SRI VIRUPAKSHESHWARA PATTINS SOUHARDA SAHAKARI NIYAMITA,RAICHUR vs. INCOME TAX OFFICER, WARD-2, RAICHUR

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ITA 2746/BANG/2017Status: DisposedITAT Bangalore23 March 2018AY 2010-113 pages
AI SummaryRemanded

What did the Tribunal hold?

The Tribunal found that the CIT(A) had followed the Supreme Court judgment without comparing the facts of the present case. Therefore, the matter was restored back to the CIT(A) for a fresh decision after a proper factual comparison.

What were the facts?

The assessee, a cooperative society, claimed deduction under Section 80P(2)(a)(i) for providing credit facilities. The CIT(A) disallowed this deduction, treating the assessee as a cooperative bank and relying on the Supreme Court judgment in The Citizen Co-operative Society Ltd. vs. ACIT.

What were the issues?

Whether the CIT(A) erred in disallowing deduction under Section 80P(2)(a)(i) by treating the assessee as a cooperative bank without a proper factual analysis compared to precedent judgments.

Which sections of the Income-tax Act were involved?

Section 80P

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Income Tax Appellate Tribunal, “SMC-B” BENCH : BANGALORE

Before: SHRI ARUN KUMAR GARODIA

For Appellant: Shri Madhukar G Hegde, CA
For Respondent: Shri L.V. Bhaskar Reddy, Addl. CIT (DR)
Hearing: 21.03.2018Pronounced: 23.03.2018

Date of hearing : 21.03.2018 Date of Pronouncement : 23.03.2018 O R D E R

Per Shri A.K. Garodia, Accountant Member

1.

This appeal is filed by the assessee which is directed against the order of ld. CIT(A), Gulbarga dated 28.09.2017 for Assessment Year 2010-11.

2.

The grounds raised

by the assessee are as under. “1. The order of the learned CIT(A)-Gulbarga is opposed to law and facts of the case.

2. Whether on the facts and circumstances of the case, the learned CIT(A)-Gulbarga was justified in not allowing deduction u/s 80P(2)(a)(i) of the Income Tax Act, 1961 to the appellant co-operative society carrying on the business of providing credit facility to members, treating it as co-operative bank.

3. Whether the learned CIT(A)-Gulbarga was justified in upholding the additions made by learned ITO, Ward-2, Raichur treating the appellant co-operative society as bank and disallowing the claim of deduction of Rs.24,77,370/- for the A Y 2010-11.

4.

Whether the learned CIT(A)-Gulbarga was justified in not considering the observations made by the Honourable Supreme Court in the case of Citizen Co-operative Society Limited, Hyderabad Vs ACIT wherein it was held that Section 80P of the Act is benevolent provision and such a provision have to be read liberally, reasonably and in favour of the assessee.

5. Whether CIT(A)-Gulbarga was correct in treating the appellant society on par with Citizen Co-operative Society Hyderabad, without verifying the fact that Section 22 of Karnataka SouhardaSahakari Act, 1997 which prohibits collection of deposits from nominal members and non members.

6. Whether CIT(A)-Gulbarga was correct in not following the judgment of jurisdictional Honourable High Court, Dharwad Bench in the case of Sri BilurGurubasavaPattinaSahakari Sangha Niyamitha, Bagalkot in and several other cases.

7.

Whether CIT(A)-Gulbarga was correct in not following the judgments of jurisdictional Honourable High Court, in the case of Tumkur Merchants Souharda Credit Co-operative Limited Vs ITO in ITA No.307 of 2014 dated 28.10.2014, in not allowing the deduction u/s 80P(2)(a)(i) of the Income Tax Act, 1961 for the Interest earned on investments.

8.

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.

9.

The appellant craves leave to add, alter, amend and/or delete any of the grounds mentioned above.”

3.

It is submitted by ld. AR of assessee that ld. CIT(A) has decided the issue against the assessee by following 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 1. But the facts of the present case are different and therefore, this judgment is not applicable but CIT(A) has not discussed and compared the facts of the present case with the facts of that case and therefore, his order should be reversed. He also submitted that if considered necessary, the matter should be restored back to the file of CIT(A) for fresh decision by way of a speaking and reasoned order after discussing and comparing the facts of the present case with the facts of that case. The ld. DR of revenue supported the orders of authorities below.

4. I have considered the rival submissions. I find force in the submissions of ld. AR of assessee that CIT(A) has followed this judgment of Hon’ble Apex Court rendered in the case of The Citizen Co-operative Society Ltd. Vs. ACIT (supra) without discussing and comparing the facts of the present case with the facts of that case and therefore, in the interest of justice, I feel it proper to restore the matter back to the file of CIT(A) for fresh decision by way of a speaking and reasoned order. Accordingly, I set aside the order of CIT(A) and restore the matter back to his file for fresh decision by way of a speaking and reasoned order after providing adequate opportunity of being heard to both sides.

5.

The CIT(A) should discuss and compare the facts of the present case with the facts in the case of The Citizen Co-operative Society Ltd. Vs. ACIT (supra) and then pass a speaking and reasoned order. In view of this decision, no further adjudication is called for regarding the merit of the case at the present stage.

6.

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.

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