Shri. Shanteshwar Vividoddeshagala Sahakara Sangh Niyamit, Bijapur V. ITO, Bijapur

ITA 844/BANG/2014

• Counselvise Citation: [2015] 140 COUNSELVISE.COM (IT) 90018 (ITAT-BANGALORE)
• Duration Of Justice: 1 year(s) 6 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 03-07-2015
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: B
• Assessment Year: 2010-2011
• Appeal Filed On: 27-06-2014
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: DR P K SRIHARI
• Assessee Lawyers: S RAMASUBRAMANIAN
• Section: 43B; 143(3); 263

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL BANGALORE BENCH B BEFORE SHRI N.V. VASUDEVAN , JUDICIAL MEMBER AND SHRI JASON P. BOAZ, ACCOUNTANT MEMBER I.T.A. NO. 844 /BANG/201 4 (ASSESSMENT YEAR : 20 10 - 11 ) SHRI SHANTESHWAR VIVIDODESHAGALA SAHAKARA SANGH NIYAM IT, CO - OPERATIVE BANK BUILDING, MAIN ROAD, HORTI, BIJAPUR - 586 117 PAN AAAAS 7423G VS. INCOME TAX OFFICER, WARD 2, BIJAPUR. APPELLANT RESPONDENT. APPELLANT BY : SHRI S. RAMASUBRAMANIAN, C.A. RESPONDENT BY : DR.P.K. SRIHARI, ADDL. CIT (D.R.) DATE OF H EARING : 27.5.2015. DATE OF P RONOUNCEMENT : 3.7. 201 5 . O R D E R PER SHRI JASON P. BOAZ, A.M. : THIS APPEAL BY THE ASSESSEE IS DIRECTED AGAINST THE ORDER OF THE COMMI SSIONER OF INCOME TAX (APPEALS) , B ELGAUM DT. 16.04.2010 FOR ASSESSMENT YEAR 2010 - 11 . 2. THE FACTS OF THE CASE, BRIEFLY, ARE AS UNDER : - 2.1 THE ASSESSEE IS A CO - OPERATIVE SOCIETY REGISTERED UNDER THE KARNATAKA STATE CO - OPERATIVE SOCIETIES ACT, CARRYING ON THE BUSINESS OF PROVIDING CREDIT FACILITIES TO ITS MEMBERS. FOR ASST. YEAR 2010 - 11, THE ASSESSEE FILED ITS RETURN OF INCOME ON 30.3.2010 DECLARING TOTAL INCOME AT NIL AFTER CLAIMING DEDUCTION U/ S. 80P(2)(A)(I) OF THE INCOME TAX 2 ITA NO. 844 /BANG/ 2014 ACT, 1961 (IN SHORT 'THE ACT'). IN ASSESSMENT PROCEEDINGS, THESE CLAIMS OF THE ASSESSEE FOR DEDUCTION U/S. 80P(2)(A)(I) OF THE ACT WERE REJECTED BY THE ASSESSING OFFICER ON THE GROUND THAT THE ASSESSEE IS A CO - OPERATIVE BANK AND HENCE NOT ENTITLED TO BE ALLOWED DEDUCTION U/S. 80P(2)(A)(I) OF THE ACT BY VIRTUE OF THE PROVISIONS OF SECTION 80P(4) OF THE ACT. THE ASSESSMENT WAS CONCLUDED U/S. 143(3) OF THE ACT VIDE ORDER DT.7.12.2012 WHEREIN THE INCOME OF THE ASSESSEE WAS DETERMINED AT RS.31,43,143, IN VIEW OF THE FOLLOWING DISALLOWANCES WERE MADE : - (I) DISALLOWANCE OF ASSESSEE'S CLAIM FOR DEDUCTION U/S. 80P(2)(A)(I) : RS.28,61,768. (II) DISALLOWANCE OF AUDIT FEE UNDER SECTION 43B : RS.2,58,035. 2.2 AGGRIEVE D BY THE ORDER OF ASSESSMENT FOR ASSESSMENT YEAR 2010 - 11 DT.7.12.2012, THE ASSESSEE PREFERRED AN APPEAL BEFORE THE CIT (APPEALS), BELGAUM. THE LEARNED CIT (APPEALS) DISMISSED THE ASSESSEE'S APPEAL VIDE ORDER DT.16.4.2014. 3. AGGRIEVED BY THE ORDER OF THE CIT (APPEALS), BELGAUM DT.16.4.2014 FOR ASSESSMENT YEAR 2010 - 11, THE ASSESSEE HAS PREFERRED THIS APPEAL BEFORE THIS TRIBUNAL RAISING THE FOLLOWING GROUNDS : - 1. THAT THE ORDER OF THE LEARNED CIT (APPEALS), IN SO FAR IT IS PREJUDICIAL TO THE INTERES TS OF THE APPELLANT. 2. THAT THE LEARNED CIT (APPEALS) ERRED IN LAW AND ON FACTS IN NOT GRANTING DEDUCTION UNDER SECTION 80P(2)(A)(I) AMOUNTING TO RS.28,61,768. 3. THAT THE LEARNED CIT (APPEALS) ERRED IN LAW AND ON FACTS IN HOLDING THAT THE APPELLANT IS A PRIMARY CO - OPERATIVE BANK AND NOT A CO - OPERATIVE SOCIETY AND SUCH A FINDING IS PERVERSE AS BEING CONTRARY TO THE MATERIALS ON RECORD AND NOT BEING SUPPORTED BY ANY MATERIAL AND EVIDENCES ON RECORD. 4. THAT THE LEARNED CIT (APPEALS) ERRED IN LAW AND ON F ACTS IN WRONGLY APPLYING THE PROVISIONS OF SECTION 80P(4) TO THE APPELLANT WHILE THE PROVISIONS WILL APPLY ONLY TO THE BANKING CO - OPERATIVE INSTITUTIONS. 3 ITA NO. 844 /BANG/ 2014 5. THE LEARNED CIT (APPEALS) ERRED IN LAW AND ON FACTS IN NOT FOLLOWING THE CBDT INSTRUCTION NO.F NO. 123/06/2007 - TPL DT.9.5.2008. 6. THE LEARNED CIT (APPEALS) ERRED IN LAW IN NOT FOLLOWING THE BINDING DECISION OF THE JURISDICTIONAL APPELLATE TRIBUNAL I.E. ITAT, BANGALORE BENCH. 7. THE LEARNED CIT (APPEALS) ERRED IN LAW IN DISALLOWING RS.2,58,035 UNDER SE CTION 43B ON THE GROUND THAT AUDIT FEE PAYABLE TO CO - OPERATIVE AUDITORS WAS NOT DISCHARGED BEFORE THE DUE DATE OF FILING RETURN ON INCOME UNDER SECTION 139(1) OF THE INCOME TAX ACT, 1961 EVEN THOUGH IT S NOT COVERED U/S. 43B. 4. THE GROUND AT S.NO.1 IS GENERAL IN NATURE AND THEREFORE NO ADJUDICATION IS CALLED FOR THEREON. 5. GROUNDS AT S.NO.2 TO 6 : DEDUCTION U/S. 80P(2)(A)(I) OF THE ACT. 5.1 IN SUPPORT OF THE GROUNDS RAISED, THE LD. AUTHORISED REPRESENTATIVE OF THE ASSESSEE SUBMITTED THAT TH E ASSESSEE IS A CO - OPERATIVE SOCIETY CARRYING ON THE BUSINESS OF PROVIDING BANKING AND CREDIT FACILITIES TO ITS MEMBERS AND THUS CANNOT BE SAID TO BE CARRYING ON THE BUSINESS OF A CO - OPERATIVE BANK AS HELD BY THE AUTHORITIES BELOW, WHICH FINDING IT IS CONTE NDED IS NOT SUPPORTED BY ANY MATERIAL OR EVIDENCE ON RECORD. IT IS CONTENDED THAT THE LEARNED CIT (APPEALS) ERRED IN WRONGLY APPLYING THE PROVISIONS OF SECTION 80P(4) OF THE ACT IN ITS CASE TO DENY THE ASSESSEE DEDUCTION U/S. 80P(2)(A)(I) OF THE ACT, WHI CH WAS APPLICABLE TO A CO - OPERATIVE BANK AND NOT TO THE ASSESSEE WHO IS A CO - OPERATIVE SOCIETY. IT WAS ALSO CONTENDED THAT THE LEARNED CIT (APPEALS) HAD ERRED IN NOT FOLLOWING THE BINDING DECISION OF THE HON BLE KARNATAKA HIGH COURT IN THE CASE OF CIT, BE LGAUM V SRI BILURU GURUBASAVA PATTINA SAHAKARI SANGHA NIYAMITHA IN ITA NO.5006/2013 DT.5.2.2014 (369 ITR 86) WHICH HAS BEEN FOLLOWED BY THE ITAT, BANGALORE BENCHES AND IN NOT FOLLOWING THE CBDT INSTRUCTION IN F. NO.123/06/2007 - TPL DT.9.5.2008. IT WAS PRAY ED THAT IN VIEW OF 4 ITA NO. 844 /BANG/ 2014 THE ABOVE, THE ASSESSEE BE ALLOWED DEDUCTION CLAIMED UNDER SECTION 80P(2)(A)(I) OF THE ACT. 5.2 PER CONTRA, THE LEARNED DEPARTMENTAL REPRESENTATIVE SUPPORTED THE ORDERS OF THE AUTHORITIES BELOW. 5.3 WE HAVE HEARD THE RIVAL CONTENT IONS AND PERUSED AND CAREFULLY CONSIDERED THE MATERIAL ON RECORD; INCLUDING THE JUDICIAL PRONOUNCEMENTS RELIED UPON BY THE ASSESSEE. WE FIND THAT THE HON'BLE HIGH COURT OF KARNATAKA IN THE CASE OF SRI BILURU GURUBASAVA PATTINA SAHAKARI SANGHA NIYAMITHA (S UPRA) WAS DEALING WITH A CASE OF A SOCIETY WHICH WAS INITIALLY ALLOWED DEDUCTION U/S. 80P(2)(A)(I) OF THE ACT AND SUBSEQUENTLY THE CIT IN REVISIONARY PROCEEDINGS UNDER SECTION 263 OF THE ACT REVISED THE ORDER OF THE ASSESSING OFFICER HOLDING THAT THE DEDUC TION U/S. 80P(2)(A)(I) OF THE ACT WAS NOT ALLOWABLE IN VIEW OF THE PROVISIONS OF SECTION 80P(4) OF THE ACT. THE ITAT SET ASIDE THE ORDER UNDER SECTION 263. ON FURTHER APPEAL, THE HON'BLE HIGH COURT HELD THAT SECTION 80P(4) OF THE ACT WAS APPLICABLE ONL Y TO A BANK AND NOT A CO - OPERATIVE SOCIETY PROVIDING CREDIT FACILITIES TO ITS MEMBERS AND THUS UPHELD THE ORDER OF THE TRIBUNAL SETTING ASIDE THE ORDER UNDER SECTION 263 OF THE ACT. THERE IS NO DISPUTE THAT THE ASSESSEE IN THE CASE ON HAND IS A CO - OPERAT IVE CREDIT SOCIETY REGISTERED UNDER THE KARNATAKA STATE CO - OPERATIVE SOCIETIES ACT, 1959 AND THAT THE INCOME EARNED WAS FROM ITS A C TIVITY OF PROVIDING CREDIT FACILITIES TO ITS MEMBERS. THEREFORE, RESPECTFU L LY FOLLOWING THE DECISION OF THE HON'BLE HIGH C OURT OF KARNATAKA IN THE CASE OF SRI BILURU GURUBASAVA PATTINA SAHAKARI SANGHA NIYAMITHA 5 ITA NO. 844 /BANG/ 2014 (SUPRA), WE HOLD THAT SINCE THE FACTS OF THE ASSESSEE IN THE CASE ON HAND ARE SIMILAR, THE ASSESSEE BEFORE US IS ALSO ELIGIBLE FOR DEDUCTION U/S. 80P(2)(A)(I) OF THE A CT. 6. GROUND NO.7 D ISALLOWANCE OF AUDIT FEE PAYABLE U/S.43B OF THE ACT. 6.1 THE ASSESSEE CONTENDS THAT THE AUTHORITIES BELOW HAVE ERRED IN DISALLOWING AND UPHOLDING DISALLOWANCE OF RS.2,5 8 ,035 UNDER SECTION 43B OF THE ACT ON THE GROUND THAT T HE AUDIT FEE PAYABLE TO CO - OPERATIVE AUDITORS WAS NOT DISCHARGED BEFORE THE DUE DATE FOR FILING THE RETURN OF INCOME UNDER SECTION 139(1) OF THE ACT; EVEN THOUGH IT IS NOT COVERED WITHIN THE AMBIT OF THE PROVISIONS OF SECTION 43B OF THE ACT. THE LEARNED AUTHORISED REPRESENTATIVE SUBMITTED THAT THIS VERY ISSUE WAS COVERED BY DECISION OF THE CO - ORDINATE BENCH OF THIS TRIBUNAL IN THE CASE OF JAMKHANDI URBAN MINORITY CO - OPERATIVE CREDIT SOCIETY LTD. V ITO IN ITA NO.1358/BANG/2013 DT.22.1.2015; WHEREIN IT WAS HELD THAT GOVERNMENT AUDIT FEES PAYAB LE BY THE SOCIETY WAS NOT COVERE D BY THE PROVISIONS OF SECTION 43B OF THE ACT. 6.2 PER CONTRA, THE LEARNED DEPARTMENTAL REPRESENTATIVE SUPPORTED THE ORDERS OF THE AUTHORITIES BELOW. 6.3.1 WE HAVE HEARD THE RIVA L CONTENTIONS AND PERUSED AND CAREFULLY CONSIDERED THE MATERIAL ON RECORD. WE FIND THAT A CO - ORDINATE BENCH OF THIS TRIBUNAL IN THE CASE OF JAMKHANDI CO - OPERATIVE CREDIT SOCIETY LTD. (SUPRA) FOR ASSESSMENT YEARS 2009 - 10 AND 2010 - 11 , FOLLOWING AN EARLIER DECISION IN THE CASE OF JAMKHANDI URBAN MINORITY CO - OPERATIVE CREDIT SOCIETY LTD. (SUPRA) WHICH IN TURN FOLLOWING THE DECISION OF THE HON BLE BOMBAY HIGH COURT IN THE CASE OF S H REE WARNA SAHAKARI S A KHAR KARKHANA LTD . 253 6 ITA NO. 844 /BANG/ 2014 ITR 226 , H ELD THAT GOVERNMENT A UDIT FEES PAYABLE BY THE SOCIETY WAS NOT COVERED BY THE PROVISIONS OF SECTION 43B OF THE ACT. FOLLOWING THE DECISION OF THE CO - ORDINATE BENCH IN THE CASE OF JAMKHANDI CO - OPERATIVE CREDIT SOCIETY LTD. (SUPRA), WE HOLD THAT THE DISALLOWANCE OF AUDIT FEES P AYABLE BY THE CO - OPERATIVE S OCIETY UNDER SECTION 43B OF THE ACT BY THE AUTHORITIES BELOW IN THE CASE ON HAND WAS NOT CORRECT AS IT WAS NOT COVERED UNDER SECTION 43B OF THE ACT AND ACCORDINGLY DE LETE THE DISALLOWANCE MADE THEREUNDER. CONSEQUENTLY , THE GROU ND RAISED BY THE ASSESSEE AT S.NO.7 IS ALLOWED. 7. IN THE RESULT, THE ASSESSEE'S APPEAL FOR ASSESSMENT YEARS 2010 - 11 IS ALLOWED. ORDER PRONOUNCED IN THE OPEN COURT ON 3 RD JULY, 201 5 . SD/ - (N.V.VASUDEVAN) JUDICIAL MEMBER SD/ - (JASON P BOAZ) ACCOUNTANT MEMBER *REDDY GP COPY TO : 1. APPELLANT 2. RESPONDENT 3. C.I.T. 4. CIT(A) 5. DR, ITAT, BANGALORE. 6. GUARD FILE. (TRUE COPY) BY ORDER ASST. REGISTRAR, ITAT, BANGALORE