Income-Tax Officer, Ward-7(2)(5), Bengaluru V. M/s. Kammavari Credit Co-operative Society Limited, Bengaluru

ITA 493/BANG/2023

AI Insights

The case involves the Income Tax Officer, Ward \\u2013 7(2)(5), Bengaluru as the appellant and M/s. Kammavari Credit Co-operative Society Ltd. as the respondent. The dispute arose from the assessment year 2014-15, where the Income Tax Officer added Rs. 2,13,74,847 as interest income to the assessee's income, which was contested. The assessee argued that this income was part of its business activities and was exempt under section 80P(2)(a)(i) of the Income Tax Act, 1961. The Ld.CIT(A) agreed with the assessee, leading to the revenue's appeal to the tribunal. The tribunal's decision to dismiss the appeal was based on precedents set by the Hon'ble High Court, which clarified the applicability of section 80P(2)(a)(i) in similar circumstances.

• Counselvise Citation: [2023] 140 COUNSELVISE.COM (IT) 124457 (ITAT-BANGALORE)
• Duration Of Justice: 1 month(s) 29 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 07-09-2023
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: C
• Next Hearing Date: 06-09-2023
• Assessment Year: 2014-2015
• Appeal Filed On: 09-07-2023
• Other Referred Cases: M/s. Totgar Sales Credit Co-op. Society Ltd. vs. ITO, Karnataka, M/s. Guttigedarara Credit Co-operative Ltd., Tumkur Merchants Souharda Credit Co-operative Ltd.
• Laws Referred To: Income Tax Act, 1961
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: V. PARITHIVEL
• Assessee Lawyers: B. CHATTARAJ
• Section: 143(3)

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL ‘C’ BENCH : BANGALORE BEFORE SHRI CHANDRA POOJARI, ACCOUNTANT MEMBER AND MS. MADHUMITA ROY, JUDICIAL MEMBER ITA No. 493/Bang/2023 Assessment Year : 2014-15 The Income Tax Officer, Ward – 7(2)(5), Bengaluru. Vs. M/s. Kammavari Credit Co-operative Society Ltd., No. 10, 22 nd Main Road, Jayanagar HBSC Layout, Padmanabhanagar, Bengaluru – 560 070. PAN: AAAAK2670H APPELLANT RESPONDENT Assessee by : Shri B. Chattaraj, Advocate Revenue by : Shri V. Parithivel, JCIT (DR) Date of Hearing : 07-09-2023 Date of Pronouncement : 08-09-2023 ORDER PER MADHUMITA ROY, JUDICIAL MEMBER The instant appeal filed by the revenue is directed against the order dated 04.05.2023 passed by the National Faceless Appeal Centre (NFAC), Delhi arising out of the order dated 15.01.2016 passed by the ITO, Ward No. 7(2)(4), Bangalore u/s. 143(3) of the Income Tax Act, 1961 (hereinafter referred to as “the Act”) for A.Y. 2014-15 whereby and whereunder the addition made by the Ld.AO to the tune of Rs. 2,13,74,847/- on account of interest income has been deleted. Hence the instant appeal before us by the revenue. Page 2 of 5 ITA No. 493/Bang/2023 2. The appellant is a Credit Co-operative Society established in the year 1994, engaged in activities of providing credit facilities to its members and also taking deposits from its members, filed its return of income for year under consideration on 30.09.2014 showing an income of Rs.9,10,344/-. 3. During the course of scrutiny assessment, the Ld.AO observed that the appellant earned interest income to the tune of Rs.2,13,74,847/- from various fixed deposits with different banks including some co-operative societies. Following the decision of its predecessor in the preceding year for A.Ys. 2013-14 and 2012-13 he was of the opinion that the interest income was not earned out of business carried on by the appellant credit society and thus the same was liable to be added relying upon the judgment passed by the Hon’ble Apex Court in case of M/s. Totgar Sales Credit Co-op. Society Ltd. vs. ITO, Karnataka reported in 320 ITR 238 SC. 3.1 The case of the assessee was otherwise. According to the assessee the interest earned by the co-operative society was attributable to the business activity of the appellant and a good portion of the said interest income was also from the investment with the other co-operative societies which is exempt u/s. 80P(2)(a)(i) of the Act. The assessee relied upon the judgement passed by the Hon’ble jurisdictional High Page 3 of 5 ITA No. 493/Bang/2023 Court in case of M/s. Guttigedarara Credit Co-operative Ltd. in ITA No. 29 of 2015 on this aspect. The case further made out by the assessee is that the fixed deposits were made out of the money not required by the society immediately for lending. Further that this was also not out of the money due to the members. In that view of the matter, the interest earned from such investment was attributable to the carrying out of the business of the appellant society and the judgment mentioned hereinabove in case of M/s. Guttigedarara Credit Co-operative Ltd. (supra) squarely applies to the facts of the present case. The ultimate prayer was to allow the income earned by the assessee. However, such contention made by the assessee was found to be not acceptable and the addition was made to the impugned amount which was ultimately deleted by the Ld.CIT(A), relying upon the judgment passed by the Hon’ble jurisdictional High Court in case of M/s. Guttigedarara Credit Co-operative Ltd. (supra) and in the case of Tumkur Merchants Souharda Credit Co-operative Ltd. in ITA no. 307 of 2014 and also the order passed by his predecessor in appeals in case for A.Ys. 2012-13 and 2013- 14. 4. At the time of hearing the instant appeal, the Ld.Counsel appearing for the assessee submitted before us that the issue is squarely covered by the judgment passed by the Hon’ble jurisdictional High Court in case of M/s. Guttigedarara Credit Co-operative Ltd. (supra) and the impugned addition has been rightly deleted by the Ld.CIT(A) applying the ratio Page 4 of 5 ITA No. 493/Bang/2023 laid down therein. Such contention made by the assessee, however, was not been able to be controverted by the Ld.DR. 4.1 Having heard the Ld.Counsel appearing for the parties and having regard to the facts and circumstances of the case, and particularly considering the judgment passed by the Hon’ble jurisdictional High Court in case of M/s. Guttigedarara Credit Co-operative Ltd. (supra) on the identical facts and circumstances of the case, we find that the order passed by the Ld.CIT(A) is just and proper so as to warrant interference. The same is, therefore, upheld. In that view of the matter, the appeal preferred by the revenue is found to be devoid of any merit and thus dismissed. In the result, the appeal filed by revenue stands dismissed. Order pronounced in the open court on 08 th September, 2023. Sd/- Sd/- (CHANDRA POOJARI) (MADHUMITA ROY) Accountant Member Judicial Member Bangalore, Dated, the 08 th September, 2023. /MS / Page 5 of 5 ITA No. 493/Bang/2023 Copy to: 1. Appellant 2. Respondent 3. CIT 4. DR, ITAT, Bangalore 5. Guard file By order Assistant Registrar, ITAT, Bangalore