INCOME TAX OFFICER, WARD-1 & TPS, BENGALURU vs. M/S MERCHANTS CREDIT CO-OPERATIVE SOCIETY LTD, BENGALURU

Per Shri Jason P Boaz, A. J.M. : This appeal by Revenue is directed against the order of the Commissioner of Income Tax (Appeals), Hubli dt.18.9.2017 for the Assessment Year 2013-14. Notice for the hearing fixed on 10.4.2018 was duly served on the assessee, but none was present for the assessee when the case was called for hearing. We, therefore, proceed to dispose off Departmental Representative for Revenue and on the basis of material on record.

Section 40(a)(ia) of the Act in respect of Audit Fees, pigmy commission paid, bad and doubtful debts are eligible for deduction under Section 80P(2)(a) of the Act. 3.1 Revenue, being aggrieved by the order of CIT (Appeals), Hubli has filed this appeal raising the following grounds :-

3.2 We have heard the learned Departmental Representative for Revenue on the grounds raised and perused and carefully considered the material on record; including the judicial pronouncements cited and placed reliance upon. According to the learned Departmental Representative, in the impugned order, the learned CIT (Appeals) erred in not applying the ratio of the decision of the Hon'ble Apex Court in the case of Citizen Co-op Society Ltd. Vs. ACIT (2017) 397 ITR

1. (SC) for the reason that the assessee also caters to the category of members called associate members who are not akin to regular members. It was submitted that the learned CIT (Appeals), while considering the assessee's eligibility for deduction under Section 80P(2)(a)(i) of the Act, ought to have called for a remand report from the Assessing Officer to ascertain whether the assessee is a co-operative society meant only for its members and / or whether it earned any income by way of investment / loans etc to non-members and by not doing so had ignored the ratio laid down by the Hon'ble Apex Court in the case of Citizen Co- operative Society Lt. (supra). It was prayed that in the facts and circumstances of the case, the impugned order of the learned CIT (Appeals) be set aside and the matters raised by Revenue in the grounds of appeal before the Tribunal (supra) be remanded to the file of the learned CIT (Appeals) for consideration and adjudication in the light of the ratio of the aforesaid decision of the Hon'ble Apex Court (supra). 3.3 On a careful appreciation of the facts and circumstances of the case on hand; the issue of the assessee's claim for deduction u/s.80P(2)(a)(i) of the Act and the decision of the Hon'ble Apex Court in the case of Citizen Co-op. Society Ltd. (supra), we are of the view that it would be appropriate that the finding rendered in the impugned order of the learned CIT (Appeals) on the issue of the assessee's claim for deduction under Section 80P(2)(a)(i) of the Act requires to be re- examined in the light of the ratio of the aforesaid decision rendered by the Hon'ble Apex Court (supra). We, therefore, set aside the finding of CIT (Appeals) rendered in the impugned order on the assessee's claim for deduction under Section 80P(2)(a)(i) of the Act and remand this issue to the file of the learned CIT (Appeals) for consideration and adjudication in accordance with our observations, after affording both the Assessing Officer and the assessee adequate opportunity of being heard and to file details, submissions, rebuttals, etc in this regard which shall be duly considered. We hold and direct accordingly. Consequently, the grounds raised by Revenue are allowed for statistical purposes.

4. In the result, Revenue’s appeal for Assessment Year 2013-14 is allowed for statistical purposes. Order pronounced in the open court on the 18th day of April,2018.