Vrushabhavathy Nagara Credit Co-operative Society Ltd., , Bangalore V. Income Tax Officer, Ward-6(2)(1), Bangalore

ITA 917/BANG/2023

• Counselvise Citation: [2023] 100 COUNSELVISE.COM (IT) 4585 (ITAT-BANGALORE)
• Duration Of Justice: 1 month(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 20-12-2023
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: C
• Next Hearing Date: 19-12-2023
• Assessment Year: 2018-2019
• Appeal Filed On: 19-11-2023
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Keywords: Reasonable cause
• Section: 80P; 250

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL “SMC - C” : BANGALORE BEFORE SHRI GEORGE GEORGE K, VICE PRESIDENT AND SHRI LAXMI PRASAD SAHU, ACCOUNTANT MEMBER ITA Nos.916 and 917/Bang/2023 Assessment Years: 2017-18 and 2018-19 M/s. Vrushabhavathy Nagara Credit Co-operative Society Ltd., No.57, SLN Traders Building, 3 rd Main, Vrushabhavathy Nagar, Kamakshipalya, Bengaluru – 560 079. PAN : AACVA 3606 L Vs. ITO, Ward – 6(2)(1), Bengaluru. APPELLANTRESPONDENT Assessee by:Shri. H. Guruswamy, ITP Revenue by :Shri. Ganesh R Ghale, Standing Counsel for Revenue. Date of hearing:20.12.2023 Date of Pronouncement:21.12.2023 O R D E R Per George George K, Vice President: These appeals at the instance of the assessee are directed against two orders of CIT(A) both dated 25.08.2023, passed under section 250 of the Income Tax Act, 1961 (hereinafter called ‘the Act’). The relevant Assessment Years are 2017-18 and 2018-19. 2. Both appeals are time barred by 27 days. Assessee filed a petition for condonation of delay accompanied by an affidavit of the CEO of the assessee society stating therein the reasons for belated filing of these appeals. I have perused the reasons stated in the affidavit of the CEO of the assessee society. I am of the view that there is reasonable cause in filing these appeals late and no ITA Nos.916 and 917/Bang/2023 Page 2 of 5 latches can be attributed to the assessee. Hence, I condone the delay of 27 days in filing these appeals and proceed to dispose off the same on merits. 3. Common issues are raised in these appeals; hence, they were heard together and are disposed by way of this consolidated order. 4. Identical grounds are raised for both the Assessment Years except for variance in figures. Therefore, the grounds raised for Assessment Year 2017-18 are extracted here below: 1.The impugned Order u/s. 250 of the Act dated: 25-082023 passed by the Ld. CIT(A), NAFC Delhi is opposed to law, facts and circumstances of the case. 2.The Ld. CIT(A) has erred in confirming the addition of Rs. 40,42,455/- being the disallowance made by the AO rejecting the Appellant's claim for deduction u/s. 80P(2)(a)(i) of the Act without appreciating the facts and circumstances of the case. 3.The Ld. CIT(A) has erred in confirming the addition of Rs. 40,30,236/- without appreciating the fact that the said interest was not earned from the Co-operative Banks. 4.The Ld. CIT(A) has erred in confirming the addition of Rs. 40,30,236/- without appreciating the fact that the said interest consists of interest from Apex Bank only of Rs. 1,56,103/- and the balance represents interest received from the members on operational funds. 5.The Ld. CIT(A) has erred in confirming the addition of Rs. 40,30,236/- which was disallowed by the AO following the ratio laid down by the Hon'ble High Court of Karnataka in the case of The PCIT v/s. Totagars Co-operative Sales Society, Sirsi which was rendered u/s. 80P(2)(d) of the Act and hence the said decision was distinguishable both on law and facts of the case. ITA Nos.916 and 917/Bang/2023 Page 3 of 5 6.The Appellant craves leave to add, alter, amend and delete any of the grounds at the time of hearing. 5. Brief facts of the case are as follows: For the Assessment Years 2017-18 and 2018-19, assessee had claimed deduction under section 80P of the Act amounting to Rs.40,42,454/- and Rs.42,32,326/- respectively. The claim of deduction under section 80P of the Act was denied by the AO by observing that assessee had deposited its surplus funds in Co-operative Banks and earned interest income. It was further observed by the AO that the interest income earned out of investments with Co-operative Banks is not entitled to deduction either under section 80P(2)(a)(i) or under section 80P(2)(d) of the Act. 6. Aggrieved, asssessee filed appeal before the CIT(A). The CIT(A) confirmed the view taken by the AO for Assessment Years 2017-18 and 2018-19. 7. Aggrieved by the orders of the CIT(A), assessee has filed the present appeals before the Tribunal. The limited submission of the learned AR is that the interest income earned by the assessee for which it had claimed deduction under section 80P(2)(a)(i) of the Act is out of loan dispersed to its members. It was submitted by the learned AR that for Assessment Year 2017-18, only a sum of Rs.1,56,103/- and for Assessment Year 2018-19 a sum of Rs.1,56,596/- is received as interest income on investments with Co-operative Banks. It was submitted that the balance receipt of interest income is out of providing credit facilities to its members. Hence, it was submitted that the assessee is entitled to deduction under section 80P(2)(a)(i) of the Act. ITA Nos.916 and 917/Bang/2023 Page 4 of 5 8. Learned Standing Counsel supported the orders of the AO and the CIT(A). 9. I have heard the rival submissions and perused the material on record. The limited prayer of the assessee is only a sum of Rs.1,56,103/- and Rs.1,56,596/- are interest income earned out of investments with Apex Co-operative Bank. Therefore, only the said sums can be assessed as “income from other sources”. It is stated by the learned AR that the balance interest income that is received by the assessee is by providing credit facilities to its members and therefore is entitled to deduction under section 80P(2)(a)(i) of the Act. I am of the view that the matter needs to be examined afresh by the AO. The AO is directed to examine whether the interest income received by the assessee is on account of providing credit facilities to its members. If the interest income that is received by the assesse is out of providing credit facilities to its members, then the assessee shall be entitled to deduction under section 80P(2)(a)(i) of the Act. It is ordered accordingly. 10. In the result, appeals filed by the assessee are allowed for statistical purposes. Pronounced in the open court on the date mentioned on the caption page. Sd/- Sd/- Sd/- (LAXMI PRASAD SAHU) (GEORGE GEORGE K) Accountant MemberVice President Bangalore. Dated: 21.12.2023. /NS/* ITA Nos.916 and 917/Bang/2023 Page 5 of 5 Copy to: 1.Appellants2.Respondent 3.DRP4.CIT 5.CIT(A)6.DR,ITAT, Bangalore. 7. Guard file By order Assistant Registrar, ITAT, Bangalore.