Appeal details
Counselvise Citation
[2020] 110 COUNSELVISE.COM (IT) 9469 (ITAT-BANGALORE)
Assessee PAN
Bench
Appeal Number
Duration Of Justice
5 month(s) 20 day(s)
Appellant
Respondent
Appeal Type
Income Tax Appeal
Pronouncement Date
21-08-2020
Appeal Filed By
Assessee
Order Result
Dismissed
Bench Allotted
C
Assessment Year
2015-2016
Appeal Filed On
02-03-2020
Judgement Text
IN THE INCOME TAX APPELLATE TRIBUNAL C SMC BENCH : BANGALORE SHRI A.K GARODIA, ACCOUNTANT MEMBER SMT. BEENA PILLAI, JUDICIAL MEMBER ITA NO.282 & 283/BANG/2020 & S.P NOS.63 & 64/BANG/2020 ASSESSMENT YEAR : 2014-15 & 2016-17 MAHAVEERA CREDIT CO-OP. SOCIETY LTD., THAKSHILA BUILDING, BALLAL BAGH, MANGALURU-575 003. PAN AAEAM 3398 Q VS. THE INCOME-TAX OFFICER, WARD-1(3), MANGALURU. APPELLANT RESPONDENT APPELLANT BY : SHRI MAHESH R UPPIN, ADVOCATE RESPONDENT BY : SMT. R PREMI, JCIT DATE OF HEARING : 21-08-2020 DATE OF PRONOUNCEMENT : 21-08-2020 ORDER PER BEENA PILLAI, JUDICIAL MEMBER PRESENT APPEALS HAVE BEEN FILED BY ASSESSEE AGAINST ORDER DATED 06/01/2020 PASSED BY LD. CIT (A), BANGA LORE FOR ASSESSMENT YEARS 2015-16 AND 2016-17. 2. AT THE OUTSET LD. AR SUBMITTED THAT ASSESSEE IS A CO- OPERATIVE SOCIETY REGISTERED UNDER KARNATAKA CO-OPE RATIVE SOCIETIES ACT 1959 AND IS ENGAGED IN THE BUSINESS O F PROVIDING CREDIT FACILITIES TO ITS MEMBERS. ASSESSE E DURING PAGE 2 OF 6 ITA NOS.282 & 283/BANG/2020 S.P NOS.63 & 64/BANG/2020 THE YEARS UNDER CONSIDERATION FILED AN ILL RETURN O F INCOME AFTER CLAIMING DEDUCTION OF RS. 25, 06, 874/-AND 27 , 68, 927/-UNDER SECTION 80 P OF THE ACT. THE RETURN WAS SELECTED FOR SCRUTINY AND DURING ASSESSMENT PROCEEDINGS, LD. AO NOTICED THAT PRINCIPLES OF NEW BRUTALITY WERE VIOLA TED BY ASSESSEE. LD. AO THUS DENIED THE DEDUCTION CLAIMED UNDER SECTION 80 P OF THE ACT BY FOLLOWING DECISION OF HONBLE SUPREME COURT IN CASE OF C ITIZEN CO-OPERATIVE SOCIETY LTD. , REPORTED IN (2017)84 TAXMAN.COM114 . LD. AO DISALLOWED THE ENTIRE DEDUCTION BY OBSERVING AS UNDER: A) INTEREST INCOME EARNED OUT OF INVESTMENT WITH CO- OPERATIVE BANKS WAS TREATED AS INCOME FROM OTHER SOURCES NOT ELIGIBLE FOR DEDUCTION UNDER SECTION 80 P (2) (D) RELYING ON HONBLE KARNATAKA HIGH COURT DECISION IN CASE OF M/STOTGARS CO-OPERATIVE SALE SOCIETY LTD DATED 16/06/2017 . B) THE PRINCIPLES OF MATURITY WERE VIOLATED RELYING ON THE DECISION OF ORDERABLE APEX COURT IN CASE OF M/S.CIT IZEN CO-OPERATIVE SOCIETY LTD HYDRABAD DATED 08/09/2017 3. AGGRIEVED BY ADDITION MADE BY LD.AO, ASSESSEE PREFERRED APPEAL BEFORE LD.CIT(A). 4. LD.CIT(A) OBSERVED THAT, NOMINAL MEMBERS DO NOT CONTRIBUTE TO SHARE CAPITAL AND PAYS RS.50 WORDS AD MISSION FEE WHICH IS CREDITED TO P&L ACCOUNT. IT WAS ALSO R ECORDED BY LD.CIT(A) THAT ASSESSEE HAS 279 NOMINAL MEMBERS AND THEIR NOT REFLECTED IN THE BALANCE SHEET AS MEMBERS AT AL L. LD.CIT (A) NOTED THAT, LOANS HAVE BEEN ADVANCED TO NOMINAL PAGE 3 OF 6 ITA NOS.282 & 283/BANG/2020 S.P NOS.63 & 64/BANG/2020 MEMBERS, AGAINST WHICH INTEREST HAS BEEN EARNED BY ASSESSEE. 5. HE THUS UPHELD OBSERVATIONS BY LD.AO AND CONFIRM ED THE ADDITION MADE THEREIN. 6. AGGRIEVED BY ORDERS OF LD.CIT(A), ASSESSEE IS IN APPEAL BEFORE US NOW. 7. LD.AR REFERRED TO A CHART REPRODUCED BY LD.CIT(A ) AT PAGE 10 OF HIS ORDER. LD. A.R. SUBMITTED THAT, THER E ARE 3198 REGULAR MEMBERS AND 279 NOMINAL MEMBERS THUS FORMIN G LESS THAN 10% OF THE REGULAR MEMBERS. HE SUBMITTED THAT ASSESSEE IS INTO CREDIT ONLY TO ITS MEMBERS WHEREAS IN CASE OF CITIZEN CO-OPERATIVE SOCIETY LTD., (SUPRA) IT WA S A MULTISTATE REGISTERED SOCIETY THAT DEALT WITH NONME MBERS AND ADVANCED LOANS TO GENERAL PUBLIC AS WELL WHICH WAS IN GROSS VIOLATED OF BYE LAWS AND PROVISIONS OF THE AC T AND AS SUCH, EXEMPTION UNDER SECTION 80 P WAS DENIED. HE SUBMITTED THAT, RATIO OF HONBLE SUPREME COURT IN CASE OF CITIZEN CO-OPERATIVE SOCIETY LTD., (SUPRA), THEREFO RE WILL NOT BE APPLICABLE TO THE FACTS OF THE PRESENT CASE. LD. AR SUBMITTED THAT DECISION OF HONBLE KARNATAKA HIGH C OURT IN CASE OF PCIT VS. TOTGARS CO-OPERATIVE SALE SOCIETY REPORTED IN 395 ITR 611 RELIED BY LD.CIT(A) IS ALSO NOT APPL ICABLE TO PRESENT FACTS OF THE CASE. LD.AR SUBMITTED THAT, ASSESSEES FACTS ARE MORE SIMILAR WITH FACTS IN CASE OF TUMKUR CO- OPERATIVE SOCIETY LTD., MERCHANTS SOUHARDS CO-OPERA TIVE SOCIETY LTD., REPORTED IN 230 TAXMAN 309 HE ALSO SU BMITTED THAT THERE HAS BEEN VARIOUS DECISIONS OF THIS TRIBU NAL PAGE 4 OF 6 ITA NOS.282 & 283/BANG/2020 S.P NOS.63 & 64/BANG/2020 WHEREIN THE ISSUE HAS BEEN REMANDED TO LD.AO FOR DU E VERIFICATION OF FACTS. 8. ON THE CONTRARY LD.SR.DR SUBMITTED THAT, ISSUE M AY BE REMANDED TO LD.AO FOR DUE VERIFICATION OF FACTS IN THE LIGHT OF DECISIONS OF HONBLE JURISDICTIONAL HIGH COURT , AS WELL AS HONBLE APEX COURT REFERRED TO HEREIN. 9. WE HAVE PERUSED SUBMISSIONS ADVANCED BY BOTH SID ES IN LIGHT OF RECORDS PLACED BEFORE US. 10. THE GRIEVANCE OF ASSESSEE IS THAT, IN ITS CASE TEST OF MUTUALITY IS SATISFIED HOWEVER, LD.CIT(A) DID NOT SPELL OUT AS TO HOW THE SAID TEST FAILS. WE ARE OF THE VIEW THAT , SUCH GRIEVANCE OF THE ASSESSEE WOULD BE ADDRESSED BY SET TING ASIDE THE ISSUE OF DEDUCTION U/S.80P(2)(A)(I) OF TH E ACT TO LD.AO FOR CONSIDERATION AFRESH, WITH A DIRECTION TO THE ASSESSEE TO PRODUCE A CERTIFICATE FROM RBI THAT IT DOES NOT POSSESS LICENSE FROM IT FOR DOING BANKING BUSINESS AND FURTHER THAT BUSINESS CARRIED ON BY ASSESSEE IS NOT AKIN TO BUSINESS OF A CO-OPERATIVE BANK. FURTHER THE FIRST PART OF SEC.80P(2)(A)(I) ALLOWS DEDUCTION IN RESPECT OF INC OME DERIVED BY A CO- OPERATIVE SOCIETY FROM BUSINESS OF BANKING . EVEN THE CLAIM OF THE ASSESSEE FOR DEDUCTION REQUIRES TO BE EXAMINED UNDER THE FIRST PART OF SEC.80P(2)(A)(I) O F THE ACT. HON'BLE SUPREME COURT IN CASE OF CITIZEN CO- OPERATIVE SOCIETY LTD. ( SUPRA ) HAS ALSO HELD THAT, IT IS ALSO IMPORTANT TO ASCERTAIN AS TO WHAT IS THE NATURE OF INCOME WHICH IS CLAIMED AS EXEMPT AND AS TO HOW THE PRINCIPLE OF MU TUALITY IS NOT VIOLATED IN RESPECT OF SUCH INCOME. AN EXAMI NATION OF PAGE 5 OF 6 ITA NOS.282 & 283/BANG/2020 S.P NOS.63 & 64/BANG/2020 (I)THE MEMORANDUM OF ASSOCIATION, THE ARTICLES OF ASSOCIATION, (II) THE BYELAWS AND OTHER DOCUMENTS E XPLAINING THE RULES AND REGULATIONS OF THE SOCIETY IS NECESSA RY, SO AS TO CLEARLY UNDERSTAND THE PURPOSE AND THE NATURE OF BU SINESS DONE BY IT. AN EXAMINATION OF THE FACTS IN LIGHT OF DISCUSSION CITED BY LD.CIT(A) AS WELL AS DECISION OF HONBLE K ARNATAKA HIGH COURT IN CASE OF TUMKUR (SUPRA) IS TO BE CARRI ED OUT. 11. WE, THEREFORE, REMAND THE ISSUE BACK TO LD.AO F OR RE ADJUDICATING IT AFRESH ON THE BASIS OF ABOVE DIRECT ION. 12. ACCORDINGLY, APPEALS FILED BY ASSESSEE STANDS A LLOWED FOR STATISTICAL PURPOSES. 13. AS A RESULT , STAY PETITIONS STANDS INFURCTUOUS AND DISMISSED. ORDER PRONOUNCED IN THE OPEN COURT ON 1 ST AUG, 2020. SD/- SD/- (A.K GARODIA) (BEENA PILLAI) ACCOUNTANT MEMBER JUDICIAL MEMBER BANGALORE, DATED, THE 1 ST AUG, 2020. /VMS/ COPY TO: 1. APPELLANT 2. RESPONDENT 3. CIT 4. CIT(A) 5. DR, ITAT, BANGALORE 6. GUARD FILE BY ORDER ASSISTANT REGISTRAR, INCOME-TAX APPELLATE TRIBUNAL. BANGALORE PAGE 6 OF 6 ITA NOS.282 & 283/BANG/2020 S.P NOS.63 & 64/BANG/2020 DATE INITIAL 1. DRAFT DICTATED ON ON DRAGON SR.PS 2. DRAFT PLACED BEFORE AUTHOR -08-2020 SR.PS 3. DRAFT PROPOSED & PLACED BEFORE THE SECOND MEMBER -08-2020 JM/AM 4. DRAFT DISCUSSED/APPROVED BY SECOND MEMBER. -08-2020 JM/AM 5. APPROVED DRAFT COMES TO THE SR.PS/PS -08-2020 SR.PS/PS 6. KEPT FOR PRONOUNCEMENT ON -08-2020 SR.PS 7. DATE OF UPLOADING THE ORDER ON WEBSITE -08-2020 SR.PS 8. IF NOT UPLOADED, FURNISH THE REASON -- SR.PS 9. FILE SENT TO THE BENCH CLERK -08-2020 SR.PS 10. DATE ON WHICH FILE GOES TO THE AR 11. DATE ON WHICH FILE GOES TO THE HEAD CLERK. 12. DATE OF DISPATCH OF ORDER. 13. DRAFT DICTATION SHEETS ARE ATTACHED NO SR.PS
