M/s Sri Basaveshwara Swamy Pattana Sahakara Sangha , Shivamogga V. The Income Tax Officer Ward-1 , Shivamogga

ITA 2794/BANG/2018

• Counselvise Citation: [2019] 118 COUNSELVISE.COM (IT) 6121 (ITAT-BANGALORE)
• Duration Of Justice: 3 month(s) 20 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 25-01-2019
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: B
• Next Hearing Date: 27-12-2018
• Assessment Year: 2012-2013
• Appeal Filed On: 05-10-2018
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: S VENKATESH JT DIT
• Keywords: Opportunity of being heard; Source of fund; Reasonable cause; Condonation of delay
• Section: 10

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL SMC B BENCH : BANGALORE BEFORE SHRI N.V. VASUDEVAN, VICE PRESIDENT ITA NO. 2793 & 2794 /BANG/2018 ASSESSMENT YEAR S : 2009 - 10 & 2012 - 13 M/S. SRI BASAVESHWARA SWAMY PATTINA SAHAKARA SANGHA, BASAVA SADANA, NEHRU ROAD, SHIVAMOGGA. PAN: AABAS 7894N VS. THE INCOME TAX OFFICER, WARD 1, SHIVAMOGGA. APP ELLANT RESPONDENT APP ELLANT BY : S MT. PRATIBHA R., ADVOCATE RESPONDENT BY : SHRI S. VENKATESH, JT. DIT DATE OF HEARING : 22.01.2019 DATE OF PRON OUNCEMENT : 25 .01 . 201 9 O R D E R THIS IS AN APPEAL BY THE ASSESSEE AGAINST THE SE PARATE ORDERS DATED 28.08.2017 OF THE CIT(APPEALS), DAVANGERE REL ATING TO ASSESSMENT YEARS 2009-10 & 2012-13. 2. THERE IS A DELAY OF 343 DAYS IN FILING OF BOTH T HE APPEALS BEFORE THE TRIBUNAL. IN THE APPLICATION FOR CONDONATION OF DE LAY ALONG WITH AFFIDAVITS, IT HAS BEEN STATED THAT AGAINST THE ORDER OF THE CIT(A PPEALS) WITH RESPECT TO DEDUCTION U/S. 80P(2)(A)(I) OF THE INCOME-TAX ACT, 1961 [THE ACT], THE FORMER COUNSEL OF THE ASSESSEE OPINED THAT THE MATT ER SHOULD NOT BE APPEALED FURTHER. HOWEVER, ON THE APPOINTMENT OF S TATUTORY AUDITOR FOR THE FY 2017-18, IT WAS ADVISED THAT APPEAL HAS TO BE PR EFERRED FOR RELIEF. ITA NO. 2793 & 2794/BANG/2018 PAGE 2 OF 5 ACCORDINGLY, THIS APPEAL CAME TO BE FILED BEFORE TH E TRIBUNAL WITH A DELAY OF 343 DAYS ON ACCOUNT OF REASONABLE CAUSE AS AFORESAI D AND CONDONATION OF DELAY WAS PRAYED FOR. 3. CONSIDERING THE RIVAL SUBMISSIONS, I AM OF THE V IEW THAT THERE IS REASONABLE CAUSE FOR DELAY IN FILING THE APPEAL AND ACCORDINGLY THE DELAY IS CONDONED AND THE APPEALS ARE ADMITTED FOR ADJUDICAT ION. 4. IN THIS APPEAL, THE ASSESSEE WHICH IS A CO-OPER ATIVE SOCIETY HAS CHALLENGED THE ACTION OF THE REVENUE AUTHORITIES IN NOT ALLOWING DEDUCTION CLAIMED BY THE ASSESSEE U/S 80P(2)(A)(I) OF THE ACT ON A SUM OF RS.5,09,538 & RS.5,99,036 FOR AYS 2009-10 & 2012-13 RESPECTIVELY. THE DEDUCTION CALMED BY THE ASSESSEE WAS NOT ALLOWED BY THE REVENUE AUTHORITIES FOR THE REASON THAT THE INCOME WHICH WA S CLAIMED AS DEDUCTION WAS INTEREST INCOME WHICH WAS EARNED BY THE ASSESSE E ON DEPOSITS AND IN VIEW OF THE DECISION OF THE HONBLE SUPREME COURT I N THE CASE OF PCIT VS. TOTGARS CO-OPERATIVE SALE SOCIETY LTD., 83 TAXMANN. COM 140, INTEREST INCOME HAD TO BE REGARDED AS INCOME FROM OTHER SOU RCES. SINCE INTEREST INCOME WAS NOT INCOME DERIVED FROM THE BUSINESS OF CO-OPERATIVE SOCIETY, THE DEDUCTION CLAIMED BY THE ASSESSEE CANNOT BE ALL OWED. 5. ON APPEALS BY THE ASSESSEE, THE CIT(A) CONFIRMED THE ACTION OF THE AO. 6. I HAVE HEARD THE RIVAL SUBMISSIONS. THE LEARNED AR RELIED ON THE DECISION OF THE HONBLE KARNATAKA HIGH COURT IN THE CASE OF TUMKUR MERCHANTS SOUHARDA CREDIT CO-OPERATIVE SOCIETY LTD. VS. ITO 230 TAXMAN 309 (KARN) WHEREIN THE HONBLE KARNATAKA HIGH COURT CONSIDERE D THE DECISION OF THE HONBLE APEX COURT IN THE CASE OF THE TOTGARS CO- OPERATIVE SALES SOCIETY (SUPRA) AND HELD THAT INTEREST INCOME IN RESPECT OF TEMPORARY PARKING OF OWN SURPLUS FUNDS NOT IMMEDIAT ELY REQUIRED IS ELIGIBLE ITA NO. 2793 & 2794/BANG/2018 PAGE 3 OF 5 FOR DEDUCTION U/S.80P(2)(A)(I) OF THE ACT. THE LEAR NED DR RELIED ON A SUBSEQUENT DECISION OF THE HONBLE KARNATAKA HIGH C OURT IN THE CASE OF PCIT VS. TOTGARS CO-OPERATIVE SALE SOCIETY LTD. 395 ITR 611 (KARN) . 7. I HAVE CAREFULLY GONE THROUGH THE JUDGMENT RELIE D BY THE LEARNED DR. THE FACTS OF THE CASE BEFORE THE HONBLE KARNATAKA HIGH COURT IN THE 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 WAS AY 1991-92 TO 1999- 2000. THE NATURE OF INTEREST INCOME FOR ALL THE AY S WAS IDENTICAL. THE BONE OF CONTENTION OF THE ASSESSEE IN AY 2007-08 TO 2011-12 WAS THAT THE DEDUCTION UNDER SECTION 80P(2) OF THE ACT IS CLAIME D 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 IN 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-OPERATIVE SALES SOCIETY LTD. (SUPRA) AND HELD THAT INTEREST EARNED FROM SCHEDULE BANK OR CO- OPERATIVE BANK IS ASSESSABLE UNDER THE HEAD INCOME FROM OTHER SOURCES AND THEREFORE THE PROVISIONS OF SEC.80P(2)(D) OF TH E ACT WAS NOT APPLICABLE TO SUCH INTEREST INCOME. IT IS THUS CLEAR THAT THE SOURCE OF FUNDS OUT OF ITA NO. 2793 & 2794/BANG/2018 PAGE 4 OF 5 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 ASSESSEES 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 EXTENT, THE DECISION OF THE HONBLE KARNATAKA HIGH COURT IN THE CASE OF TUMKUR 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 JUDGMENTS 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 TUMKUR MERCHANTS SOUHARDA CO-OPERATIVE LTD. (SUPRA) . THE AO WILL AFFORD OPPORTUNITY OF BEING HEARD TO THE AS SESSEE TO FILE APPROPRIATE EVIDENCE, IF DESIRED BY THE ASSESSEE, TO SUBSTANTIA TE ITS CASE, BEFORE DECIDING THE ISSUE. 8. IN THE RESULT, APPEALS BY THE ASSESSEE ARE TREAT ED AS ALLOWED FOR STATISTICAL PURPOSES. PRONOUNCED IN THE OPEN COURT ON THIS 25 TH DAY OF JANUARY, 2019. SD/- ( N.V. VASUDEVAN ) VICE PRESIDENT BANGALORE, DATED, THE 25 TH JANUARY, 2019. / D ESAI S MURTHY / ITA NO. 2793 & 2794/BANG/2018 PAGE 5 OF 5 COPY TO: 1. APPELLANT 2. RESPONDENT 3. CIT 4. CIT(A) 5. DR, ITAT, BANGALORE. 6. GUARD FILE BY ORDER ASSISTANT REGISTRAR, ITAT, BANGALORE.