M/s Shri Poornsanda Vividoddesh Souharda Sahakari Niyamitha , Mangalore V. Income Tax Officer Ward-2(1), Mangalore

ITA 873/BANG/2019

• Counselvise Citation: [2019] 112 COUNSELVISE.COM (IT) 0715 (ITAT-BANGALORE)
• Duration Of Justice: 7 month(s) 29 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 23-12-2019
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: A
• Assessment Year: 2016-2017
• Appeal Filed On: 24-04-2019
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: GANESH G. R
• Keywords: Opportunity of being heard; Set aside
• Section: 234B; 80P; 20

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL SMC - A BENCH : BANGALORE BEFORE SHRI A. K. GARODIA, ACCOUNTANT MEMBER ITA NO. 87 3 / BANG /201 9 ASSESSMENT YEAR : 20 1 6 - 1 7 M/S. SHRI POORNANANDA VIVIDODDESHA SOUHARDA SAHAKARI SANGH NIYAMITHA, 221, NALAPAD APSARA CHAMBERS, K. S. RAO ROAD, HAMPANKATTA, MANGALURU 575 001. PAN : AA D A S 7 986 B VS. THE INCOME TAX OFFICER, WARD 2(1), MANGALURU. APPELLANT RESPONDENT ASSESSEE BY : SHRI. NARENDRA SHARMA , ADVOCATE REVENUE BY : SHRI. GANESH G. R, STANDING COUNSEL DATE OF HEARING : 20 . 11 .201 9 DATE OF PRONOUNCEMENT : . 1 2 .201 9 O R D E R THIS APPEAL IS FILED BY THE ASSESSEE AND IS DIRECTED AGAINST THE ORDER OF LEARNED CIT(A), MANGALURU, DATED 25.02.2019, FOR ASSESSMENT YEAR 2016-17. THE GROUND RAISED BY THE ASSESSEE IN THIS APPEAL ARE AS UNDER:- 1. THE ORDERS OF THE AUTHORITIES BELOW IN SO FAR AS THEY ARE AGAINST THE APPELLANT, ARE OPPOSED TO LAW, EQUITY, WEIGHT OF EVIDENCE, PROBABILITIES, FACTS AND CIRCUMSTANCES OF THE CASE. 2. THE APPELLANT DENIES ITSELF LIABLE TO BE ASSESSED ON A SUM OF RS. 27,18,730/-AS AGAINST THE RETURNED INCOME OF RS.NIL/- AFTER CLAIMING ELIGIBLE DEDUCTION UNDER SECTION 80P[2][A] OF THE ACT, UNDER THE FACTS AND IN THE CIRCUMSTANCES OF THE APPELLANT'S CASE. 3. THE LEARNED COMMISSIONER OF INCOME-TAX [APPEALS] IS NOT JUSTIFIED IN LAW IN HOLDING THAT THE APPELLANT BEING A SOUHARDA REGISTERED UNDER THE KARNATAKA SOUHARDA SAHAKARI ACT, 1997 WAS NOT ENTITLED TO DEDUCTION U/S. ITA NO. 873/BANG/2019 PAGE 2 OF 4 80P[2][A] OF THE ACT TO THE EXTENT OF RS.27,18,730/- CLAIMED BY THE APPELLANT UNDER THE FACTS AND IN THE CIRCUMSTANCES OF THE APPELLANT'S CASE. 4. WITHOUT PREJUDICE TO THE ABOVE, THE LEARNED COMMISSIONER OF INCOME TAX [APPEALS] OUGHT TO HAVE NOTICED AND DECIDED THAT THE JUDGEMENT OF THE HON'BLE SUPREME COURT IN THE CASE OF CITIZEN'S CO-OPERATIVE SOCIETY LTD., REPORTED IN 397 ITR 1 [SC] CITED BY THE LEARNED A.O. TO DENY EXEMPTION TO THE APPELLANT WAS NOT APPLICABLE TO THE FACTS OF THE APPELLANT'S CASE AND HENCE, THE APPELLANT OUGHT NOT TO HAVE BEEN DENIED DEDUCTION U/S. 80P[2][A] OF THE ACT ON THIS SCORE. 5. THE LEARNED COMMISSIONER OF INCOME-TAX [APPEALS] FURTHER OUGHT TO HAVE APPRECIATED AND DECIDED THAT THE ASSESSMENT OF INTEREST INCOME EARNED BY THE APPELLANT FROM OUT OF THE DEPOSITS KEPT IN THE BANKS AND CO-OPERATIVE BANKS UNDER THE HEAD 'OTHER SOURCES' BY THE LEARNED A.O., WAS ERRONEOUS AS THE SAID INTEREST EARNED BY THE APPELLANT FORMED AN INTEGRAL PART OF THE BUSINESS OF PROVIDING CREDIT FACULTIES TO ITS MEMBERS AND HENCE WAS ELIGIBLE FOR DEDUCTION U/S. 80P[2][A] OF THE ACT. 6. WITHOUT PREJUDICE TO THE ABOVE AND WITHOUT PREJUDICE TO THE RIGHT OF THE APPELLANT TO SEEK FOR WAIVER OF THE INTEREST LEVIED, THE APPELLANT DENIES ITSELF LIABLE TO BE CHARGED TO INTEREST UNDER SECTION 234A, 234B AND 234C OF THE INCOME TAX ACT, WHICH LEVY, UNDER THE FACTS AND IN THE CIRCUMSTANCES OF THE APPELLANT'S CASE, DESERVES TO BE CANCELLED. 7. FOR THE ABOVE AND OTHER GROUNDS THAT MAY BE URGED AT THE TIME OF HEARING OF THE APPEAL, YOUR APPELLANT HUMBLY PRAYS THAT THE APPEAL MAY BE ALLOWED AND JUSTICE RENDERED AND THE APPELLANT MAY BE AWARDED COSTS IN PROSECUTING THE APPEAL AND ALSO ORDER FOR THE REFUND OF THE INSTITUTION FEES AS PART OF THE COSTS. 2. IT WAS SUBMITTED BY LEARNED AR OF THE ASSESSEE THAT THE LEARNED CIT(A) HAS FOLLOWED THE TRIBUNAL RENDERED IN THE CASE OF UDAYA SOUHARDA CREDIT CO-OPERATIVE SOCIETY LIMITED VS. ITO IN ITA NO.2831/BANG/2017 DATED 17.08.2018. HE PLACED RELIANCE ON A SUBSEQUENT TRIBUNAL ORDER RENDERED IN THE CASE OF SIDDARTHA PATTINA SOUHARDA SAHAKARI NIYAMITHA VS. ITO IN ITA NO.1234/BANG/2019 DATED 26.07.2019. HE SUBMITTED A COPY OF THIS TRIBUNAL ITA NO. 873/BANG/2019 PAGE 3 OF 4 ORDER AND POINTED OUT THAT IN THIS CASE, THE TRIBUNAL HAS DULY CONSIDERED THE TRIBUNAL ORDER RENDERED IN THE CASE OF UDAYA SOUHARDA CREDIT CO-OPERATIVE SOCIETY LIMITED (SUPRA) AND NOTED THAT IN THAT CASE, THE TRIBUNAL RESTORED THE MATTER BACK TO THE FILE OF AO FOR A FRESH DECISION WITH A DIRECTION THAT THE AO HAS TO EXAMINE AS TO WHETHER SOUHARDAS REGISTERED UNDER THE KARNATAKA SOUHARDA SAHAKARI ACT, 1997 CAN BE REGARDED AS A CO-OPERATIVE SOCIETY AND IS ENTITLED TO BENEFIT OF DEDUCTION UNDER SECTION 80P OF THE INCOME TAX ACT, 1961. HE FURTHER POINTED OUT THAT THE AO AND CIT(A) HAVE CONSIDERED THE ISSUE IN THE LIGHT OF THE KARNATAKA SOUHARDA SAHAKARI ACT, 1997 AND THEREFORE, THE ISSUE IS NOT REQUIRED TO RESTORED BACK TO THE FILE OF THE AO AND IT WAS DECIDED BY THE TRIBUNAL. THE TRIBUNAL PROCEEDED TO DECIDE THE ISSUE AFTER EXAMINING VARIOUS PROVISIONS OF THE KARNATAKA SOUHARDA SAHAKARI ACT, 1997 AND HELD THAT SOUHARDA CO-OPERATIVES ARE ALSO ONE OF THE CO-OPERATIVE SOCIETY REGISTERED UNDER A LAW IN FORCE IN THE STATE OF KARNATAKA FOR REGISTRATION OF CO- OPERATIVE SOCIETIES AND THEREFORE, THE CONCLUSION OF THE REVENUE AUTHORITIES THAT THE CO-OPERATIVE SOCIETIES AND CO-OPERATIVES ARE DIFFERENT AND THAT CO-OPERATIVES REGISTERED AS SOUHARDA SAHAKARI CANNOT BE REGARDED AS CO-OPERATIVE SOCIETIES IS UNSUSTAINABLE AND THE MATTER WAS RESTORED BACK TO THE FILE OF THE AO FOR A FRESH DECISION ON MERIT AFTER EXAMINING THE FACTS OF THE PRESENT CASE AS TO WHETHER OTHER CONDITIONS REQUIRED TO BE SATISFIED FOR ALLOWABILITY OF DEDUCTION UNDER SECTION 80P IS SATISFIED BY THE ASSESSEE OR NOT. HE SUBMITTED THAT IN THE PRESENT CASE ALSO, THE MATTER SHOULD BE RESTORED TO THE FILE OF THE AO WITH A SIMILAR DIRECTION. THE LEARNED DR SUPPORTED THE ORDER OF THE AUTHORITIES BELOW. 3. I HAVE CONSIDERED THE RIVAL SUBMISSIONS. I REPRODUCE THE RELEVANT PARA OF THE TRIBUNAL ORDER CITED BY THE LEARNED AR OF THE ASSESSEE HAVING BEEN RENDERED IN THE CASE OF SIDDARTHA PATTINA SOUHARDA SAHAKARI NIYAMITHA VS. ITO (SUPRA). THIS PARA IS AS UNDER: 10. THE ABOVE DISCUSSION WOULD SHOW THAT SOUHARDA CO-OPERATIVES ARE ALSO ONE FORM OF CO-OPERATIVE SOCIETIES REGISTERED UNDER A LAW IN FORCE IN THE STATE OF KARNATAKA FOR REGISTRATION OF CO-OPERATIVE SOCIETIES. THEREFORE, THE CONCLUSION OF THE REVENUE AUTHORITIES THAT CO-OPERATIVE SOCIETIES AND CO-OPERATIVES ARE DIFFERENT AND THAT CO-OPERATIVE REGISTERED AS SOUHARDA SAHAKARI CANNOT BE REGARDED AS CO-OPERATIVE SOCIETIES IS UNSUSTAINABLE. WE THEREFORE HOLD THAT THE ASSESSEE SHOULD BE ALLOWED DEDUCTION U/S.80P(2)(A)(I) OF THE ACT, AS THE GROUND ON WHICH THE SAME WAS DENIED TO THE ASSESSEE IS HELD TO BE INCORRECT. HOWEVER, THE OTHER CONDITIONS FOR ALLOWING DEDUCTION U/S. 80P(2)(A)(I) OF THE ACT NEEDS TO BE EXAMINED BY THE AO. I, THEREFORE, REMAND THE QUESTION OF ALLOWING DEDUCTION U/S. 80P(2)(A)(I) OF THE ACT TO THE AO, EXCEPT THE ISSUE ALREADY DECIDED ABOVE. ITA NO. 873/BANG/2019 PAGE 4 OF 4 4. RESPECTFULLY FOLLOWING THIS TRIBUNAL ORDER, I HOLD THAT THE ASSESSEE SHOULD BE ALLOWED DEDUCTION UNDER SECTION 80P OF THE IT ACT AFTER EXAMINING THIS ASPECT AS TO WHETHER THE ASSESSEE SATISFIES VARIOUS CONDITIONS REQUIRED FOR ALLOWABILITY FOR DEDUCTION UNDER SECTION 80P OF THE IT ACT AND THIS CLAIM OF THE ASSESSEE CANNOT BE REJECTED ON THIS BASIS THAT THE ASSESSEE IS A SOUHARDA SAHAKARI NIYAMITHA. THIS ACTION OF THE AO AND CIT(A) IS SET ASIDE AND THE MATTER IS RESTORED TO THE FILE OF THE AO FOR A FRESH DECISION ON MERIT AFTER PROVIDING ADEQUATE OPPORTUNITY OF BEING HEARD TO THE ASSESSEE. IF IT IS FOUND THAT THE OTHER CONDITIONS FOR ALLOWING DEDUCTIONS U/S 80P ARE BEING SATISFIED BY THE ASSESSEE IN THE PRESENT CASE, THEN SUCH DEDUCTION SHOULD BE ALLOWED TO THE ASSESSEE. 5. IN THE RESULT, THE APPEAL OF THE ASSESSEE IS ALLOWED FOR STATISTICAL PURPOSES. PRONOUNCED IN THE OPEN COURT ON THE DATE MENTIONED ON THE CAPTION PAGE. SD/- SD/- ( PAVAN KUMAR GADALE ) ( A. K. GARODIA ) JUDICIAL MEMBER ACCOUNTANT MEMBER BANGALORE. DATED: 23 RD DECEMBER, 2019. /NS/* COPY TO: 1. APPELLANT S 2. RESPON DENT 3. CIT 4. CIT(A) 5. DR, ITAT, BANGALORE. 6. GUARD FILE BY ORDER ASSISTANT REGISTRAR, ITAT, BANGALORE.