M/S BHUVANESHWARI SOUHARDA SAHAKARI NIYAMITHA ,GANGAVATHI vs. INCOME TAX OFFICER WARD-1, KOPPALA

O R D E R

Per Shri A.K. Garodia, Accountant Member

by the assessee are as under. “1. The impugned order is opposed to facts and law in so far as it is prejudicial to the interests of the Appellant.

2. The Ld.CIT (A) erred in denying the deduction under section 80P (2) of the Income Tax Act in respect of interest income received from various banks and in doing so a) The Ld.CIT(A) failed to appreciate that the interest income from other banks are attributable to profits and gains of the business of extending credit facilities to Appellant's members. b) The Ld. CIT(A) failed to appreciate that the business of the Appellant consists entirely of extending credit facilities only to its members and the interest income from various banks arose only on account of keeping the surplus funds for the time being in anticipation of lending the same to the members as there were no ready borrowers for the said amount.

4. Without prejudice to Ground no.2 and as an alternate plea the Appellant further submits that in respect of the income earned from the co-operative banks it is entitled for deduction u/s 80P (2) (d) of the Act inasmuch as the co-operative banks are also co-operative societies as per section 2(b1) of Karnataka Co-operative Societies Act, 1959. 5.The Ld.CIT(A) erred in not giving full benefit in respect of E- Stamping commission, pigmy account closing charges, pay order & DD commission, miscellaneous charges, cheque clearing commission and other income inasmuch as these incomes were earned by the appellant in the normal course of lending to its own members and are attributable to the said business. 6. Without prejudice to above grounds even if the appellant is held to be not eligible for the deduction under section 80P(2) it is submitted that the Ld.AO ought to have restricted the disallowance under section 80P(2) at the most to the net profit. For these and such other grounds that may be adduced in time to time, it is requested that the Hon'ble ITAT to cancel the addition made by the Assessing Officer and allow deduction under Section 80P (2) of the Act.” 3. The ld. AR of assessee submitted a copy of Tribunal order in assessee’s own case for Assessment Year 2014-15 and pointed out that in that year, the Tribunal has restored back the matter to the file of CIT(A) for fresh decision and in this regard, my attention was drawn to para 4 of this Tribunal order. He submitted that on similar line, in the present year also, the issue may be restored back to the file of CIT(A) for fresh decision with similar directions. The ld. DR of revenue supported the order of CIT(A).

“4. I have considered the rival submissions. I find that after discussing so many judgments, the CIT(A) has ultimately followed the later judgment of Hon’ble Apex Court rendered in the case of The Citizen Co-operative Society Ltd. Vs. ACIT(supra). But there is no discussion or comparison of the facts of the present case and facts of that case and therefore, I feel it proper in the interest of justice to restore the matter back to the file of CIT(A) for fresh decision after discussing and comparing the facts of the present case with the facts of that case. Hence I set aside the order of CIT (A) and restore the matter back to his file for a fresh decision in the light of above discussion after providing adequate opportunity of being heard to both sides.”