M/s Bank Officers & Officials House Building Co-operative Society Limited , Bangalore V. Income Tax Officer Ward-2(2)(1), Bangalore

ITA 465/BANG/2019

• Counselvise Citation: [2019] 117 COUNSELVISE.COM (IT) 7596 (ITAT-BANGALORE)
• Duration Of Justice: 1 month(s) 19 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 25-04-2019
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: B
• Assessment Year: 2015-2016
• Appeal Filed On: 07-03-2019
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: PADMA MEENAKSHI
• Keywords: Opportunity of being heard; Set aside
• Section: 80P; 251

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL SMC-B BENCH : BANGALORE BEFORE SHRI ARUN KUMAR GARODIA, ACCOUNTANT MEMBER ITA NO. 465 /BANG/201 9 ASSESSMENT YEAR : 2015 - 16 M/S. BANK OFFICERS & OFFICIALS HOUSE BUILDING CO-OPERATIVE SOCIETY LTD., NO. 33, 1 ST FLOOR, SIRUR PARK ROAD, SHESHADRIPURAM, BANGALORE 560 020. PAN: AAAJB0694H VS. THE INCOME TAX OFFICER, WARD 2 (2) (1), BANGALORE. APPELLANT RESPONDENT APPELLANT BY : SHRI S.N. SHYANBHOG, ADVOCATE RESPONDENT BY : SMT. PADMA MEENAKSHI, ADDL. CIT (DR) DATE OF HEARING : 08 . 0 4 .201 9 DATE OF PRONOUNCEMENT : 25 . 0 4 .201 9 O R D E R PER SHRI A.K. GARODIA, ACCOUNTANT MEMBER THIS APPEAL IS FILED BY THE ASSESSEE AND THE SAME IS DIRECTED AGAINST THE ORDER OF LD. CIT(A)-2, BANGALORE DATED 24.01.2019 FOR ASSESSMENT YEAR 2015-16. 2. THE GROUNDS RAISED BY THE ASSESSEE ARE AS UNDER. 1. THE ORDERS OF THE LEARNED COMMISSIONER OF INCOME TAX (APPEALS)-2, BANGALORE, AND A.O. IS OPPOSED TO LAW ON THE FACTS OF THE CASE. 2. THE CIT (A)-2 ERRED IN HOLDING THAT THE INTEREST INCOME OF RS.10,73,079/- IS NOT EXEMPT U/S 80P (2) (D) OF THE I.T.ACT. THE A.O. HAS HELD THAT THE SAME IS EXEMPT AS PER THE DECISION OF THE HONBLE HIGH COURT OF KARNATAKA IN THE CASE OF BILUR GURUBASAVA SAHAKARI SANGHA NIYAMITHA, BUT SINCE THE APPEAL BY THE REVENUE IS PENDING BEFORE THE APEX COURT, HELD THAT TILL SUCH TIME THE ADDITION IS MADE PROTECTIVELY. BUT THE JUDGEMENT OF THE HON'BLE HIGH COURT OF KARNATAKA IS APPLICABLE TO THE APPELLANT'S CASE AND AS SUCH, THE ADDITION BY A.O. AND CONFIRMED BY THE CIT(A) IS NOT IN ORDER. 3. THE CIT (A)-2 HAS NOT GIVEN ANY FINDING ON THE GROUNDS OF APPEAL THAT OUT OF INTEREST INCOME OF RS.10,73,079/-, AN AMOUNT OF RS.9,47,708/- IS THE INTEREST EARNED ON RESERVE FUND KEPT IN CO- OPERATIVE BANK WHICH QUALIFIES FOR DEDUCTION U/S 80P AS PER THE DECISION OF THE APEX COURT IN THE CASE OF CIT VIS. KARNATAKA STATE ITA NO. 465/BANG/2019 PAGE 2 OF 3 APEX BANK LTD. 4. THE CIT (A)-2 HAS FOLLOWED THE DECISION OF CIT (A)-3 FOR THE ASSESSMENT YEAR 2014-15 PASSED IN THE CASE OF APPELLANT WITHOUT GIVING OPPORTUNITY TO YOUR APPELLANT BEFORE PASSING THE ABOVE ORDER. THE ISSUES INVOLVED FOR THE ASST.YEAR 2014-15 ARE DIFFERENT THAN THE ISSUES INVOLVED FOR THE ASSESSMENT YEAR 2015-16. ALSO THE ORDER OF THE CIT (A)-3 FOR THE ASSESSMENT YEAR 2014-15 HAS BEEN SET ASIDE BY THE HONBLE ITAT, BANGALORE BENCH, BY ITS ORDER ITA NO. 02/BANG/2018 DATED 1-6-2018. 5. THE CIT (A)-2 STATES THAT THE ASSESSMENT IS ENHANCED BUT IS NOT CLEAR ON WHICH ISSUE THE ASSESSMENT IS ENHANCED AND CIT (A)-2 HAS NOT GIVEN ANY OPPORTUNITY TO THE APPELLANT AS REQUIRED U/S 251 (2) OF THE I.T. ACT BEFORE ENHANCING THE INCOME. 6. FOR THESE AND ANY OTHER GROUNDS THAT MAY BE URGED AT THE TIME OF HEARING OF THIS APPEAL, IT IS PRAYED THAT THE ORDER OF THE CIT(A)-2 NEEDS TO BE CANCELLED AND DEDUCTION U/S 80P (2) (D) MAY BE ALLOWED ON THE INTEREST INCOME OF THE APPELLANT IN ACCORDANCE WITH THE DECISION OF THE JURISDICTIONAL HON'BLE HIGH COURT IN THE CASE OF BAILURU GURUBASAVA SAHAKARI SANGHA NIYAMITHA AND ALSO DECISION OF THE APEX COURT IN THE CASE OF KARNATAKA STATE APEX BANK LTD. 3. IT WAS SUBMITTED BY LD. AR OF ASSESSEE THAT THE ASSESSEES CLAIM FOR DEDUCTION U/S. 80P(2) IN RESPECT OF INTEREST INCOME SHOULD BE DECIDED IN FAVOUR OF THE ASSESSEE BECAUSE THIS ISSUE IS COVERED IN FAVOUR OF THE ASSESSEE BY THE JUDGEMENT 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. AT THIS JUNCTURE, THE BENCH POINTED OUT THAT ON THIS ISSUE, THERE IS ONE MORE JUDGMENT OF HON'BLE KARNATAKA HIGH COURTRENDERED IN THE CASE OF PCIT AND ANOTHER VS. TOTAGARS CO-OPERATIVE SALE SOCIETY AS REPORTED IN 395 ITR 611 (KARN). THE BENCH POINTED OUT THAT IN BOTH THESE JUDGEMENTS, THE ULTIMATE CONCLUSION IS DIFFERENT BECAUSE THE FACTS ARE DIFFERENT BUT THERE IS NO CONTRADICTION IN THESE TWO JUDGMENTS. THE BENCH POINTED OUT THAT IN THE CASE OF TUMKUR MERCHANTS SOUHARDA CREDIT COOPERATIVE LTD. VS. ITO (SUPRA), IT WAS FOUND THAT THE AMOUNT DEPOSITED IN BANK WAS OUT OF ASSESSEES OWN FUNDS AND NOT OUT OF ITS LIABILITY AND THEREFORE, THIS ISSUE WAS DECIDED IN FAVOUR OF THE ASSESSEE BUT IN THE CASE OF PCIT AND ANOTHER VS. TOTAGARS CO-OPERATIVE SALE SOCIETY (SUPRA), IT WAS FOUND THAT THE AMOUNT DEPOSITED IN BANK WAS OUT OF ASSESSEES LIABILITY AND NOT OUT OF ASSESSEES OWN FUNDS AND THEREFORE, THIS ITA NO. 465/BANG/2019 PAGE 3 OF 3 ISSUE WAS DECIDED AGAINST THE ASSESSEE. THE BENCH OBSERVED THAT THERE IS NO FINDING OF ANY OF THE AUTHORITIES BELOW ON THIS FACTUAL ASPECT AND THEREFORE, IT IS PROPER TO RESTORE BACK THE MATTER TO THE FILE OF CIT(A) FOR FRESH DECISION AFTER EXAMINING THE FACTS OF PRESENT CASE IN THE LIGHT OF THESE TWO JUDGEMENTS OF HON'BLE KARNATAKA HIGH COURT. THE LD. AR OF ASSESSEE AGREED TO THIS PROPOSITION PUT FORWARD BY THE BENCH. THE LD. DR OF REVENUE SUBMITTED THAT ON THIS ASPECT, HE IS ALSO IN AGREEMENT WITH THE PROPOSITION PUT FORWARD BY THE BENCH. 4. IN VIEW OF THE ABOVE DISCUSSION, I SET ASIDE THE ORDER OF CIT(A) AND RESTORE THE MATTER BACK TO THE FILE OF CIT(A) FOR FRESH DECISION IN THE LIGHT OF ABOVE DISCUSSION AFTER EXAMINING THE FACTS OF PRESENT CASE IN THE LIGHT OF THESE TWO JUDGEMENTS OF HON'BLE KARNATAKA HIGH COURT RENDERED IN THE CASE OF TUMKUR MERCHANTS SOUHARDA CREDIT COOPERATIVE LTD. VS. ITO (SUPRA) AND PCIT AND ANOTHER VS. TOTAGARS CO-OPERATIVE SALE SOCIETY (SUPRA). THEREAFTER THE CIT(A) SHOULD PASS NECESSARY ORDER AS PER LAW 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 PRONOUNCED IN THE OPEN COURT ON THE DATE MENTIONED ON THE CAPTION PAGE. SD/- (ARUN KUMAR GARODIA) ACCOUNTANT MEMBER BANGALORE, DATED, THE 25 TH APRIL, 2019. /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.