L S M P CO-OP SOCIETY LTD,UTTARA KANNADA V. INCOME TAX OFFICER, WARD-1, SIRSI

ITA 364/BANG/2025

AI Insights

The case involves L.S.M.P. Co-operative Society Ltd., the appellant, contesting the dismissal of their appeal by the CIT(A) for non-compliance regarding an assessment order under section 143(3) of the Income Tax Act, 1961, for the assessment year 2017-18. The primary contention revolves around the deduction claimed under section 80P(2)(d) amounting to Rs.6,07,415.99, which was initially disallowed by the Income Tax Officer, Ward 1, Sirsi. The CIT(A) dismissed the appeal due to the appellant's non-compliance with multiple notices. The Tribunal found that the CIT(A) erred by not deciding the appeal on its merits and restored the matter back to the CIT(A) for a decision based on the merits, referencing recent Supreme Court decisions that support the appellant's position.

• Counselvise Citation: [2025] 140 COUNSELVISE.COM (IT) 717228 (ITAT-BANGALORE)
• Duration Of Justice: 5 month(s) 17 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 11-08-2025
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: SMC
• Assessment Year: 2017-2018
• Appeal Filed On: 25-02-2025
• Other Referred Cases: Mavilayi Service Co-operative Bank Ltd. [TS-12-SC-2021], Kerala State Co-Operative Agricultural & Rural Development Bank Ltd. [TS-528-SC-2023]
• Laws Referred To: Income-tax Act, 1961
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: REVENUE; GANESH R. GHALE; STANDING COUNSEL REVENUE
• Assessee Lawyers: SHANKAR CHALAPATHI
• Section: 143(3)

Judgement Text

"IN THE INCOME TAX APPELLATE TRIBUNAL “SMC” BENCH : BANGALORE BEFORE SHRI PRASHANT MAHARISHI, VICE PRESIDENT ITA No.364/Bang/2025 Assessment year : 2017-18 L.S.M.P. Co-operative Society Ltd., # 1, Pala Mundgod, Uttara Kannada – 581 349. PAN: AAAAL 0146P Vs. The Income Tax Officer, Ward 1, Sirsi. APPELLANT RESPONDENT Appellant by : Shri Shankar Chalapathi, CA Respondent by : Shri Ganesh R. Ghale, Standing Counsel for Revenue Date of hearing : 12.06.2025 Date of Pronouncement : 11.08.2025 O R D E R 1. This appeal is filed by L.S.M.P. Co-operative Society Ltd. (the assessee/appellant) for the assessment year 2017-18 against the appellate order passed by the CIT(Appeals), Gwalior [ld. CIT(A)] dated 21.1.2025 wherein the appeal filed by the assessee against the assessment order passed u/s. 143(3) of the Income-tax Act, 1961 [the Act] dated 24.12.2019 by the ITO, Ward 1, Sirsi was dismissed for non-compliance. The assessee is aggrieved and is in appeal claiming deduction u/s. 80P(2)(d) of the Act of Rs.6,07,415.99. 2. The brief facts show that assessee is a primary agricultural credit society registered under the Karnataka Co-operative Societies Act, 1959, engaged in the business of providing credit facilities to farmers Printed from counselvise.com ITA No.364/Bang/2025 Page 2 of 4 and also accepting deposits from farmers. Assessee is conducting its business activities according to the bye laws and in terms of the provisions of the Act. It has made investments in shares & fixed deposits of Kanara Districut Central Co-op. Bank [KDCC Bank] and have earned interest income of dividend income therefrom. Assessee filed its return of income at a gross total income of Rs.74,81,168 and net taxable income was disclosed at Rs.6,870. Assessee has claimed deduction u/s. 80P(2)(a)(i) of the Act of Rs.6,07,415. 3. The ld. AO during the course of assessment proceedings passed an order u/s. 143(3) dated 24.12.2019 disallowing deduction u/s. 80P of the Act which are consisting of trading profit of Rs.4,17,701, godown rent of Rs.21,228, dividend income of Rs.1,64,636 and net dividend income of Rs.3,850, totalling to Rs.6,07,415. The total income was assessed at the above sum. 4. Assessee preferred appeal before the ld. CIT(A) who issued 5 notices to the assessee, but none of them were complied with and therefore he held that it seems that assessee is not interested to pursue the appeal and dismissed the appeal of the assessee. Against this order of appellate authority, assessee is in appeal before us. 5. I have heard the rival contentions and found that the ld. CIT(A) has not decided the issue on the merits of the case, whether assessee is entitled to deduction u/s. 80P of the Act or not. He has merely dismissed the appeal for non-prosecution. The ld. CIT(A) is mandated to decide the Printed from counselvise.com ITA No.364/Bang/2025 Page 3 of 4 issue only on the merit of the case and not on the issue whether assessee is willing to prosecute the appeal or not. 6. In view of the above facts, we restore the whole appeal back to the file of ld. CIT(A) with a direction to decide the issue about the allowability of deduction u/s. 80P(2)(d) of the Act, after considering the decision of Hon’ble Supreme Court in the case of Mavilayi Service Co-operative Bank Ltd. [TS-12-SC-2021] and Kerala State Co-Operative Agricultural & Rural Development Bank Ltd. [TS-528-SC-2023] dated 14.9.2023 wherein it has been held that co-operative societies are entitled to deduction u/s. 80P of the Act and provisions are to be interpreted liberally. 7. Assessee is directed to make submission before the CIT(A), who after giving opportunity of hearing to the assessee, may decide the issue in accordance with law considering the above decisions of Hon’ble Supreme Court. 8. In the result, the appeal of the assessee is allowed for statistical purposes. Pronounced in the open court on this 11th day of August, 2025. Sd/- ( PRASHANT MAHARISHI ) VICE PRESIDENT Bangalore, Dated, the 11th August, 2025. /Desai S Murthy / Printed from counselvise.com ITA No.364/Bang/2025 Page 4 of 4 Copy to: 1. Appellant 2. Respondent 3. Pr. CIT 4. CIT(A) 5. DR, ITAT, Bangalore. By order Assistant Registrar ITAT, Bangalore. Printed from counselvise.com "