M/S. SAMRUDHA SOUHARDA CREDIT CO-OPERATIVE LIMITED,BANGALORE vs. INCOME TAX OFFICER, WARD- 5(2)(4), BANGALORE

O R D E R These appeals filed by the assessee are directed against two different orders of the CIT(A), both dated 29.11.2019. The relevant assessment years are 2014-2015 and 2015-2016.

“1. The order of the Learned Commissioner of Income Tax (Appeals)-5 is not justified in law and on facts and circumstances of the case, in so far as it is against the Appellant. 2. The Learned Commissioner of Income Tax (Appeals)-5 is not justified in denying the deduction u/s 80P(2)(a)(i) for the Appellant. CIT(A) has erred in not considering the appellant as a Co-operative Society entitled for the deduction u/s 80P(2)(a)(i).

3. The Learned CIT(A) has erred in concluding that interest income earned by the appellant is not eligible for deduction u/s 80P(2)(a)(i). CIT(A) has failed to recognize the facts of the case, ignored the claim of the appellant and has failed to specifically adjudicate on this matter, despite specific plea made by the Appellant.

5. Without prejudice, the Learned AO has failed to apply the decision of Hon'ble Karnataka High Court in the case of CIT Vs Sri Bilure Gurubasava Pattina Sahakari Sangha iyamita, quoting that the case has not reached finality as it is pending before Hon'ble Supreme Court Decision of Karnataka High Court is binding so long as facts are similar. The learned CIT(A) has failed to adjudicate the matter by setting aside the actions of the AO in this regard despite facts being similar.

6. The Learned Assessing Officer has erred in levying Interest u/s 234A without observing the due date of Filing of return u/s 139( 1).

7. The appellant craves leave to add, alter, substitute and/or delete any or all of the grounds of appeal

urged above.

8. For the above and other grounds to be urged during the hearing of the appeal, the Appellant prays that the appeal be allowed in the interest of equity and justice.

4. Briefly stated the facts of the case are that the assessee is a Co-operative Society registered under the Karnataka Souharda Sahakari Act, 1997. The assessee e-filed its return of income for the assessment year 2014-2015 on 29.09.2014 declaring a total income of Rs.3,13,110 after claiming deduction u/s 80P of the I.T.Act, amounting to Rs.18,95,288.

The case was selected for scrutiny. The Assessing Officer completed the assessment u/s 143(3) on 20.12.2016 after making an addition / disallowance of Rs.18,95,288 u/s 80P of the Act.

5. Aggrieved by the order of the Assessing Officer denying the deduction u/s 80P of the Act, the assessee carried the matter in appeal before the CIT(A), who confirmed the view taken by the Assessing Officer. Against the above orders of the authorities below, the assessee is in appeal before the Tribunal.

6. None appeared on behalf of the assessee, hence, we proceed to dispose of this appeal after hearing the learned Departmental Representative.

“4. I have considered the rival submissions. Regarding the judgment of Hon'ble Karnataka High Court rendered in the case of Pr. CIT Vs. Vijay Souharda Credit Sahakari Ltd. (supra) on which reliance was placed by ld. DR of revenue as per which the matter was restored back to AO to examine the applicability of the judgment of Hon’ble Apex Court rendered in the case of The Citizen Co-operative Society Ltd. Vs. ACIT (supra), I find that in the present case, this is not the case of the AO as per the assessment order that this judgment of Hon’ble Apex Court rendered in the case of The Citizen Co-operative Society Ltd. Vs. ACIT (supra) is applicable in the present case. As per the impugned order of ld. CIT(A) also, no finding of ld. CIT(A) is there that this judgment rendered in the case of The Citizen Co- operative Society Ltd. Vs. ACIT (supra) is applicable in the present case. Hence, I hold that this judgment of Hon'ble Karnataka High Court has no applicability in the present case in view of the facts discussed above. Regarding the argument of ld. DR of revenue that the earlier Tribunal order rendered by the Division Bench of the Tribunal in the case of M/s. Udaya Souharda Credit Cooperative Society Ltd. (supra) should be followed in preference to the later decision of SMC bench of the Tribunal rendered in the case of Siddartha Pattina Souharda Sahakari Niyamitha Vs. ITO (supra), I find that in this later case, the SMC bench of the Tribunal has duly considered the earlier decision of the Division Bench of the Tribunal rendered in the case of M/s. Udaya Souharda Credit Co-operative Society (supra) and it is also noted that ld. CIT(A) and AO in that case has examined the whole issue in the light of Karnataka Souharda Sahakari Act, 1997. Because of this reason, it was held by the SMC bench of the Tribunal that issue has to be decided by the Tribunal and it cannot be remanded to the AO as was canvassed by the Revenue and hence, this argument has not merit that even now, the matter should be restored back to the AO for fresh decision although the SMC bench of the Tribunal has decided the issue. Regarding the judgment of Hon’ble Allahabad High Court rendered in the case of CIT Vs. Hari Nath and Co. (supra) on which reliance was placed by ld. DR of revenue, I find that in this case, it was held by Hon’ble Allahabad High Court that decision of Division Bench given in an earlier case is binding on its subsequent bench of the same High Court. There is no quarrel on this aspect but this is not the case of the SMC bench of the Tribunal as per the subsequent order that the decision of the Division Bench of the Tribunal in the case of M/s. Udaya Souharda Credit Co-operative Society Ltd. (supra) is not binding on the Tribunal whether SMC Bench or Division Bench. As per the subsequent decision of the SMC Bench of the Tribunal, it was held that as per the earlier decision of the Division Bench of the Tribunal, the matter was restored back to the AO for a fresh decision in the light of Karnataka Souharda Sahakari Act, 1997 and this was done by CIT (A) and AO as directed by the tribunal and because of this reason, SMC bench of the Tribunal held that now the issue has to be decided by the Tribunal at its own level instead of again restoring the matter back to the file of AO and after considering the various provisions of Karnataka Souharda Sahakari Act, 1997, the SMC Bench of the Tribunal came to the conclusion that souharda co-operatives are also one form of co- operative societies registered under a law in force in the State of Karnataka for registration of co-operative societies and therefore, the conclusion of the revenue authorities that co- operative societies and co-operatives are different and that co- operative registered as Souharda Sahakari cannot be regarded as co-operative societies is unsustainable. After holding so, the Tribunal restored back the matter to the AO for fresh decision regarding allowability of deduction u/s. 80P of the IT Act after examining the fulfilment of other conditions in that regard. For ready reference, we reproduce para nos. 5 to 11 of this Tribunal order rendered in the case of Siddartha Pattina Souharda Sahakari Niyamitha Vs. ITO (supra) by SMC bench of the Tribunal on 26.07.2019. These paras are as under: “5. I have heard the rival submissions. The learned counsel for the Assessee submitted that Souharda Sahakari registered under the Karnataka Souharda Sahakari Act, 1997 are also co-operative societies within the meaning of Sec.2(19) of the Act and therefore the revenue authorities were not justified in denying the benefit of deduction to the Assessee. The learned DR relied on a decision of the ITAT Bangalore Bench in the case of M/s. Millennium Credit Cooperative Society Ltd. Vs. ITO & 2607/Bang/2017 in which the Tribunal followed the decision of ITAT Bangalore Bench in the case of M/s. Udaya Souharda Credit Co-operative Society Ltd. ITA No.2831/Bang/2017 order dated 17.8.2018 in which the issue whether souharda registered under the Karnataka Souharda Sahakari Act, 1997 can be regarded as co-operative society entitled to benefit of deduction u/s.80P(2)(a)(i) of the Act was remanded to the AO for fresh consideration. We are of the view that in the present case, the AO and CIT(A) have already considered this issue in the light of the Karnataka Souharda Sahakari Act, 1997 and therefore this issue has to be decided by me and cannot be remanded to the AO as was canvassed by the Revenue.

7. As can be seen from the aforesaid definition of ‘Co- operative society’ under the Act, any co-operative society registered under any other law of any State for registration of co-operative society is also regarded as co-operative society under the Act. Souhardas’ also operate on the principle of co-operation and adopt the principles of co-operation. Cooperative Societies and Co-operatives are all founded on the principle of cooperation.

8. Since the beginning of mankind the concept of ‘co- operation’ has been the foundation for harmonious existence In India, the Cooperative Societies Act 1912 regulated formation, management, winding up and other supervision by the Government etc. This Act became the model for the provincial governments to form their own Cooperative Acts. Post-Independence, various state governments framed their own independent Cooperative Acts and the Central Government its Multi-State Cooperative Act. Accordingly, Karnataka State Cooperative Societies Act, 1959 (KSCS Act, 1959) regulates Cooperative societies in the state of Karnataka. A Panchayat, a Cooperative society and a School for every village were considered as the three pillars of the integrated community development. As time passed by, other aspects were included into the Cooperative act thus heralding the resurgence of a new era in cooperative movement. The state and the central governments were investing millions of rupees in the form of shares, grants, subsidy, contributions, government support, etc., but the expected results couldn’t be achieved in cooperative movements. This condition continued almost until early 1980s.