Chikkerur Pattina Souharda Sahakari Niyamitha , Haveri V. The Income Tax Officer Ward-2 , Haveri

ITA 3275/BANG/2018

• Counselvise Citation: [2019] 118 COUNSELVISE.COM (IT) 7892 (ITAT-BANGALORE)
• Duration Of Justice: 26 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 02-01-2019
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: B
• Assessment Year: 2014-2015
• Appeal Filed On: 07-12-2018
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: D KIRAN
• Keywords: Principle of natural justice
• Section: 80P; 6

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL, BANGALORE BENCH B, SMC BEFORE SHRI N.V VASUDEVAN, VICE PRESIDENT ITA NO.3275/BANG/2018 ASSESSMENT YEAR : 2014- 15 CHIKKERUR PATTINA SOUHARDA SAHAKARI NIYAMITHA, MAIN ROAD, NR. BUS STAND, CHIKKERUR, HAVERI DIST. PAN AAAAC 9264H. VS. THE INCOME-TAX OFFICER, WARD 2, HAVERI. APPELLANT RESPONDENT APPELLANT BY : NONE RESPONDENT BY : SHRI D KIRAN, JCIT DATE OF HEARING : 26.12.2018 DATE OF PRONOUNCEMENT : 02.01.2019 O R D E R PER SHRI N.V VASUDEVAN, VICE PRESIDENT THIS IS AN APPEAL BY THE ASSESSEE AGAINS T THE ORDER DATED 27/9/2018 OF CIT(A), DAVANGERE RELATING TO ASST. YE AR 2014-15. 2. THE GROUNDS OF APPEAL RAISED BY THE ASSESSEE READS AS FOLLOWS:- 1) THAT ORDER OF THE HONBLE COMMISSIONER OF INCOM E (APPEALS) DAVANGERE IS OPPOSED TO THE LAW AND *FACT S AND CIRCUMSTANCES OF THE CASE. ITA NO.3275/B/18 2 2) THAT THE LEARNED CIT (APPEALS) DAVANGERE IS NOT JUSTIFIED IN REJECTING GROUNDS SUMMARILY WHICH IS O PPOSED TO THE PRINCIPLES OF NATURAL JUSTICE. 3) THAT THE LEARNED CIT (APPEALS) DAVANGERE HAS ERR ED IN UPHOLDING THE DISALLOWANCE OF RS. 19,24,014/- U/ S 80(2)(A)(1) WITHOUT APPRECIATING THE LEGAL PROVISIO NS AS APPLICABLE. 4) THAT THE LEARNED CIT (APPEALS) DAVANGERE HAS ERR ED IN CONFIRMING AN ADDITION OF RS. 20,77,789/- BEING INCOME EARNED FROM LIQUID DEPOSIT MADE IN NATIONALISED BAN KS WITHOUT PERUSING THE CASE AND THE SAME IS OPPOSED T O THE PRINCIPLES OF NATURAL JUSTICE. 5) THAT THE LEARNED CIT (APPEALS) DAVANGERE HAS ERR ED IN SUSTAINING AND ADDITION OF RS. 39,830/- BEING RE NTAL INCOME. 2. DURING THE COURSE OF HEARING OUR ATTENTIO N WAS INVITED TO THE FACT THAT THE ASSESSEE WAS REGISTERED UNDER SOUHARDHA S AHAKARI ACT AS CO- OPERATIVE BUT THE ASSESSEE CLAIMED IT TO BE CO-OPER ATIVE SOCIETY REGISTERED UNDER KARNATAKA SOUHARDHA SAHAKARI ACT 1 977 FOR CLAIMING DEDUCTION U/S 80P OF THE ACT. 3. THE LD DR FURTHER CONTENDED THAT IN THE CAS E OF M/S UDAYA SOUHARDA CREDIT CO-OPERATIVE SOCIETY LIMITED VS. IT O IN ITA NO.2831/BANG/2017, THE TRIBUNAL HAS RESTORED THE MA TTER TO THE AO FOR VERIFICATION OF THE IMPACT OF REGISTRATION UNDER KA RNATAKA SOUHARDHA SAHAKARI ACT, 1977 AS CO-OPERATIVE. SINCE IN THE IN STANT CASE, THE ASSESSEE IS REGISTERED UNDER KARNATAKA SOUHARDHA SA HAKARI ACT, 1977 AS IT APPEARS TO BE BY NAME, THE MATTER TO BE RESTO RED TO THE AO TO ASCERTAIN THE IMPACT OF REGISTRATION UNDER THE REGI STRATION OF SOUHARDHA ACT AS CO-OPERATIVE AND ALSO TO DECIDE WHETHER THE ASSESSEE IS ELIGIBLE FOR DEDUCTION U/S 80P OF THE ACT. ITA NO.3275/B/18 3 4. NOTICE WAS SENT TO THE ASSESSEE TO THE ADDR ESS GIVEN IN FORM NO.36 BUT NONE APPEARED FOR THE ASSESSEE. 5. HAVING CAREFULLY EXAMINED THE ORDERS OF THE AUTHORITIES BELOW IN THE LIGHT OF THE TRIBUNAL ORDER IN THE CASE OF UDA YA SOUHARDA CREDIT CO- OPERATIVE SOCIETY LIMITED (SUPRA), WE FIND THAT THO UGH ARGUMENT WAS NOT RAISED EARLIER BUT IT GOES TO THE ROOT OF THE CASE AS IT IS TO BE ASCERTAINED WHETHER THE ASSESSEE IS ENTITLED FOR DEDUCTION U/S 80P AND IN THE SIMILAR CIRCUMSTANCE, THE TRIBUNAL HAS RESTO RED THE MATTER BACK TO THE FILE OF THE AO IN THE CASE OF UDAYA SOUHARDA C REDIT CO-OPERATIVE SOCIETY LIMITED (SUPRA) IN WHICH THE UNDERSIGNED IS THE PARTY. RELEVANT PORTION OF THAT ORDER IS EXTRACTED HEREUNDER FOR TH E SAKE OF REFERENCE. 7. HAVING CAREFULLY EXAMINED THE ORDERS OF AUTHROI TES BELOW IN THE LIGHT OF RIVAL SUBMISSIONS, WE FIND TH AT WHILE ADJUDICATING THE ISSUE OF CLAIM OF DEDUCTION UNDER SECTION 80P(2) OF THE ACT, THE AO CONFINED HIMSELF TO THE C LAIM OF ENTITLEMENT AND HAS DENIED THE SAME HAVING OBSERVED THAT THE ASSESSEE WAS ENGAGED IN TRANSACTING IN BAN KING BUSINESS AND THUS IT IS A PRIMARY CO-OPERATIVE BANK AND DOES NOT FORM THE SECOND CATEGORY OF CO-OPERATIVE C REDIT SOCIETIES. WHEN THE MATTER TRAVELLED TO CIT(A), TH E CIT(A) HAS ALSO EXAMINED THE CLAIM OF THE ASSESSEE IN THE LIGHT OF JUDGMENT OF THE APEX COURT IN THE CASE OF CITIZEN CO-OPERATIVE SOCIETY LTD., VS. ACIT (SUPRA) , WHEREIN IT WAS HELD THAT WHERE THE ASSESSEE BEING A CO- OPERATIVE SOCIETY ADVANCES LOAN TO MEMBERS OF GENER AL PUBLIC WITHOUT ANY APPROVAL FROM THE REGISTRAR OF SOCIETIES, THE ACTIVITY OF THE CO-OPERATIVE SOCIETY IS IN VIOLATION OF CO-OPERATIVE SOCIETIES ACT AND THE CO-OPERATIVE CRE DIT SOCIETY WAS NOT ENTITLED TO DEDUCTION UNDER SECTION 80P(2)(I)(A) OF THE ACT. 8. NOW, DURING THE COURSE OF HEARING OF THE APPEALS , THE LEARNED DR HAS RAISED A FEW VALID POINTS WHICH CANN OT BE OUTRIGHTLY IGNORED. THE LEARNED DR HAS SPECIFICALL Y RAISED AN ISSUE THAT ASSESSEE IS ONLY A CO-OPERATIV E REGISTERED UNDER THE KARNATAKA STATE SOUHARDA SAHAK ARI ITA NO.3275/B/18 4 ACT. SINCE THE ASSESSEE IS NOT A CO-OPERATIVE SOCI ETY, IT IS NOT ENTITLED/ELIGIBLE FOR DEDUCTION UNDER SECTIO N 80P(2) OF THE ACT. THOUGH THIS ARGUMENT WAS RAISED FIRST TIME BEFORE THE TRIBUNAL AT THIS STAGE, BUT WHEN IT IS A LEGAL ARGUMENT AND GOES TO THE ROOT OF THE CASE, IT CANNO T BE OUTRIGHTLY IGNORED. THEREFORE, WE HAVE TO EXAMINE THE ARGUMENT RAISED BY THE LEARNED DR IN THIS REGARD. UNDER SECTION 80P, THE DEDUCTION IS TO BE ALLOWED ONLY TO THE CO-OPERATIVE SOCIETIES AS PER SUB SECTION 1 OF THE ACT. IN THE ENTIRE SECTION 80P, THE WORD USED IS ONLY A CO-OPERATIVE SOCIETIES AND NO WHERE REFERE NCE WAS MADE TO THE CO-OPERATIVES. 9. PRESENTLY WE ARE CONCERNED WITH THE KARNATAKA AN D THE KARNATAKA STATE HAS NOTIFIED KARNATAKA CO-OPERA TIVE SOCIETIES ACT, 1959 AS WELL AS THE KARNATAKA SOUHAR DA SAHAKARI ACT, 1997 AND EVEN AT PRESENT BOTH THE ACT S ARE IN FORCE SIMULTANEOUSLY. UNDER THE KARNATAKA CO- OPERATIVE SOCIETIES ACT, THE CO-OPERATIVE SOCIETIES ARE REGISTERED AND UNDER THE KARNATAKA SOUHARDA SAHAKAR I ACT, ONLY CO-OPERATIVES ARE REGISTERED. THE OBJECT OF INTRO DUCING THE KARNATAKA SOUHARDA SAHAKARI ACT HAS BEEN GIVEN IN ACT 17/2000, AMENDING ACT 21/2004, AMENDING ACT 16/2005, AMENDING ACT 4/2013, AMENDING ACT 34/2014, AMENDING ACT 24/2016 AND AMENDING ACT 8/2017. THROUGH VARIOUS AMENDMENTS, THE SCOPE OF SOUHARDA SAHAKARI ACT WAS EXPANDED BUT NO WHERE THE CO- OPERATIVE SOCIETIES ARE CONVERTED INTO THE CO-OPERA TIVES. IN BOTH THE ACTS, CO-OPERATIVES AND CO-OPERATIVE SO CIETIES ARE DEFINED INDEPENDENTLY. IN THE SOUHARDA SAHAKAR I ACT, THE WORD CO-OPERATIVE AND CO-OPERATIVE SOCIETIES ARE DEFINED IN CLAUSE 2(C) A ND 2(G) WHICH ARE EXTRACTED HEREUNDER FOR THE SAKE OF REFER ENCE: (E) CO-OPERATIVE MEANS A CO-OPERATIVE INCLUDING A CO-OPERATIVE BANK DOING THE BUSINESS OF BANKING REGISTERED OR DEEMED TO BE REGISTERED UNDER SECTION 5 AND WHICH AHS THE WORDS SOUHARDA SAHAKARI IN ITS NAME. ITA NO.3275/B/18 5 .. (G) CO-OPERATIVE SOCIETY MEANS A CO-OPERATIVE SOCIETY REGISTERED UNDER THE KARNATAKA CO-OPERATIVE SOCIETIES ACT, 1959 (KARNATAKA ACT 11 OF 1959); 10. SECTION 4 OF SOUHARDA SAHAKARI ACT DEAL WITH TH E FORMATION OF CO-OPERATIVES AND ITS MEMBERS AND AS P ER SECTION 4(2) CLAUSE B, CO-OPERATIVE SOCIETIES CAN BE CONVERTED INTO CO-OPERATIVE BY PASSING A RESOLUTION AND ONCE IT IS CONVERTED, THE REGISTRATION UNDER THE SO CIETIES ACT SHALL BE CANCELLED BY THE REGISTRAR W.E.F. THE DATE OF CERTIFICATE OF REGISTRATION GIVEN UNDER SOUHARDA AC T. RELEVANT PROVISIONS OF SECTION 6 OF SOUHARDA ACT IS EXTRACTED HEREUNDER FOR THE SAKE OF REFERENCE: 6. CERTIFICATE OF REGISTRATION.- (1) WHERE A CO- OPERATIVE IS REGISTERED OR DEEMED TO BE REGISTERED, THE CERTIFICATE OF REGISTRATION DULY SIGNED AND SEALED BY THE REGISTRAR SHALL BE CONCLUSIVE EVIDENCE THAT THE CO- OPERATIVE MENTIONED THEREIN, IS A CO-OPERATIVE REGI STERED OR DEEMED TO BE REGISTERED UNDER THIS ACT. (2) NOTWITHSTANDING ANYTHING CONTAINED IN THE KARNATAKA CO-OPERATIVE SOCIETIES ACT, 1959, WHEN A CERTIFICATE OF REGISTRATION IS ISSUED TO A CO-OPERA TIVE AFTER CONVERSION OF A CO-OPERATIVE SOCIETY INTO A CO-OPER ATIVE, THE REGISTRATION OF SUCH CO-OPERATIVE SOCIETY UNDER THE KARNATAKA CO-OPERATIVE SOCIETIES ACT, 1959, SHALL B E CANCELLED BY THE REGISTRAR WITH EFFECT FROM THE DAT E OF ISSUE OF CERTIFICATE OF REGISTRATION UNDER THIS ACT . 11. SIMILARLY, IF THE CO-OPERATIVES INTEND TO CONVE RT INTO CO-OPERATIVE SOCIETIES, CONVERSION IS ALSO POSSIBLE AS PER AMENDING ACT 13/2004. IN THE CO-OPERATIVE SOCIETIES ACT, THE WORD CO-OPERATIVE SOCIETIES AND THE CO- OPERATIVES HAS ALSO BEEN DEFINED UNDER SECTION 2(C) AND 2 (D)(2), ACCORDING TO WHICH CO-OPERATIVE SOCIETY M EANS A SOCIETY REGISTERED OR DEEMED TO BE REGISTERED UNDER THE CO-OPERATIVE SOCIETIES ACT AND THE CO-OPERATIVE MEA NS CO-OPERATIVE REGISTERED UNDER THE KARNATAKA SOUHARD A ITA NO.3275/B/18 6 SAHAKARI ACT, 1997. THEREFORE, FROM CAREFUL READIN G OF BOTH THE SECTIONS, IT IS ABUNDANTLY CLEAR THAT THE CO- OPERATIVE AND THE CO-OPERATIVE SOCIETIES ARE 2 DIFF ERENT ENTITIES THOUGH THEIR CONVERSION FROM ONE TO OTHER IS POSSIBLE AS PER PROVISIONS OF THE RESPECTIVE ACT. 12. WE HAVE ALSO CAREFULLY EXAMINED THE CERTIFICATE OF REGISTRATION GRANTED TO THE ASSESSEE AND WE FIND TH AT ASSESSEE WAS REGISTERED AS A CO-OPERATIVE UNDER THE NAME UDAYA SOUHARDHA PATTINA CO-OPERATIVE LIMITED AND NOT AS A CO-OPERATIVE SOCIETY. THOUGH THE REGISTRATION CERTIFICATE WAS GRANTED BY JOINT REGIS TRAR, CO- OPERATIVE SOCIETIES, BENGALURU BUT IT MAKES NO DIFF ERENCE AS A JOINT REGISTRAR MAY BE SAME FOR CO-OPERATIVE SOCIETIES AND CO-OPERATIVES. FOR THE SAKE OF REFER ENCE, WE EXTRACT THE CERTIFICATE OF REGISTRATION GRANTED AS UNDER: GOVT OF KARNATAKA CO-OPERATIVE SOCIETY SL.NO.GRB: RGN: 69:148 2003-04 DATE D:13.2.2004 CERTIFICATE OF REGISTRATION I, BASAVEGOWDA, JOINT.REGISTRAR OF CO-OPERATIVE SOC IETY, BANGALORE REGION, BANGALORE REGISTER UDAYA SOUHARDH A PATTINA CO-OPERATIVE LTD.,NO.735, 5 TH CROSS, 9TH MAIN , 2ND PHASE, BSK 1ST STAGE, BANGALORE-50, UNDER SECTION-5 OF THE KARNATAKA SOUHARDHA SAHAKARI ACT-1997 AND CERTIFICATE OF REGISTRATION IS ISSUED ON 13.02.2004 AS PER SEC 6(2) OF THE SAID ACT. SD. JOINT.REGISTRAR OF CO- OPERATIVE SOCIETY, BANGALORE REGION, BANGALORE. ITA NO.3275/B/18 7 13. WE HAVE ALSO CAREFULLY PERUSED THE CAUSE TITLE IN THE ASSESSMENT ORDER AND IN THE CAUSE TITLE OF THE ASSESSMENT ORDER, WE FIND THAT ASSESSMENT ORDER WAS PASSED IN THE NAME OF UDAYA SOUHARDA CREDIT CO- OPERATIVE SOCIETY LTD., WHEREAS NO CERTIFICATE OF REGISTRATION WAS PLACED BEFORE US IN THE NAME OF UD AYA SOUHARDHA CREDIT CO-OPERATIVE SOCIETY LTD. THEREFORE, WE ARE UNABL E TO UNDERSTAND HOW THE ASSESSEE CAN CLAIM IT TO BE THE CO- OPERATIVE SOCIETY IN THE ABSENCE OF PROPER REGISTRA TION UNDER THE KARNATAKA CO-OPERATIVE SOCIETIES ACT. CREATION OF CO-OPERATIVE SOCIETY UNDER THE CO-OPERA TIVE SOCIETIES ACT IS DOUBTFUL. THUS THE CLAIM OF DEDUC TION UNDER SECTION 80P CANNOT BE ALLOWED. AS PER THE PROVISIONS OF SECTION 80P OF THE ACT, DEDUCTION CAN ONLY BE ALLOWED TO THE CO-OPERATIVE SOCIETIES REGISTERED UNDER THE CO-OPERATIVE SOCIETIES ACT. WITHOUT A PROPER REGISTRATION UNDER CO-OPERATIVE SOCIETIES ACT, NOBO DY CAN CLAIM IT TO BE CO-OPERATIVE SOCIETY AS THE ACTIVITI ES OF THE CO-OPERATIVE SOCIETIES ARE TO BE CONTROLLED UNDER T HE CO- OPERATIVE SOCIETIES ACT THROUGH REGISTRAR OF THE CO - OPERATIVE SOCIETIES. SINCE ALL THESE NEW POINTS HA VE BEEN RAISED DURING THE COURSE OF HEARING BEFORE US AND ACCORDING TO US ALL THESE POINTS GOES TO THE ROOT O F THE CASE, WE ARE OF THE VIEW THAT PROPER ADJUDICATION O F THE ISSUES IS REQUIRED BY THE AO. WE ACCORDINGLY SET A SIDE THE ORDER OF THE CIT(A) AND RESTORE THE MATTER TO T HE AO TO RE-EXAMINE ALL THESE ASPECTS BY MAKING NECESSARY ENQUIRY AND INVESTIGATION AND ALSO BY PASSING A REA SONED ORDER IN THIS REGARD. SINCE WE HAVE RESTORED THE M ATTER TO THE AO, WE FIND NO JUSTIFICATION TO ADJUDICATE T HE ISSUE RAISED ON MERIT. ACCORDINGLY, ORDER OF THE CIT(A) IS SET ASIDE AND MATTER IS RESTORED TO THE AO FOR ADJUDICA TION OF THE IMPUGNED ISSUE IN TERMS INDICATED ABOVE. 6. FOLLOWING THE AFORESAID ORDER OF THE TRIBUNAL, WE SET ASIDE THE ORDER OF THE CIT(A) AND RESTORE THE MATTER TO T HE FILE OF THE AO TO RE- ADJUDICATE THE CLAIM OF THE ASSESSEE IN THE LIGHT O F AFORESAID ORDER OF THE TRIBUNAL TO ASCERTAIN AS TO WHETHER THE ASSESSEE IS ENTITLED FOR DEDUCTION U/S 80P OR NOT BEFORE GOING ON MERIT. ITA NO.3275/B/18 8 7. IN THE RESULT, APPEAL OF THE ASSESSEES IS ALLOW ED FOR STATISTICAL PURPOSES. ORDER PRONOUNCED IN THE OPEN COURT ON 2 ND JANUARY, 2019 . SD/- (N.V VASUDEVAN) VICE PRESIDENT BANGALORE DATED : 2/1/2019 VMS COPY TO :1. THE ASSESSEE 2. THE REVENUE 3.THE CIT CONCERNED. 4.THE CIT(A) CONCERNED 5.DR 6.GF BY ORDER ASST. REGISTRAR, I TAT, BANGALORE. ITA NO.3275/B/18 9 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. ..