M/s. Srinagara Credit Co-operative Society Limited , Bengaluru V. Income Tax Officer, Ward-5(2)(4), Bengaluru

ITA 2603/BANG/2017

• Counselvise Citation: [2018] 122 COUNSELVISE.COM (IT) 2730 (ITAT-BANGALORE)
• Duration Of Justice: 10 month(s) 11 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 15-10-2018
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: C
• Assessment Year: 2013-2014
• Appeal Filed On: 04-12-2017
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: DR P V PRADEEP KUMAR
• Assessee Lawyers: S V RAVISHANKAR
• Keywords: Opportunity of being heard; Principle of natural justice

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL, BANGALORE BENCH C BEFORE SHRI SUNIL KUMAR YADAV, JUDICIAL MEMBER AND SHRI A.K GARODIA, ACCOUNTANT MEMBER ITA NOS.2603 & 2604/BANG/2017 (ASST. YEAR 2013-14 & 201 4-15) M/S SRINAGARA CREDIT CO-OPERATIVE SOCIETY LTD., NO.36-2/48, SAPTHASRI, 15 TH MAIN ROAD, SRI RAMANJENAYA STREET SRIRANGA, BENGALURU. . APPELLANT PAN AAAA59196A. VS. THE INCOME-TAX OFFICER, WARD-5(2)(4), BENGALURU. . RESPONDENT APPELLANT BY : SHRI S.V RAVISHANKAR, ADVOCATE RESPONDENT BY : DR. P.V PRADEEPKUMAR, ADDL. CIT DATE OF HEARING : 04-10-2018 DATE OF PRONOUNCEMENT : 15-10-2018 O R D E R PER SHRI SUNIL KUMAR YADAV, JUDICIAL MEMBER : THESE APPEALS ARE PREFERRED BY THE ASSESSEE AGAINST THE ORDER OF THE CIT(A), INTER ALIA, ON FOLLOWING GROUNDS: 1. THE ORDER OF THE LEARNED COMMISSIONER OF INCOME - TAX [APPEALS] - 5 IN SO FAR IT IS AGAINST THE APPEL LANT IS OPPOSED TO LAW, WEIGHT OF EVIDENCE, FACTS AND CIRCUMSTANCES OF THE APPELLANT'S CASE. 2. THE APPELLANT DENIES ITSELF LIABLE TO BE ASSESSE D ON TOTAL INCOME OF RS.51,64,480/- AS AGAINST THE RETUR NED ITA NO.2603 & 260 4/B/17 2 INCOME BY THE APPELLANT OF RS.NIL/- AFTER CLAIMING ELIGIBLE DEDUCTION UNDER SECTION 80 P [2] OF THE AC T, ON THE FACTS AND CIRCUMSTANCES OF THE CASE. 3. THE LEARNED COMMISSIONER OF INCOME-TAX [APPEALS] IS NOT JUSTIFIED IN LAW IN CONFIRMING THE DENIAL OF ELIGIBLE DEDUCTION MADE BY THE LEARNED ASSESSING OFFICER CLA IMED BY THE APPELLANT OF RS. 19,19,836/- UNDER THE PROVI SIONS OF SECTION 80 P [2][A][I] OF THE ACT AS INCOME FROM BUSINESS AND RS. 32,44,647/- BEING THE INTEREST REC EIVED BY THE APPELLANT FROM ITS INVESTMENT AND CLAIMED DEDUCTION UNDER THE PROVISIONS OF SECTION 80 P [2][ D] OF THE ACT ON THE FACTS AND CIRCUMSTANCES OF THE CASE. 4. THE LEARNED COMMISSIONER OF INCOME-TAX [APPEALS] FAILED TO APPRECIATE THAT THE APPELLANT IS NOT A CO - OPERATIVE BANK WITHIN THE MEANING OF PART - V OF TH E BANKING REGULATION ACT, 1949, TO WHICH THE EXPLANAT ION TO SECTION 80 P [4] OF THE ACT DRAWS REFERENCE AND CONSEQUENTLY, THE PROVISIONS OF SECTION 80 P [4] OF THE ACT ARE NOT APPLICABLE TO THE CASE OF THE APPELLANT . 5. THE LEARNED COMMISSIONER OF INCOME-TAX [APPEALS] IS NOT JUSTIFIED IN HOLDING THAT THE APPELLANT HAS VIOLATED THE BYE-LAWS AND THE KARNATAKA SOCIETIES REGISTRATI ONS ACT, 1959 WITHOUT EVEN PROPERLY VERIFYING THE FACTS OF THE APPELLANT AND ERRONEOUSLY DENIED THE ELIGIBLE CLAIM OF DEDUCTION BY THE APPELLANT UNDER SECTION 80 P [2][A ][I] OF THE ACT, ON THE FACTS AND CIRCUMSTANCES OF THE C ASE. 6. WITHOUT PREJUDICE, THOUGH NOT CONCEDING, THE LEARNED COMMISSIONER OF INCOME-TAX [APPEALS] OUGHT TO HAVE ALLOWED DEDUCTION UNDER SECTION 80 P [2] OF TH E ACT PROPORTIONATELY, IN SO FAR AS THE INCOME ATTRIBUTAB LE TO THE ACTIVITIES OF THE APPELLANT WHICH ARE NOT IN VI OLATION OF THE PROVISIONS OF SECTION 80 P [2] OF THE ACT ON THE FACTS AND CIRCUMSTANCES OF THE CASE. ITA NO.2603 & 260 4/B/17 3 7. WITHOUT PREJUDICE THE LEARNED AUTHORITIES BELOW OUGHT TO HAVE ALLOWED THE CORRESPONDING EXPENDITURE S PROPORTIONATELY ON INCOME EARNED BY THE APPELLANT F ROM INVESTMENTS WHICH WAS CLAIMED AS DEDUCTION UNDER SECTION 80 P [2][D] OF THE ACT, ON THE FACTS AND CIRCUMSTANCES OF THE CASE. 8. WITHOUT PREJUDICE THE LEARNED AUTHORITIES BELOW DID NOT GIVE THE APPELLANT A REASONABLE OPPORTUNITY OF HEARING AND PRODUCE THE DOCUMENTS IN SUPPORT OF THE CASE OF THE APPELLANT WHICH IS AGAINST THE PRINCIPL ES OF NATURAL JUSTICE AND CONSEQUENTLY THE IMPUGNED ORDER S PASSED REQUIRES TO BE CANCELLED ON THE FACTS AND CIRCUMSTANCES OF THE CASE. 9. WITHOUT PREJUDICE TO THE RIGHT TO SEEK WAIVER AS PER THE PARITY OF REASONING OF THE DECISION OF THE HON' BLE APEX COURT IN THE CASE OF KARANVIR SINGH 349 ITR 69 2, THE APPELLANT DENIES ITSELF LIABLE TO BE CHARGED TO INTEREST UNDER SECTION 234 B OF THE INCOME TAX ACT UNDER THE FACTS AND CIRCUMSTANCES OF THE CASE. FURTHER THE LE VY OF INTEREST UNDER SECTION 234 B OF THE ACT IS ALSO BAD IN LAW AS THE PERIOD, RATE, QUANTUM AND METHOD OF CALCULAT ION ADOPTED ON WHICH INTEREST IS LEVIED ARE ALL NOT DIS CERNIBLE AND ARE WRONG ON THE FACTS OF THE CASE. 10. THE APPELLANT CRAVES LEAVE TO ADD, ALTER, SUBST ITUTE AND DELETE ANY OR ALL OF THE GROUNDS OF APPEAL URGE D ABOVE. 11. FOR THE ABOVE AND OTHER GROUNDS TO BE URGED DUR ING THE HEARING OF THE APPEAL THE APPELLANT PRAYS THAT THE APPEAL BE ALLOWED IN THE INTEREST OF EQUITY AND JUS TICE. 2. DURING THE COURSE OF HEARING, THE LEARNED DR HAS INVITED OUR ATTENTION TO THE ORDER OF THE AO WITH THE SUBMISSIO N THAT AO HAS ITA NO.2603 & 260 4/B/17 4 RECORDED THAT THE ASSESSEE WAS REGISTERED UNDER THE KARNATAKA KARNATAKA SOUHARDHA SAHAKARI ACT 1977, THEREFORE, THE ASSESSEE IS NOT ENTITLED FOR ANY DEDUCTION U/S 80P OF THE ACT A S IT IS NOT A COOPERATIVE SOCIETY. WHEREAS, THE LD COUNSEL FOR T HE ASSESSEE HAS STRONGLY CONTENDED THAT IT WAS REGISTERED UNDER COO PERATIVE SOCIETY ACT AND IN SUPPORT OF ITS CONTENTION, HE PLACED REG ISTRATION CERTIFICATE AND THE COPY OF THE BYE LAWS. THE DOCUMENTS FILED BY THE ASSESEE WERE DISPUTED BY THE LD DR WITH THE SUBMISSION THAT ON THE FIRST PAGE OF BYE LAWS APPEARED AT PAGE NO.25, THERE IS REFERE NCE OF ONE REGISTRATION NO AT PAGE 6. IT IS ALSO POINTED TH AT AS TO HOW THE REGISTRATION NO. WAS MENTIONED. IT WAS ALSO CONTEN DED THAT IT IS NOT CLEAR AS TO WHETHER THE ASSESSEE GOT REGISTERED ITS ELF UNDER THE SOUHARDHA ACT ON ITS CONVERSION. THESE FACTS ARE R EQUIRED PROPER VERIFICATION. 3. THE LD DR FURTHER PLACED RELIANCE UPON THE O RDER OF THE TRIBUNAL IN THE CASE OF M/S UDAYA SOUHARDA CREDIT CO-OPERATI VE SOCIETY LIMITED VS. ITO IN ITA NO.2831/BANG/201, IN WHICH TRIBUNAL HAS RESTORED THE MATTER TO THE AO IN ORDER TO VERIFY WH ETHER ANY COOPERATIVE REGISTERED UNDER THE KARNATAKA SOUHARDH A SAHAKARI ACT 1977 IS ELIGIBLE FOR DEDUCTION U/S 80P OF THE ACT. THEREFORE, IN THE LIGHT OF THESE FACTS THIS MATTER SHOULD GO BACK TO AO FOR RE- CONSIDERATION OF THE ENTIRE ISSUE. 4. THE LD COUNSEL FOR THE ASSESSEE ON THE OTHER HAND HAS STRONGLY ITA NO.2603 & 260 4/B/17 5 CONTENDED THAT ASSESSEE IS REGISTERED AS COOPERATIV E SOCIETY UNDER THE KARNATAKA CO-OPERATIVE SOCIETY ACT. THE LD COUNSEL FOR THE ASSESSEE HOWEVER AGREED THAT LET THE MATTER BE SENT BACK TO AO FOR RE- ADJUDICATION OF THE ISSUE IN THE LIGHT OF THE JUDGM ENT OF THE APEX COURT IN THE CASE OF THE CITIZEN CO-OPERATIVE LTD. VS. ACIT, 397 ITR 1. 5. HAVING CAREFULLY EXAMINED THE ORDER OF THE AUTHORITIES BELOW AND THE DOCUMENTS FILED BEFORE US AND ALSO IN THE L IGHT OF RIVAL SUBMISSIONS, WE FIND THAT ASSESSEE HAS PLACED REGIS TRATION CERTIFICATE DATED 28/6/2000 IN ORDER TO DEMONSTRATE THAT IT WAS REGISTERED UNDER THE KARNATAKA SOUHARDHA SAHAKARI ACT 1959 ACT AS CO OPERATIVE SOCIETY BUT SIDE BY SIDE AO HAS CATEGORICALLY OBSER VED IN ITS ORDER THAT ASSESSEE HAS REGISTERED UNDER THE KARNATAKA S OUHARDHA SAHAKARI ACT 1977 AND IN THE ASST. ORDER ASSESSEE ITSELF HAS ADMITTED THAT IT IS COVERED UNDER KARNATAKA SOUHARDHA SAHAKARI ACT 1977 . THE SCOPE OF REGISTRATION UNDER THE KARNATAKA SOUHARDHA SAHAKARI ACT 1977 HAS BEEN EXAMINED BY TRIBUNAL IN THE CASE OF M/S UDAYA SOUHARDA CREDIT CO-OPERATIVE SOCIETY LIMITED (SUPRA) IN WHICH IT HAS BEEN HELD THAT A SOCIETY HAS TO BE REGISTERED UNDER THE KARNATAKA SOCIETY ACT 1977 AS COOPERATIVE SOCIETY FOR CLAIMING DEDUCTION UNDER 80P OF THE ACT. IN ANY CASE, THE MATTER WAS TO BE REFERRED TO THE AO TO EXAMINE WHETHER THE ASSESSEE WAS REGISTERED UNDER THE KARN ATAKA COOPERATIVE SOUHARDHA ACT OR KARNATAKA COOPERATIVE SOCIETY ACT TO MAKE ELIGIBLE FOR DEDUCTION UNDER SEC. 80P OF THE ACT. IN THE INSTANT CASE ITA NO.2603 & 260 4/B/17 6 UNDISPUTEDLY THERE IS A REFERENCE OF REGISTRATION N O. ON THE 1 ST PAGE OF BYE LAWS. THEREFORE IT BECOMES NECESSARY TO VERIFY THAT IN WHAT CONNECTION THE REGISTRATION NO. IS MENTIONED ON T HE FIRST PAGE OF BYE LAWS. ALL THESE ISSUES REQUIRES PROPER ADJUDICATI ON AFTER MAKING NECESSARY VERIFICATION. UNDER THESE CIRCUMSTANCE, W E ARE OF THE VIEW THAT THE MATTER SHOULD BE EXAMINED BY THE AO AFRES H IN THE LIGHT OF THE ORDER OF THE TRIBUNAL IN THE CASE OF M/S UDAYA SOUHARDA CREDIT CO-OPERATIVE SOCIETY LIMITED (SUPRA) AND THE JUDG MENT OF THE APEX COURT IN THE CASE OF CITIZEN CO-OPERATIVE LTD. VS. ACIT (SUPRA). ACCORDINGLY, ORDER OF CIT(A) IS SET ASIDE AND MATTE R IS RESTORED TO THE FILE OF THE AO FOR RE-ADJUDICATION AFTER AFFORDING OPPORTUNITY OF BEING HEARD TO THE ASSESSEE. 6. IN THE RESULT, APPEALS OF THE ASSESSEE ARE ALLOWED FOR STATISTICAL PURPOSES. ORDER PRONOUNCED IN THE OPEN COURT ON 15 TH OCT , 2018 . SD/- SD/- (A.K GARODIA) (SUNI L KUMAR YADAV) ACCOUNTANT MEMBER JUDICIAL MEM BER BANGALORE DATED : 15/10/2018 VMS COPY TO :1. THE ASSESSEE 2. THE REVENUE 3.THE CIT CONCERNED. 4.THE CIT(A) CONCERNED 5.DR 6.GF BY ORDER ASST. REGISTRAR, I TAT, BANGALORE ITA NO.2603 & 260 4/B/17 7 1. DATE OF DICTATION 2. DATE ON WHICH THE TYPED DRAFT IS PLACED BEFORE THE DICTATING MEMBER . 3. DATE ON WHICH THE APPROVED DRAFT COMES TO SR.P.S .. 4. DATE ON WHICH THE FAIR ORDER IS PLACED BEFORE THE DICTATING MEMBER .. 5. DATE ON WHICH THE FAIR ORDER COMES BACK TO THE S R. P.S. .. 6. DATE OF UPLOADING THE ORDER ON WEBSITE .. 7. IF NOT UPLOADED, FURNISH THE REASON FOR DOING SO .. 8. DATE ON WHICH THE FILE GOES TO THE BENCH CLERK .. 9. DATE ON WHICH ORDER GOES FOR XEROX & ENDORSEMENT 10. DATE ON WHICH THE FILE GOES TO THE HEAD CLERK . 11. THE DATE ON WHICH THE FILE GOES TO THE ASSISTANT RE GISTRAR FOR SIGNATURE ON THE ORDER . 12. THE DATE ON WHICH THE FILE GOES TO DISPATCH SEC TION FOR DISPATCH OF THE TRIBUNAL ORDER . 13. DATE OF DESPATCH OF ORDER. ..