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Income Tax Appellate Tribunal, “A” BENCH : BANGALORE
Before: SHRI ARUN KUMAR GARODIA & SHRI LALIET KUMAR
O R D E R
Per Shri A.K. Garodia, Accountant Member
This appeal is filed by the revenue and the same is directed against the order of ld. CIT (A)-10, Bangalore dated 09.03.2018 for Assessment Year 2014-15.
The grounds raised
by the revenue are as under. “1. The order of the learned CIT(A) is opposed to law and facts of the case
2. Whether on facts, and circumstances of the case and in law the Ld.CIT(A) in holding the assessee Society is not a cooperative Bank ignoring the fact that the nature of its business and functioning has all the trappings and attributes of a bank ?
3. Whether on facts and circumstances of the case and in law, the Ld. CIT(A) was right in holding that the assessee Society is not a cooperative Bank ignoring the fact of insertion of clause (viia) in section 2(24) of the Income Tax act, 1961 by the Finance act,2016 ?
4. Whether on the facts and circumstances of the case and in law, the Ld. CIT (A) was right in holding that the assessee is eligible for deduction U/s 80P (2) ignoring the fact that with effect from Page 2 of 4 01.04.2007, sub-section (4) of section 80P provides that the provisions of section 80P shall not apply in relation to any Cooperative Bank other than Primary Agricultural Credit Society or Primary Agricultural Rural Development Bank? 5. Whether on the facts and circumstances of the case and in law, the Ld. CIT (A) was right in holding that the assessee is not a cooperative Bank when it has been clearly defined in the Karnataka Co-operative Society Act,1959 that any Co-operative Society engaged in the Business of Banking is termed as Cooperative Bank ? 6. For these and other grounds that may be urged upon at the time of hearing, it is prayed that the order of CIT(A) in so far as it relates to the above grounds, may be reversed and that of the Assessing Officer may be restored.
The appellant craves leave to alter, amend or delete any of the grounds mentioned above and / or add any new grounds on or before the hearing.”
The ld. DR of revenue supported the assessment order. She drawn our attention to para no. 7 on page no. 9 of the assessment order and pointed out that the AO has followed the judgement of Hon’ble Apex Court rendered in the case of The Totgars Cooperative Sale Society Limited Vs. ITO in Appeal No. 1622 of 2010 dated 08.02.2010 later reported in 322 ITR 283. She submitted that in view of this, the order of CIT(A) should be reversed and that of AO should be restored. As against this, the ld. AR of assessee supported the order of CIT(A) and he also placed reliance on the judgement of Hon'ble Karnataka High Court rendered in the case of Tumkur Merchants Souharda Credit Cooperative Ltd. vs. ITO as reported in 230 Taxman 309.
We have considered the rival submissions. We find that the judgement of Hon'ble Karnataka High Court rendered in the case of Tumkur Merchants Souharda Credit Cooperative Ltd. vs. ITO (supra) is in favour of the assessee whereas the judgement of Hon'ble Karnataka High Court rendered in the case of PCIT and Another Vs. Totagars Co-operative Sale Society Ltd. as reported in 395 ITR 611 (Karn) and the judgment of Hon’ble Apex Court rendered in the case of The Totgars Cooperative Sale Society Limited Vs. ITO (supra) are against the assessee but we find that there is no contradiction in these two judgements which are in favour of the revenue and in the judgement of Hon'ble Karnataka High Court rendered in the case Page 3 of 4 of Tumkur Merchants Souharda Credit Cooperative Ltd. vs. ITO (supra) which is in favour of the assessee but the decision are different because the facts are different. In the case of Tumkur Merchants Souharda Credit Cooperative Ltd. vs. ITO (supra), it was found that the investment or deposit in bank was out of assessee’s own funds and not out of liability of the assessee whereas in the case of PCIT and Another Vs. Totagars Co- operative Sale Society Ltd. (supra), it was found that the deposit in bank was out of assessee’s liability and not out of assessee’s own funds. In the present case, there is no discussion in the orders of the lower authorities on this factual aspect as to whether the deposit in bank was out of assessee’s own funds or out of liability and therefore, we feel it proper to set aside the order of CIT(A) and restore the matter back to the file of AO for fresh decision after examining the facts of present case in the light of these two judgments of Hon'ble Karnataka High Court rendered in the case of Tumkur Merchants Souharda Credit Cooperative Ltd. vs. ITO (supra) and in the case of PCIT and Another Vs.Totagars Co-operative Sale Society Ltd. (supra) and also the judgment of Hon’ble Apex Court rendered in the case of The Totgars Cooperative Sale Society Limited Vs. ITO (supra) and then decide the issue afresh as per law after providing adequate opportunity of being heard to the assessee. The AO should also examine the applicability of the judgment of Hon’ble apex court rendered in the case of Citizen Co – operative Society Limited vs. ACIT, 397 ITR 1 because this judgment is relevant for deciding this issue as to whether the present assessee is a co operative bank or not.
In the result, the appeal filed by the revenue is allowed for statistical purposes. Order pronounced in the open court on the date mentioned on the caption page.