKING REGULATIONS. HENCE THE ASSESSEE IS NOT A CO-OPERATIVE BANK AND THE INTERES T EARNED ON THE CREDIT FACILITIES PROVIDED TO ITS MEMBERS IS ELIGIB LE FOR DEDUCTION UNDER SECTION 80P OF THE INCOME TAX ACT, 1961. THIS FACT IS DECIDED BY THE FOLLOWING JUDGMENTS: 1. 2015 TAXPUB(DT) 2857 (KARN-HC) TUMKUR MERCHANTS SOUHARDA CREDIT COOPERATIVE LTD. V. ITO IT APPEAL NO. 307 OF 2014DATE OF ORDER 28 OCTOBER, 2014. ASSESSMENT YEAR 2009-10 2. 2016 TAXPUB(DT) 0288 (KARN-HC) : (2016) 069 (I) ITCL 0417 CHANDRAPRABHU URBAN CO-OPERATIVE CREDIT SOCIETY LTD . V. ITO INCOME TAX APPEAL NOS. 100043, 100045 OF 2014 DATE OF ORDER 21 SEPTEMBER, 2015 A.Y. 2009-10 & 2010-11 3. 2015 TAXPUB(DT) 0429 (KARN-HC) : (2014) 369 ITR 0086 CIT &ANR. V. SRI BILURU GURUBASAVA PATTINA SAHAKARI SAN GHA NIYAMITHA BAGALKOT INCOME TAX APPEAL NO. 5006 OF 2013 DATE OF ORDER 5 FEBRUARY, 2014 A.Y. 2007-08 4. 2015 TAXPUB(DT) 0517 (KARP-HC) : (2015) 066 (I) ITCL 0025: (2015) 370 ITR 0636: (2015) 276 CTR 0084 : (2015) 1 14 DTR 0388 VENUGRAM MULTIPURPOSE CO-OPERATIVE CREDIT SOCIETY L TD. V. ITO I.T.A. NO. 100042 OF 2014 DATE OF ORDER 17 SEPTEMBE R, 2014 A.Y. 2010-11. 5. 2015 TAXPUB(DT) 4347 (BANG-TRIB) : (2015) 043 IT R (TRIB) 0365 ITO V. JAMKHANDI TALUKA SCHOOL TEACHERS CO-OPERATIV E CREDIT SOCIETY LTD.ITA NO. 1504/ BANG/ 2014 DATE OF ORDER 8 MAY 2015 A.Y. 2011-12. 6. I.T(TP).A NO.666/BANG/2015 ; INCOME-TAX OFFICER (APPELLANT) VS M/ S. KPTC & HESCOM EMPLOYEES CO-OP CREDIT SOCIETY LTD . DATE OF ORDER: 01-10-2015 ASSESSMENT YEAR : 2010-11. 7. SRISI URBAN SOUHARDA SAHAKARA BANK LTD. V. ITO, NO. 1421/2006, DATED 29.03.2007. B) THE LEARNED CIT (APPEALS)- 3 IS NOT JUSTIFIED IN DISALLOWING THE CLAIM OF DEDUCTION MADE UNDER SECTION 80P (2) (A) ( I) FOR RS. 14,19,454/- AND DEMAND OF TAX FOR RS.6,57,620/- WAS RAISED ON THE GROUND THAT THE ASSESSEE CARRYING THE BANKING ACTIV ITIES AS DEFINED U/S ITA NO. 2282/BANG/2018 PAGE 3 OF 4 2 (24) (VIIA) IS INSERTED TO INCLUDE THE PROFITS AN D GAINS OF ANY BUSINESS OF BANKING (INCLUDING PROVIDING CREDIT FACILITIES) CARRIED ON BY A CO- OPERATIVE SOCIETY WITH ITS MEMBERS IN THE DEFINITIO N OF INCOME. 4. 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. 5. THE APPELLANT CRAVES LEAVE TO ADD, TO ALTER, TO AMEND OR DELETE ANY OF THE GROUNDS THAT MAY BE URGED AT THE TIME OF HEA RING OF APPEAL. 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 BE 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 BUT THERE IS NO CONTRADICTION IN THESE TWO JUDGMENTS. THE BENCH PO INTED OUT THAT IN THE CASE OF TUMKUR MERCHANTS SOUHARDA CREDIT COOPERATIVE LTD. V S. ITO (SUPRA), IT WAS FOUND THAT THE AMOUNT DEPOSITED IN BANK WAS OUT OF ASSESSEES OWN FUNDS AND NOT OUT OF ITS LIABILITY AND THEREFORE, THIS ISSUE WAS DECIDED IN FAVOUR OF THE ASSESSEE BUT IN THE CASE OF PCIT AND ANOTHER VS. TO TAGARS CO-OPERATIVE SALE SOCIETY (SUPRA), IT WAS FOUND THAT THE AMOUNT DEPOS ITED IN BANK WAS OUT OF ASSESSEES LIABILITY AND 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 AUTHORITIES BELOW ON THIS FAC TUAL ASPECT AND THEREFORE, IT IS PROPER TO RESTORE BACK THE MATTER TO THE FILE OF CI T(A) FOR FRESH DECISION AFTER EXAMINING THE FACTS OF PRESENT CASE IN THE LIGHT OF THESE TWO JUDGEMENTS OF HON'BLE KARNATAKA HIGH COURT. THE LD. AR OF ASSESS EE AGREED TO THIS PROPOSITION PUT FORWARD BY THE BENCH. THE LD. DR O F REVENUE SUBMITTED THAT ON THIS ASPECT, HE IS ALSO IN AGREEMENT WITH THE PROPO SITION PUT FORWARD BY THE BENCH. ITA NO. 2282/BANG/2018 PAGE 4 OF 4 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 THESE TWO JUDGEMENTS O F HON'BLE KARNATAKA HIGH COURT RENDERED IN THE CASE OF TUMKUR MERCHANTS SOUH ARDA CREDIT COOPERATIVE LTD. VS. ITO (SUPRA) AND PCIT AND ANOTHER VS. TOTAG ARS CO-OPERATIVE SALE SOCIETY (SUPRA). THEREAFTER 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.