M/S SRI NAGENDRA CREDIT CO OPERATIVE V. THE INCOME TAX OFFICER

ITA/658/2018

AI Insights

The case involves M/s Sri. Nagendra Credit Co-operative Society Limited, which appealed against the order of the ITAT that denied deductions under Section 80P(2)(a)(i) and Section 80P(2)(d) of the Income Tax Act for the assessment years 2013-14 and 2014-15. The ITAT had remanded the matter to the CIT(A), which the Assessee contested, arguing that the issue was settled by the Karnataka High Court in Tumkur Merchants Souharda Credit Cooperative Ltd. vs. Income-tax officer. The Revenue supported the ITAT's decision to remand the matter. The High Court decided to remand the matter to the AO for a detailed examination of the facts concerning the source of the funds used for deposits.

• Counselvise Citation: [2022] 140 COUNSELVISE.COM (IT) 693840 (HC-KARNATAKA)
• Appeal Type: Others
• Pronouncement Date: 12-12-2022
• Assessment Year: misc
• Other Referred Cases: Tumkur Merchants Souharda Credit Cooperative Ltd. Vs. Income-tax officer, Word-V, Tumkur, PCIT and another Vs. Totagars Co-operative Sale Society
• Laws Referred To: Income Tax Act, 1961
• Result in Favour of: Partly Allowed
• Court: HIGH COURT
• Department Lawyers: E I SANMATHI
• Assessee Lawyers: CHANDRASHEKAR
• Keywords: Deduction under section 80P; Income tax appeal; Remand to CIT(A); Assessment Years 2013-2014 and 2014-2015
• Section: 80P(2)(d); 80P(2)(a)(i); 260-A

Judgement Text

" - 1 - ITA No. 658 of 2018 IN THE HIGH COURT OF KARNATAKA AT BENGALURU DATED THIS THE 12TH DAY OF DECEMBER, 2022 PRESENT THE HON'BLE MR. JUSTICE P.S.DINESH KUMAR AND THE HON'BLE MR. JUSTICE T G SHIVASHANKARE GOWDA INCOME TAX APPEAL NO. 658 OF 2018 BETWEEN: M/S SRI. NAGENDRA CREDIT CO-OPERATIVE SOCIETY LIMITED REP. BY SRI.SIDDESH K.S CEO, #368/A, 6TH MAIN NAGENDRA BLOCK BSK 3RD STAGE BENGALURU-560 050 PAN NO:AALAS80544C …APPELLANT (BY SHRI. CHANDRASHEKAR FOR SHRI. M. LAVA, ADVOCATES) AND: THE INCOME TAX OFFICER WARD-5(2)(5) BMTC BUILDING, 80 FEET ROAD 6TH BLOCK, KORAMANGALA BENGALURU-560 095 …RESPONDENT (BY SHRI. E.I. SANMATHI, ADVOCATE) THIS INCOME TAX APPEAL IS FILED UNDER SEC.260-A OF INCOME TAX ACT 1961, ARISING OUT OF ORDER DATED 04.05.2018 PASSED IN ITA NO. 1154 & 1155/BANG/2018, FOR THE ASSESSMENT YEARS 2013-2014 AND 2014-2015, PRAYING TO FORMULATE THE SUBSTANTIAL QUESTION OF LAW AS STATED THEREIN AND TO ALLOW THE APPEAL AND SET ASIDE THE FINDINGS TO THE EXTENT AGAINST THE APPELLANT IN THE ORDER PASSED BY THE INCOME TAX APPELLATE TRIBUNAL, SMC \"B\" BENCH IN ITA NO. 1154 & Digitally signed by YASHODHA N Location: High Court Of Karnataka - 2 - ITA No. 658 of 2018 1155/BANG/2018, DATED 04.05.2018 FOR THE ASSESSMENT YEARS 2013-2014 AND 2014-2015 RESPECTIVELY. THIS INCOME TAX APPEAL, COMING ON FOR ORDERS, THIS DAY, P.S. DINESH KUMAR J., DELIVERED THE FOLLOWING: JUDGMENT This appeal by the Assessee, directed against the order dated 04.05.2018 in ITAs No.1154 & 1155/Bang/2018 passed by the ITAT1, \"SMC-B\" Bench, Bangalore, for the Assessment Years 2013-14 and 2014-15, has been admitted to consider following questions of law: \"1. Whether the Tribunal was justified in law in not allowing an amount of Rs.3,60,550/- and Rs.4,78,953/- for the Assessment Years 2013-14 and 2014-15 respectively under Section 80P(2)(a)(i) of the Act, as the said income was attributable to the business of banking and consequently erred in passing a perverse order by remanding the matter to the Commissioner of Income Tax (appeals) on the facts and circumstances of the case? 2. Without prejudice, whether the Tribunal was justified in law in not granting relief in respect of the income earned from co-operative banks which are primarily cooperative societies and consequently ought to have allowed deduction under Section 80P(2)(d) of the Act, on the facts and circumstances of the case? 1 Income Tax Appellate Tribunal, Bengaluru Bench - 3 - ITA No. 658 of 2018 2. Heard Shri Chandrashekar, learned advocate for the appellant-Assessee and Shri E.I.Sanmathi, learned Standing Counselz for the respondent-Revenue. 3. Shri Chandrashekar for the Assessee submitted that Assessee-Society had deposited its own funds in the banks. Therefore, it was entitled for the benefit of deduction under Section 80P(2)(a)(i) of the Act.2 However, the ITAT has remanded the matter on the file of CIT (A)3 though the issue is covered by the decision of this Court in Tumkur Merchants Souharda Credit Cooperative Ltd. Vs. Income-tax officer, Word-V, Tumkur4 . 4. Opposing the appeal, Shri Sanmathi for the Revenue adverting to para 5 of ITAT's order, submitted that the ITAT has only remanded the matter to the CIT(A) and therefore, no question of law arises for consideration. 5. In reply, Shri Chandrashekar submitted that if at all the remand order is to be sustained, the matter will have to be sent back on the file of the AO5 to examine whether the deposit made 2 Income Tax Act, 1961 3 Commissioner of Income Tax (Appeals) 4 [2015]55 taxmann.com 447(Karnataka) 5 Assessing Officer - 4 - ITA No. 658 of 2018 was out of own funds or borrowed funds, because law with regard to deposit of own funds has been decided in Tumkur Merchants' case. 6. We have carefully considered rival submissions and perused the records. 7. In the operative portion of the order, ITAT has remanded the matter to the CIT(A) and also observed that if it is found that facts are inline with the facts in PCIT and another Vs. Totagars Co-operative Sale Society6, then the issue shall be decided against the Assessee and if it is found inline with facts in Tumkur Merchants' case, then it shall be decided in favour of the Assessee. It is not in dispute that position of law has been decided in Totagars Co-operative Society and Tumkur Merchants' cases. Thus, ITAT's remand order is for examination of facts of the case and application of relevant laws. Therefore, in our view, it would be more appropriate to remand the matter on the file of the Assessing Officer instead of CIT(A) for fresh adjudication. 6 395 ITR 611 - 5 - ITA No. 658 of 2018 8. In the light of the above discussions, we modify the order passed by the ITAT to the extent of remanding the matter on the file of the CIT(A) and direct that the matter shall be remanded on the file of the AO for fresh consideration, in accordance with law. 9. The appeal is accordingly disposed of. Since the matter is remanded, the questions of law do not require any answer and they are not answered. The AO shall pass fresh order in accordance with law without being influenced by the observations made by the ITAT or this Court. No costs. Sd/- JUDGE Sd/- JUDGE YN List No.: 1 Sl No.: 47 "