Shrinidhi Urban Co-operative Credit Society Limited , Bagalkot V. Income Tax Officer Ward-2 , Bagalkot

ITA 3090/BANG/2018

• Counselvise Citation: [2018] 118 COUNSELVISE.COM (IT) 8668 (ITAT-BANGALORE)
• Duration Of Justice: 1 month(s) 5 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: 16-11-2018
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: PADMA MEENAKSHI
• Assessee Lawyers: ASHOK G. MUDNUR
• Keywords: Opportunity of being heard; Co-operative Credit Society
• Section: 80P

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL SMC-C BENCH : BANGALORE BEFORE SHRI A.K.GARODIA, ACCOUNANT MEMBER ITA NO. 3090 (BANG) 2018 (ASSESSMENT YEAR : 2015 16) M/S. SHRINIDHI URBAN COOP CREDIT SOCIETY LTD. APPELLANT MAIN ROAD, RABAKAVI - 587311, TAL. JAMKHANDI, DIST.:- BAGALKOT. PAN. AAAAS7029Q VS THE INCOME TAX OFFICER, WARD 2, BAGALKOT. RESPONDENT ASSESSEE BY : SHRI ASHOK G. MUDNUR, C. A. 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 DIR ECTED AGAINST THE ORDER OF CIT (A) BELGAUM DATED 24.08.2018 FOR A. Y. 2015 16. 2. THE GROUNDS RAISED BY THE ASSESSEE ARE AS UNDER: - 1. THE LEARNED COMMISSIONER OF INCOME TAX (APPEALS) ,BELGAUM HAS ERRED IN UPHOLDING THE LEARNED ASSESSING OFFICER OR DER DISALLOWING THE APPELLANT'S CLAIM U/S 80P(2)(A)(I) OF THE INCOM E TAX ACT 1961 WHICH IS OPPOSED TO LAW AND FACTS OF THE CASE. 2. THE LEARNED COMMISSIONER OF INCOME TAX (APPEALS) , BELGAUM HAS ERRED IN APPLYING CITIZEN COOP SOCIETY LTD, HYDERAB AD (SC) CASE WHICH FACTS ARE DIFFERENT THAN THAT OF THE APPELLAN T WHEREIN THERE ARE NO LOANS TO GENERAL PUBLIC BUT ONLY TO MEMBERS ELIG IBLE UNDER THE STATE ACT. 3. THE LEARNED COMMISSIONER OF INCOME TAX (APPEALS) ERRED IN BRINGING NEW DIMENSION TO THE MEANING OF 'MEMBER' B Y DRAWING ITA NO. 3090(BANG)2018 2 DISTINCTION BETWEEN GENERAL MEMBERS, ASSOCIATE MEMB ERS AND NOMINAL MEMBERS WHICH THE INCOME TAX ACT ,1961 DOES NOT. THE APPELLANTS DRAW SUPPORT FROM THE JALAGAON DISTRICT CENTRAL COOPERATIVE BANK LTD & ANR VS UNION OF INDIA & ORS (2004) 265 ITR 423 (BORN) 4. THE LEARNED COMMISSIONER OF INCOME TAX (APPEALS) ,BELGAUM HAS ERRED IN UPHOLDING THE LEARNED ASSESSING OFFICER OR DER WHEREIN THEY HAVE EQUATED NOMINAL MEMBERS AND ASSOCIATE MEMBERS AS NON- MEMBERS AND HENCE VIOLATION OF KARNATAKA COOPERATIV E SOCIETY ACT, 1959 AND THEREBY NOT ELIGIBLE TO DEDUCTION U/S 80P( 2) APPLYING CITIZEN COOP SOCIETY LTD HYDERABAD VS ACIT,9(1) HYDERABAD ( SC ) CASE. 5. THE APPELLANTS CRAVES LEAVE TO ADD/ALTER ANY OF THE GROUNDS OF APPEAL ON OR BEFORE THE DATE OF FINAL HEARING. 3. LEARNED AR OF THE ASSESSEE SUBMITTED THAT THE AO AND CIT 9A) HAD APPLIED THE JUDGMENT OF HONBLE APEX COURT RENDERED IN THE CASE OF CITIZEN CO- OPERATIVE SOCIETY LIMITED VS. ACIT, 397 ITR 1 WITHO UT COMPARING THE FACTS OF THAT CASE WITH THE FACTS OF THE PRESENT CASE. LEARN ED DR OF THE REVENUE SUPPORTED THE ORDERS OF THE LOWER AUTHORITIES AND P LACED RELIANCE ON THE JUDGMENT OF HONBLE APEX COURT RENDERED IN THE CASE OF CITIZEN CO-OPERATIVE SOCIETY LIMITED VS. ACIT (SUPRA). 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 RELEVANT AND TH EREFORE, 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 ITA NO. 3090(BANG)2018 3 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 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 APPE LLANT, 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 GRANTED TO GENERAL PUBLIC. IN THE PRESENT CASE, THESE ASPECTS OF FACTS ARE NOT EXAMINED AND COMMENT ED UPON BY ANY OF THE LOWER AUTHORITIES. HENCE, I FEEL IT PROPER TO RESTO RE THE MATTER BACK TO THE AO FOR A FRESH DECISION AFTER EXAMINING THE FACTS OF THE P RESENT CASE IN THE LIGHT OF THIS JUDGMENT BY WAY OF A SPEAKING AND REASONED ORDER AF TER 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