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Income Tax Appellate Tribunal, “B’’ BENCH: BANGALORE
Before: SHRI CHANDRA POOJARI
PER CHANDRA POOJARI, ACCOUNTANT MEMBER:
This appeal filed by the assessee is directed against order of the CIT(A) dated 9.1.2020. The assessee has raised following grounds of appeal:
1. In the facts and circumstances of the case, the Assessing Officer and the Appellate Authority erred in denying the benefit of deduction under Sec.80P(2) of the Income Tax Act, 1961 to the appellant.
2. Both the authorities below erred in applying the decision rendered by the Hon’ble Apex Court in Thotgars Sale Co-operative Society Ltd. Vs. ITO for denying the benefit of deduction under Sec.80P(2) of the I.T. Act to the appellant in respect of the interest on investments earned by the appellant from scheduled banks amounting to Rs.9,70,324/-.
M/s. Shreerama Credit Co-Op. Society Ltd., Udupi
Page 2 of 3 3. The appellant craves leave to add, to amend, modify and/or to alter any of the foregoing grounds and also urge such other grounds at the time of hearing.
Facts of the case are that the assessee is a co-operative society engaged in carrying on business of providing credit facilities to its members and not carrying on any other activities. The assessee has received inter-alia interest income from following banks: i. Axis bank - Rs.16,766/- ii. SBI - Rs.9,53,558/- Total interest earned by assessee was Rs.70,23,462/- and there was a business loss of Rs.10,61,306/-. Assessee claimed set off of business loss on the income. Assessee claimed deduction u/s 80(2)(d) of the Income-tax Act,1961 ['the Act' for short] at Rs.59,62,261/-, which was granted by A.O. Assessee also claimed deduction u/s 80P(2)(a)(i) of the Act on the income earned by interest at Rs.9,70,324/- u/s 80P(2)(a)(i) of the Act. This was denied by lower authorities on the reason that this deduction could be allowable only on income earned by interest or dividend by the co- operative society from its investment with any other co-operative society not with bank by placing reliance on the judgement of Hon’ble Supreme Court in the case of Totagars Co-operative Sale Society Ltd. Vs. ITO 322 ITR 283. Again the assessee is in appeal before us.
I have heard the D.R. submissions, perused the materials available on record and gone through the orders of the authorities below. None appeared for the assessee. I am of the opinion that similar issue came for consideration before ‘B’ Bench Bengaluru in for the assessment year 2014-15 in which the Tribunal vide order dated 26.7.2019 held as under: “We have considered the rival submissions and we set aside the order of CIT(A) and restore the matter back to his file for fresh decision in the light of above discussion, by way of a speaking and M/s. Shreerama Credit Co-Op. Society Ltd., Udupi
Page 3 of 3 reasoned order after providing adequate opportunity of being heard to both sides. The Ld. CIT(A) is directed to pass a speaking and reasoned order after comparing the facts of present case with the facts in the case of The Citizen Co-operative Society Ltd. Vs. ACIT 397 ITR 1 (SC). He is also directed to examine the facts of present case in the light of these two judgements of Hon’ble Karnataka High Court rendered in the case of Tumkur Merchants Souharda Credit Co-Operative Ltd. Vs. ITO 230 Taxman 309 and PCIT and Another Vs. Totagars Co-operative Sale Society (supra) and pass necessary order as per law in the light of above discussion after providing adequate opportunity of being heard to both sides.”
Respectfully following the above order of the Tribunal, we remit this issue to the file of the A.O. for similar direction. Accordingly, the appeal of the assessee is partly allowed for statistical purposes. Order pronounced in the open court on 6th Apr, 2021