Shri Parvati Parameshwar Pattin Sahakari Sangha Niyamit , Bagalkot V. Income Tax Officer Ward-1 , Bagalkot

ITA 3081/BANG/2018

• Counselvise Citation: [2018] 118 COUNSELVISE.COM (IT) 8663 (ITAT-BANGALORE)
• Duration Of Justice: 1 month(s) 6 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 21-12-2018
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: B
• Assessment Year: 2015-2016
• Appeal Filed On: 15-11-2018
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Keywords: Opportunity of being heard; Co-operative Credit Society
• Section: 80P

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL SMC-B BENCH : BANGALORE BEFORE SHRI A.K.GARODIA, ACCOUNANT MEMBER ITA NO. 3081 (BANG) 2018 (ASSESSMENT YEAR : 2015 16) M/S. SHRI PARVATI PARAMESHWAR PATTIN SAHAKARI SANGH A NIYAMIT, APPELLANT NEAR JUMMA MASJID BUILDING, KAMATAGI, DIST. BAGALKOT. PAN. AAKAS5692K VS THE ITO, WARD 1, BAGALKOT. RESPONDENT ASSESSEE BY : SHRI MALLAH RAO, ADVOCATE REVENUE BY : SMT. PADMAMEENAKSHI, JCIT (DR) DATE OF HEARING : 03-12-2018 DATE OF PRONOUNCEMENT : 21-12-2018 O R D E R PER A. K. GARODIA, A.M.: THIS APPEAL IS FILED BY THE ASSESSEE AND IT IS DIRE CTED AGAINST THE ORDER OF CIT (A) BELGAUM DATED 17.09.2018 FOR A. Y. 2015 16. 2. THE GROUNDS RAISED BY THE ASSESSEE ARE AS UNDER: - 1. THE LD. COMMISSIONER OF INCOME TAX (APPEALS) ERR ED IN LAW AS WELL AS ON FACTS IN REJECTING THE CLAIM OF THE APPE LLANT IN RESPECT OF GRANT OF DEDUCTION U/S 80P(2)(A)(I) TO THE EXTENT O F RS.8,56,930.00 AS CLAIMED BY THE APPELLANT. THE APPELLANT PRAYS FOR G RANT OF THE DEDUCTION AS CLAIMED. 2. THE LD. COMMISSIONER OF INCOME TAX (APPEALS) ERR ED IN LAW AS WELL AS ON FACTS IN APPLYING THE JUDGEMENT OF HON. SUPREME COURT OF INDIA IN THE CASE OF CITIZEN CO-OPERATIVE SOCIETY, HYDERABAD. AS THE FACTS OF CITIZEN SOCIETY & THE ASSESSEE SOCIETY IS TOTALLY DIFFERENT. 3. THE LD. COMMISSIONER OF INCOME TAX (APPEALS) ERR ED IN LAW AND ON FACTS IN NOT FOLLOWING THE HON'BLE HIGH COURT OF KA RNATAKA, DHARWAD BENCH IN THE CASE OF TUMKUR MERCHANTS SOUHARDA CRED IT CO- OPERATIVE LTD V/S ITO AND GUTTUGEDARARA CREDIT CO-O PERATIVE SOCIETY LTD., VS. ITO. THE HIGH COURT OF KARNATAKA IS THE JURISDICTIONAL HIGH COURT TO THE LD. CIT (APPEAL). THE ASSESSEE SOCIETY HAS MADE DEPOSITS WITH BDCC BANK & OTHERS AS A SHOR T TERM DEPOSIT. ITA NO. 3081(BANG)2018 2 THESE DEPOSITS ARE MADE UP OUT OF IDLE FUNDS WHICH ARE REQUIRED FOR LENDING PURPOSE. AS & WHEN THE SOCIETY REQUIRES MON EY, IT WITHDRAWS THE DEPOSIT. THEREFORE INVESTMENT IS ATTRIBUTABLE T O THE MAIN ACTIVITY OF THE ASSESSEE SOCIETY. 4. EACH OF THE ABOVE GROUNDS IS WITHOUT PREJUDICE T O ONE ANOTHER AND THE APPELLANT CRAVES LEAVE TO ADD, DELETE, AMEND OR OTHERWISE MODIFY OR WITHDRAW ONE OR MORE OF THE ABOVE GROUNDS EITHER BEFORE OR AT THE TIME OF HEARING OF THIS APPEAL. 3. LEARNED AR OF THE ASSESSEE SUBMITTED THAT THE AO AND CIT (A) HAD APPLIED THE JUDGMENT OF HONBLE APEX COURT RENDERED IN THE CASE OF CITIZEN CO-OPERATIVE SOCIETY LIMITED VS. ACIT, 397 ITR 1 WITHOUT COMPARING THE FACTS OF THAT CASE WITH THE FACTS OF THE PRESENT CASE. LEARNED DR OF THE REVENUE SUPPORTED THE ORDERS OF THE LOWER AUTHORITIES AND PLACED RELIANCE ON THE JUDGMENT OF HONBLE APEX COURT REND ERED IN THE CASE OF CITIZEN CO-OPERATIVE SOCIETY LIMITED VS. ACIT (SUPR A). 4. I HAVE CONSIDERED THE RIVAL SUBMISSIONS AND I FI ND THAT PARA 25 OF THIS JUDGMENT OF HONBLE APEX COURT RENDERED IN THE CASE OF CITIZEN CO- OPERATIVE SOCIETY LIMITED VS. ACIT (SUPRA) IS RELEV ANT AND THEREFORE, THE SAME IS REPRODUCED HEREIN BELOW:- 25. SO FAR SO GOOD. HOWEVER, IT IS SIGNIFICANT TO P OINT OUT THAT THE MAIN REASON FOR DISENTITLING THE APPELLANT FROM GETTING THE DEDUCTION PROVIDED UNDER SECTION 80P OF TH E ACT IS NOT SUB-SECTION (4) THEREOF. WHAT HAS BEEN NOTIC ED BY THE ASSESSING OFFICER, AFTER DISCUSSING IN DETAIL THE AC TIVITIES OF THE APPELLANT, IS THAT THE ACTIVITIES OF THE APPELL ANT ARE IN VIOLATIONS OF THE PROVISIONS OF THE MACSA UNDER WHI CH IT IS FORMED. IT IS POINTED OUT BY THE ASSESSING OFFICER TH AT THE ASSESSEE IS CATERING TO TWO DISTINCT CATEGORIES OF PEOPLE. THE FIRST CATEGORY IS THAT OF RESIDENT MEMBERS OR ORD INARY MEMBERS. THERE MAY NOT BE ANY DIFFICULTY AS FAR AS THI S CATEGORY IS CONCERNED. HOWEVER, THE ASSESSEE HAD CARV ED OUT ANOTHER CATEGORY OF NOMINAL MEMBERS. THESE ARE THOSE MEMBERS WHO ARE MAKING DEPOSITS WITH THE ASSESS EE FOR THE PURPOSE OF OBTAINING LOANS, ETC. AND, IN FA CT, THEY ARE NOT MEMBERS IN REAL SENSE. MOST OF THE BUSINESS OF TH E APPELLANT WAS WITH THIS SECOND CATEGORY OF PERSONS W HO HAVE BEEN GIVING DEPOSITS WHICH ARE KEPT IN FIXED DEP OSITS WITH A MOTIVE TO EARN MAXIMUM RETURNS. A PORTION OF THESE DEPOSITS IS UTILISED TO ADVANCE GOLD LOANS, ETC. TO THE MEMBERS OF THE FIRST CATEGORY. IT IS FOUND, AS A MAT TER OF FACT, THAT HE DEPOSITORS AND BORROWERS ARE QUIET DISTI NCT. IN REALITY, SUCH ACTIVITY OF THE APPELLANT IS THAT OF FINANCE BUSINESS AND CANNOT BE TERMED AS CO-OPERATIVE SOCIETY. IT IS ALSO FOUND THAT THE APPELLANT IS ENGAGED IN THE ACTI VITY OF ITA NO. 3081(BANG)2018 3 GRANTING LOANS TO GENERAL PUBLIC AS WELL. ALL THIS IS DONE WITHOUT ANY APPROVAL FROM THE REGISTRAR OF THE SOCI ETIES. WITH INDULGENCE IN SUCH KIND OF ACTIVITY BY THE APPEL LANT, IT IS REMARKED BY THE ASSESSING OFFICER THAT THE ACTIVI TY OF THE APPELLANT IS IN VIOLATION OF THE CO-OPERATIVE SOCIE TIES ACT. MOREOVER, IT IS A CO-OPERATIVE CREDIT SOCIETY WHICH IS NOT ENTITLED TO DEDUCTION UNDER SECTION 80P(2)(A)(I) OF T HE ACT. 5. IT IS SEEN THAT IN THAT CASE, IT WAS NOTED THAT THE ASSESSEE IS IN FINANCE BUSINESS BECAUSE IT WAS FOUND IN THAT CASE THAT THE DEPOSITORS AND BORROWERS ARE QUITE DISTINCT AND LOAN IS ALSO GRANT ED TO GENERAL PUBLIC. IN THE PRESENT CASE, THESE ASPECTS OF FACTS ARE NOT EX AMINED AND COMMENTED UPON BY ANY OF THE LOWER AUTHORITIES. HENCE, I FEEL IT PROPER TO RESTORE THE MATTER BACK TO THE AO FOR A FRESH DECISION AFTER EX AMINING THE FACTS OF THE PRESENT CASE IN THE LIGHT OF THIS JUDGMENT BY WAY O F A SPEAKING AND REASONED ORDER AFTER PROVIDING ADEQUATE OPPORTUNITY OF BEING HEARD TO THE ASSESSEE. 6. IN THE RESULT, THE APPEAL OF THE ASSESSEE IS ALL OWED FOR STATISTICAL PURPOSES. ORDER PRONOUNCED IN THE OPEN COURT ON THE DATE MENT IONED ON THE CAPTION PAGE. SD/- (A.K. GARODIA) ACCOUNTANT MEMBER BANGALORE D A T E D : 21.12.2018 /MS/ COPY TO: 1. APPELLANT 4. CIT(A) 2. RESPONDENT 5. DR, ITAT, BANGALORE 3. CIT 6. GUARD FILE BY ORDER ASSISTANT REGISTRAR, INCOME TAX APPELLATE TRIBUNAL, BANGALORE.