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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 Both these appeals are filed by the assessee which are directed against two separate orders of ld. CIT(A)-7, Bangalore both dated 21.09.2017 for Assessment Years 2013-14 and 2014-15.
The grounds raised
by the assessee for Assessment Year 2013-14 in are as under. “1. The order of the learned Commissioner of Income-tax [Appeals] - 7 in so far it is against the appellant is opposed to law, weight of evidence, facts and circumstances of the Appellant's case.
2. The appellant denies itself liable to be assessed on total income of Rs.17,40,425/- as against the returned income by the appellant of Rs.NIL/- after claiming eligible deduction under section 80P [2] of the Act, on the facts and circumstances of the case.
3. The learned Commissioner of Income-tax [Appeals] is not justified in law in denying the eligible deduction claimed by the appellant of Rs. 17,40,450/- under the provisions of section 80 P [2][a][i] of the Act resulting in enhancement of assessment and confirmed the disallowance made by the learned assessing officer of Rs. 97,776/- being the interest-received by the appellant from its deposits with other C-operative Banks and claimed deduction under the provisions of section 80 P [2][d] of the Act on the facts and circumstances of the case.
The learned Commissioner of Income-tax [Appeals] failed to appreciate that the appellant is not a Co-Operative Bank within the meaning of Part - V of the Banking Regulation Act, 1949, to which the Explanation to section 80 P [4] of the Act draws reference and consequently, the provisions of section 80 P [4] of the Act are not applicable to the case of the appellant.
The learned Commissioner of Income-tax [Appeals] is not justified in holding that the Appellant has violated the bye-laws and the Karnataka Societies Registrations Act, 1959 without even properly verifying the facts of the case of the appellant and erroneously denied the eligible claim of deduction by the appellant under section 80 P [2][a][i] of the Act, on the facts and circumstances of the case.
6. Without prejudice, though not conceding, the learned Commissioner of Income-tax [Appeals] ought to have allowed deduction under section 80 P [2] of the Act proportionately, in so far as the income attributable to the activities of the appellant which are not in violation of the provisions of section 80 P [2] of the Act on the facts and circumstances of the case.
Without prejudice the learned authorities below ought to have allowed the corresponding expenditures proportionately on income earned by the appellant from investments which was claimed as deduction under section 80 P [2][d] of the Act, on the facts and circumstances of the case.
Without prejudice the learned authorities below did not give the appellant a reasonable opportunity of hearing and produce the documents in support of the case of the appellant which is against the principles of natural justice and consequently the impugned orders passed requires to be cancelled on the facts and circumstances of the case.
Without prejudice to the right to seek waiver as per the parity of reasoning of the decision of the Hon'ble Apex Court in the case of Karanvir Singh 349 ITR 692, the Appellant denies itself liable to be charged to interest under section 234 A & 234 B of the Income Tax Act under the facts and circumstances of the case. Further the levy of interest under section 234 A & 234 B of the Act is also bad in law as the period, rate, quantum and method of calculation adopted on which interest is levied are all not discernible and are wrong on the facts of the case.
10. The appellant craves leave to add, alter, substitute and delete any or all of the grounds of appeal urged above.
11. For the above and other grounds to be urged during the hearing of the appeal the Appellant prays that the appeal be allowed in the interest of equity and justice.”
3. The grounds raised
by the assessee for Assessment Year 2014-15 in are as under. “1. The order of the learned Commissioner of Income-tax [Appeals] - 7 in so far it is against the appellant is opposed to law, weight of evidence, facts and circumstances of the Appellant's case.
2. The appellant denies itself liable to be assessed on total income of Rs.21,37,778/- as enhance by the learned Commissioner of Income- tax [Appeals], as against the returned income by the appellant of Rs.NIL/- after claiming eligible deduction under section 80 P [2] of the Act, on the facts and circumstances of the case.
3. The learned Commissioner of Income-tax [Appeals] is not justified in law in denying the eligible deduction claimed by the appellant of Rs. 21,37,778/- under the provisions of section 80 P [2][a][i] of the Act resulting in enhancement of assessment and confirmed the disallowance made by the learned assessing officer of Rs. 1,27,690/- being the interest received by the appellant from its deposits with other 1.o-operative Banks and other income and claimed deduction under the provisions of section 80 P [2][d] of the Act on the facts and circumstances of the case.
4. The learned Commissioner of Income-tax [Appeals] failed to appreciate that the appellant is not a Co-Operative Bank within the meaning of Part - V of the Banking Regulation Act, 1949, to which the Explanation to section 80 P [4] of the Act draws reference and consequently, the provisions of section 80 P [4] of the Act are not applicable to the case of the appellant.
5. The learned Commissioner of Income-tax [Appeals] is not justified in holding that the Appellant has violated the bye-laws and the Karnataka Societies Registrations Act, 1959 without even properly verifying the facts of the case of the appellant and erroneously denied the eligible claim of deduction by the appellant under section 80 P [2][a][i] of the Act, on the facts and circumstances of the case.
6. Without prejudice, though not conceding, the learned Commissioner of Income-tax [Appeals] ought to have allowed deduction under section 80 P [2] of the Act proportionately, in so far as the income attributable to the activities of the appellant which are not in violation of the provisions of section 80 P [2] of the Act on the facts and circumstances of the case.
7. Without prejudice the learned authorities below ought to have allowed the corresponding expenditures proportionately on income earned by the appellant from investments which was claimed as deduction under section 80 P [2][d] of the Act, on the facts and circumstances of the case.
8. Without prejudice the learned authorities below did not give the appellant a reasonable opportunity of hearing and produce the documents in support of the case of the appellant which is against the principles of natural justice and consequently the impugned orders passed requires to be cancelled on the facts and circumstances of the case.
9. Without prejudice to the right to seek waiver as per the parity of reasoning of the decision of the Hon'ble Apex Court in the case of Karanvir Singh 349 ITR 692, the Appellant denies itself liable to be charged to interest under section 234 A & 234 B of the Income Tax Act under the facts and circumstances of the case. Further the levy of interest under section 234 A & 234 B of the Act is also bad in law as the period, rate, quantum and method of calculation adopted on which interest is levied are all not discernible and are wrong on the facts of the case.
The appellant craves leave to add, alter, substitute and delete any or all of the grounds of appeal
urged above.
11. For the above and other grounds to be urged during the hearing of the appeal the Appellant prays that the appeal be allowed in the interest of equity and justice.”
4. It was submitted by ld. AR of assessee that in Para 5.2 of his order, the ld. CIT(A) has noted various facts of the present case which has been brought out on record by the AO regarding the nature of business activity of the assessee. He submitted that it is noted by the AO that there is nothing in the bye laws of the co-operative society that prevents the assessee society from accepting deposits from public but there is no discussion on this aspect as to whether in the present year or till the end of the present year, the assessee has accepted any deposit from public or not. He also pointed out that this is also noted by the AO that the membership of the co-operative society is open and not restricted by any classification or covenant and therefore, any person of the public can become member of the co-operative society. He submitted that this observation has no relevance in the present case. He also submitted that ld. CIT(A) has considered and followed the judgment of Hon’ble Apex Court rendered in the case of The Citizen Co-operative Society Ltd. Vs. ACIT as reported in 397 ITR 1but there is no discussion about the facts of the present case and the facts of that case and whether the facts are similar or not. He submitted that under this factual position, the matter should be restored back to the file of CIT(A) for fresh decision by way of a speaking and reasoned order.The ld. DR of revenue supported the order of CIT(A).
5. I have considered the rival submissions. I find that for applying any judgment in a given case, it has to be seen as to whether the facts in the said judgment and the facts in the case on hand are comparable or not. The facts may not be identical but it should be reasonably similar. Without discussing the facts of the present case and the facts of the case of the judgment which is being followed, such judgment cannot be applied. Moreover having no restriction in the bye laws of the assessee’s co-operative society preventing the assessee society from accepting deposit from public is not akin to actually accepting of deposit from public by assessee society. There is no discussion on this aspect in the orders of authorities below as to whether in fact any deposit was accepted by assessee society from public or not. Hence I feel it proper to restore the entire matter back in both years to the file of CIT (A) for fresh decision by way of a speaking and reasoned order. The CIT (A) is also directed to discuss and compare the relevant facts of the present case and the facts of the judgment of Hon’ble Apex Court rendered in the case of The Citizen Co-operative Society Ltd. vs. ACIT (supra). Needless to say, the CIT (A) should provide adequate opportunity of being heard to both sides.
In the result, both the appeals filed by the assessee are allowed for statistical purposes. Order pronounced in the open court on the date mentioned on the caption page.