Sri Udayaravi Souhardha Credit Co-operative Limited , Tiptur V. The Income Tax Officer Ward-1 , Tiptur

ITA 313/BANG/2019

• Counselvise Citation: [2019] 116 COUNSELVISE.COM (IT) 7146 (ITAT-BANGALORE)
• Duration Of Justice: 5 month(s) 4 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 26-07-2019
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: B
• Assessment Year: 2013-2014
• Appeal Filed On: 21-02-2019
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Assessee Lawyers: SOUMYA K
• Keywords: Opportunity of being heard; Source of fund; TDS; Set aside
• Section: 80P

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL BANGALORE BENCHES : B , BANGALORE BEFORE SHRI B.R.BASKARAN, A CCOUNTANT MEMBER AND SMT.BEENA PILLAI, JUDICAL MEMBER ITA NO . 313 (BANG)/201 9 (ASSESSMENT YEAR : 201 3 - 14 ) M/S UDAYA RAVI SOUHARDA CREDIT CO - OPERATIVE LTD., UDAYARAVI BHAVANA, 1 ST MAIN ROAD, 7 TH CROSS, K.R.EXTENSION, TIPTUR - 572 201 . PANNO.AA WFS0981J APPELLANT VS THE INCOME TAX OFFICER , WARD - 1 , TIPTUR RESPONDENT APPELLANT BY : S MT SOUMYA, K. A DVOCATE REVENUE BY : S HRI R.N.SIDDAPPAJI, ADDL. CIT DATE OF HEARING : 2 5 - 0 7 - 2019 DATE OF PRONOUNCEMENT : 26 - 07 - 2019 O R D E R PER BEENA PILLAI, JUDICIAL MEMBER : PRESENT APPEAL HAS BEEN FILED BY ASSESSEE AGAINST ORDER DATED 28 - 0 1 - 201 9 PASSED BY LD. CIT (A) - 7 , BE NGAL URU FOR ASSESSMENT YEAR 201 4 - 15 ON FOLLOWING GROUNDS; . 1. THE ORDER OF THE LR . IN SO FAR AS IT IS AGAINST THE APPELLANT IS OPPOSED TO FACTS, CIRCUMSTANCES, LAW, EQUITY, WEIGHT OF EVINCE, PROBABILITIES OF THE C A SE. 2. THE LR HAVING APPRECIATED THE FACTS THAT APP ELLANT IS CARRYING ON THE BUSINESS OF PROVIDING CREDIT FACILITIES TO ITS MEMBERS, OU GHT TO HAVE APPRECIATED THAT APPELLANT, IS ELIGIBLE FOR DEDUCTION U/S 80P(2)(A) (I). ITA NO. 313 / BANG/201 9 PAGE 2 OF 6 3. THE LR CIT(A)OUGHT TO HAVE APPRECIATE D THAT THE JURISDICTIONAL HIGH COURTS IN VARIOUS CASES AS SUBMITTED, HAS LAID DOWN THE LAW REGARDING ADMISSIBILITY OF DEDUCTION U/S 80P(2)(A)(I). THE SUCH RATIO LAID DOWN BY THE JURISDICTIONAL HIGH COURTS SQU A RELY APPLIES TO THE APPELLANT AND HENCE ACCORDINGLY APPELLANT IS ELIGIBLE FOR DEDUCTION U/S 80P(2)(A)(I). THE CONTENTION OF LR. , BEING A CO - OPERATIVE SOCIETY IS NOT PRIMARY AGRICULTURE SOCIETY IS NOT AS P ER THE LAW. 4. THE LR OUGHT TO HAVE APPRECIATED THAT THE DECISION OF HONBLE SUPREME COURT IN THE CASE OF M/S TOTGARS CO - OPERATIVE SALE SOCIETY LTD VS ITO IS NOT APPLIES TO THE APPELLANT FOR THE REASON, APPELLANT THAT IS A CREDIT SOCIETY CARRYING ON THE BUSINESS OF PROVIDING CREDIT FACILITIES TO ITS MEMBERS AND HENCE THE CASE OF SQUARELY FALLS UNDER THE DECISION OF KARNA TAKA HIGH COURT TUMKUR MER C HANTS SOUHADA CREDIT CO - OP E RATIVE LTD VS ITO DATE 28 - 10 - 2014 IN ITA NO.307 OF 2014 AND UNDER THE CIRCULAR OF THE BOARD BEARING NO.18/2015 DATED 2 ND NOVEMBER, 2015 HENCE INTEREST ON DEPOSIT IS ATTRIBUTABLE TO BUSINESS OF THE APPEL LANT AND HENCE SAME LIABLE OF DEDUCTION U/S 80P(2)(A)(I) OF THE ACT. 5 . FOR THESE AND SUCH OTHER GROUNDS THAT MAY BE URGED AT THE TIME OF HEARING OF THE APPEAL, THE APPELLANT P RA YS THAT APPE A L MAY BE A LLOWED. 2. AT THE VERY BEGINNING, IT WAS SUBMITTED BY LD AR THAT ONLY GRIEVANCE IS REGARDING DISALLOWANCE OF ASSESSEES CLAIM FOR DEDUCTION U/S. 80P OF THE IT ACT. 3. BRIEF FACTS OF THE CASE ARE AS UNDER: (AY 20 1 4 - 15 ) : ASSESSEE IS A CO - OPERATIVE S OCIE T Y REGI S TER E D UNDER T HE KA RNATAKA CO - OPERATIVE SOCIETIES ACT, 1959. THE ASSESSEE IS A PRIM ARY CREDIT CO - OPERATIVE SOCIETY PROVIDING CREDIT F A CILITI E S TO ITS MEMBERS. ASSESSEE FILED RETURN OF INCOME FOR THE AY: 201 4 - 15 DECLARING NIL TOTAL INCOME AFTER CLAIMING DEDUCTION U/S 80P(2) OF THE IT ACT, 1961. 3.1 I T WAS SUBMITTED BY LD. AR OF ASSESSEE THAT THE ASSESSEE HAS EARNED SOME INTEREST INCOME FROM BANK WHICH HAS BEEN ASSESSED BY THE AO AS INCOME FROM OTHER SOURCES AND ASSESSEES CLAIM FOR DEDUCTION U/S. 80P OF THE IT ACT WAS DISALLOWED BY THE ITA NO. 313 / BANG/201 9 PAGE 3 OF 6 AO AND IT IS CONFIRMED BY CIT(A). HE SUBMITTED THAT THE MAIN BASIS OF THE DECISION OF THE AUTHORITIES BELOW IS B Y FOLLOWING THE JUDGMENT OF HON'BLE KARNATAKA HIGH COURT RENDERED IN THE CASE OF PCIT AND ANOTHER VS. TOTAGARS CO - OPERATIVE SALE SOCIETY AS REPORTED IN 395 ITR 611 (KARN). HE ALSO SUBMITTED THAT OTHER JUDGMENT ON WHICH RELIANCE HAS BEEN PLACED BY THE AUTH ORITIES BELOW IS THE JUDGMENT OF HONBLE APEX COURT RENDERED IN THE CASE OF THE CITIZEN CO - OPERATIVE SOCIETY LTD. VS. ACIT AS REPORTED IN 397 ITR 1. HE SUBMITTED THAT NONE OF THE AUTHORITIES BELOW HAS EXAMINED AND COMPARED THE FACTS OF THE PRESENT CASE WI TH THE FACTS IN THE CASE OF THE CITIZEN CO - OPERATIVE SOCIETY LTD. VS. ACIT (SUPRA). REGARDING THE JUDGMENT OF HON'BLE KARNATAKA HIGH COURT RENDERED IN THE CASE OF PCIT AND ANOTHER VS. TOTAGARS CO - OPERATIVE SALE SOCIETY (SUPRA), IT WAS SUBMITTED THAT IN TH E FACTS OF PRESENT CASE, THIS JUDGMENT OF HON'BLE KARNATAKA HIGH COURT IS NOT APPLICABLE AND INSTEAD OF THAT, ANOTHER JUDGMENT OF HON'BLE KARNATAKA HIGH COURT RENDERED IN THE CASE OF TUMKUR MERCHANTS SOUHARDA CREDIT COOPERATIVE LTD. VS. ITO AS REPORTED IN 230 TAXMAN 309 IS APPLICABLE. AT THIS JUNCTURE, THIS PROPOSITION WAS PUT FORWARD BY THE BENCH THAT UNDER SIMILAR FACTS, THE TRIBUNAL IS RESTORING THE MATTER BACK TO THE FILE OF CIT(A) FOR FRESH DECISION AFTER EXAMINING THE FACTS OF THE PRESENT CASE IN THE LIGHT OF THESE TWO JUDGMENTS RENDERED IN THE CASE OF PCIT AND ANOTHER VS. TOTAGARS CO - OPERATIVE SALE SOCIETY (SUPRA) AND TUMKUR MERCHANTS SOUHARDA CREDIT COOPERATIVE LTD. VS. ITO (SUPRA) WITH THE DIRECTION THAT IF THE FACTS ARE IN LINE WITH THE FACTS IN T HE CASE OF PCIT AND ANOTHER VS. TOTAGARS CO - OPERATIVE SALE SOCIETY (SUPRA), THEN THE ISSUE SHOULD BE DECIDED AGAINST THE ASSESSEE. BUT IF THE FACTS OF THE PRESENT CASE ARE IN ITA NO. 313 / BANG/201 9 PAGE 4 OF 6 LINE WITH THE FACTS IN THE CASE OF TUMKUR MERCHANTS SOUHARDA CREDIT COOPERATIVE LTD. VS. ITO (SUPRA), THEN THE ISSUE SHOULD BE DECIDED IN FAVOUR OF THE ASSESSEE. THE BENCH POINTED OUT THAT IN THE CASE OF PCIT AND ANOTHER VS. TOTAGARS CO - OPERATIVE SALE SOCIETY (SUPRA), THE AMOUNT DEPOSITED IN BANK ON WHICH INTEREST INCOME WAS EARNED W AS OUT OF THE LIABILITY OF THE ASSESSEE SOCIETY AND NOT OUT OF ITS OWN FUNDS AND FOR THIS REASON, IN THAT CASE OF PCIT AND ANOTHER VS. TOTAGARS CO - OPERATIVE SALE SOCIETY (SUPRA), THE HON'BLE KARNATAKA HIGH COURT DECIDED T HE ISSUE AGAINST THE ASSESSEE. BUT IN THE CASE OF TUMKUR MERCHANTS SOUHARDA CREDIT COOPERATIVE LTD. VS. ITO (SUPRA), IT WAS FOUND THAT THE MONEY DEPOSITED IN BANK BY ASSESSEE WAS OUT OF ITS OWN FUNDS AND NOT OUT OF LIABILITY AND THEREFORE, THE ISSUE IN THAT CASE WAS DECIDED IN FAVOUR OF THE ASSESSEE. THE BENCH PROPOSED THAT SINCE THE FACTS IN THE PRESENT CASE ARE NOT READILY AVAILABLE ON RECORD AND THERE IS NO FINDING OF AUTHORITIES BELOW ON THIS FACTUAL ASPECT REGARDING THE SOURCE OF FUNDS DEPOSITED ON BANK ON WHICH INTEREST INCOME WAS EAR NED, THE ISSUE SHOULD GO BACK TO THE FILE OF CIT(A) FOR FRESH DECISION. THE BENCH ALSO PROPOSED THAT REGARDING THE JUDGMENT OF HONBLE APEX COURT RENDERED IN THE CASE OF THE CITIZEN CO - OPERATIVE SOCIETY LTD. VS. ACIT (SUPRA) ALSO, THE LD. CIT(A) SHOULD PAS S A SPEAKING AND REASONED ORDER AFTER COMPARING THE FACTS OF PRESENT CASE WITH THE FACTS IN THAT CASE IN THE LIGHT OF LAW FOR COOPERATIVE SOCIETY IN THE STATE OF KARNATAKA BECAUSE IN THAT CASE, THE STATE IS DIFFERENT AND COOPERATIVE LAW IS DIFFERENT . IN RE PLY, THE LD. AR OF ASSESSEE AGREED WITH THIS PROPOSITION PUT FORWARD BY THE BENCH. THE LD. DR OF REVENUE SUPPORTED THE ORDER OF CIT(A). ITA NO. 313 / BANG/201 9 PAGE 5 OF 6 4. WE HAVE C ONSIDERED THE RIVAL SUBMISSIONS AND WE SET ASIDE THE ORDER OF CIT( A) AND RESTORE THE MATTER BACK TO HIS FILE FOR FRESH DECISION IN THE LIGHT OF ABOVE DISCUSSION, BY WAY OF A SPEAKING AND REASONED ORDER AFTER PROVIDING ADEQUATE OPPORTUNITY OF BEING HEARD TO BOTH SIDES. THE LD. CIT(A) IS DIRECTED TO PASS A SPEAKING AND R EASONED ORDER AFTER COMPARING THE FACTS OF PRESENT CASE WITH THE FACTS IN THE CASE OF THE CITIZEN CO - OPERATIVE SOCIETY LTD. VS. ACIT (SUPRA). HE IS ALSO DIRECTED TO EXAMINE THE FACTS OF PRESENT CASE IN THE LIGHT OF THESE TWO JUDGMENTS OF HON'BLE KARNATAKA HIGH COURT RENDERED IN THE CASE OF TUMKUR MERCHANTS SOUHARDA CREDIT CO - OPERATIVE LTD. VS. ITO (SUPRA) AND PCIT AND ANOTHER VS. TOTAGARS CO - OPERATIVE SALE SOCIETY (SUPRA) AND PASS NECESSARY ORDER AS PER LAW IN THE LIGHT OF ABOVE DISCUSSION AFTER PROVIDING ADEQUATE OPPORTUNITY OF BEING HEARD TO BOTH SIDES. 5. IN THE RESULT, THE APPEAL FILED BY THE ASSESSEE IS ALLOWED FOR STATISTICAL PURPOSES. ORDER P RONOUNCED IN THE OPEN COURT ON 26 - 07 - 2019. SD/ - SD/ - (B.R.BASKAR A N) (BEENA PILLAI) ACCOUNTAN T MEMBER JUDICIAL MEMBER DATED: THE 26 TH JULY, 2019. *AM COPY OF THE ORDER FORWARDED TO: 1.APPELLANT; 2.RESPONDENT; 3.CIT; 4.CIT(A); 5. DR 6. ITO (TDS) 7.GUARD FI LE BY ORDER ASST.REGISTRAR ITA NO. 313 / BANG/201 9 PAGE 6 OF 6