JANAPRAGATHI CREDIT CO-OPERATIVE SOCIETY LTD,BANGALORE vs. INCOME TAX OFFICER WARD-7(2)(3), BANGALORE

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ITA 2161/BANG/2017Status: DisposedITAT Bangalore11 May 2018AY 2013-144 pages
AI SummaryRemanded

What did the Tribunal hold?

The Tribunal found that the CIT(A) had not properly compared the facts of the assessee's case with the facts of the cited judgments. Therefore, the matter was restored to the CIT(A) for a fresh decision after a detailed factual analysis and comparison.

What were the facts?

The assessee, a co-operative society, claimed deduction under Section 80P. The Assessing Officer disallowed the claim, and the CIT(A) upheld the disallowance by relying on Supreme Court and High Court judgments. The assessee argued that these judgments were not applicable to its facts.

What were the issues?

The primary issue was the applicability of various judicial precedents, particularly the Supreme Court's decision in The Citizen Co-operative Society Ltd. vs. ACIT, to the assessee's claim for deduction under Section 80P, based on a factual comparison.

Which sections of the Income-tax Act were involved?

Section 80P

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Cases cited in this judgment(4)Show list

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Income Tax Appellate Tribunal, “SMC-C” BENCH : BANGALORE

Before: SHRI ARUN KUMAR GARODIA

For Appellant: Shri B.S. Balachandran, Advocate
For Respondent: Shri Abi Rama Karthikeyan, IRS (DR)
Hearing: 02.05.2018Pronounced: 11.05.2018

O R D E R

Per Shri A.K. Garodia, Accountant Member

1.

This appeal is filed by the assessee which is directed against the order of ld. CIT (A)-7, Bangalore dated 30.08.2017for Assessment Year 2013-14.

2.

The grounds raised

by the assessee are as under. “1. The order of the learned CIT (A) is bad and unsustainable in the eye of law as the denial of benefit of deduction under S.80P(2)(a)(1) is arbitrary and without proper application of mind.

2. The order of CIT (A) in upholding the addition by denying the benefit of deduction under S.80P (2) (a) when the appellant had demonstrated that it is a co-operative society which had only transacted strictly with its regular members.

3. CIT(A) grossly erred in not properly appreciating the fact that the appellant never marketed any commodity; therefore there was no income from this source and hence the decisions including Totgar's Co-operative sale society (Kar) relied on by him were out of context and inapplicable.

4. CIT (A) ought to have appreciated that the interest income earned was from FDs made out of operational funds which was the only fund available, for a short period and hence eligible for deduction as held by Tribunal in many cases, including the one reported as BASAVARAJ, CEO, PACCSL, BALLARI -Vs- CIT (A0, KALABURUGI - in dated 31.05.2017.

5. The CIT (A) ought to have appreciated that the case of the appellant was that it had no "NOMINATED" members with whom it transacted and hence the decision of supreme court in Citizen Co- operative case was not at all applicable. 6. For these and such other grounds that may be urged at the time of hearing, the Appellant prays that the appeal may be allowed.”

3.

It was submitted by ld. AR of assessee that the AO has referred to judgement of Hon'ble Karnataka High Court rendered in the case of CIT vs. Sri Biluru Gurubasappa Pattina Sahakari Sangha Niyamita as reported in 369 ITR 86, but stated on page no. 13 of assessment order that since the Department has not accepted the decision of Hon'ble Karnataka High Court and S.L.P has been filed before the Hon’ble Apex Court, the AO is disallowing the claim of assessee u/s. 80P(2) in order to keep the matter alive. He has also stated that demand raised shall not be enforced pending finalization of the S.L.P. and order may be modified depending on the decision of the Hon’ble Apex Court. He further submitted that when the matter was carried in appeal before CIT(A), he has decided the issue against the assessee by following the judgement of Hon’ble Apex Court rendered in the case of The Citizen Co-operative Society Ltd. Vs. ACIT as reported in 397 ITR 1. He has also referred to judgement of Hon'ble Karnataka High Court rendered in the case of PCIT and Another Vs. Totagars Co-operative Sale Society as reported in 395 ITR 611 (Karn). He submitted that the judgement of Hon’ble Apex Court rendered in the case of The Citizen Co-operative Society Ltd. vs. ACIT (supra) is not applicable in the facts of the present case. He further submitted that the judgement rendered in the case of PCIT and Another vs. Totagars Co-operative Sale Society (supra) is also not applicable in the present case and in the present case, another 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 is applicable. At this juncture, the bench pointed out that since the applicability of judgement of Hon’ble Apex Court rendered in the case of The Citizen Co-operative Society Ltd. Vs. ACIT (supra)has to be examined by comparing the facts of the present case with the facts of that case and this is not done as per impugned order, this matter has to go back to the file of CIT(A) for fresh decision by way of a speaking and reasoned order after comparing the facts of present case with the facts of that case and similarly, the issue regarding applicability of the judgement of Hon'ble Karnataka High Court rendered in the cases of PCIT and Another Vs. Totagars Co-operative Sale Society (supra) and Tumkur Merchants Souharda Credit Cooperative Ltd. Vs. ITO (supra) also has to be decided afresh by comparing the facts of present case with the facts of these two cases and for doing so, the matter has to be restored back to CIT (A). The ld. AR of assessee agreed to this proposition put forward by the bench. The ld. DR of revenue also agreed to this proposition put forward by the bench.

4.

In view of above discussion, I set aside the order of CIT (A) and restore the matter back to his file for fresh decision by way of a speaking and reasoned order with the directions that he should discuss and compare the facts of present case with the facts in the case of The Citizen Co-operative Society Ltd. Vs. ACIT (supra). He is also directed to examine the facts of present case in the light of these two judgements of Hon'ble Karnataka High Court rendered in the case of PCIT and Another Vs. Totagars Co-operative Sale Society (supra) and Tumkur Merchants Souharda Credit Cooperative Ltd. Vs. ITO (supra) and if it is found that in the facts of the present case of the assessee, the judgement of Hon’ble Apex Court rendered in the case of The Citizen Co-operative Society Ltd. Vs. ACIT (supra) is not applicable then the issue should be decided on the basis of applicability of the relevant judgement out of these two judgements of Hon'ble Karnataka High Court rendered in the case of PCIT and Another Vs. Totagars Co-operative Sale Society(supra) and Tumkur Merchants Souharda Credit Cooperative Ltd. Vs. ITO (supra). If it is found that the facts of present case are in line with the facts in the case of PCIT and Another Vs. Totagars Co- operative Sale Society (supra), then the issue should be decided against the assessee but if it is found that the facts of the present case are in line with the facts in the case of Tumkur Merchants Souharda Credit Cooperative Ltd. Vs. ITO (supra), then the issue should be decided in favour of the assessee. Needless to say the CIT (A) should provide adequate opportunity of being heard to both sides.

5.

In the result, the appeal filed by the assessee stands allowed for statistical purposes. Order pronounced in the open court on the date mentioned on the caption page.

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