Income Tax Officer, Ward-1 & TPS, Bengaluru V. M/s Merchants Credit Co-operative Society Ltd, Bengaluru

ITA 2770/BANG/2017

• Counselvise Citation: [2018] 121 COUNSELVISE.COM (IT) 4851 (ITAT-BANGALORE)
• Duration Of Justice: 3 month(s) 29 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 18-04-2018
• Appeal Filed By: Department
• Order Result: Allowed
• Bench Allotted: A
• Assessment Year: 2013-2014
• Appeal Filed On: 20-12-2017
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Department Lawyers: B R RAMESH
• Keywords: Opportunity of being heard
• Section: 143(3); 56

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL BANGALORE BENCH A BEFORE S HRI N.V. VASUDEVAN , JUDICIAL MEMBER AND SHRI JASON P BOAZ , ACCOUNTANT MEMBER I.T . A. NO. 2770 /BANG/20 17 (ASSESSMENT YEAR : 20 13 - 14 ) INCOME TAX OFFICER, WARD 1 & TPS, BAGALKOT. . APPELLANT. VS. M/S. MERCHANTS CREDIT CO - OPERATIVE SOCIETY LTD., KERUR, TALUK BADAMI, DIST. BAGALKOT. .. RESPONDENT. APPELLANT BY : SHRI B. R. RAMESH, JCIT (D.R) R E SPONDENT BY : NONE. DATE OF H EARING : 10.04.2018. DATE OF P RONOUNCEMENT : 18.04 .201 8 . O R D E R PER SHRI JASON P BOAZ, A. J .M . : THIS APPEAL BY REVENUE IS DIRECTED AGAINST THE ORDER OF THE COMMISSIONER OF INCOME TAX (APPEALS), HUBLI DT.18.9.2017 FOR THE ASSESSMENT YEAR 20 13 - 14. NOTICE FOR THE HEARING FIXED ON 10.4.2018 WAS DULY SERVED ON THE ASSESSEE, BUT NONE WAS PRESENT FOR THE ASSESSEE WHEN THE CASE WAS CALLED FOR HEARING. WE, THEREFORE, PROCEED TO DISPOSE OFF 2 IT A NO. 2770 /BANG/201 7 THIS APPEAL WITH THE ASSISTANCE OF THE LEARNED DEPARTMENTAL REPRESENTATIVE FOR REVENUE AND ON THE BASIS OF MATERIAL ON RECORD. 2. BRIEFLY ST ATED, THE FACTS OF THE CASE ARE AS UNDER : - 2.1 THE ASSESSEE FILED ITS RETURN OF INCOME FOR ASSESSMENT YEAR 2013 - 14 ON 16.9.2013 DECLARING NIL TOTAL INCOME, AFTER CLAIMING DEDUCTION OF RS.46,14,176 UNDER SECTION 80P(2)(A)(I) OF THE INCOME TAX ACT, 1 961 (IN SHORT 'THE ACT'). THE RETURN WAS PROCESSED UNDER SECTION 143(1) OF THE ACT AND THE CASE WAS SUBSEQUENTLY TAKEN UP FOR SCRUTINY. THE ASSESSMENT WAS CONCLUDED UNDER SECTION 143(3) OF THE ACT VIDE ORDER DT.16.12.2015 WHEREIN THE ASSESSEE'S INCOME W AS DETERMINED AT RS.56,55,801 IN VIEW OF THE FOLLOWING ADDITIONS / DISALLOWANCES : - I) DI SALLOWANCE OF CLAIM U/S.80P(2) (A) (I ) RS.46,14,176 II) DISALLOWANCE OF AUDIT FEES U/S.40(A)(IA) RS2,20,000 III) DISALLOWANCE OF PIGMY COMMISSION U/S.40(A)(IA) RS4,21,62 5 IV) DISALLOWANCE OF BAD AND DOUBTFUL LOANS U/S.40(A)(IA) RS.4,00,000 2.2 ON APPEAL, THE LEARNED CIT (APPEALS) VIDE THE IMPUGNED ORDER DT.18.9.2017 ALLOWED THE ASSESSEE PARTIAL RELIEF. IN DOING SO, THE LEARNED CIT (APPEALS), FOLLOWING THE JUDGME NT OF THE HON'BLE KARNATAKA HIGH COURT IN THE CASE OF TOTAGAR CO - OPERATIVE SALE SOCIETY IN 100066/2016 (2017) HELD THAT THE INTEREST / DIVIDEND EARNED FROM CO - OPERATIVE BANKS & SCHEDULED BANKS BY THE ASSESSEE ON DEPOSITS / INVESTMENTS ARE NOT ELIGIBLE FOR DEDUCTION UNDER SECTION 80P(2)(D) OF THE ACT AND IS LIABLE TO TAX UNDER SECTION 56 OF THE ACT. THE LEARNED CIT (APPEALS) FURTHER HELD 3 IT A NO. 2770 /BANG/201 7 THAT THE DISALLOWANCES UNDER SECTION 40(A)(IA) OF THE ACT IN RESPECT OF AUDIT FEES, PIGMY COMMISSION PAID, BAD AND DOUB TFUL DEBTS ARE ELIGIBLE FOR DEDUCTION UNDER SECTION 80P(2)(A) OF THE ACT. 3.1 REVENUE, BEING AGGRIEVED BY THE ORDER OF CIT (APPEALS), HUBLI HAS FILED THIS APPEAL RAISING THE FOLLOWING GROUNDS : - 3.2 WE HAVE HEARD THE LEARNED DEPARTM ENTAL REPRESENTATIVE FOR REVENUE ON THE GROUNDS RAISED AND PERUSED AND CAREFULLY CONSIDERED THE MATERIAL ON RECORD; INCLUDING THE JUDICIAL PRONOUNCEMENTS CITED AND PLACED RELIANCE UPON. ACCORDING TO THE LEARNED DEPARTMENTAL REPRESENTATIVE, IN THE IMPUGNED ORDER, THE LEARNED CIT (APPEALS) ERRED IN NOT APPLYING THE RATIO OF THE DECISION OF THE HON'BLE APEX COURT IN THE CASE OF CITIZEN CO - OP SOCIETY LTD. VS. ACIT (2017) 397 ITR 1 (SC) FOR THE 4 IT A NO. 2770 /BANG/201 7 REASON THAT THE ASSESSEE ALSO CATERS TO THE CATEGORY OF MEMBERS CA LLED ASSOCIATE MEMBERS WHO ARE NOT AKIN TO REGULAR MEMBERS. IT WAS SUBMITTED THAT THE LEARNED CIT (APPEALS), WHILE CONSIDERING THE ASSESSEE'S ELIGIBILITY FOR DEDUCTION UNDER SECTION 80P(2)(A)( I ) OF THE ACT, OUGHT TO HAVE CALLED FOR A REMAND REPORT FROM T HE ASSESSING OFFICER TO ASCERTAIN WHETHER THE ASSESSEE IS A CO - OPER A TIVE SOCIETY MEANT ONLY FOR ITS MEMBERS AND / OR WHETHER IT EARNED ANY INCOME BY WAY OF INVESTMENT / LOANS ETC TO NON - MEMBERS AND BY NOT DOING SO HAD IGNORED THE RATIO LAID DOWN BY THE HO N'BLE APEX COURT IN THE CASE OF CITIZEN CO - OPERATIVE SOCIETY LT. (SUPRA). IT WAS PRAYED THAT IN THE FACTS AND CIRCUMSTANCES OF THE CASE, THE IMPUGNED ORDER OF THE LEARNED CIT (APPEALS) BE SET ASIDE AND THE MATTERS RAISED BY REVENU E IN THE GROUNDS OF APPEA L BEFORE THE TRIBUNAL (SUPRA) BE REMA NDED TO THE FILE OF THE LEARNED CIT (APPEALS) FOR CONSIDERATION AND ADJUDICATION IN THE LIGHT OF THE RATIO OF THE AFORESAID DECISION OF THE HON'BLE APEX COURT (SUPRA). 3.3 ON A CAREFUL APPRECIATION OF THE FACTS AND CIRCUMSTANCES OF THE CASE ON HAND; THE ISSUE OF THE ASSESSEE'S CLAIM FOR DEDUCTION U/S.80P(2)(A)(I) OF THE ACT AND THE DECISION OF THE HON'BLE APEX COURT IN THE CASE OF CITIZEN CO - OP. SOCIETY LTD. (SUPRA), WE ARE OF THE VIEW THAT IT WOULD BE APPROPRI ATE THAT THE FINDING RENDERED IN THE IMPUGNED ORDER OF THE LEARNED CIT (APPEALS) ON THE ISSUE OF THE ASSESSEE'S CLAIM FOR DEDUCTION UNDER SECTION 80P(2)(A)(I) OF THE ACT REQUIRES TO BE RE - EXAMINED IN THE LIGHT OF THE RATIO OF THE AFORESAID DECISION RENDERE D BY THE HON'BLE APEX COURT (SUPRA). WE, THEREFORE, SET ASIDE THE FINDING OF 5 IT A NO. 2770 /BANG/201 7 THE LEARNED CIT (APPEALS) RENDERED IN THE IMPUGNED ORDER ON THE ASSESSEE'S CLAIM FOR DEDUCTION UNDER SECTION 80P(2)(A)(I) OF THE ACT AND REMAND THIS ISSUE TO THE FILE OF THE LEAR NED CIT (APPEALS) FOR CONSIDERATION AND ADJUDICATION IN ACCORDANCE WITH OUR OBSERVATIONS, AFTER AFFORDING BOTH THE ASSESSING OFFICER AND THE ASSESSEE ADEQUATE OPPORTUNITY OF BEING HEARD AND TO FILE DETAILS, SUBMISSIONS, REBUTTALS, ETC IN THIS REGARD WHICH SHALL BE DULY CONSIDERED. WE HOLD AND DIRECT ACCORDINGLY. CONSEQUENTLY, THE GROUNDS RAISED BY REVENUE ARE ALLOWED FOR STATISTICAL PURPOSES. 4. IN THE RESULT, REVENUE S APPEAL FOR ASSESSMENT YEAR 20 1 3 - 14 IS ALLOWED FOR STATISTICAL PURPOSES. ORDER PRONOUNCED IN THE OPEN COURT ON THE 18TH DAY OF APRIL,2 01 8 . SD/ - (N.V. VASUDEVAN) JUDICIAL MEMBER SD/ - (JASON P BOAZ) ACCOUNTANT MEMBER BANGALORE, DT. 18 .04.2018. *REDDY GP 6 IT A NO. 2770 /BANG/201 7 COPY TO : 1 APPELLANT 4 CIT(A) 2 RESPONDENT 5 DR. ITAT, BANGALORE 3 CIT 6 GUARD FILE SENIOR PRIVATE SECRETARY INCOME TAX APPELLATE TRIBUNAL BANGALORE.