BANNANJE GRAHAKARA SAHAKARI SANGHA LTD,UDUPI vs. INCOME TAX OFFICER, WARD-1, UDUPI

O R D E R

Per Shri A.K. Garodia, Accountant Member

by the assessee as per concise grounds of appeal are as under. “1. The Assessing Officer as well as the Appellate authority failed to consider that the petitioner in appeal is a co-operative society engaged exclusively in providing credit facilities to its members and further they have grossly erred in holding that the appellant is a primary co-operative bank and thus making an addition to the returned income to the tune of Rs. 18,99,400/- and demanding tax of Rs. 8,69,890/- which otherwise qualifies for full deduction u/s. 80P(2)(a)(i) of the Act.

2. The 1st Appellate authority is not a fact finding authority and unfortunately instead of deciding the appeal on merits, it proceeded to record speculative and imaginary facts as attributable to the activities of the appellant and dismissed appeal relying on the decision of the Hon'ble Apex Court in The Citizen Co-operative Society Ltd - Civil Appeal No. 10245 of 2017. It is submitted that neither it is a fact nor there is anything on record to prove that the appellant is doing business in violation of laws and advancing loans to general public to support the view taken by the 1" Appellate authority.

3. The appellant submits, it is doing its business exclusively with its members well within the framework of its approved bye-laws and the provisions of Karnataka Co-operative Societies Act, 1959 / Rules framed thereunder. The finding of the 1st Appellate authority that the appellant by investing its surplus funds with non-member Nationalized Banks and Co-operative Banks has become ineligible to claim exemption under Sec. 80P of the Act is unfounded, without any rationale and opposed to the judgement of Hon'ble High Court of Karnataka ITA 29/2015 - M/s. Guttigedarara Credit Co-op. Society Ltd. Mysore Vs. ITO, Ward 2(2), Mysore and ITA 307/2014 - M/s. Tumkur Merchants Souharda Credit Co-operative Ltd. Vs. ITO, Ward-1, Tumkur.

4. The appellant submits that the impugned orders passed by the authorities below are illegal and are liable to be set aside in view of the good number of Orders passed by this Tribunal in similar cases and also the judgment of the Hon'ble High Court of Karnataka in ITA: 5006/2013 - The Commissioner of Income Tax vs. Sri Bilur Gurubasava Pattina Sahakara Sangha Niyamitha, Bagalkot. It is, therefore, prayed that the Appeal submitted by the Appellant be allowed in the interest of equity and justice.”

3. At the very outset, it was submitted by ld. AR of assessee that ld. CIT(A) has followed 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. But this judgement is not applicable in the present case because the facts are different.

4. At this juncture, it was pointed out by the bench that since there is no discussion in the order of CIT(A) regarding comparison of the facts in the present case and in that case, the matter has to be restored back to the file of CIT(A) for fresh decision by way of a speaking and reasoned order after comparing the facts of the present case with the facts of that case. In reply, ld. AR of assessee agreed to this proposition put forward by the bench. The ld. DR of revenue also agreed to this proposition.