M/s Prathamik Krishi Pattina Sahakari Sangha Niyamit , Bagalkot V. Income Tax Officer Ward-2 , Bagalkot

ITA 2903/BANG/2018

• Counselvise Citation: [2018] 118 COUNSELVISE.COM (IT) 8927 (ITAT-BANGALORE)
• Duration Of Justice: 2 month(s) 16 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 21-12-2018
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: C
• Assessment Year: 2015-2016
• Appeal Filed On: 05-10-2018
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: KARUPPASWAMY S.R
• Keywords: Opportunity of being heard; Source of fund; Condonation of delay

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL, BANGALORE BENCH C SMC BEFORE SHRI N.V VASUDEVAN, VICE PRE SIDENT ITA NO.2903/BANG/2018 ASSESSMENT YEAR : 2015-16 PRATHAMIK KRISHI PATTINA SAHAKARI SANGHA NIYAMIT POST : SAVALGI TA: JAMAKHANDI DIST.BAGALKOT. PAN AABAP 3832B. VS. THE INCOME-TAX OFFICER, WARD-2, BAGALKOT. APPELLANT RESPONDENT APPELLANT BY : SHRI VEERANNA M MURGOD, C.A RESPONDENT BY : SHRI KARUPPASWAMY S.R, ADDL. CIT DATE OF HEARING : 17.12.2018 DATE OF PRONOUNCEMENT : .12.2018 O R D E R PER SHRI N.V VASUDEVAN, VICE PRESIDENT : THIS IS AN APPEAL BY THE ASSESSEE AGAINST THE ORD ER DATED 25/6/2018 OF CIT(A), BELAGAVI RELATING TO ASST. Y EAR 2015-16. 2. THE ASSESSEE CLAIMED DEDUCTION OF SUM OF RS.5,68 ,571/- U/S 80P(2)(D) OF THE ACT / U/S 80P(2)(A)(I) OF THE ACT. THIS WAS DENIED BY THE REVENUE AUTHORITIES FOR THE REASON THAT THE INTERES T INCOME WHICH WAS THE SUBJECT MATTER OF THE CLAIM FOR DEDUCTION WAS TO BE ASSESSED UNDER THE HEAD INCOME FROM OTHER SOURCES. THE DEDUCTION CA LMED BY THE ASSESSEE ITA NO.2903/B/18 2 WAS NOT ALLOWED BY THE REVENUE AUTHORITIES FOR THE REASON THAT THE INCOME WHICH WAS CLAIMED AS DEDUCTION WAS INTEREST INCOME WHICH WAS EARNED BY THE ASSESSEE ON DEPOSITS AND IN VIEW OF THE DECI SION OF THE HONBLE SUPREME COURT IN THE CASE OF PCIT VS. TOTGARS CO-OP ERATIVE SALE SOCIETY LTD., 83 TAXMANN.COM 140 INTEREST INCOME HAD TO BE REGARDED AS INCOME FROM OTHER SOURCES. SINCE INTEREST INCOME WAS NOT INCOME DERIVED FROM THE BUSINESS OF CO-OPERATIVE SOCIETY, THE DEDUCTION CLAIMED BY THE ASSESEE CANNOT BE ALLOWED. 3. ON APPEAL BY THE ASSESSEE, THE CIT(A) CONFIRMED THE ACTION OF THE AO. AGGRIEVED BY THE ORDER OF THE CIT(A), THE ASSE SSEE IS IN APPEAL BEFORE THE TRIBUNAL. 4. THERE IS A DELAY OF 19 DAYS IN FILING OF THIS A PPEAL BY THE ASSESSEE. IT HAS BEEN EXPLAINED IN AFFIDAVIT FILED BEFORE THE TR IBUNAL THAT THE DELAY WAS DUE TO THE FACT THAT THE ASSESSEE WAS LOCATED FAR O FF PLACE FROM BANGALORE AND DUE TO THE PRE OCCUPATION OF CONCERNED PERSON I N ARRANGING AGM OF THE SOCIETY, WE ACCEPT THE REASONS GIVEN IN THE AFF IDAVIT FOR CONDONATION OF DELAY AND CONDONE THE DELAY IN FILING THE APPEAL. 4. AS FAR AS THE MERITS OF THE CLAIM OF THE ASSESSE E IS CONCERNED, THE GRIEVANCE OF THE ASSESSEE IS THAT INTEREST INCOME O UGHT NOT TO HAVE TREATED AS INCOME FROM OTHER SOURCES AND OUGHT TO H AVE BEEN CONSIDERED AS INCOME FROM BUSINESS ELIGIBLE FOR DEDUCTION U/S. 80P(2)(A)(I) OF THE ACT. 5. I HAVE HEARD THE RIVAL SUBMISSIONS. THE LEARNE D 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 CONSIDERED THE DECISION OF THE HONBLE APEX COURT IN THE CASE OF T HE TOTGARS CO- OPERATIVE SALES SOCIETY (SUPRA) AND HELD THAT INTER EST INCOME IN RESPECT OF ITA NO.2903/B/18 3 TEMPORARY PARKING OF OWN SURPLUS FUNDS NOT IMMEDIAT ELY REQUIRED IS ELIGIBLE FOR DEDUCTION U/S.80P(2)(A)(I) OF THE ACT. THE LEARNED DR RELIED ON A SUBSEQUENT DECISION OF THE HONBLE KARNATAKA HIGH COURT IN THE CASE OF PCIT VS. TOTGARS CO-OPERATIVE SALE SOCIETY LTD. 395 ITR 611 (KARN.). 6. I HAVE CAREFULLY GONE THROUGH THE JUDGMENT RELIE D BY THE LEARNED DR. THE FACTS OF THE CASE BEFORE THE HONBLE KARNA TAKA 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 W AS AY 1991-92 TO 1999-2000. THE NATURE OF INTEREST INCOME FOR ALL T HE AYS WAS IDENTICAL. THE BONE OF CONTENTION OF THE ASSESSEE IN AY 2007-0 8 TO 2011-12 WAS THAT THE DEDUCTION UNDER SECTION 80P(2) OF THE ACT IS CLAIMED 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 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-OPE RATIVE SALES SOCIETY LTD. (SUPRA) AND HELD THAT INTEREST EARNED FROM SCH EDULE BANK OR CO- OPERATIVE BANK IS ASSESSABLE UNDER THE HEAD INCOME FROM OTHER SOURCES AND THEREFORE THE PROVISIONS OF SEC.80P(2)(D)OF THE ACT WAS NOT APPLICABLE ITA NO.2903/B/18 4 TO SUCH INTEREST INCOME. IT IS THUS CLEAR THAT THE SOURCE OF FUNDS OUT OF 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 A SSESSEES 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 C OURT IN THE CASE OF TUMUKUR 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 EXAMING THE FACTS IN THE LIGHT OF THESE JUDGMENT OF THE HONBLE APEX COURT RENDERED IN THE CASE OF THE TOTG ARS CO-OPERATIVE SALE SOCIETY LTD. (SUPRA) AND OF HONBLE KARNATAKA HIGH COURT RENDERED IN THE CASE OF TUMUKUR MERCHNTS SOUHARDA CO-OPERATIVE LTD. (SUPRA). 7. THE AO WILL AFFORD OPPORTUNITY OF BEING HEARD TO THE ASSESSEE AND FILING APPROPRIATE EVIDENCE, IF DESIRED, BY THE ASS ESSEE TO SUBSTANTIATE ITS CASE, BEFORE DECIDING THE ISSUE.BEFORE DECIDING THE ISSUE. 8. IN THE RESULT, APPEAL BY THE ASSESSEE IS TREATED AS ALLOWED FOR STATISTICAL PURPOSE. ORDER PRONOUNCED IN THE OPEN COURT ON 21 ST DECEMBER, 2018 . SD/- (N.V VASUDEVAN) VICE PRESIDENT BANGALORE DATED : 21/12/2018 VMS ITA NO.2903/B/18 5 COPY TO :1. THE ASSESSEE 2. THE REVENUE 3.THE CIT CONCERNED. 4.THE CIT(A) CONCERNED. 5.DR 6.GF BY ORDER ASST. REGI STRAR, ITAT, BANGALORE ITA NO.2903/B/18 6 1. DATE OF DICTATION 2. DATE ON WHICH THE TYPED DRAFT IS PLACED BEFORE THE DICTATING MEMBER . 3. DATE ON WHICH THE APPROVED DRAFT COMES TO SR. P. S ... 4. DATE ON WHICH THE FAIR ORDER IS PLACED BEFORE THE DICTATING MEMBER .. 5. DATE ON WHICH THE FAIR ORDER COMES BACK TO THE S R. P.S. .. 6. DATE OF UPLOADING THE ORDER ON WEBSITE.. 7. IF NOT UPLOADED, FURNISH THE REASON FOR DOING SO .. 8. DATE ON WHICH THE FILE GOES TO THE BENCH CLERK .. 9. DATE ON WHICH ORDER GOES FOR XEROX & ENDORSEMENT.. 10. DATE ON WHICH THE FILE GOES TO THE HEAD CLERK . 11. THE DATE ON WHICH THE FILE GOES TO THE ASSISTANT REGISTRAR FOR SIGNATURE ON THE ORDER . 12. THE DATE ON WHICH THE FILE GOES TO DISPATCH SEC TION FOR DISPATCH OF THE TRIBUNAL ORDER . 13. DATE OF DESPATCH OF ORDER. ..