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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)-7, Bangalore dated22.09.2017 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 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.34,39,029/- as enhanceby 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. 34,39,029/- under the provisions of section 80 P [2][a][i] of the Act and Rs. 1,52,622/- being the interest received _by the appellant from its Savings Bank Account [out of the total deduction of Rs. 34,39,029/ -] 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.
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.
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 Et 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.”
3. It was submitted by ld. AR of assessee that as per para 6 of the order of CIT(A), the assessee society has earned interest on deposits with banks for its surplus funds. He submitted that the ld. CIT(A) has followed the judgment of Hon'ble Karnataka High Court rendered in the case of PCIT and Another Vs. Totagars Co-operative Sale Society as reported in395 ITR 611 (Karn) but in the facts of the present case, the judgment 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 is applicable and therefore, the addition made by the AO and confirmed by CIT(A) should be deleted. As against this, the ld. DR of revenue supported the order of CIT(A).
4. I have considered the rival submissions. I have gone through the judgment of Hon’ble Karnataka High Court rendered in the cases of PCIT and Another Vs. Totagars Co-operative Sale Society (supra) and Tumkur Merchants Souharda Credit Cooperative Ltd. Vs. ITO (supra). I find that there is no conflict in these two judgments of Hon'ble Karnataka High Court. Both these judgments are on same line but ultimate conclusion is different because the facts are different. In the case of PCIT and Another Vs. Totagars Co-operative Sale Society(supra), it was noted that the amount which was invested was not the own money of the assessee but was liability of the assessee society and therefore, the issue was decided against the assessee whereas in the case of Tumkur Merchants Souharda Credit Cooperative Ltd. Vs. ITO (supra), it was noticed that the money deposited in bank was not liability of the assessee and it was assessee’s own money and therefore, the issue was decided in favour of the assessee. In the present case, a categorical finding was given by CIT(A) that the amount deposited in bank was surplus and this is not the case of the revenue that amount was liability of the assessee. Hence in my considered opinion, the judgment of Hon'ble Karnataka High Court rendered in the case of Tumkur Merchants Souharda Credit Cooperative Ltd. Vs. ITO(supra) is applicable in the facts of the present case and not the judgment rendered in the case of PCIT and Another Vs. Totagars Co-operative Sale Society(supra). Respectfully following this judgment of Hon'ble Karnataka High Court rendered in the case of Tumkur Merchants Souharda Credit Cooperative Ltd. Vs. ITO(supra), I decide the issue in favour of the assessee.
In the result, the appeal filed by the assessee is allowed.
Order pronounced in the open court on the date mentioned on the caption page.