UDUPI TALUK PROTESTANT CHRISTIAN CREDIT CO-OPERATIVE SOCIETY LIMITED,UDUPI V. INCOME TAX OFFICER, WARD-1, UDUPI

ITA 2321/BANG/2024

AI Insights

The case involves the Udupi Taluk Protestant Christian Credit Co-operative Society Ltd., which appealed against the order of the CIT(A) concerning the assessment year 2018-19. The primary contention was regarding the treatment of interest income earned from commercial banks and cooperative banks, which the Assessing Officer (AO) taxed under 'Other sources' and denied deductions under section 80P(2)(d) of the Income Tax Act, 1961. The CIT(A) upheld the AO's decision, leading to the appeal before the ITAT. The ITAT found that the CIT(A) had not adequately addressed all contentions and material on record, necessitating a remand for a fresh assessment.

• Counselvise Citation: [2025] 140 COUNSELVISE.COM (IT) 34174 (ITAT-BANGALORE)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 09-01-2025
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: A
• Assessment Year: 2018-2019
• Other Referred Cases: Mavilayi Co-operative Bank Ltd. vs. CIT, Totagars Co-operative Sale Society vs. CIT
• Laws Referred To: Income Tax Act, 1961, Karnataka Co-operative Society Act, 1959
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: NEHA SAHAY
• Assessee Lawyers: MAHESH R UPPIN
• Keywords: Business income
• Section: 56; 80P

Judgement Text

"ITA No.2321/Bang/2024 Udupi Taluk Protestant Christian Credit Co-operative Society Ltd., Udupi IN THE INCOME TAX APPELLATE TRIBUNAL “A’’ BENCH: BANGALORE BEFORE SHRI WASEEM AHMED, ACCOUNTANT MEMBER AND SHRI PRAKASH CHAND YADAV, JUDICIAL MEMBER ITA No.2321/Bang/2024 Assessment Year: 2018-19 Udupi Taluk Protestant Christian Credit Co-operative Society Ltd. Grace Plaza, 76 Badagabettu Bailoor Udupi-576101 PAN NO : AAAAU1479J Vs. ITO Ward-1 Udupi APPELLANT RESPONDENT Appellant by : Sri Mahesh R Uppin, A.R. Respondent by : Ms. Neha Sahay, D.R. Date of Hearing : 08.01.2024 Date of Pronouncement : 09.01.2025 O R D E R PER PRAKASH CHAND YADAV, JUDICIAL MEMBER: Present appeal of the assessee is arising from the order of ld. CIT(A) dated 23.7.2024 and relates to assessment year 2018-19 having DIN number ITBA/NFAC/S/250/2024-25/1066924934(1). 2. Brief facts as coming out from the orders of authorities below are that the assessee is a credit co-operative society registered under the provisions of Karnataka Co-operative Society Act, 1959. The assessee is in the business of providing credit facilities to its members for their various financial needs. The assessee filed its return of income declaring a gross total income of Rs.1,47,79,120/-, after claiming deduction of Rs.1,47,77,664/- u/s 80P of the Income Tax Act, 1961 (in short “The Act”). During the course of assessment proceedings, the AO observed that interest income earned by the ITA No.2321/Bang/2024 Udupi Taluk Protestant Christian Credit Co-operative Society Ltd., Udupi Page 2 of 3 assessee from commercial bank is liable to be segregated from the business income of the assessee and to be taxed u/s 56 of the Act. The ld. AO could not allow corresponding expenses to the assessee while taxing the income under the head “Other sources”. The ld. AO also took a view that the assessee is not entitled for deduction of section 80P(2)(d) of the Act in respect of the interest income earned from the co-operative banks. 3. Aggrieved with the order of AO, the assessee filed an appeal before the ld. CIT(A) and inter-alia contended that the assessee is entitled for deduction of section 80P(2)(d) of the Act in respect of the interest income or in the alternative the assessee would be granted deduction of corresponding expenses. The ld. CIT(A) overlooking submissions and facts of the case, dismissed the appeal of the assessee. 4. Ld. Counsel appearing on behalf of the assessee reiterated the submissions before the lower authorities and contended that both the authorities have failed to appreciate the facts of the case in proper manner. 4. Ld. D.R. appearing on behalf of the revenue fairly pointed out that the AO has erred in making a distinction between members and non-members while framing the assessment. The ld. D.R. averted that the AO has failed to take cognizance of the judgement of Hon’ble Supreme Court in the case of Mavilayi Co-operative Bank Ltd. reported in 431 ITR 1. 5. After considering the rival submissions, we are of the view that the issue involved in the present appeal requires fresh consideration at the end of ld. CIT(A) in as much as the ld. CIT(A) has not at all dealt with all the contentions and the material available on record in a judicious manner. Therefore, in the interest of justice, we remit ITA No.2321/Bang/2024 Udupi Taluk Protestant Christian Credit Co-operative Society Ltd., Udupi Page 3 of 3 this matter back to the file of ld. CIT(A) for examining afresh in the light of judgement of Mavilayi Co-operative Bank Ltd. cited (supra) as well as in the light of judgement of jurisdictional High Court in the case of Totagars Co-operative Sale Society reported in 395 ITR 611. The Ld. CIT(A) also consider whether the assessee is entitled for corresponding expenses relatable to interest earned from Cooperative banks, in the light of the decisions of the Bangalore Benches of the ITAT, as referred to by the assessee. Needless to say that the CIT(A) would grant sufficient opportunities to the assessee before passing any order. 6. In the result, appeal of the assessee is allowed for statistical purposes. Order pronounced in the open court on 9th Jan, 2025 Sd/- (Waseem Ahmed) Accountant Member Sd/- (Prakash Chand Yadav) Judicial Member Bangalore, Dated 9th Jan, 2025. VG/SPS Copy to: 1. The Applicant 2. The Respondent 3. The CIT 4. The DR, ITAT, Bangalore. 5 Guard file By order Asst. Registrar, ITAT, Bangalore. "