Income Tax Officer Ward-2 , Bagalkot V. M/s Prabhulingeshwar Souharda Credit Co-op Ltd , Bagalkot

ITA 230/BANG/2018

• Counselvise Citation: [2018] 125 COUNSELVISE.COM (IT) 1408 (ITAT-BANGALORE)
• Duration Of Justice: 7 month(s) 8 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 07-09-2018
• Appeal Filed By: Department
• Order Result: Allowed
• Bench Allotted: C
• Assessment Year: 2012-2013
• Appeal Filed On: 29-01-2018
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Department Lawyers: SIDDAPP A JI R N
• Assessee Lawyers: CHAITANYA V MUDRABETTU
• Keywords: Additional evidence
• Section: 12

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL A BENCH : BANGALORE BEFORE SHRI N.V. VASUDEVAN, JUDICIAL MEMBER AND SHRI ARUN KUMAR GARODIA, ACCOUNTANT MEMBER ITA NO S . 2881 & 2882 /BANG/201 7 ASSESSMENT YEAR S : 20 12 - 13 & 2013 - 14 M/S. SHRI PRABHULINGESHWAR SOUHARDA CREDIT CO-OP. LTD., SIDDAPUR, JAMAKHANDI, BAGALKOT 587 301. PAN: AAALS0495F VS. THE INCOME TAX OFFICER, WARD 2, BAGALKOT. APPELLANT RESPONDENT ITA NOS. 229 TO 231/BANG/2018 ASSESSMENT YEARS : 2011 - 12 TO 2013 - 14 THE INCOME TAX OFFICER, WARD 2, BAGALKOT. VS. M/S. SHRI PRABHULINGESHWAR SOUHARDA CREDIT CO-OP. LTD., SIDDAPUR, JAMAKHANDI, BAGALKOT 587 301. PAN: AAALS0495F APPELLANT RESPONDENT ASSESSEE BY : SHRI CHAITANYA V. MUDRABETTU, ADVOCATE RE VENUE BY : SHRI SIDDAPPAJI R.N., ADDL. CIT(DR) DATE OF HEARING : 28. 0 8 .2018 DATE OF PRONOUNCEMENT : 07 . 0 9 .2018 O R D E R PER SHRI A.K. GARODIA, ACCOUNTANT MEMBER OUT OF THIS BUNCH OF 5 APPEALS, THERE IS ONLY ONE A PPEAL FILED BY THE REVENUE FOR ASSESSMENT YEAR 2011-12 AND THE REMAINING 4 APPEALS ARE CROSS APPEALS FILED BY THE ASSESSEE AND REVENUE FOR ASSESSMENT YEARS 20 12-13 AND 2013-14. ALL THESE APPEALS WERE HEARD TOGETHER AND ARE BEING DIS POSED OF BY WAY OF THIS COMMON ORDER FOR THE SAKE OF CONVENIENCE. ITA NOS. 2881 & 2882/BANG/2017 & 229 TO 231/BANG/2018 PAGE 2 OF 7 2. THE GROUNDS RAISED BY THE ASSESSEE FOR ASSESSMEN T YEAR 2012-13 IN ITA NO. 2881/BANG/2017 ARE AS UNDER. 1. THE LEARNED COMMISSIONER OF INCOME TAX (APPEALS) , BELGAUM HAS ERRED IN PASSING THE ORDER TREATING THE INTEREST ON LONG TERM INVESTMENTS AS INCOME FROM OTHER SOURCES INSTEAD OF INCOME FROM BUSINESS WHICH IS OPPOSED TO LAW AND FACTS OF THE C ASE. 2. THE LEARNED COMMISSIONER OF INCOME TAX (APPEALS) , BELGAUM HAS ERRED IN NOT ALLOWING THE DEDUCTION U/S 80P (2) (A) (I) OF INCOME TAX ACT 1961 ON THE INCOME DERIVED FROM INTEREST ON INV ESTMENTS, WHICH ARE REQUIRED TO BE INVESTED AS PER STATUTE AND ON S OME INVESTMENTS WHICH ARE INVESTED VOLUNTARILY OUT OF SURPLUS FUNDS AND INTEREST ON SUCH INVESTMENTS IS ATTRIBUTABLE TO BUSINESS. 3. THE LEARNED COMMISSIONER OF INCOME TAX (APPEALS) , BELGAUM HAS ERRED IN NOT FOLLOWING THE JUDGMENT OF HONOURABLE K ARNATAKA HIGH COURT, DHARWAD BENCH IN OUR OWN CASE FOR THE AY 200 9-10 AND 2010- 11 IN ITA 10078/2015 AND ITA 10079/2015 AND DECISIO N OF JURISDICTIONAL ITAT IN ITA NO.817/2017,818/2017 & 8 19/2017 DATED 03.11.2017. 4. THE LEARNED COMMISSIONER OF INCOME TAX (APPEALS) HAS ERRED IN FOLLOWING THE ORDER OF THE HONOURABLE KARNATAKA HIG H COURT IN TOTAGARS CO-OP SALE SOCIETY,SIRSI CASE IN ITA 10006 6/2016 WHERE IN FACTS AND NATURE OF BUSINESS OF THAT ASSESSEE AND O URS ARE CLEARLY DISTINGUISHABLE. 5. THE APPELLANT CRAVES TO LEAVE, ADD/ALTER ANY OF THE GROUNDS OF APPEAL ON OR BEFORE THE DATE OF FINAL HEARING. 3. THE GROUNDS RAISED BY THE ASSESSEE FOR ASSESSMEN T YEAR 2013-14 IN ITA NO. 2882/BANG/2017 ARE AS UNDER. 1. THE LEARNED COMMISSIONER OF INCOME TAX (APPEALS) , BELGAUM HAS ERRED IN PASSING THE ORDER TREATING THE INTEREST ON LONG TERM INVESTMENTS AS INCOME FROM OTHER SOURCES INSTEAD OF INCOME FROM BUSINESS WHICH IS OPPOSED TO LAW AND FACTS OF THE C ASE. 2. THE LEARNED COMMISSIONER OF INCOME TAX (APPEALS) , BELGAUM HAS ERRED IN NOT ALLOWING THE DEDUCTION U/S 80P (2) (A) (I) OF INCOME TAX ACT 1961 ON THE INCOME DERIVED FROM INTEREST ON INV ESTMENTS, WHICH ARE REQUIRED TO BE INVESTED AS PER STATUTE AND ON S OME INVESTMENTS WHICH ARE INVESTED VOLUNTARILY OUT OF SURPLUS FUNDS AND INTEREST ON SUCH INVESTMENTS IS ATTRIBUTABLE TO BUSINESS. ITA NOS. 2881 & 2882/BANG/2017 & 229 TO 231/BANG/2018 PAGE 3 OF 7 3. THE LEARNED COMMISSIONER OF INCOME TAX (APPEALS) , BELGAUM HAS ERRED IN NOT FOLLOWING THE JUDGMENT OF HONOURABLE K ARNATAKA HIGH COURT, DHARWAD BENCH IN OUR OWN CASE FOR THE AY 200 9-10 AND 2010- 11 IN ITA 10078/2015 AND ITA 10079/2015 AND DECISIO N OF JURISDICTIONAL ITAT IN ITA NO.817/2017,818/2017 & 8 19/2017 DATED 03.11.2017. 4. THE LEARNED COMMISSIONER OF INCOME TAX (APPEALS) HAS ERRED IN FOLLOWING THE ORDER OF THE HONOURABLE KARNATAKA HIG H COURT IN TOTAGARS CO-OP SALE SOCIETY,SIRSI CASE IN ITA 10006 6/2016 WHERE IN FACTS AND NATURE OF BUSINESS OF THAT ASSESSEE AND O URS ARE CLEARLY DISTINGUISHABLE. 5. THE APPELLANT CRAVES TO LEAVE, ADD/ALTER ANY OF THE GROUNDS OF APPEAL ON OR BEFORE THE DATE OF FINAL HEARING. 4. THE GROUNDS RAISED BY THE REVENUE FOR ASSESSMENT YEAR 2011-12 IN ITA NO. 229/BANG/2018 ARE AS UNDER. (1) IN THE FACTS AND CIRCUMSTANCES OF THE CASE, THE CIT(APPEALS) ERRED IN ADMITTING ADDITIONAL EVIDENCE IN THE FORM OF SENIOR GENERAL MANAGER AFFIDAVIT IN CONTRAVENTION OF RULE 46A SINC E THE ASSESSING OFFICER WAS NOT PROVIDED WITH AN OPPORTUNITY TO EXA MINE THE CONTENTS OF THE AFFIDAVIT FILED BY THE ASSESSEE. (2) IN THE FACTS AND CIRCUMSTANCES OF THE CASE, THE CIT(APPEALS) ERRED IN ACCEPTING AS CORRECT THE AFFIDAVIT OF THE SENIOR GENERAL MANAGER WITHOUT EXAMINING THE BALANCE-SHEET WHEREIN, THE CA TEGORY OF MEMBERS DEALT WITH BY THE ASSESSEE SOCIETY CLEARLY INDICATED THAT THE ASSESSEE IS NOT DOING BUSINESS WITH MEMBERS ALONE. (3) THE ID CIT(A) IN THE FACTS AND CIRCUMSTANCES OF THE CASE OF HON'BLE APEX COURT OUGHT TO HAVE CALLED FOR REMAND REPORT IN REGARD TO WHETHER THE ASSESSEE IS A COOPERATIVE SOCIETY ME ANT FOR ITS MEMBERS ONLY AND WHETHER ANY INCOME WAS EARNED BY WAY OF IN VESTMENT/LOANS ETC TO NON-MEMBERS (4) THE LD.CIT(A) ERRED IN NOT APPLYING THE RATIO O F THE DECISION OF HON'BLE SUPREME COURT IN THE CASE OF CITIZEN CO-OP SOCIETY LTD V. ACIT, C-9(1), HYDERABAD IN CIVIL APPEAL NO.10245 OF 2017 (ARISING OUT OF SLP (C) NO.20044 OF 2015) DATED 8.08.2017 (R EPORTED IN (2017)88 TAXMAN.COM 279(SC)) SINCE THE ASSESSEE IS ALSO CATERING TO THE CATEGORY OF MEMBERS CALLED ASSOCIATE MEMBERS WH ICH IS NOT AKIN TO REGULAR MEMBER. (5) THE LD.CIT(A) ERRED IN COMING TO THE CONCLUSION THAT THE ASSESSEE SOCIETY IS A COOPERATIVE SOCIETY MEANT ONLY FOR ITS MEMBERS AND ELIGIBLE FOR DEDUCTION UNDER SECTION 80P(2)(A)(I) I GNORING THE RATIO ITA NOS. 2881 & 2882/BANG/2017 & 229 TO 231/BANG/2018 PAGE 4 OF 7 LAID DOWN BY THE HON'BLE APEX COURT IN THE CASE OF CITIZEN CO-OP SOCIETY LTD. (6) FOR THESE AND OTHER GROUNDS THAT MAY BE URGED A T THE TIME OF HEARING, THE ORDER OF THE LEARNED CIT(APPEALS) MAY BE SET ASIDE AND THAT THE ORDER OF THE ASSESSING OFFICER BE RESTORED . 5. THE GROUNDS RAISED BY THE REVENUE FOR ASSESSMENT YEAR 2012-13 IN ITA NO. 230/BANG/2018 ARE AS UNDER. (1) IN THE FACTS AND CIRCUMSTANCES OF THE CASE, THE CIT(APPEALS) ERRED IN ADMITTING ADDITIONAL EVIDENCE IN THE FORM OF SENIOR GENERAL MANAGER AFFIDAVIT IN CONTRAVENTION OF RULE 46A SINC E THE ASSESSING OFFICER WAS NOT PROVIDED WITH AN OPPORTUNITY TO EXA MINE THE CONTENTS OF THE AFFIDAVIT FILED BY THE ASSESSEE. (2) IN THE FACTS AND CIRCUMSTANCES OF THE CASE, THE CIT(APPEALS) ERRED IN ACCEPTING AS CORRECT THE AFFIDAVIT OF THE SENIOR GENERAL MANAGER WITHOUT EXAMINING THE BALANCE-SHEET WHEREIN, THE CA TEGORY OF MEMBERS DEALT WITH BY THE ASSESSEE SOCIETY CLEARLY INDICATED THAT THE ASSESSEE IS NOT DOING BUSINESS WITH MEMBERS ALONE. (3) THE LD CIT(A) IN THE FACTS AND CIRCUMSTANCES OF THE CASE OF HON'BLE APEX COURT OUGHT TO HAVE CALLED FOR REMAND REPORT I N REGARD TO WHETHER THE ASSESSEE IS A COOPERATIVE SOCIETY MEANT FOR ITS MEMBERS ONLY AND WHETHER ANY INCOME WAS EARNED BY WAY OF IN VESTMENT/LOANS ETC TO NON-MEMBERS (4) THE LD.CIT(A) ERRED IN NOT APPLYING THE RATIO O F THE DECISION OF HON'BLE SUPREME COURT IN THE CASE OF CITIZEN CO-OP SOCIETY LTD V. ACIT, C-9(1), HYDERABAD IN CIVIL APPEAL NO.10245 OF 2017 (ARISING OUT OF SLP (C) NO.20044 OF 2015) DATED 8.O8.2017(RE PORTED IN (2017)88 TAXMAN.COM 279(SC))SINCE THE ASSESSEE IS A LSO CATERING TO THE CATEGORY OF MEMBERS CALLED ASSOCIATE MEMBERS WH ICH IS NOT AKIN TO REGULAR MEMBER. (5) THE LD.C1T(A) ERRED IN COMING TO THE CONCLUSION THAT THE ASSESSEE SOCIETY IS A COOPERATIVE SOCIETY MEANT ONLY FOR ITS MEMBERS AND ELIGIBLE FOR DEDUCTION UNDER SECTION 80P(2)(A)(I) I GNORING THE RATIO LAID DOWN BY THE HON'BLE APEX COURT IN THE CASE OR CITIZEN CO-OP SOCIETY LTD. (6) FOR THESE AND OTHER GROUNDS THAT MAY BE URGED A T THE TIME OF HEARING, THE ORDER OF THE LEARNED CIT(APPEALS) MAY BE SET ASIDE AND THAT THE ORDER OF THE ASSESSING OFFICER BE RESTORED . 6. THE GROUNDS RAISED BY THE REVENUE FOR ASSESSMENT YEAR 2013-14 IN ITA NO. 231/BANG/2018 ARE AS UNDER. ITA NOS. 2881 & 2882/BANG/2017 & 229 TO 231/BANG/2018 PAGE 5 OF 7 (1) IN THE FACTS AND CIRCUMSTANCES OF THE CASE, THE CIT(APPEALS) ERRED IN ADMITTING ADDITIONAL EVIDENCE IN THE FORM OF SENIOR GENERAL MANAGER AFFIDAVIT I) CONTRAVENTION OF RULE 46A SINC E THE ASSESSING OFFICER WAS NOT PROVIDED WITH A; OPPORTUNITY TO EXA MINE THE CONTENTS OF THE AFFIDAVIT FILED BY THE ASSESSEE. (2) IN THE FACTS AND CIRCUMSTANCES OF THE CASE, THE CIT(APPEALS) ERRED IN ACCEPTING AS CORRECT THE AFFIDAVIT OF THE SENIOR GENERAL MANAGER WITHOUT EXAMINING THE BALANCE-SHEET WHEREIN, THE CA TEGORY OF MEMBERS DEALT WITH BY THE ASSESSEE, SOCIETY CLEARLY INDICATED THAT THE ASSESSEE IS NOT DOING BUSINESS WITH MEMBER ALONE. (3) THE ID CIT(A) IN THE FACTS AND CIRCUMSTANCES OF THE CASE OF HON'BLE APEX COURT OUGHT TO HAVE CALLED FOR REMAND REPORT IN REGARD TO WHETHER THE ASSESSEE IS A CO-OPERATIVE SOCIETY M EANT FOR ITS MEMBERS ONLY AND WHETHER ANY INCOME WAS EARNED BY W AY OF INVESTMENT/LOANS ETC TO NON-MEMBERS (4) THE LD.CIT(A) ERRED IN NOT APPLYING THE RATIO O F THE DECISION OF HON'BLE SUPREME COURT IN THE CASE OF CITIZEN CO-OP SOCIETY LTD V. ACIT, C-9(1), HYDERABAD IN CIVIL APPEAL NO.10245 OF 2017 (ARISING OUT OF SLP (C) NO.20044 OF 2015) DATED 8.08.2017(RE PORTED IN (2017)88 TAXMAN.COM 279(SC))SINCE THE ASSESSEE IS A LSO CATERING TO THE CATEGORY OF MEMBERS CALLED ASSOCIATE MEMBER: WH ICH IS NOT AKIN TO REGULAR MEMBER. (5) THE ID.CIT(A) ERRED IN COMING TO THE CONCLUSION THAT THE ASSESSEE SOCIETY IS A CO- OPERATIVE SOCIETY MEANT ONLY FOR I TS MEMBERS AND ELIGIBLE FOR DEDUCTION UNDER SECTION 80P(2)(A)(I) I GNORING THE RATIO LAID DOWN BY THE HON'BLE APEX COURT IN THE CASE OF CITIZEN CO-OP SOCIETY LTD. (6) FOR THESE AND OTHER GROUNDS THAT MAY BE URGED A T THE TIME OF HEARING, THE ORDER OF THE LEARNED CIT(APPEALS) MAY BE SET ASIDE AND THAT THE ORDER OF THE ASSESSING OFFICER BE RESTORED . 7. AT THE VERY OUTSET, IT WAS POINTED OUT BY THE BE NCH THAT IN THE PRESENT CASE, THE ASSESSEE IS A SOUHARDA CREDIT CO-OPERATIVE LTD. AND THE TRIBUNAL HAS TAKEN A VIEW IN THE CASE OF M/S. UDAYA SOUHARDA CREDIT CO-O PERATIVE SOCIETY LTD. VS. ITO IN ITA NO. 2831/BANG/2017 DATED 17.08.2018 WHER EIN IT WAS HELD THAT NO ASSESSEE CAN CLAIM TO BE A CO-OPERATIVE SOCIETY IN THE ABSENCE OF PROPER REGISTRATION UNDER THE CO-OPERATIVE SOCIETIES ACT. THE TRIBUNAL ALSO HELD THAT IF THE CREATION OF CO-OPERATIVE SOCIETY UNDER THE CO-O PERATIVE SOCIETIES ACT IS DOUBTFUL, THE CLAIM OF DEDUCTION U/S. 80P CANNOT BE ALLOWED. IN THAT CASE, THE ITA NOS. 2881 & 2882/BANG/2017 & 229 TO 231/BANG/2018 PAGE 6 OF 7 MATTER WAS RESTORED BACK TO THE FILE OF AO TO EXAMI NE VARIOUS ASPECTS AFTER MAKING NECESSARY ENQUIRY AND INVESTIGATION AND THEN FOR PASSING A REASONED ORDER. PARA 13 OF THIS TRIBUNAL ORDER IS RELEVANT WHICH IS REPRODUCED HEREINBELOW FOR READY REFERENCE. 13. WE HAVE ALSO CAREFULLY PERUSED THE CAUSE TITLE IN THE ASSESSMENT ORDER AND IN THE CAUSE TITLE OF THE ASSESSMENT ORDE R, WE FIND THAT ASSESSMENT ORDER WAS PASSED IN THE NAME OF UDAYA SO UHARDA CREDIT CO-OPERATIVE SOCIETY LTD., WHEREAS NO CERTIFICATE O F REGISTRATION WAS PLACED BEFORE US IN THE NAME OF UDAYA SOUHARDHA CRE DIT CO- OPERATIVE SOCIETY LTD. THEREFORE, WE ARE UNABLE TO UNDERSTAND HOW THE ASSESSEE CAN CLAIM IT TO BE THE CO-OPERATIVE SO CIETY IN THE ABSENCE OF PROPER REGISTRATION UNDER THE KARNATAKA CO-OPERA TIVE SOCIETIES ACT. CREATION OF CO-OPERATIVE SOCIETY UNDER THE CO- OPERATIVE SOCIETIES ACT IS DOUBTFUL. THUS THE CLAIM OF DEDUCT ION UNDER SECTION 80P CANNOT BE ALLOWED. AS PER THE PROVISIONS OF SEC TION 80P OF THE ACT, DEDUCTION CAN ONLY BE ALLOWED TO THE CO-OPERAT IVE SOCIETIES REGISTERED UNDER THE CO-OPERATIVE SOCIETIES ACT. WI THOUT A PROPER REGISTRATION UNDER CO-OPERATIVE SOCIETIES ACT, NOBO DY CAN CLAIM IT TO BE CO-OPERATIVE SOCIETY AS THE ACTIVITIES OF THE CO -OPERATIVE SOCIETIES ARE TO BE CONTROLLED UNDER THE CO-OPERATIVE SOCIETI ES ACT THROUGH REGISTRAR OF THE COOPERATIVE SOCIETIES. SINCE ALL T HESE NEW POINTS HAVE BEEN RAISED DURING THE COURSE OF HEARING BEFOR E US AND ACCORDING TO US ALL THESE POINTS GOES TO THE ROOT O F THE CASE, WE ARE OF THE VIEW THAT PROPER ADJUDICATION OF THE ISSUES IS REQUIRED BY THE AO. WE ACCORDINGLY SET ASIDE THE ORDER OF THE CIT (A) A ND RESTORE THE MATTER TO THE AO TO REEXAMINE ALL THESE ASPECTS BY MAKING NECESSARY ENQUIRY AND INVESTIGATION AND ALSO BY PASSING A REA SONED ORDER IN THIS REGARD. SINCE WE HAVE RESTORED THE MATTER TO T HE AO, WE FIND NO JUSTIFICATION TO ADJUDICATE THE ISSUE RAISED ON MER IT. ACCORDINGLY, ORDER OF THE CIT (A) IS SET ASIDE AND MATTER IS RES TORED TO THE AO FOR ADJUDICATION OF THE IMPUGNED ISSUE IN TERMS INDICAT ED ABOVE. 8. THE BENCH POINTED OUT THAT IN THE PRESENT CASE A LSO, NO CERTIFICATE OF REGISTRATION WAS PLACED BEFORE US IN THE NAME OF PR ESENT ASSESSEE M/S. SHRI PRABHULINGESHWAR SOUHARDA CREDIT CO-OP. LTD. AND TH EREFORE, THE BENCH PUT FORWARD A PROPOSITION THAT RESPECTFULLY FOLLOWING T HIS TRIBUNAL ORDER, IN THE PRESENT CASE ALSO, THE MATTER SHOULD BE RESTORED TO AO FOR FRESH DECISION WITH SIMILAR DIRECTIONS. IN REPLY, BOTH SIDES AGREED TO THIS PROPOSITION PUT FORWARD BY THE BENCH. HENCE, WE SET ASIDE THE ORDER OF LD. CIT (A) IN ALL THESE THREE YEARS AND RESTORE THE MATTER BACK TO THE FILE OF AO WITH THE SAME DIRECTIONS AS WERE GIVEN BY TRIBUNAL IN THAT CASE AS PER PARA 13 OF TH AT TRIBUNAL ORDER REPRODUCED ITA NOS. 2881 & 2882/BANG/2017 & 229 TO 231/BANG/2018 PAGE 7 OF 7 ABOVE. WE ALSO HOLD THAT IN VIEW OF THIS DECISION, NO ADJUDICATION ON MERIT IS CALLED FOR AT THE PRESENT STAGE. 9. IN THE RESULT, ALL THE APPEALS OF ASSESSEE AND R EVENUE ARE ALLOWED FOR STATISTICAL PURPOSES. ORDER PRONOUNCED IN THE OPEN COURT ON THE DATE MENT IONED ON THE CAPTION PAGE. SD/- SD/- (N.V. VASUDEVAN) (ARUN KUMAR GARODIA) JUDICIAL MEMBER 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.