SRI VARUN SOUHARDA CREDIT CO-OPERATIVE LIMITED,BANGALORE vs. INCOME TAX OFFICER, WARD- 5(2)(4), BANGALORE

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ITA 263/BANG/2020Status: DisposedITAT Bangalore31 August 2020AY 2014-1511 pages
AI SummaryRemanded

What did the Tribunal hold?

The Tribunal, by respectfully following the judgment of the Hon'ble High Court in the case of M/s. Swabhimani Souharda Credit Co-operative Ltd. Vs. Govt. of India, Min. of Finance and Others, held that entities registered under the Karnataka Souharda Sahakari Act, 1997, fit the definition of 'co-operative society' as per Section 2(19) of the Income Tax Act, 1961. The High Court's reasoning emphasized that the legislative object of Section 80P is to promote the co-operative movement and that entities registered under co-operative enactments, regardless of nomenclature, should be treated as co-operative societies. Consequently, the Tribunal remitted the issue back to the Assessing Officer to decide afresh in light of the High Court's judgment, after providing an opportunity of hearing to the assessee. The assessee was also granted liberty to raise any other issue deemed fit. The same directions were applied to the other two appeals.

What were the facts?

The assessee, M/s. Sri Varun Souharda Credit Co-operative Limited, filed appeals against the orders of the CIT(Appeals)-5, Bangalore, for Assessment Years 2014-15 to 2016-17. The appeals concerned the disallowance of a claim for deduction under Section 80P(2)(a)(i) of the Income Tax Act, 1961. The Assessing Officer disallowed the deduction on the grounds that the assessee was engaged in the business of banking, and the CIT(Appeals) confirmed this disallowance. The assessee's primary contention revolved around its eligibility for this deduction.

What were the issues?

1. Whether the assessee, a 'Souharda Sahakari' registered under the Karnataka Souharda Sahakari Act, 1997, qualifies as a 'co-operative society' for the purpose of claiming deduction under Section 80P(2)(a)(i) of the Income Tax Act, 1961, despite the Assessing Officer's view that it is in the business of banking. Assessee's contention: The assessee argued that it is a co-operative society and therefore entitled to the deduction under Section 80P(2)(a)(i). Revenue's contention: The revenue contended that the assessee is engaged in the business of banking and thus not eligible for the deduction under Section 80P(2)(a)(i).

Which sections of the Income-tax Act were involved?

Section 80P(2)(a)(i),Section 80P,Section 2(19)

AI-generated summary — verify with the full judgment below

Income Tax Appellate Tribunal, BANGALORE BENCHES “ B ” BENCH: BANGALORE

Before: SHRI CHANDRA POOJARI

For Appellant: Shri S.V. Ravi Shankar, Advocate
For Respondent: Shri Ganesh Ghale, Standing
Hearing: 31.08.2020Pronounced: 31.08.2020

O R D E R These three appeals filed by the assessee are directed against the different orders of Commissioner of Income Tax (Appeals)-5, Bangalore dt.30.12.2019 for the Assessment Years 2014-15 to 2016-17. The effective ground in these appeals is common and identical, for the sake of convenience, they are heard together and consolidated order is passed.

2 264 & 265/Bang/2020 2. We take up the Appeal in . The assessee has argued Ground No.3 regarding disallowance of claim of deduction under Section 80P(2)(a)(i) of the Income Tax Act, 1961 (the Act). The other grounds and additional grounds are not relevant at this stage and are only academic in nature which are not argued before us, accordingly these grounds are dismissed. The effective ground No.3 is as under :

“ 3. The ld. CIT (Appeals) was not justified in law in confirming the disallowance of Rs.20,43,170 under the provision of Section 80P(2)(a)(i) of the Act on the facts and circumstances of the case.” 3. The Assessing Officer has disallowed the claim of deduction made under Section 80P(2)(a)(i) of the Act on the reason that the assessee is in the business of Banking. The CIT (Appeals) has confirmed the order of the Assessing Officer. Hence the assessee is in appeal before us.

4.

I have heard both the parties and perused the material on record. Similar issue has been dealt by the Hon’ble High Court in Writ Petition No.48414 of 2018 in the case of M/s. Swabhimani Souharda Credit Co-operative Ltd. Vs. Govt. of India, Min. of Finance and Others Dt.16.01.2020 observed as under :

Therefore respectfully following the above judgment, I remit the issue in dispute to the file of Assessing Officer to decide afresh in the light of above judgement after giving an opportunity of hearing to the assessee. Further we make it clear that the assessee is at liberty to raise any other issue as deem it fit if so advised. Similarly, in the other two appeals in & 265/Bang/2020 shall equally apply the above decision and remit to the file of Assessing Officer with similar directions given above.

5.

In the result, appeals of the assessee are partly allowed for statistical purposes.

Pronounced in the open court on the date mentioned on the caption page.

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