Sub-Ordinate Courts Employees Credit Co-operative Society ltd, Bengaluru V. Income Tax Officer, Ward-5(2)(3), Bengaluru

ITA 2681/BANG/2017

• Counselvise Citation: [2018] 119 COUNSELVISE.COM (IT) 2268 (ITAT-BANGALORE)
• Duration Of Justice: 11 month(s) 6 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 14-11-2018
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: A
• Assessment Year: 2013-2014
• Appeal Filed On: 08-12-2017
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: SI DDAPPAJI B N
• Assessee Lawyers: S V RAVISHANKAR
• Keywords: Opportunity of being heard
• Section: 143(3); 6; 2

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL BANGALORE BENCH A BEFORE S HRI JASON P BOAZ , ACCOUNTANT MEMBER AND SHRI LALIET KUMAR, JUDICIAL MEMBER I.T . A. NO S . 2681 & 2682 /BANG/20 17 (ASSESSMENT YEAR S : 20 13 - 14 & 2014 - 15 ) THE SUB - ORDINATE COURT EMPLOYEES C REDIT CO - OPERATIVE SOCIETY LTD., 1 ST FLOOR, CITY CIVIL COURT COMPLEX, K.G. ROAD, BANGALORE. . APPELLANT. PAN AAATT 0926E VS. INCOME TAX OFFICER, WA RD 5(2)(3), BANGALORE. .. RESPONDENT. APPELLANT BY : SHRI S.V. RAVISHANKAR, ADVOCATE. R E SPONDENT BY : SHRI SI DDAPPAJI B.N., JCIT (D.R) DATE OF H EARING : 03.10.2018. DATE OF P RONOUNCEMENT : 14 .11 .201 8 . O R D E R PER SHRI JASON P BOAZ , A .M . : TH E S E APPEAL S BY THE ASSESSEE ARE DIRECTED AGAINST THE ORDER S OF COMMISSIONER OF INCOME TAX (APPEALS) - 5 , BANGALORE DT.1/8/2017 FOR THE ASSESSMENT YEAR S 20 13 - 14 AND 2.8.2017 FOR ASSESSMENT YEAR 2014 - 15. SINCE COMMON ISSUES ARE INVOLVED, THESE APPEALS WERE HEARD TOGETHER 2 IT A NO S . 2681 & 2682 /BANG/20 17 AND WE DEEM IT APPROPRIATE TO DISPOSE OFF THE SAME BY WAY O THI S COMMON ORDER. 2. BRIEFLY STATED, THE FACTS OF THE CASE ARE AS UNDER : - 2.1 FOR ASSESSMENT YEAR 2013 - 14 , THE ASSESSEE FILED ITS RETURN OF INCOME ON 25.9.2013, DECLARING NIL INCOME AFTER CLAIMING DEDUCTION UNDER SECTION 80P(2)(A) AND 80P(2)(D) OF THE INCOME TAX ACT, 1961 (IN SHORT 'THE ACT') TO THE EXTENT OF RS.75,09,226. THE CASE WAS TAKEN UP FOR SCRUTINY FOR THIS ASSESSMENT YEAR. THE ASSESSING OFFICER REJECTED THE CLAIMS AND SUBMISSIONS OF THE ASSESSEE THAT IT WAS A CO - OPERATIVE SOCIETY AND THEREFORE ELIGIBLE TO CLAIM DEDUCTION UNDER SECTION 80P(2)(A) AND 80P(2)(D) OF THE ACT IN RESPECT OF INTEREST EARNED ON CREDIT FACILITIES AFFORDED TO MEMBERS AND ON INTEREST ON DEPOSITS FROM OTHER CO - OPERATIVE INSTITUTIONS, ETC. THE ASSESSING OFFICE R HELD THE ASSESSEE TO BE A CO - OPERATIVE BANK AND THEREFORE BY VIRTUE OF THE INSERTION OF SEC. 80P(4) OF THE ACT, WAS NOT ELIGIBLE TO CLAIM DEDUCTION UNDER SECTION 80P OF THE ACT. THE ASSESSMENT WAS ACCORDINGLY COMPLETED UNDER SECTION 143(3) OF THE A CT VIDE ORDER DT.28.3.2016, WHEREIN THE ASSESSEE'S INCOME WAS DETERMINED AT RS.75,09,230 IN VIEW OF THE ASSESSING OFFICER REJECTING THE ASSESSEE'S CLAIM FOR DEDUCTION UNDER SECTION 80P OF THE ACT. ON APPEAL, THE CIT (APPEALS) - 5, BANGALORE DISMISSED THE AS SESSEE'S APPEAL VIDE THE IMPUGNED ORDER DT.1.8.2017. 2.2 FOR ASSESSMENT YEAR 2014 - 15 , THE ASSESSEE FILED ITS RETURN OF INCOME ON 11.10.2014 DECLARING NIL INCOME AFTER CLAIMING DEDUCTION UNDER SECTION 80P(2)(A) AND 80P(2)(D) OF THE ACT TO THE EXTENT OF 3 IT A NO S . 2681 & 2682 /BANG/20 17 RS.1,03,30,715. THE CASE WAS TAKEN UP FOR SCRUTINY FOR THIS ASSESSMENT YEAR ALSO. THE ASSESSING OFFICER REJECTED THE CLAIM AND SUBMISSIONS PUT FORTH BY THE ASSESSEE THAT IT WAS A CO - OPERATIVE SOCIETY AND THEREFORE ELIGIBLE TO CLAIM DEDUCTION UNDER SECTION 80P(2)(A) AND 80P(2)(D) OF THE ACT IN RESPECT OF INTEREST EARNED ON CREDIT FACILITIES AFFORDED TO ITS MEMBERS AND FROM INTEREST EARNED ON DEPOSITS WITH OTHER CO - OPERATIVE INSTITUTIONS, ETC. AS IN THE EARLIER ASSESSMENT YEAR 2013 - 14, IN THIS ASSES SMENT YEAR ALSO THE ASSESSING OFFICER HELD THAT THE ASSESSEE IS A CO - OPERATIVE BANK AND THEREFORE BY VIRTUE OF THE PROVISIONS OF SECTION 80P(4) OF THE ACT WAS NOT ELIGIBLE TO CLAIM DEDUCTION UNDER SECTION 80P OF THE ACT. THE ASSESSMENT WAS COMPLETED UN DER SECTION 143(3) OF THE ACT VIDE ORDER DT.23.12.2016; WHEREIN THE ASSESSEE'S INCOME WAS DETERMINED AT RS.1,03,30,715 IN VIEW OF THE ASSESSING OFFICER REJECTING THE ASSESSEE'S CLAIM FOR DEDUCTION UNDER SECTION 80P OF THE ACT. ON APPEAL, THE CIT (APPEALS) 5, BANGALORE DISMISSED THE ASSESSEE'S APPEAL VIDE THE IMPUGNED ORDER DT.2.8.2017. 3.1 AGGRIEVED BY THE AFORESAID ORDER SOFTWARE CIT (APPEALS) - 5, BANGALORE DT.1.8.2017 FOR ASSESSMENT YEAR 2013 - 14 AND DT.2.8.2017 FOR ASSESSMENT YEAR 2014 - 15, THE ASSE SSEE HAS PREFERRED THESE APPEALS BEFORE THIS TRIBUNAL. ON A PERUSAL OF THE GROUNDS RAISED IN THE APPEALS FOR BOTH ASSESSMENT YEARS, WE FIND THAT THE GROUNDS ARE IDENTICAL IN NUMBER AND CONTENT; EXCEPT FOR THE FIGURE OF DEDUCTIONS CLAIMED UNDER SECTION 80P OF THE ACT WHICH WAS REJECTED IN BOTH ASSESSMENT YEARS. WE, 4 IT A NO S . 2681 & 2682 /BANG/20 17 THEREFORE, EXTRACT HEREUNDER ONLY THE GROUNDS OF APPEAL RAISED IN ASSESSMENT YEAR 2013 - 14 : - 5 IT A NO S . 2681 & 2682 /BANG/20 17 3.2 SINCE IDENTICAL ISSUES HAVE BEEN RAISED BY THE ASSESSEE IN APPEALS FOR BOTH ASSESSM ENT YEARS 2013 - 14 AND 2014 - 15, WE PROCEED TO CONSIDER AND DECIDE THE ISSUE S FOR BOTH YEARS TOGETHER HEREUNDER. 3.3 THE LEARNED AR FOR THE ASSESSEE WAS HEARD IN SUPPORT OF THE GROUNDS RAISED. THE LEARNED AR SUBMITTED THAT THE PRIMARY ISSUE RAISED IN TH ESE APPEALS WAS IN RESPECT OF THE FINDING OF THE AO, AND UPHELD BY THE CIT(A) THAT THE ASSESSEE IS A CO - OPERATIVE BANK AND NOT A CO - OPERATIVE SOCIETY , WHICH IT IS CONTENDED IS FACTUALLY ERRONEOUS SINCE THE ASSESSEE DID NOT POSSESS A BANKING LICENSE ISS UED BY THE R.B.I., THE REGULATOR OF BANKING IN INDIA. IN THESE CIRCUMSTANCES, THE LEARNED AR SUBMITS THAT IT IS EVIDENT THAT THE ASSESSEE IS NOT A CO - OPERATIVE BANK AND THEREFORE THE ASSESSEE BEING A CO - OPERATIVE SOCIETY AS CLAIMED, WOULD NOTBE HIT BY THE MISCHIEF OF THE PROVISIONS OF SECTION 80P(4) OF THE 6 IT A NO S . 2681 & 2682 /BANG/20 17 ACT AND HENCE AS SUCH, WOULD BE ENTITLED TO BE ALLOWED ITS CLAIM FOR DEDUCTION U/S 80P(2) OF THE ACT. THE AR CONTENDED THAT THE AUTHORITIES BELOW HAVE FAILED TO RENDER ANY FINDING AS TO WHETHER THE ASSE SSEE HELD A LICENCE FROM RBI TO CONDUCT THE BUSINESS OF BANKING/MONEY LENDING AND HENCE THIS MATTER REQUIRES TO BE REMANDED TO FILE OF THE AO FOR ASCERTAINING WHETHER THE ASSESSEE DID POSSESS A BANKING LICENCE FROM RBI, AS HELD BY THE HON BLE KARNATAKA HIG H COURT IN THE CASE OF CIT VS. SRI BILURU GURUBASAVA PATTINA SAHAKARI SANGHA NIYAMITHA, BENGALURU (2014) 369 ITR 86 (KARNATAKA). 3.4 THE LEARNED DR FOR REVENUE CONTENDED THAT REVENUE HAS NOT ACCEPTED THE DECISION OF THE HON BLE KARNATAKA HIGH COURT IN THE CASE OF CIT VS. SRI BILURU GURUBASAVA PATTINA SAHAKARI SANGHA NIYAMITHA, BANGALORE (SUPRA) AND THAT THE SLP PREFERRED BY REVENUE HAS BEEN ADMITTED BY THE HON BLE APEX COURT, ON THE VERY SAME ISSUE. 3.5 IN REJOINDER, THE LEARNED AR SUBMITTED THAT THE ABOVE ISSUE; IN SO FAR AS TO WHETHER A CO - OPERATIVE SOCIETY WAS A CO - OPERATIVE BANK HAS ALREADY BEEN SETTLED BY THE HON BLE APEX COURT IN THE CASE OF M/S. CITIZENS CO - OPERATIVE SOCIETY LTD., VS. ACIT, REPORTED IN (2017) 397 ITR 1 (SC). 3.6.1 WE HAVE HEARD TH E RIVAL CONTENTIONS, PERUSED AND CAREFULLY CONSIDERED THE MATERIAL ON RECORD; INCLUDING THE JUDICIAL DECISIONS CITED. 7 IT A NO S . 2681 & 2682 /BANG/20 17 THE PRIMARY ISSUES FOR CONSIDERATION IS WHETHER THE ASSESSEE IS A CO - OPERATIVE SOCIETY, ELIGIBLE FOR THE CLAIM OF DEDUCTION UNDER SECTION 80P(2) OF THE ACT AS CLAIMED BY ASSESSEE, OR WHETHER THE ASSESSEE IS A CO - OPERATIVE BANK AS CONTENDED BY THE AUTHORITIES BELOW AND THUS NOT ELIGIBLE FOR DEDUCTION UNDER SECTION 80P OF THE ACT. 3.6.2 THE CRUCIAL FINDING OF FACT AS TO WHETHER THE ASSE SSEE WAS A CO - OPERATIVE BANK AND HELD A BANKING LICENCE ISSUED BY RBI, AS LAID DOWN BY THE HON BLE APEX COURT IN THE CASE OF M/S. CITIZENS CO - OPERATIVE SOCIETY LTD., (SUPRA) HAS NOT BEEN EXAMINED AND RENDERED BY THE AUTHORITIES BELOW. IN THIS REGARD, THE HON BLE APEX COURT AT PARA 24 OF ITS ORDER (SUPRA) HAS HELD AS UNDER: 24) UNDOUBTEDLY, IF ONE HAS TO GO BY THE AFORESAID DEFINITION OF CO - OPERATIVE BANK , THE APPELLANT DOES NOT GET COVERED THEREBY. IT IS ALSO A MATTER OF COMMON KNOWLEDGE THAT IN ORDER T O DO THE BUSINESS OF A CO - OPERATIVE BANK, IT IS IMPERATIVE TO HAVE A LICENCE FROM THE RESERVE BANK OF INDIA, WHICH THE APPELLANT DOES NOT POSSESS. NOT ONLY THIS, AS NOTICED ABOVE, THE RESERVE BANK OF INDIA HAS ITSELF CLARIFIED THAT THE BUSINESS OF THE APPE LLANT DOES NOT AMOUNT TO THAT OF A CO - OPERATIVE BANK. THE APPELLANT, THEREFORE, WOULD NOT COME WITHIN THE MISCHIEF OF SUB - SECTION (4) OF SECTION 80P. 3.6.3 IN THE LIGHT OF THE FACTS AND CIRCUMSTANCES OF THE CASE AND JUDICIAL PRONOUNCEMENT OF HON BLE AP EX COURT (SUPRA) AS DISCUSSED ABOVE,THE IMPUGNED ORDERS OF BOTH THE AUTHORITIES BELOW FOR BOTH ASSESSMENT YEARS 2013 - 14 AND 2014 - 15 ARE SET ASIDE AND THE MATTER REMANDED TO THE FILE OF THE AO FOR EXAMINING/ASCERTAINING AS TO WHETHER THE ASSESSEE 8 IT A NO S . 2681 & 2682 /BANG/20 17 IN THE CAS E ON HAND HAS OBTAINED A LICENCE FROM THE RBI TO CONDUCT BANKING BUSINESS. IF THE ASSESSEE IS FOUND TO BE POSSESSING A LICENCE FROM THE RBI TO CONDUCT BANKING BUSINESS, IT WILL BE HIT BY THE MISCHIEF OF SUB - SECTION (4) OF SECTION 80P OF THE ACT AND THUS W OULD NOT BE ELIGIBLE TO DEDUCTION UNDER SECTION 80P(2) OF THE ACT AS CLAIMED. NEEDLESS TO ADD THE AO SHALL AFFORD THE ASSESSEE ADEQUATE OPPORTUNITY OF BEING HEARD AND TO FILE DETAILS/SUBMISSIONS REQUIRED WHICH SHALL BE DULY CONSIDERED BEFORE DECIDING THE ISSUE IN THE LIGHT OF THE OBSERVATIONS ABOVE AND THE AFORESAID DECISION OF THE HON BLE APEX COURT (SUPRA). 4. IN VIEW OF THE ABOVE, THE GROUNDS RAISED ON MERITS, BECOME ACADEMIC AND ARE NOT ADJUDICATED. 5. IN THE RESULT, THE ASSESSEE S APPEALS FOR ASSESS MENT YEARS FOR BOTH ASSESSMENT YEARS 2013 - 14 AND 2015 - 16 ARE ALLOWED FOR STATISTICAL PURPOSES. ORDER PRONOUNCED IN THE OPEN COURT ON THE 14TH DAY OF NOV.,2 01 8 . SD/ - ( LALIET KUMAR ) JUDICIAL MEMBER SD/ - ( JASON P BOAZ ) ACCOUNTANT MEMBER BANGALO RE, DT. 14 .11.2018. *REDDY GP