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Income Tax Appellate Tribunal, BENGALURU BENCH B, BENGALURU
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integra, for the said issue has been decided by the Income-tax Appellate Tribunal itself in different cases . . .". No other binding precedent was discussed in the said judgment. Of course, the Bench has observed that a co-operative bank is a specie of the genus co-operative society, with which we agree, but as far as applicability of section 80P(2) of the Act is concerned, the applicability of the Supreme Court's decision cannot be restricted only if the income was to fall under section 80P(2)(a) of the Act and not under section 80P(2)(d) of the Act. It was submitted that as the issue has already been decided against the assessee, the legal position may kindly be noted and the matter may be decided in accordance with law.
Per contra the Ld. DR submitted that the assessee had conceded that the ground had been decided by the Hon’ble jurisdictional High Court (supra) therefore no further elaboration is required from the Revenue’s side.
We have heard the rival submissions and perused the material on record. The issue pertains to eligibility of the assessee for claiming the deduction u/s.80P2(d), is squarely covered against the assessee by the categorical pronouncement in the matter of Pr. CIT versus Totgars Co-op Sale Society [395 ITR 611] , wherein after taking into account the judgment of the Hon’ble Supreme Court in the matter of Totgar’s Cooperative Sale Society v. ITO [322 ITR 283] the issue was decided against the assessee. We do not find any reason to take a contrary view and accordingly the ground raised by the assessee is dismissed.
With respect of ground no.5, it was the contention of the assessee that the term ‘profits and gains’ used in section 80P(2)(c)
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The CIT (A) after issuing the show-cause notice had also denied the deduction of Rs.50,000/- given by the AO u/s.80P(2)(c). Aggrieved by the denial of deduction by the CIT (A), the assessee is in appeal before this Tribunal.
Regarding ground 4 the Ld. AR submitted that case of the assessee is covered by the decision of jurisdictional High Court in the matter of Pr. CIT . Totgars Co-op Sale Society [(2017) 392 ITR 74W], wherein at para 10, it was held as under :
Admittedly, the interest which the assessee-respondent had earned was from a co-operative bank. Therefore, according to section 80P(2)(d) of the Income-tax Act, the said amount of interest earned from a co-operative bank would be deductible from the gross income of the co-operative society in order to assess its total income. Therefore, the Assessing Officer was not justified in denying the said deduction to the assessee- respondent. It was fairly conceded by the Ld AR that the issue in the present case was subsequently decided by the jurisdictional High Court in the matter of Pr. CIT . Totgars Co-op Sale Society [395 ITR 611] against the assessee , wherein at para 18, it was held as under :
The contention of the learned counsel for the assessee that a Co-ordinate Bench of this court dismissed the Revenue's appeals by referring, but not applying the decision of the hon'ble Supreme Court, we observe with greatest respects that we do not find any detailed discussion of the facts and law pronounced by the hon'ble Supreme Court in the case of the respondent-assessee in the said order passed by the Co- ordinate Bench and therefore, we are unable to follow the same in the face of the binding precedent laid down by the hon'ble Supreme Court. We find in paragraph 8 of the said order passed by a Co-ordinate Bench that the learned judges have observed that "the issue whether a co-operative bank is considered to be a co-operative society is no longer res
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is required to be read in the light of the judgment of the Hon’ble Supreme Court rendered in the matter of CIT v. Virmani Industries P. Ltd [216 ITR 607], wherein the Hon’ble Supreme Court held as under : We may first consider the meaning of the expression "profits or gains chargeable". On the first impression, the said expression appears to refer only to profits or gains of business or profession chargeable under section 28. But this court has repeatedly held that the said expression is not so confined and that it refers to income under all the heads of income specified in section 14. In Jaipuria China Clay Mines (P.) Ltd.'s case [1966] 59 ITR 555 (SC), the facts were these : the total income of the respondentassessee for the assessment year 1952-53 before charging depreciation was Rs. 14,041. After deducting depreciation of Rs. 5,360, the Income-tax Officer computed the profit at Rs. 8,681. Against this profit, he set off the losses of an earlier year. Having done this, the Income-tax Officer computed the income of the assessee from dividends at Rs. 2,01,130 and levied tax on it. The assessee claimed that the unabsorbed depreciation aggregating to Rs. 76,857 should be deducted from the dividend and if it is so done, the total income would get reduced to Rs. 1,32,955. The Income-tax Officer rejected the claim. When the matter was ultimately carried to this court, it took note of the opening words of the sub-section, viz., "where, in the assessment of the assessee or if the assessee is a registered firm, in the assessment of its partners, full effect cannot be given to any such allowance. . . ." and held on that basis that the expression "profits or gains chargeable" in the said sub-section is not confined to profits and gains from business or profession but takes within its ambit all heads of income. This court was of the opinion that while amending section 10(2)(vi) of the Indian Income-tax Act, 1922, by the Amendment Act 25 of 1953, Parliament has accepted the interpretation placed upon the said expression by several High Courts to the above effect. It referred to the decisions of the Lahore High Court in Karam Ilahi Muhammad Shafi v. CIT [1929] 3 ITC 456, the Madras High Court in A. Suppan Chettiar and Co. v. CIT [1929] 4 ITC 211, the East Punjab High Court in Laxmichand Jaiporia Spg. and Wvg. Mills, In re, [1950] 18 ITR 919 and the Bombay High
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28.11.2018, for the assessment years 2009-10, 2013-14 and 2015- 16, respectively.
The common grounds of appeal were raised by the assessee. We are only reproducing the effective grounds 4 & 5 raised by the assessee for AY 2009-10 which are as under :
The Ld. AR has submitted that ground no.1 is general and ground nos.2 and 3 are not pressed therefore we are not deciding ground nos.2 and 3.
3.1 Ground 4 pertains to 80P(2)(d). In this regard, the Ld. AR submitted that the assessee is a Housing Cooperative Society and filed return of income for AY 2009-10. Thereafter the AO had issued notice u/s.148 of the Act and in response thereto the assessee filed the return of income declaring nil income after claiming deduction u/s.80P2(d) of the Act. The AO considering the provision of section 80P2(d), had disallowed the deduction claimed by the assessee. Further the AO has allowed the deduction of Rs.50,000/- u/s.80P(2)(c) of the Act. Aggrieved, assessee filed appeal before the CIT (A).
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IN THE INCOME TAX APPELLATE TRIBUNAL BENGALURU BENCH 'B', BENGALURU BEFORE SHRI. A. K. GARODIA, ACCOUNTANT MEMBER AND SHRI. LALIET KUMAR, JUDICIAL MEMBER I.T.A Nos.1500 & 1501/Bang/2018 (Assessment Years : 2009-10 & ITA.2013-14) I.T.A. No.77/Bang/2019 (Assessment year : 2015-16) M/s. Karnataka State Government House Building Cooperative Society Ltd, No.142, ‘Vellahalu Nilayam’, 8th Main Road, 18th Cross, Vijayanagar, Bengaluru 560 040 .. Appellant PAN : AABAK1360M v. Income-tax Officer, Ward -3(2)(2), Bengaluru .. Respondent Assessee by : Shri. C. Sandeep, CA Revenue by : Shri. R. N. Siddappaji, Addl. CIT Heard on : 14.03.2019 Pronounced on : 22.03.2019 O R D E R PER LALIET KUMAR, JUDICIAL MEMBER :
These are three appeals filed by the assessee against the orders of the CIT (A) -3, Bengaluru, dt.13.03.2018, 06.03.2018 and
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Provided that in the case of a co-operative society falling under sub-clause (vi) or sub-clause (vii) the rules and bye-laws of the society restrict the voting rights to the following classes of its members, namely:-- (1) the individuals who contribute their labour or, as the case may be, carry on the fishing or allied activities ; (2) the co-operative credit societies which provide financial assistance to the society: (3) the State Government ; (b) in the case of a co-operative society, being a primary society engaged in supplying milk, oilseeds, fruits or vegetables raised or grown by its members to— (i) a federal co-operative society, being a society engaged in the business of supplying milk, oilseeds, fruits or vegetables, as the case may be ; or (ii) the Government or a local authority ; or (iii) a Government company as defined in section 617 of the Companies Act, 1956 (1 of 1956), or a corporation established by or under a Central, State or Provincial Act (being a company or corporation engaged in supplying milk, oilseeds, fruits or vegetables, as the case may be, to the public), the whole of the amount of profits and gains of such business ; (c) in the case of a co-operative society engaged in activities other than those specified in clause (a) or clause (b) (either independently of, or in addition to, all or any of the activities so specified), so much of its profits and gains attributable to such activities as does not exceed,-- (i) where such co-operative society is a consumers' co-operative society, 2one hundred thousand rupees ; and (ii) in any other case, twenty thousand rupees. Explanation.--In this clause, "consumers' co-operative society" means a society for the benefit of the consumers ; (d) in respect of any income by way of interest or dividends derived by the co- operative society from its investments with any other co-operative society, the whole of such income ; (e) in respect of any income derived by the co-operative society from the letting of godowns or warehouses for storage, processing or facilitating the marketing of commodities, the whole of such income ; (f) in the case of a co-operative society, not being a housing society or an urban consumers' society or a society carrying on transport business or a society engaged in the performance of any manufacturing operations with the aid of power, where the gross total income does not exceed twenty thousand rupees, the amount of any income by way of interest on securities or any income from house property chargeable under section 22.
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Court in Ambika Silk Mills Co. Ltd. v. CIT [1952] 22 ITR 58 besides the judgment of the Judicial Commissioner, Nagpur, in Ballarpur Collieries v. CIT [1929] 4 ITC 255 (Nag), interpreting the said expression as covering all heads of income..... On the basis of the above, it was submitted that the profits and gains attributable to such activities include the activities of the assessee and the profit earned by the assessee from such activities.
Per contra, the Ld. DR relies on paras 4.8 & 4.9 of the order of the CIT (A).
We have heard the rival contentions and perused the material on record. Section 80P(2) is reproduced below :
80P(2) The sums referred to in sub-section (1) shall be the following, namely:-- (a) in the case of a co-operative society engaged in-- (i) carrying on the business of banking or providing credit facilities to its members, or (ii) a cottage industry, or (iii) the marketing of agricultural produce grown by its members, or (iv) the purchase of agricultural implements, seeds, livestock or other articles intended for agriculture for the purpose of supplying them to its members, or (v) the processing, without the aid of power, of the agricultural produce of its members, or (vi) the collective disposal of the labour of its members, or (vii) fishing or allied activities, that is to say, the catching, curing, processing, preserving, storing or marketing of fish or the purchase of materials and equipment in connection therewith for the purpose of supplying them to its members, the whole of the amount of profits and gains of business attributable to any one or more of such activities:
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In the result, all the three appeals of the assessee are partly allowed as common grounds of law are raised by the assessee.
Order pronounced in the open court on 22nd day of March,2019.
Sd/- Sd/- (A. K. GARODIA) (LALIET KUMAR) ACCOUNTANT MEMBER JUDICIAL MEMBER Bengaluru Dated : 22.03.2019 MCN* Copy to: 1. The assessee 2. The Assessing Officer 3. The Commissioner of Income-tax 4. Commissioner of Income-tax(A) 5. DR 6. GF, ITAT, Bangalore By order Assistant Registrar, ITAT, Bengaluru