M/s. Vaishnavi Pattin Souharda Sahakari Niyamita, Gangavathi V. Income Tax Officer, Ward- 1, Koppal

ITA 285/BANG/2020

• Counselvise Citation: [2020] 110 COUNSELVISE.COM (IT) 7013 (ITAT-BANGALORE)
• Duration Of Justice: 6 month(s) 5 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 07-09-2020
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: B
• Next Hearing Date: 03-09-2020
• Assessment Year: 2016-2017
• Appeal Filed On: 02-03-2020
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Keywords: Set aside
• Section: 80P; 20

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL S M C B BENCH: BANGALORE BEFORE SHRI CHANDRA POOJARI, ACCOUNTANT MEMBER ITA NO. 285 /BANG/20 20 (ASSESSMENT YEAR: 20 16 - 17 ) M/S. VAISHNAVI PATTIN SOUHARDA SAHAKARI NIYAMITA, NO.9, TAPCMS COMPLEX, CBS GUNJ, GANGA VATHI - 583 227 PAN AALAS9104P .APPELLANT VS. INCOME TAX OFFICER , WARD 1, KOPPAL. RESPONDENT. ASSESS EE BY: SHRI R.E. BALASUBRAMANYAM, C.A. REVENUE BY: SHRI GANESH R GHALE, STANDING COUNSEL. DATE OF HEARING : 03.09 .20 20. DATE OF PRONOUNCEMENT : 07 .09 .20 20. O R D E R TH IS APPEAL BY THE ASSESSEE IS DIRECTED AGAINST THE ORDER OF C OMMISSI ONER OF INCOME TAX (APPEALS) , KALABURAGI DT.30.12.2019 FOR THE A SST. Y EAR 2016 - 17. 2. THE ASSESSEE HAS RAISED THE FOLLOWING GROUNDS : 2 ITA NO. 285/BANG/2020 3. THE ASSESSEE IS IN THE BUSINESS OF PROVIDING CREDIT FACILITIES TO ITS MEMBERS, CHARGES INTEREST AND EARNS IN COME. THE ASSESSEE EARNED INTEREST ON F.DS IN DIF FERENT CO - OPERATIVE BANKS AMOUNTING TO RS.14,80,232 AND CLAIMED DEDUCTION UNDER SECTION 80P OF THE INCOME TAX ACT, 1961 ('THE ACT'). THE LOWER AUTHORITIES DISALLOWED THE CLAIM OF DEDUCTION AGAINST THIS IN COME AND ADDED TO THE INCOME OF THE ASSESSEE. THE CONTENTION OF THE ASSESSEE BEFORE LOWER AUTHORITIES WAS THAT ASSESSEE IS BASICALLY A CO - OPERATIVE SOCIETY AND REGISTERED UNDER KARNATAKA CO - 3 ITA NO. 285/BANG/2020 OPERATIVE SOCIETY ACT, 1959 AND AS SUCH THE INTEREST INCOME EARNE D FROM S.B. ACCOUNT AND F.DS ACCOUNT WHICH IS ELIGIBLE FOR DEDUCTION UNDER SECTION 80P(2) OF THE ACT. 3 . ON THE OTHER HAND, THE CONTENTION OF THE DEPARTMENT IS THAT THE ASSESSEE IS NOT A PURELY CO - OPERATIVE SOCIETY AND BEING SO, THE CIT (APPEALS) RELIED ON THE DECISION OF JUDGEMNET OF HON'BLE SUPREME COURT IN THE CASE OF TOTGARS CO - OPERATIVE SALES SOCIETY LTD. VS. ITO 322 ITR 283 AND CONFIRMED THE DISALLOWANCE ORDER BY ASSESSING OFFICER. 4 . I HAVE HEARD BOTH THE PARTIES AND PERUSED THE MATERIAL ON RECORD. I FIND THAT S IMILAR ISSUE CAME FOR ADJUDICATION BEFORE THIS TRIBUNAL IN THE CASE OF M/S. SINDHU CREDIT SOUHARDA SAHAKARI NIYAMITA VS. ITO IN ITA NO.2144/BANG/2019 VIDE ORDER DT. 20.02.2020 WHEREIN IT WAS HELD AS UNDER : 4. I HAVE CONSIDERED THE RIVAL SUBMISSIONS. REGARDING THE JUDGMENT OF HON'BLE KARNATAKA HIGH COURT RENDERED IN THE CASE OF PR. CIT VS. VIJAY SOUHARDA CREDIT SAHAKARI LTD. (SUPRA) ON WHICH RELIANCE WAS PLACED BY LD. DR OF REVENUE AS PER WHICH THE MATTER WAS RESTORED BACK TO AO TO EXAMINE THE APPLICABILITY OF THE JUDGMENT OF HONBLE APEX COURT RENDERED IN THE CASE OF THE CITIZEN CO - OPERATIVE SOCIETY LTD. VS. ACIT (SUPRA), I FIND THAT IN THE PRESENT CASE, THIS IS NOT THE CASE OF THE AO AS PER THE ASSESSMENT ORDER THAT THIS JUDGMEN T OF HONBLE APEX COURT RENDERED IN THE CASE OF THE CITIZEN CO - OPERATIVE SOCIETY LTD. VS. ACIT (SUPRA) IS APPLICABLE IN THE PRESENT CASE. AS PER THE IMPUGNED ORDER OF LD. CIT(A) ALSO, NO FINDING OF LD. CIT(A) IS THERE THAT THIS JUDGMENT RENDERED IN THE CAS E OF THE CITIZEN CO - OPERATIVE SOCIETY LTD. VS. ACIT (SUPRA) IS APPLICABLE IN THE PRESENT CASE. HENCE, I HOLD THAT THIS JUDGMENT OF HON'BLE KARNATAKA HIGH COURT HAS NO APPLICABILITY IN THE PRESENT CASE IN VIEW OF THE FACTS DISCUSSED ABOVE. REGARDING THE ARG UMENT OF LD. DR OF REVENUE THAT THE EARLIER TRIBUNAL ORDER RENDERED BY THE DIVISION BENCH OF THE TRIBUNAL IN THE CASE OF M/S. UDAYA SOUHARDA CREDIT COOPERATIVE SOCIETY LTD. (SUPRA) SHOULD BE FOLLOWED IN PREFERENCE TO THE LATER DECISION OF SMC BENCH OF THE TRIBUNAL RENDERED IN THE CASE OF SIDDARTHA PATTINA SOUHARDA SAHAKARI NIYAMITHA VS. ITO (SUPRA), I FIND THAT IN THIS LATER CASE, THE SMC BENCH OF THE TRIBUNAL HAS DULY CONSIDERED THE EARLIER DECISION OF THE DIVISION BENCH OF THE TRIBUNAL RENDERED IN THE CAS E OF M/S. UDAYA SOUHARDA CREDIT CO - OPERATIVE SOCIETY LTD. (SUPRA) AND IT IS 4 ITA NO. 285/BANG/2020 ALSO NOTED THAT LD. CIT(A) AND AO IN THAT CASE HAS EXAMINED THE WHOLE ISSUE IN THE LIGHT OF KARNATAKA SOUHARDA SAHAKARI ACT, 1997. BECAUSE OF THIS REASON, IT WAS HELD BY THE SMC BENCH OF THE TRIBUNAL THAT ISSUE HAS TO BE DECIDED BY THE TRIBUNAL AND IT CANNOT BE REMANDED TO THE AO AS WAS CANVASSED BY THE REVENUE AND HENCE, THIS ARGUMENT HAS NOT MERIT THAT EVEN NOW, THE MATTER SHOULD BE RESTORED BACK TO THE AO FOR FRESH DECISION ALT HOUGH THE SMC BENCH OF THE TRIBUNAL HAS DECIDED THE ISSUE. REGARDING THE JUDGMENT OF HONBLE ALLAHABAD HIGH COURT RENDERED IN THE CASE OF CIT VS. HARI NATH AND CO. (SUPRA) ON WHICH RELIANCE WAS PLACED BY LD. DR OF REVENUE, I FIND THAT IN THIS CASE, IT WAS HELD BY HONBLE ALLAHABAD HIGH COURT THAT DECISION OF DIVISION BENCH GIVEN IN AN EARLIER CASE IS BINDING ON ITS SUBSEQUENT BENCH OF THE SAME HIGH COURT. THERE IS NO QUARREL ON THIS ASPECT BUT THIS IS NOT THE CASE OF THE SMC BENCH OF THE TRIBUNAL AS PER THE SUBSEQUENT ORDER THAT THE DECISION OF THE DIVISION BENCH OF THE TRIBUNAL IN THE CASE OF M/S. UDAYA SOUHARDA CREDIT CO - OPERATIVE SOCIETY LTD. (SUPRA) IS NOT BINDING ON THE TRIBUNAL WHETHER SMC BENCH OR DIVISION BENCH. AS PER THE SUBSEQUENT DECISION OF THE SMC BENCH OF THE TRIBUNAL, IT WAS HELD THAT AS PER THE EARLIER DECISION OF THE DIVISION BENCH OF THE TRIBUNAL, THE MATTER WAS RESTORED BACK TO THE AO FOR A FRESH DECISION IN THE LIGHT OF KARNATAKA SOUHARDA SAHAKARI ACT, 1997 AND THIS WAS DONE BY CIT (A) AN D AO AS DIRECTED BY THE TRIBUNAL AND BECAUSE OF THIS REASON, SMC BENCH OF THE TRIBUNAL HELD THAT NOW THE ISSUE HAS TO BE DECIDED BY THE TRIBUNAL AT ITS OWN LEVEL INSTEAD OF AGAIN RESTORING THE MATTER BACK TO THE FILE OF AO AND AFTER CONSIDERING THE VARIOUS PROVISIONS OF KARNATAKA SOUHARDA SAHAKARI ACT, 1997, THE SMC BENCH OF THE TRIBUNAL CAME TO THE CONCLUSION THAT SOUHARDA CO - OPERATIVES ARE ALSO ONE FORM OF CO - OPERATIVE SOCIETIES REGISTERED UNDER A LAW IN FORCE IN THE STATE OF KARNATAKA FOR REGISTRATION OF CO - OPERATIVE SOCIETIES AND THEREFORE, THE CONCLUSION OF THE REVENUE AUTHORITIES THAT CO - OPERATIVE SOCIETIES AND CO - OPERATIVES ARE DIFFERENT AND THAT CO - OPERATIVE REGISTERED AS SOUHARDA SAHAKARI CANNOT BE REGARDED AS CO - OPERATIVE SOCIETIES IS UNSUSTAINABLE . AFTER HOLDING SO, THE TRIBUNAL RESTORED BACK THE MATTER TO THE AO FOR FRESH DECISION REGARDING ALLOWABILITY OF DEDUCTION U/S. 80P OF THE IT ACT AFTER EXAMINING THE FULFILMENT OF OTHER CONDITIONS IN THAT REGARD. FOR READY REFERENCE, WE REPRODUCE PARA NOS. 5 TO 11 OF THIS TRIBUNAL ORDER RENDERED IN THE CASE OF SIDDARTHA PATTINA SOUHARDA SAHAKARI NIYAMITHA VS. ITO (SUPRA) BY SMC BENCH OF THE TRIBUNAL ON 26.07.2019. THESE PARAS ARE AS UNDER. 5. I HAVE HEARD THE RIVAL SUBMISSIONS. THE LEARNED COUNSEL FOR THE ASSESSEE SUBMITTED THAT SOUHARDA SAHAKARI REGISTERED UNDER THE KARNATAKA SOUHARDA SAHAKARI ACT, 1997 ARE ALSO CO - OPERATIVE SOCIETIES WITHIN THE MEANING OF SEC.2(19) OF THE ACT AND THEREFORE THE REVENUE AUTHORITIES WERE NOT JUSTIFIED IN DENYING THE BENEFIT OF DEDUCTION TO THE ASSESSEE. THE LEARNED DR RELIED ON A DECISION OF THE ITAT BANGALORE BENCH IN THE CASE OF M/S. MILLENNIUM CREDIT COOPERATIVE SOCIETY LTD. VS. ITO ITA NOS. 2606 & 2607/BANG/2017 IN WHICH THE TRIBUNAL FOLLOWED THE DECISION OF ITAT BANGALO RE BENCH IN THE CASE OF M/S. UDAYA SOUHARDA CREDIT CO - OPERATIVE SOCIETY LTD. ITA NO.2831/BANG/2017 ORDER DATED 17.8.2018 IN WHICH THE ISSUE WHETHER SOUHARDA REGISTERED UNDER THE KARNATAKA SOUHARDA SAHAKARI ACT, 1997 CAN BE REGARDED AS CO - OPERATIVE SOCIETY ENTITLED TO BENEFIT OF DEDUCTION U/S.80P(2)(A)(I) OF THE ACT WAS REMANDED TO THE AO FOR FRESH CONSIDERATION. WE ARE OF THE VIEW THAT IN THE PRESENT CASE, THE AO AND CIT(A) HAVE ALREADY CONSIDERED THIS ISSUE IN THE LIGHT OF THE KARNATAKA SOUHARDA SAHAKARI A CT, 1997 AND THEREFORE THIS ISSUE HAS TO BE DECIDED BY ME AND CANNOT BE REMANDED TO THE AO AS WAS CANVASSED BY THE REVENUE. 6. I HAVE CONSIDERED THE RIVAL SUBMISSIONS. SEC.2(19) DEFINES COOPERATIVE SOCIETIES FOR THE PURPOSE OF THE ACT AND THE SAME IS AS F OLLOWS: DEFINITIONS. 2. IN THIS ACT, UNLESS THE CONTEXT OTHERWISE REQUIRES, (19) 'CO - OPERATIVE SOCIETY' MEANS A CO - OPERATIVE SOCIETY REGISTERED UNDER THE CO - OPERATIVE SOCIETIES ACT, 1912 (2 OF 1912), OR UNDER ANY OTHER LAW FOR THE TIME BEING IN FORCE IN ANY STATE FOR THE REGISTRATION OF CO - OPERATIVE SOCIETIES ; 5 ITA NO. 285/BANG/2020 7. AS CAN BE SEEN FROM THE AFORESAID DEFINITION OF CO - OPERATIVE SOCIETY UNDER THE ACT, ANY CO - OPERATIVE SOCIETY REGISTERED UNDER ANY OTHER LAW OF ANY STATE FOR REGISTRATION OF CO - OPERATIVE SOCI ETY IS ALSO REGARDED AS CO - OPERATIVE SOCIETY UNDER THE ACT. SOUHARDAS ALSO OPERATE ON THE PRINCIPLE OF CO - OPERATION AND ADOPT THE PRINCIPLES OF CO - OPERATION. COOPERATIVE SOCIETIES AND CO - OPERTIVES ARE ALL FOUNDED ON THE PRINCIPLE OF COOPERATION. 8. SINCE THE BEGINNING OF MANKIND THE CONCEPT OF CO - OPERATION HAS BEEN THE FOUNDATION FOR HARMONIOUS EXISTENCE IN INDIA, THE COOPERATIVE SOCIETIES ACT 1912 REGULATED FORMATION, MANAGEMENT, WINDING UP AND OTHER SUPERVISION BY THE GOVERNMENT ETC. THIS ACT BECAME T HE MODEL FOR THE PROVINCIAL GOVERNMENTS TO FORM THEIR OWN COOPERATIVE ACTS. POST - INDEPENDENCE, VARIOUS STATE GOVERNMENTS FRAMED THEIR OWN INDEPENDENT COOPERATIVE ACTS AND THE CENTRAL GOVERNMENT ITS MULTI - STATE COOPERATIVE ACT. ACCORDINGLY, KARNATAKA STATE COOPERATIVE SOCIETIES ACT, 1959 (KSCS ACT, 1959) REGULATES COOPERATIVE SOCIETIES IN THE STATE OF KARNATAKA. A PANCHAYAT, A COOPERATIVE SOCIETY AND A SCHOOL FOR EVERY VILLAGE WERE CONSIDERED AS THE THREE PILLARS OF THE INTEGRATED COMMUNITY DEVELOPMENT. AS T IME PASSED BY, OTHER ASPECTS WERE INCLUDED INTO THE COOPERATIVE ACT THUS HERALDING THE RESURGENCE OF A NEW ERA IN COOPERATIVE MOVEMENT. THE STATE AND THE CENTRAL GOVERNMENTS WERE INVESTING MILLIONS OF RUPEES IN THE FORM OF SHARES, GRANTS, SUBSIDY, CONTRIB UTIONS, GOVERNMENT SUPPORT, ETC., BUT THE EXPECTED RESULTS COULDNT BE ACHIEVED IN COOPERATIVE MOVEMENTS. THIS CONDITION CONTINUED ALMOST UNTIL EARLY 1980S. 9. KEEPING THIS IN MIND, THE CENTRAL GOVERNMENT SETUP A COMMITTEE UNDER THE CHAIRMANSHIP OF SHRI A RDHANARISHWARAN, WHICH SUBMITTED ITS REPORT IN 1987. IT ATTRIBUTED THE FAILURE OF THE COOPERATIVE MOVEMENT TO THE EXCESSIVE INTERFERENCE OF THE GOVERNMENTS. IT IS ALSO TRUE THAT THE UNABATED PARTY POLITICS IN THE CO - OPERATIVE MOVEMENT IS ALSO A BIG HINDRAN CE TO ITS PROGRESS. REALIZING THE VITAL ROLE OF THE COOPERATIVE MOVEMENT IN THE PROGRESS OF THE SOCIETY, THE CENTRAL PLANNING COMMISSION SET UP A COMMITTEE BY APPOINTING SHRI CHAUDARI BRAHMAPRAKASH AS ITS HEAD & WITH A TASK OF DRAFTING A MODEL COOPERATIVE ACT WHICH WILL PREVENT INTERFERENCE OF THE GOVERNMENTS. THIS COMMITTEE, AFTER A DETAILED STUDY OF THE COOPERATIVE ACTS OF VARIOUS STATES, DRAFTED A MODEL COOPERATIVE ACT IN 1991 AND CENTRAL GOVERNMENT RECOMMENDED THE STATE GOVERNMENTS TO ADOPT THIS. AC CORDINGLY, IN 1997 A BILL ON PARALLEL COOPERATIVE ACT WAS TABLED IN THE STATE LEGISLATURE OF KARNATAKA. DEMANDING AN EARLY APPROVAL OF THIS BILL BY BOTH THE HOUSES OF KARNATAKA LEGISLATURE, A COMMITTEE SOUHARDA SAMVARDHANA SAMITHI UNDER THE CHAIRMANSHIP OF JUSTICE RAMA JOIS CAME INTO EXISTENCE. IT WAS DUE TO THE COMBINED EFFORTS OF SAHAKARA BHARATHI KARNATAKA AND SOUHARDA SAMVARDHANA SAMITHI, THE KARNATAKA SOUHARDA SAHAKARI ACT 1997 (KSSA, 1997) WAS PASSED IN THE LEGISLATURE. WITH THE CONSENT OF THE PRE SIDENT OF INDIA, IT WAS ENFORCED FROM JANUARY 2001. PREAMBLE TO THE ACT READS THUS: - AN ACT TO PROVIDE FOR RECOGNITION, ENCOURAGEMENT AND VOLUNTARY FORMATION OF CO - OPERATIVES BASED ON SELF - HELP, MUTUAL AID, WHOLLY OWNED, MANAGED AND CONTROLLED BY MEMBERS AS ACCOUNTABLE, COMPETITIVE, SELF - RELIANT AND ECONOMIC ENTERPRISES GUIDED BY COOPERATIVE PRINCIPLES AND MATTERS CONNECTED THEREWITH; WHEREAS IT IS EXPEDIENT TO PROVIDE FOR RECOGNITION ENCOURAGEMENT AND VOLUNTARY FORMATION OF CO - OPERATIVES BASED ON SELF - HEL P, MUTUAL AID, WHOLLY OWNED, MANAGED AND CONTROLLED BY MEMBERS AS ACCOUNTABLE, COMPETITIVE SELF - RELIANT AND ECONOMIC ENTERPRISES GUIDED BY COOPERATIVE PRINCIPLES AND FOR MATTERS CONNECTED THEREWITH; BE IT ENACTED BY THE KARNATAKA STATE LEGISLATURE IN THE F ORTY - EIGHTH YEAR OF REPUBLIC OF INDIA AS FOLLOWS: - 10. THE SOUHARDA COOPERATIVES ENJOY FUNCTIONAL AUTONOMY IN DESIGN AND IMPLEMENTATION OF THEIR BUSINESS PLANS, CUSTOMER SERVICE ACTIVITIES, ETC., BASED ON THE NEEDS OF THEIR MEMBERS. UNLIKE OTHER FORMS OF COOPERATIVES IN INDIA, THE INTERFERENCE OF STATE / CENTRAL IN DAY - TO - DAY OPERATIONS OF SOUHARDA COOPERATIVES IS ALMOST MINIMAL. 6 ITA NO. 285/BANG/2020 11. THE ABOVE DISCUSSION WOULD SHOW THAT SOUHARDA CO - OPERATIVES ARE ALSO ONE FORM OF CO - OPERATIVE SOCIETIES REGISTERED UNDER A LAW IN FORCE IN THE STATE OF KARNATAKA FOR REGISTRATION OF CO - OPERATIVE SOCIETIES. THEREFORE, THE CONCLUSION OF THE REVENUE AUTHORITIES THAT CO - OPERATIVE SOCIETIES AND CO - OPERATIVES ARE DIFFERENT AND THAT CO - OPERATIVE REGISTERED AS SOUHARDA SAHAKARI CANNOT BE REGARDED AS CO - OPERATIVE HERALDING THE RESURGENCE OF A NEW ERA IN COOPERATIVE MOVEMENT. THE STATE AND THE CENTRAL GOVERNMENTS WERE INVESTING MILLIONS OF RUPEES IN THE FORM OF SHARES, GRANTS, SUBSIDY, CONTRIBUTIONS, GOVERNMENT SUPPORT, ETC., BUT THE EX PECTED RESULTS COULDNT BE ACHIEVED IN COOPERATIVE MOVEMENTS. THIS CONDITION CONTINUED ALMOST UNTIL EARLY 1980S. 11. THE ABOVE DISCUSSION WOULD SHOW THAT SOUHARDA CO - OPERATIVES ARE ALSO ONE FORM OF CO - OPERATIVE SOCIETIES REGISTERED UNDER A LAW IN FORCE IN THE STATE OF KARNATAKA FOR REGISTRATION OF CO - OPERATIVE SOCIETIES. THEREFORE, THE CONCLUSION OF THE REVENUE AUTHORITIES THAT CO - OPERATIVE SOCIETIES AND CO - OPERATIVES ARE DIFFERENT AND THAT CO - OPERATIVE REGISTERED AS SOUHARDA SAHAKARI CANNOT BE REGARDED AS CO - OPERATIVE SOCIETIES IS UNSUSTAINABLE. WE THEREFORE HOLD THAT THE ASSESSEE SHOULD BE ALLOWED DEDUCTION U/S.80P(2)(A)(I) OF THE ACT, AS THE GROUND ON WHICH THE SAME WAS DENIED TO THE ASSESSEE IS HELD TO BE INCORRECT. HOWEVER, THE OTHER CONDITIONS FOR AL LOWING DEDUCTION U/S. 80P(2)(A)(I) OF THE ACT NEEDS TO BE EXAMINED BY THE AO. I, THEREFORE, REMAND THE QUESTION OF ALLOWING DEDUCTION U/S. 80P(2)(A)(I) OF THE ACT TO THE AO, EXCEPT THE ISSUE ALREADY DECIDED ABOVE. 5 . RESPECTFULLY FOLLOWING THIS TRIBUNAL ORDER, I HOLD THAT THE ASSESSEES CLAIM REGARDING DEDUCTION U/S. 80P(2)(A)(I) CANNOT BE REJECTED ON THIS BASIS THAT ASSESSEE IS A SOUHARDA SAHAKARI AND THEREFORE, CANNOT BE REGARDED AS A CO - OPERATIVE SOCIETY. BUT AFTER HOLDING SO, I SET ASIDE THE ORDER OF LD. CIT(A) AND RESTORE THE MATTER BACK TO THE AO FOR FRESH DECISION REGARDING ALLOWABILITY OF DEDUCTION U/S. 80P(2)(A)(I) OF THE IT ACT AFTER EXAMINING OTHER CONDITIONS FOR ALLOWING SUCH DEDUCTION BECAUSE THOSE CONDITIONS ARE NOT EXAMINED BY THE AO TILL NO W. I ORDER ACCORDINGLY. 4.1 FURTHER IN THE CASE OF MAHAVEER CREDIT CO - OPERATIVE SOCIETY LTD. VS. ITO IN ITA NOS.282 & 283/BANG/2020 DT.21.08.2020 WHEREIN THE TRIBUNAL HAS HELD IN PARAS 9 TO 12 AS UNDER : 9. WE HAVE PERUSED SUBMISSIONS ADVANCED BY BOTH SIDES 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 SETTING ASIDE THE ISSUE OF DEDUCTION U/S.80P(2)(A)(I) OF THE 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 INCOME 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) OF 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 MUTUALITY IS NOT VIOLATED IN RESPECT OF SUCH INCOME. AN EXAMINATION OF - (I)THE MEMORANDUM OF ASSOCIATION, THE ARTICLES OF ASSOCIATION, 7 ITA NO. 285/BANG/2020 (II) THE BYELAWS AND OTHER DOCUMENTS EXPLAINING THE RULES AND REGULATIONS OF THE SOCIETY IS NECESSARY, SO AS TO CLEARLY UNDERSTAND THE PURPOSE AND THE NATURE OF BUSINESS DONE BY IT. AN EXAMINATION OF THE FACTS IN LIGHT OF DISCUSSION CITED BY LD.CIT(A) AS WELL AS DECISION OF HONBLE KARNATAKA HIGH COURT IN CASE OF TUMKUR (SUPRA) IS TO BE CARRIED OUT. 4.2 IN VIEW OF THE ABOVE BINDING DECISIONS OF THE CO - ORDINATE BENCH OF TRIBUNAL, WE ARE INCLINED TO REMIT THE MATTER TO THE FILE OF ASSESSING OFFICER WITH SIMILAR DIRECTIONS. 5 . IN THE RESULT, APPEAL OF TH E ASSESSEE IS ALLOWED FOR STATISTICAL PURPOSES. PRONOUNCED IN THE OPEN COURT ON THE DATE MENTIONED ON THE CAPTION PAGE. SD/ - ( CHANDRA POOJARI ) ACCOU NTANT MEMBER DATED: 07 .09. 20 20 . *REDDY GP COPY TO 1. THE APPELLANT 2. THE RE SPONDENT 3. CIT (A) 4. PR. CIT 5. DR, ITAT, BANGALORE. 6. GUARD FILE BY ORDER ASSISTANT REGISTRAR INCOME - TAX APPELLATE TRIBUNAL BANGALORE