M/s Sri Gangadhareshwara Souharda Pattana Sahakari Niyamitha , Gangavathi V. Income TAx officer Ward-1 , Koppal

ITA 2585/BANG/2017

• Counselvise Citation: [2018] 126 COUNSELVISE.COM (IT) 5680 (ITAT-BANGALORE)
• Duration Of Justice: 1 month(s) 18 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 19-01-2018
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: B
• Assessment Year: 2013-2014
• Appeal Filed On: 01-12-2017
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: DR G MANOJ KUMAR
• Assessee Lawyers: R E BALASUBRAMANYAM
• Keywords: Opportunity of being heard

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL SMC-B BENCH : BANGALORE BEFORE SHRI ARUN KUMAR GARODIA, ACCOUNTANT MEMBER ITA NO. 2585 / BANG/201 7 ASSESSMENT YEAR : 20 1 3 - 14 M/S. SRI GANGADHARESHWAR SOUHARDHA PATTINA SAHAKARI NIYAMITA, CBS COMPLEX, GANGAVATHI. PAN: AABAS 2552D VS. THE ITO, WARD 1, KOPPAL. APPELLANT RESPONDENT APPELLANT BY : SHRI R.E. BALASUBRAMANYAM, CA RESPONDENT BY : DR. G. MANOJKUMAR, ADDL. CIT (DR) DATE OF HEARING : 1 1 .01.2018 DATE OF PRONOUNCEMENT : 19 .0 1 .201 8 O R D E R PER SHRI A.K. GARODIA, ACCOUNTANT MEMBER THIS IS AN ASSESSEES APPEAL DIRECTED AGAINST THE O RDER OF LD. CIT(A) GULBARGA DATED 15.09.2017 FOR ASSESSMENT YEAR 2013- 14. 2. THE GROUNDS RAISED BY THE ASSESSEE ARE AS UNDER. THE APPELLANT OBJECTS TO THE ORDER OF THE LD. CIT ( A) ON THE GROUNDS: 1. THAT THE IMPUGNED ORDER IS OPPOSED TO FACTS AND LAW IN SO FAR AS IT IS PRE-JUDICIAL TO THE INTERESTS OF THE APPELLANT. 2. THAT THE LD.CIT(A) ERRED IN DENYING THE DEDUCTIO N UNDER SECTION 80P(2) OF THE INCOME TAX ACT IN RESPECT OF INTEREST INCOME RECEIVED FROM VARIOUS CO-OPERATIVE BANKS AND IN DOING SO A) THE LD. CIT(A) FAILED TO APPRECIATE THAT THE INTERE ST INCOME FROM THESE BANKS ARE ATTRIBUTABLE TO PROFITS AND GA INS OF THE BUSINESS OF EXTENDING CREDIT FACILITIES TO APPELLAN T'S MEMBERS AND AS SUCH ELIGIBLE FOR EXEMPTION UNDER VARIOUS CL AUSES OF SECTION 80P OF THE INCOME TAX ACT. B) THE LD. CIT(A) FAILED TO APPRECIATE THAT THE BUSINE SS OF THE APPELLANT CONSIST ENTIRELY OF EXTENDING CREDIT FACI LITIES TO ITS MEMBERS AND THE INTEREST INCOME FROM VARIOUS BANKS AROSE ONLY ITA NO.2585/BANG/2017 PAGE 2 OF 4 ON ACCOUNT OF KEEPING THE SURPLUS FUNDS FOR THE TIM E BEING IN ANTICIPATION OF LENDING THE SAME TO THE MEMBERS. C) THE LD CIT(A) FAILED TO CONSIDER THE DECISIONS OF T HE HONOURABLE JURISDICTIONAL HIGH COURT AND THE ITAT I N FAVOUR OF THE APPELLANT. THE APPELLANT PRAYS FOR LEAVE TO ADD, MODIFY, DELET E OR INTRODUCE ADDITIONAL GROUNDS OF APPEAL AT ANY TIME BEFORE THE APPEAL IS DISPOSED OFF. FOR THESE AND SUCH OTHER GROUNDS THAT MAY BE ADDUCE D IN TIME TO TIME, IT IS REQUESTED THAT THE HON'BLE ITAT TO CANCEL THE ADDITION MADE BY THE ASSESSING OFFICER AND ALLOW DEDUCTION UNDER SEC TION 80P(2) OF THE ACT. 3. THE LD. AR OF ASSESSEE SUBMITTED THAT THE ISSUE IN DISPUTE IN THE PRESENT CASE IS SQUARELY COVERED IN FAVOUR OF THE ASSESSEE BY TH E 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 (KARNATAKA), COPY AVAILABLE ON PAGES 51 TO 56 OF PAPER BOOK. AT THIS JUNCTURE, THE BENCH POINTED OUT THAT AS PER PARA NO. 10 OF THIS JUDGMEN T, VARIOUS FACTUAL ASPECTS HAD BEEN CONSIDERED THAT THE AMOUNT WHICH WAS INVES TED IN BANKS TO EARN INTEREST WAS NOT AN AMOUNT DUE TO ANY MEMBERS AND I T WAS NOT A LIABILITY. THIS FACT IS ALSO NOTED IN THE SAID PARA THAT THIS AMOUN T WHICH IS IN THE NATURE OF PROFITS AND GAINS WAS NOT IMMEDIATELY REQUIRED BY T HE ASSESSEE FOR LENDING MONEY TO THE MEMBERS, AS THERE WERE NO TAKERS. THE BENCH WANTED TO KNOW OF THE POSITION OF THESE FACTUAL ASPECTS IN THE PRESEN T CASE. THE LD. AR OF ASSESSEE SUBMITTED THAT ALTHOUGH ALL DOCUMENTS ARE MADE AVAILABLE BEFORE THE AO AND CIT(A), THERE IS NO FINDING OF AUTHORITIES B ELOW ON THESE ASPECTS. HE POINTED OUT THAT LD. CIT(A) HAS MERELY FOLLOWED TWO JUDGEMENTS OF HON'BLE APEX COURT RENDERED IN THE CASE OF TOTAGARS COOPERATIVE SALE SOCIETY LTD. VS. ITO AS REPORTED IN 322 ITR 283 AND IN THE CASE OF CITIZ EN CO-OPERATIVE SOCIETY AS REPORTED IN TS-326-SC-2017 DATED 16.08.2017 WITHOUT GIVING ANY FINDING ON FACTUAL ASPECTS AND HENCE, THE MATTER MAY BE RESTOR ED BACK TO THE FILE OF CIT(A) FOR FRESH DECISION BY WAY OF A SPEAKING AND REASONE D ORDER. THE LD. DR OF REVENUE SUPPORTED THE ORDER OF CIT(A). 4. I HAVE CONSIDERED THE RIVAL SUBMISSIONS. I FIND THAT THE CIT(A) HAS FOLLOWED THESE TWO JUDGEMENTS OF HON'BLE APEX COURT RENDERED IN THE CASE OF TOTAGARS ITA NO.2585/BANG/2017 PAGE 3 OF 4 COOPERATIVE SALE SOCIETY LTD. VS. ITO (SUPRA) AND C ITIZEN CO-OPERATIVE SOCIETY (SUPRA). IN THE JUDGEMENT OF HON'BLE KARNATAKA HIG H COURT RENDERED IN THE CASE OF TUMKUR MERCHANTS SOUHARDA CREDIT COOPERATIV E LTD. VS. ITO(SUPRA), THE JUDGMENT OF HON'BLE APEX COURT IN THE CASE OF T OTAGARS COOPERATIVE SALE SOCIETY LTD. VS. ITO(SUPRA) WAS DULY CONSIDERED AND IN VIEW OF THE FACTS OF THAT CASE, RELIEF WAS ALLOWED TO ASSESSEE. BUT FOR ALLO WING SUCH RELIEF, THE FACTS ON VARIOUS ASPECTS HAS TO BE CONSIDERED AS TO WHETHER THE AMOUNT WHICH IS DEPOSITED IN BANK IS LIABILITY OF THE ASSESSEE OR I T IS OWN FUND AND WHETHER THE FUNDS WAS IMMEDIATELY REQUIRED BY THE ASSESSEE FOR LENDING MONEY TO THE MEMBERS OF THE ASSESSEE SOCIETY OR NOT BECAUSE OF T HIS REASON THAT THERE IS NO TAKER AS IN THAT CASE. THE APPLICABILITY OF THE JU DGMENT OF HON'BLE APEX COURT RENDERED IN THE CASE OF CITIZEN CO-OPERATIVE SOCIET Y (SUPRA) IS ALSO TO BE EXAMINED IN THE LIGHT OF THE FACTS OF THAT CASE AND THE PRESENT CASE. HENCE I SET ASIDE THE ORDER OF CIT(A) AND RESTORE THE MATTE R BACK TO HIS FILE FOR FRESH DECISION BY WAY OF A SPEAKING AND REASONED ORDER IN THE LIGHT OF THIS JUDGEMENT OF HON'BLE KARNATAKA HIGH COURT RENDERED IN THE CAS E OF TUMKUR MERCHANTS SOUHARDA CREDIT COOPERATIVE LTD. VS. ITO(SUPRA) AND OF HON'BLE APEX COURT RENDERED IN THE CASE OF CITIZEN CO-OPERATIVE SOCIET Y (SUPRA) IN THE LIGHTS OF THE FACTS OF THE PRESENT CASE AND IN THESE CASES ON VAR IOUS ASPECTS AS DISCUSSED ABOVE. NEEDLESS TO SAY THAT THE CIT(A) SHOULD PASS NECESSARY ORDER AS PER LAW IN THE LIGHT OF ABOVE DISCUSSION AFTER PROVIDIN G ADEQUATE OPPORTUNITY OF BEING HEARD TO BOTH SIDES. 5. IN THE RESULT, THE APPEAL FILED BY THE ASSESSEE STANDS ALLOWED FOR STATISTICAL PURPOSES. ORDER PRONOUNCED IN THE OPEN COURT ON THE DATE MENT IONED ON THE CAPTION PAGE. SD/- (ARUN KUMAR GARODIA) ACCOUNTANT MEMBER BANGALORE, DATED, THE 19 TH JANUARY, 2018. /MS/ ITA NO.2585/BANG/2017 PAGE 4 OF 4 COPY TO: 1. APP ELLANT 2. RESPONDENT 3. CIT 4. CIT(A) 5. DR, ITAT, BANGALORE. 6. GUARD FILE BY ORDER SENIOR PRIVATE SECRETARY, INCOME TAX APPELLATE TRIBUNAL, BANGALORE.