M/s Mahaveera Minority Credit Co-operative Society Limited, Bellary V. The Income Tax Officer WArd-1 , Hospet

ITA 2289/BANG/2018

• Counselvise Citation: [2018] 125 COUNSELVISE.COM (IT) 1423 (ITAT-BANGALORE)
• Duration Of Justice: 1 month(s) 7 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: 31-07-2018
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: N. SUKUMAR
• Keywords: Opportunity of being heard; 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. 2289 /BANG/201 8 ASSESSMENT YEAR : 201 5 - 1 6 M/S. MAHAVEERA MINORITY CREDIT CO-OPERATIVE SOCIETY LTD., MAIN BAZAAR, HUVINAHADAGALI 583 219. BELLARY DISTRICT. PAN: AAAAM4533H VS. THE INCOME TAX OFFICER, WARD 1, HOSPET. APPELLANT RESPONDENT APPELLANT BY : SHRI RAVI SHANKAR, 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), GULBARGA DATED 30.05.2018 FOR ASSESS MENT YEAR 2015-16. 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 O F EVIDENCE, PROBABILITIES, FACTS AND CIRCUMSTANCES OF THE CASE. 2. THE LEARNED CIT[A] IS NOT JUSTIFIED IN UPHOLDING THE ADDITION IN RESPECT OF THE INTEREST EARNED ON DEPOSITS HELD BY THE APPELLANT IN CO- OPERATIVE BANKS AND OTHER BANKS AMOUNTING TO RS.4,1 6,376/-, WHICH IS ELIGIBLE FOR DEDUCTION U/S.80P[2][A] OF THE ACT, HA VING REGARD TO THE JUDGEMENT OF THE HON'BLE KARNATAKA HIGH COURT IN TH E CASE OF TUMKUR GRAIN MERCHANTS CO-OPERATIVE BANK REPORTED I N [2004] 367 ITR 742 [KAR] UNDER THE FACTS AND IN THE CIRCUMSTANCES OF THE APPELLANT'S CASE. 2.1 THE LEARNED CIT[A] FAILED THAT APPRECIATE THAT THE INTEREST INCOME EARNED BY THE APPELLANT FROM THE BANK DEPOSITS IS C LEARLY ATTRIBUTABLE TO THE MAIN ACTIVITY OF THE SOCIETY OF EARNING INTE REST INCOME FROM ITA NO. 2289/BANG/2018 PAGE 2 OF 4 PROVISION OF CREDIT FACILITIES TO ITS MEMBERS AND T HEREFORE THE APPELLANT IS ENTITLED TO DEDUCTION U/S. 80P[2][A] OF THE ACT HAVING REGARD TO THE RATIO LAID DOWN BY THE HON'BLE JURISDICTIONAL HIGH COURT IN THE CASE OF GUTTIGEDARARA CREDIT CO-OPERATIVE SOCIETY LTD., REPORTED IN 377 ITR 464 [KAR] AND CIT V. SRI RENUKA DEVI URBAN CREDIT CO-OP SOCIETY IN ITA 5003/2009. 3. WITHOUT PREJUDICE TO THE ABOVE, THE LEARNED CIT[ A] OUGHT TO HAVE APPRECIATED THAT THE APPELLANT HAS DERIVED INTEREST INCOME FROM CO- OPERATIVE BANKS TO THE EXTENT OF RS. 6,23,763/- FRO M HUVINAHADAGALI URBAN CO-OPERATIVE BANK AND BELLARY DISTRICT CENTRA L CO-OPERATIVE BANK, WHICH UNDOUBTEDLY QUALIFIES FOR DEDUCTION BOT H U/S. 80P[2][A][I] OF THE ACT SINCE THE SAME WAS EARNED F ROM OWN FUNDS OF THE APPELLANT DEPLOYED IN COURSE OF THE BUSINESS OF PROVIDING CREDIT FACILITIES TO ITS MEMBERS OR IN THE ALTERNATIVE U/S . 80P[2][D] OF THE ACT BEING INTEREST EARNED FROM INVESTMENTS MADE IN OTHE R CO-OPERATIVE SOCIETIES AND HENCE, THE ADDITION MADE TO THE EXTEN T OF RS. 6,23,763/-/- OUGHT TO HAVE BEEN DELETED. 4. 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. 234-A, 234-B AND 234-D OF THE ACT, WHICH UNDER THE FACTS AND IN THE CIRCUMSTANCES OF THE APPELLANT'S CASE DESERVES TO BE 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. IT WAS SUBMITTED BY LD. AR OF ASSESSEE THAT THE ASSESSEES CLAIM FOR DEDUCTION U/S. 80P (2) IN RESPECT OF INTEREST INCOME SHOULD B E 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 ITA NO. 2289/BANG/2018 PAGE 3 OF 4 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 IN THE PRESENT CASE, THERE IS NO FINDING OF ANY OF THE AUT HORITIES BELOW ON THIS FACTUAL ASPECT AND THEREFORE, IT IS PROPER TO RESTORE BACK THE MATTER TO THE FILE OF CIT(A) FOR FRESH DECISION AFTER EXAMINING THE FACTS OF PRE SENT CASE IN THE LIGHT OF THESE TWO JUDGEMENTS OF HON'BLE KARNATAKA HIGH COURT. TH E LD. AR OF ASSESSEE AGREED TO THIS PROPOSITION PUT FORWARD BY THE BENCH . THE LD. DR OF REVENUE SUBMITTED THAT ON THIS ASPECT, HE IS ALSO IN AGREEM ENT WITH THE PROPOSITION PUT FORWARD BY THE BENCH 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 FIRST IN THE LIGHT OF THESE TWO JUDGME NTS OF 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/ ITA NO. 2289/BANG/2018 PAGE 4 OF 4 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.