Income Tax Officer Ward-6(2)(4), Bangalore V. M/s BEL Employees Co-operative House Building Society Limited , Bangalore

ITA 2651/BANG/2018

• Counselvise Citation: [2018] 118 COUNSELVISE.COM (IT) 8929 (ITAT-BANGALORE)
• Duration Of Justice: 2 month(s) 27 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 21-12-2018
• Appeal Filed By: Department
• Order Result: Allowed
• Bench Allotted: C
• Next Hearing Date: 10-12-2018
• Assessment Year: 2011-2012
• Appeal Filed On: 24-09-2018
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Department Lawyers: DR P V PRADEEP KUMAR
• Assessee Lawyers: CHYTHANYA V MUDRABETTU
• Keywords: Opportunity of being heard; Source of fund

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL, BANGALORE BENCH C BEFORE SHRI N.V VASUDEVAN, VICE PRE SIDENT AND SHRI JASON P BOAZ, ACCOUNTANT MEMBER ITA NOS.2651, 2654 & 2655/BANG/2018 ASSESSMENT YEARS : 2011-12, 2012-13 & 2014-15 THE INCOME-TAX OFFICER, WARD 6(2)(4), BENGALURU. VS. M/S BEL EMPLOYEES CO- OPERATIVE HOUSE BUILDING SOCIETY LTD., C-92, BEL COLONY, JALAHALLI POST, BENGALURU. PAN AAAAH 8615 H . APPLICANT RESPONDENT APPELLANT BY : DR. P.V PRADEEP KUMAR, ADDL. CIT RESPONDENT BY : SHRI CHYTHANYA V MUDRABETTU, ADVOCATE DATE OF HEARING : 10.12.2018 DATE OF PRONOUNCEMENT : .12.2018 O R D E R PER SHRI N.V VASUDEVAN, VICE PRESIDENT : THESE ARE APPEALS BY THE REVENUE AGAINST COMMON OR DER DATED 20/6/2018 OF CIT(A), BANGALORE-6 RELATING TO ASST. YEAR 2011-2, 2012-13 AND 2014-15. 2. THE GROUNDS OF APPEAL RAISED BY THE REVENUE FOR ALL THESE APPEALS ARE IDENTICAL EXCEPT FOR THE CHANGE IN THE QUANTUM ON DEDUCTION THAT WAS ALLOWED BY THE CIT(A) U/S 80P(2)(D) OF THE INCOME-T AX ACT 1961 (THE ACT). ITA NOS.2651, 2654 & 2655/B/18 2 3. FOR THE SAKE OF READY REFERENCE GROUNDS OF APPEA L IN ASST. YEAR 2011-12 IS REPRODUCED HERE UNDER:- 1. THE ORDER OF THE CIT (APPEALS) IS OPPOSED TO LA W AND THE FACTS AND CIRCUMSTANCES OF THE CASE. 2. ON THE FACTS AND CIRCUMSTANCES OF THE CASE, WHET HER THE LD CIT(A) IS JUSTIFIED IN ALLOWING DEDUCTION OF RS. 20 ,01,469/- U/S 80P(2)(D) IN RESPECT OF THE INTEREST EARNED BY THE ASSESSEE ON DEPOSITS KEPT WITH CO-OPERATIVE BANKS? 3. ON THE FACTS AND CIRCUMSTANCES OF THE CASE, WHET HER THE LD CIT(A) IS JUSTIFIED IN NOT FOLLOWING THE JUDICIAL P RECEDENT LAID DOWN BY THE JURISDICTIONAL HON'BLE HIGH COURT IN IT S JUDGEMENT DATED 16TH JUNE 2017 IN ITA NOS. 100066 & OTHERS OF 2016 IN THE CASE OF PR. CIT VS THE TOTGARS CO-OPERATIVE SAL E SOCIETY WHEREIN, PARTICULARLY IN PARAS 14 TO 16, THE HON'BL E HIGH COURT HAS HELD THAT INTEREST EARNED BY A CO-OPERATIVE SOC IETY FROM A CO-OPERATIVE BANK IS NOT DEDUCTIBLE U/S 80P(2)(D) O F THE IT ACT? 4. ON THE FACTS AND CIRCUMSTANCES OF THE CASE, WHET HER THE LD CIT(A) IS JUSTIFIED IN RELYING UPON THE DECISION OF THE JURISDICTIONAL HON'BLE HIGH COURT IN THE CASE OF CI T VS SRI BILURU GURUBASAVA PATTINA SAHAKARI SANGHA NIYAMITHA BAGALK OT WHICH DEALS WITH DEDUCTION U/S 801D(2)(A)(I) AND NO T SECTION 80P(2)(D)? 5. FOR THESE AND SUCH OTHER GROUNDS THAT MAY BE URG ED AT THE TIME OF HEARING, IT IS HUMBLY PRAYED THAT THE ORDER OF THE CIT(A), IN SO FAR AS IT RELATES TO THE ABOVE GROUNDS MAY BE REVERSED AND THAT OF THE ASSESSING OFFICER BE RESTORED. 6. THE APPELLANT CRAVES LEAVE TO ADD, TO ALTER, TO AMEND OR DELETE ANY OF THE GROUNDS THAT MAY BE URGED AT THE TIME OF HEARING OF THE APPEAL. 4. AS CAN BE SEEN FROM THE GROUNDS OF APPEAL, THE A SSESSEE HAD CLAIMED DEDUCTION ON INTEREST RECEIVED ON FIXED DEP OSITS WITH CO-OPERATIVE BANKS. THE AO TOOK THE VIEW THAT U/S 80P(2)(D) OF THE ACT INTEREST DERIVED BY THE COOPERATIVE SOCIETY FROM ITS INVESTMENTS WIT H ANY OTHER CO- OPERATIVE SOCIETY WOULD ONLY BE ALLOWABLE AS A DEDU CTION SUBJECT TO THE ITA NOS.2651, 2654 & 2655/B/18 3 CONDITION THAT SUCH INTEREST INCOME SHOULD BE ATTRI BUTABLE TO THE BUSINESS OF THE SOCIETY. THE AO WAS OF THE VIEW THAT THE DE POSITS WERE MADE BY THE ASSESSEE WITH COOPERATIVE SOCIETIES WHICH WERE ENGAGED IN BANKING BUSINESS AND, THEREFORE, WERE TO BE REGARDED AS COO PERATIVE BANKS AND, THEREFORE, DEDUCTION U/S 80P(2)(D) SHOULD NOT BE AL LOWED AS LAID DOWN BY THE PROVISION OF SEC. 80P(4) OF THE ACT. 5. ON APPEAL BY THE ASSESSEE, THE CIT(A) FOLLOWING THE DECISION OF HONBLE KARNATAKA HIGH COURT IN THE OF CIT VS. BILU RU GURUBASAVA PATTINA SAHAKARI SANGH NIYAMIT (ITA NO.5006/2013) HELD THAT THE COOPERATIVE SOCIETY CARRYING ON BANKING BUSINESS CANNOT BE REGA RDED AS COOPERATIVE BANK AND, THEREFORE, PROVISION OF SEC. 80P(4) OF TH E ACT ARE NOT APPLICABLE IN THAT VIEW OF THE MATTER, THE CIT(A) FOLLOWING TH E DECISION OF KARNATAKA HIGH COURT ALLOWED THE CLAIM OF THE ASSESSEE. 6. AGGRIEVED BY THE ORDER OF THE CIT(A) REVENUE HA S PREFERRED PRESENT APPEAL BEFORE THE TRIBUNAL. 7. THE LEARNED AR RELIED ON THE DECISION OF THE HON BLE KARNATAKA HIGH COURT IN THE CASE OF TUMKUR MERCHANTS SOUHARD A CRED CO-OPERATIVE SOCIETY LTD. VS. ITO 230 TAXMAN 309 (KARN) WHEREIN THE HONBLE KARNATAKA HIGH COURT CONSIDERED THE DECISION OF THE HONBLE APEX COURT IN THE CASE OF THE TOTGARS CO-OPERATIVE SALES SOCI ETY (SUPRA) AND HELD THAT INTEREST INCOME IN RESPECT OF TEMPORARY PARKIN G OF OWN SURPLUS FUNDS NOT IMMEDIATELY REQUIRED IS ELIGIBLE FOR DEDUCTION U/S.80P(2)(A)(I) OF THE ACT. THE LEARNED DR RELIED ON A SUBSEQUENT DECISION OF THE HONBLE KARNATAKA HIGH COURT IN THE CASE OF PCIT VS. TOTGAR S CO-OPERATIVE SALE SOCIETY LTD. 395 ITR 611 (KARN.). 8. WE HAVE CAREFULLY GONE THROUGH THE JUDGMENT RELI ED BY THE LEARNED DR. THE FACTS OF THE CASE BEFORE THE HONBLE KARNA TAKA HIGH COURT IN THE ITA NOS.2651, 2654 & 2655/B/18 4 DECISION CITED BY THE LEARNED DR WAS THAT THE HONB LE COURT WAS CONSIDERING A CASE RELATING TO ASSESSMENT YEARS 200 7-2008 TO 2011- 2012. IN CASE DECIDED BY THE HONBLE SUPREME COURT IN THE CASE OF THE VERY SAME ASSESSEE, THE ASSESSMENT YEARS INVOLVED W AS AY 1991-92 TO 1999-2000. THE NATURE OF INTEREST INCOME FOR ALL T HE AYS WAS IDENTICAL. THE BONE OF CONTENTION OF THE ASSESSEE IN AY 2007-0 8 TO 2011-12 WAS THAT THE DEDUCTION UNDER SECTION 80P(2) OF THE ACT IS CLAIMED BY THE RESPONDENT ASSESSEE UNDER SECTION 80P(2)(D) OF THE ACT AND NOT UNDER SECTION 80P(2)(A) OF THE ACT WHICH WAS THE CLAIM IN AY 1991-92 TO 1999- 2000. THE REASON GIVEN BY THE ASSESSEE WAS THAT IN AY 2007-08 TO 2011- 12 INVESTMENTS AND DEPOSITS AFTER THE SUPREME COURT 'S DECISION AGAINST THE ASSESSEE TOTGAR'S CO-OPERATIVE SALE SOCIETY LTD . (SUPRA), WERE SHIFTED FROM SCHEDULE BANKS TO CO-OPERATIVE BANK. U/S.80P( 2)(D) OF THE ACT, INCOME BY WAY OF INTEREST OR DIVIDENDS DERIVED BY A CO-OPERATIVE SOCIETY FROM ITS INVESTMENTS WITH ANY OTHER CO-OPERATIVE SO CIETY IS ENTITLED TO DEDUCTION OF THE WHOLE OF SUCH INTEREST OR DIVIDEND INCOME. THE CLAIM OF THE ASSESSEE WAS THAT CO-OPERATIVE BANK IS ESSENTIA LLY A CO-OPERATIVE SOCIETY AND THEREFORE DEDUCTION HAS TO BE ALLOWED U NDER CLAUSE (D) OF SEC.80P(2) OF THE ACT. THE HONBLE KARNATAKA HIGH C OURT FOLLOWED THE DECISION OF THE SUPREME COURT IN THE TOTGARS CO-OPE RATIVE SALES SOCIETY LTD. (SUPRA) AND HELD THAT INTEREST EARNED FROM SCH EDULE BANK OR CO- OPERATIVE BANK IS ASSESSABLE UNDER THE HEAD INCOME FROM OTHER SOURCES AND THEREFORE THE PROVISIONS OF SEC.80P(2)(D)OF THE ACT WAS NOT APPLICABLE TO SUCH INTEREST INCOME. IT IS THUS CLEAR THAT THE SOURCE OF FUNDS OUT OF WHICH INVESTMENTS WERE MADE REMAINED THE SAME IN AY 2007-08 TO 2011- 12 AND IN AY 1991-92 TO 1999-2000 DECIDED BY THE HO NBLE SUPREME COURT. THEREFORE WHETHER THE SOURCE OF FUNDS WERE A SSESSEES OWN FUNDS OR OUT OF LIABILITY WAS NOT SUBJECT MATTER OF THE D ECISION OF THE HONBLE KARNATAKA HIGH COURT IN THE DECISION CITED BY THE L EARNED DR. TO THIS ITA NOS.2651, 2654 & 2655/B/18 5 EXTENT THE DECISION OF THE HONBLE KARNATAKA HIGH C OURT IN THE CASE OF TUMUKUR MERCHANTS SOUHARDA CO-OPERATIVE LTD. (SUPRA ) STILL HOLDS GOOD. HENCE, ON THIS ASPECT, THE ISSUE SHOULD BE RESTORED BACK TO THE AO FOR A FRESH DECISION AFTER EXAMINING THE FACTS IN THE LIG HT OF THESE JUDGMENT OF THE HONBLE APEX COURT RENDERED IN THE CASE OF THE TOTGARS CO-OPERATIVE SALE SOCIETY LTD. (SUPRA) AND OF HONBLE KARNATAKA HIGH COURT RENDERED IN THE CASE OF TUMUKUR MERCHANTS SOUHARDA CO-OPERATIVE LTD. (SUPRA). 9. THE AO WILL AFFORD OPPORTUNITY OF BEING HEARD TO THE ASSESSEE AND FILING APPROPRIATE EVIDENCE, IF DESIRED, BY THE ASS ESSEE TO SUBSTANTIATE ITS CASE, BEFORE DECIDING THE ISSUE. 10. IN THE RESULT, APPEAL BY THE REVENUE ARE TREATE D AS ALLOWED FOR STATISTICAL PURPOSE. ORDER PRONOUNCED IN THE OPEN COURT ON DECEMBER, 2018 . SD/- SD/- (JASON P BOAZ) (N.V VASUDEVAN) ACCOUNTANT MEMBER VICE PRESIDENT BANGALORE DATED : /12/2018 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. REGI STRAR, ITAT, BANGALORE ITA NOS.2651, 2654 & 2655/B/18 6 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 REGISTRAR 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. ..