Loading judgment…
No AI summary yet for this case.
Income Tax Appellate Tribunal, “SMC-A” BENCH : BANGALORE
Before: SHRI ARUN KUMAR GARODIA
O R D E R
Per Shri A.K. Garodia, Accountant Member
This appeal is filed by the assessee which is directed against the order of ld. CIT(A), Gulbarga dated 30.11.2017 for Assessment Year 2014-15.
The grounds raised
by the assessee are as under. “1. The order of the learned Commissioner of Income Tax(Appeals)-7 is prejudicial to the interest of the Appellant, is bad and erroneous in law and against the facts and circumstances of the case.
2. The learned CIT (Appeals)-7 erred in law and on facts in not allowing the interest income earned from the term deposits in the banks as deduction u/s. 80P(2)(a)(i) of the Act on the ground that the same cannot be attributable to business of providing credit facilities to the members.
3. The learned CIT (Appeals)-7 erred in law and on facts in not allowing the interest income earned from Co- operative Banks as deduction u/s. 80P(2)(d) of the Act even though the Co-operative Bank is registered as a Co-operative Society under Karnataka State Co- operative Societies Act, 1959.
4. The learned CIT (Appeals)-7 failed to consider that the petitioner in appeal is a co-operative society engaged exclusively in providing credit facilities to its members and as such invests its surplus funds as are not immediately required for use in its business in co-operative societies as well as nationalized /commercial banks. Therefore, the entire interest income of Rs.1,53,879/- derived by the appellant forms part of its profits and gains attributable to its business and chargeable u/s. 28 of the Act and qualifies for full deduction u/s. 80P(2)(a)(i) of the Act. The citation of Totgars Co-operative Sale Society Ltd. relied upon by the Respondent is not applicable to the appellant's case since Totgars Co-op. Sale Society was engaged in numerous activities unlike the appellant.
5. The impugned orders passed by the authorities are illegal and are liable to be set aside in view of the judgement of the Hon’ble High Court of Karnataka in ITA 29/2015 in the case of 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-op. Ltd. Vs. ITO,Ward-1, Tumkur. 6. For these and other grounds that may be urged at the time of hearing of the appeal the Appellant prays that the appeal may be allowed. 7. The appellant craves leave to add, alter, amend and/or delete any of the grounds mentioned above.” 3. It was submitted by ld. AR of assessee that the issue involved in the present case is squarely covered in favour of the assessee by 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 which is applicable in the present case and the 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) is not applicable in the facts of the present case. At this juncture, the bench wanted to know about the finding of the authorities below in respect of relevant facts of assessee as to whether the investment in bank for earning interest income was made by the assessee out of the assessee’s own funds or out of its liability. In reply it was submitted by ld. AR of assessee that there is no comment of the authorities below regarding these facts and hence, the matter may be restored back to the file of AO/CIT(A) for fresh decision after examining the relevant facts in the light of these two judgements. The ld. DR of revenue supported the orders of authorities below.
I have considered the rival submissions and I feel it proper that the matter should go back to the file of CIT(A) for fresh decision after examining the facts of the present case in the light of these two judgments 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 the facts of the present case are in line with the facts of the PCIT and Another Vs. Totagars Co-operative Sale Society(supra) then the issue may be decided against the assessee and if the facts of the present case are in line with the facts of the case of Tumkur Merchants Souharda Credit Cooperative Ltd. Vs. ITO(supra) then the issue may be decided in favour of the assessee. The CIT(A) should pass necessary order as per law in the light of above discussion after providing adequate opportunity of being heard to both sides.
In the result, the appeal filed by the assessee is allowed for statistical purposes.
Order pronounced in the open court on the date mentioned on the caption page.