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Income Tax Appellate Tribunal, BANGALORE BENCH ‘SMC-A’, BANGALORE
Before: SHRI A.K.GARODIA, ACCOUNANT MEMBER
O R D E R PER A. K. GARODIA, A.M.: This appeal is filed by the assessee and it is directed against the order of CIT (A) – Belgaum dated 31.10.2018 for A. Y. 2016 – 17.
The assessee has raised as many as 4 grounds with several sub grounds of Ground No.2 but except Ground No. 2, all other grounds along with sub grounds no. (i) to (ix) of Ground No. 2 are either general or arguments. In course of hearing, it was submitted by the learned AR of the assessee that only Ground No. 2 is pressed and remaining grounds including sub grounds no. (i) to (ix) of Ground No. 2 are not pressed. Accordingly all grounds except Ground No. 2 are rejected as not pressed and I reproduce Ground No. 2 which is to be decided. This reads as under:-
2. The learned Commissioner of Income tax (Appeals) erred in law as well as on facts in applying the judgment of Hon. Supreme Court of India in the case of Citizen Co – Operative Society, Hyderabad. As the facts of Citizen Society & the assessee society is totally different. Difference in facts of the case are as under:
Relevant facts in brief are that the learned CIT (A) has noted in Para 7.3 of the impugned order that as per the details submitted by the learned AR of the assessee, there are total 2277 members out of which, only 742 members, 32.59% are regular members and remaining 1535 members, 67.41% are associate/nominal members. In Para 7.4 of his order, it is noted by CIT (A) that as provided in Karnataka Co – Operative Society Act, 1959, the number of Associate/nominal members in any co operative society cannot exceed fifteen percent (15%) of the total members of the society. He noted that in the present case, there is violation of Karnataka Co – Operative Society Act, 1959. Thereafter in Para 8 of his order, learned CIT (A) came to the conclusion that in view of violation of Karnataka Co – Operative Society Act, 1959, the present assessee society is not eligible for deduction u/s 80P and as such ratio of the decision of Hon’ble Supreme Court decision in the case of Citizen Co – Operative Society Limited vs. ACIT, 397 ITR 1 is applicable to the facts of the assessee society. In Para 9 of his order, learned CIT (A) decided the issue regarding allowability of deduction u/s 80P against the assessee by observing that mutuality principals have been failed as substantial business is being carried out with the general public or nominal members. Now the assessee is in further appeal before the tribunal.
Learned AR of the assessee submitted that it is true that the percentage of nominal members to total members is high but there is no basis indicated by CIT (A) to say that substantial business is being carried out with the general public or nominal members. He submitted that no business was carried out with general public and the quantum of business carried out with nominal members is not noted by any of the authorities below and the detail of the same is not readily available. He submitted that the order of CIT (A) is very cryptic without comparing the facts of the present case with the facts in the case of Citizen Co – Operative Society Limited vs. ACIT (Supra). He submitted that under these facts, the matter should be restored to CIT (A) for a fresh decision after comparing the facts of the present case with the facts in the case of Citizen Co – Operative Society Limited vs. ACIT (Supra). Learned DR of the revenue supported the order of AO & CIT (A).
I have considered the rival submissions. In the light of above discussion, I Feel that in the interest of justice, the mater should go back to the file of CIT (A) for a fresh decision. Hence, I set aside the order of CIT (A) and restore this matter back to his file for a fresh decision with the direction that sufficient opportunity should be provided by him to both sides and the assessee should provide complete detail with cogent evidence in respect of business carried out by the assessee with nominal members and general public, if any. The assessee should also demonstrate about the difference in facts of the present case and facts in the case of Citizen Co – Operative Society Limited vs. ACIT (Supra).
The AO can also demonstrate as to how the facts are similar. Thereafter the CIT (A) should pass speaking and reasoned order as per law. 6. In the result, the appeal of the assessee is allowed for statistical purposes. Order pronounced in the open court on the date mentioned on the caption page.