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Income Tax Appellate Tribunal, “SMC-B” 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)-7, Bangalore dated 01.09.2017for Assessment Year 2013-14.
The grounds raised
by the assessee are as under. “1. The order of the Learned Assessing Officer is not justified in law and on facts and circumstances of the case.
2. The Learned Assessing Officer is not Justified in denying the deduction by saying "Section 80P (4) is taking away, effectively the privilege given u/s 80P (2) (a) (i) for other co-operative societies and banks".
3. The Learned Assessing Officer has misinterpreted the section 80P (4) where it clearly says that the provisions of Section 80P don’t apply to any co-operative bank. We are registered under the Societies Act and not governed by the Banking Regulation Act. Therefore, the Learned Assessing Officer is not Justified in not allowing deduction u/s 80P(1)(a) despite specific plea made by the appellant in this regard.
4. The Learned CIT(A) has erred in considering the facts of decision of the Honourable Supreme Court in the case of The Citizen Co- operative Society Ltd Civil Appeal No 10245 of 2017, where it was held that any income that the Appellant has been denied the benefit of 80P(2)(a)(i) on the grounds that it mostly collected deposits from the nominal members and lent loan to nominal members. The Appellant cannot be treated as co-operative society meant only for its members and providing credit facilities to its members". In our case, Appellant is accepting deposits and providing loans only to members. Therefore, the above judgment of Supreme Court does not hold good in the case of Appellant.
5. The Learned Assessing Officer has not considered the facts of Karnataka High Court judgment in the case of CIT Vs Sri Bilure Gurubasava Pattina Sahakari Sangha Niyamita, quoting that the case has not reached finality as it is pending before Hon'ble Supreme Court. Decision of Karnataka High Court is binding irrespective of interpretation of the Learned Assessing officer. On the basis of above grounds and other grounds which may be urged at the time of hearing, it is prayed that the order passed under section 143(3) be quashed and relief sought be granted.”
This appeal was fixed for hearing first time on 12.02.2018 but since the bench did not function on that date, hearing was adjourned to 05.03.2018 and the notice of hearing was issued to assessee and on this date also i.e. on 05.03.2018, the bench did not function and again hearing was adjourned to 21.03.2018 and the notice was also issued. On 21.03.2018, the hearing was adjourned to 22.03.2018 and on this date, the hearing was again adjourned to 11.04.2018 on the request of ld. AR of assessee. On this date i.e. 11.04.2018, an application was moved for seeking adjournment and in the said application, it was stated that the Chief Executive Shri L. Nagaraju who is representing the assessee’s case is out of station and therefore, hearing may be adjourned. Since the date of hearing was given after the consent of Shri L. Nagaraju on 22.03.2018 and it is not shown to the bench that there was a compelling reason which has arisen after 22.03.2018 for the ld. AR of assessee to go out of station, the request for adjournment was rejected and the appeal was heard. Shri M. Devaraju, Vice president of the assessee society appeared and argued the appeal. He reiterated the same contentions which were raised before the authorities below. The ld. DR of revenue supported the orders of authorities below.
At this juncture the bench asked the ld. DR of revenue to show that what is the basis of the AO’s allegation that assessee is a co-operative bank and whether any basis is indicated by AO for alleging so and whether it has been stated by the AO in the assessment order that the assessee is registered with RBI under Banking Regulations Act. The bench also wanted the ld. DR of revenue to show that before following the latest judgment of Hon’ble Apex Court rendered in the case ofThe Citizen Co-operative Society Ltd. Vs. ACIT as reported in 397 ITR 1 by CIT(A), he has compared the facts of the present case with the facts of that case. In reply, the ld. DR of revenue could not satisfy the bench on both these aspects.
I have considered the rival submissions and the facts of the present case as noted above and in view of these facts of the present case, I feel it proper to restore the matter back to the file of AO for fresh decision with the direction that the AO should pass a speaking and reasoned order and if it is still the allegation of the AO that assessee is a co-operative bank then he should indicate the basis for alleging so and he has to give a categorical finding that whether assessee is registered with RBI under Banking Regulations Act if AO wants to apply and follow the judgment of Hon’ble Apex Court rendered in the case of The Citizen Co-operative Society Ltd. Vs. ACIT (supra), then he should compare the facts of the present case with the facts of that case and then decide the issue by way of a speaking and reasoned order after providing adequate opportunity of being heard to assessee. In view of this decision, no adjudication is called for regarding the merit of the case at the present stage and hence, I do not make any comment on the merit of the case.
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.