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Income Tax Appellate Tribunal, “SMC-A” BENCH : BANGALORE
Before: SHRI SUNIL KUMAR YADAV
Per Sunil Kumar Yadav, Judicial Member These appeals and COs are preferred by the assessee as well as Revenue against the respective orders of the CIT(A). Since these appeals and COs were heard together, they are being disposed off through this consolidated order. .1624 & 1625/Bang/2017 CO Nos. 98 & 99/Bang/2017 Page 2 of 4 Grounds of appeal:
1. The order of Ld. CIT(A) is clearly opposed to law as far as the findings are perverse, contrary to the facts and circumstance of the case and hence not sustainable.
2. The Ld. CIT(A) erred in treating the assessee as a co-operative society involved in extending credit facilities to its members without appreciating the fact that the assessee is a co-operative bank and that the main activity of the co-operative society is to lend credit facilities to its members in the nature of banking transactions which comes under the purview of inserted sub-section (4) to section 80P w.e.f. 01.04.07.
3. The Ld. CIT(A) has erred in not appreciating the inserted provision of sec 5(i)(ccii) in the Part V of the Banking Regulation Act under section 56 wherein the Co-operative Credit Society is defined. Grounds of CO:
1. The Order of the Commissioner of Income Tax (Appeals) is opposed to law and facts of the case.
2. The Commissioner of Income Tax (Appeals) ought to have appreciated that the interest earned on deposits with Co-operative Banks is exempt u/s 80P(2)(d) in full.
3. The Cross Objector craves for leave to, add to, delete from or amend the grounds of cross objections.
During the course of hearing, the learned DR has contended that the 2. issue is squarely covered by the orders of the Tribunal, thus the issue can be sent back to the AO to readjudicate the issue in the light of the judgment of jurisdictional High Court in the case of Pr.CIT Vs. Vijay Souharda Credit Sahakari Ltd., in which the matter has been restored back to the file of the AO in the light of judgment of the Apex Court in the case of Citizen Co-operative Society Limited vs. Assistant Commissioner of Income Tax in Civil Appeal No.10245/2017 disposed of on 08.08.2017. .1624 & 1625/Bang/2017 CO Nos. 98 & 99/Bang/2017 Page 3 of 4 The learned counsel for the assessee however agreed to the proposition of the learned DR.
Having carefully examined the orders of the authorities below in the light of the rival submission, we find that in identical circumstances, the jurisdictional High Court has restored the matter back to the AO to readjudicate the issue in the light of the judgment of the Apex Court in the case of Citizen Co-operative Society Limited (supra). Relevant observation of the Hon’ble Apex Court is extracted hereunder for the sake of reference: “6. The sole substantial question of law raised by the appellants requires to be answered on the determination of the crucial question whether the respondent-assessee is a co-operative society or a co-operative bank. In the judgment referred to by the learned counsel for the revenue in the Citizen Co-operative Society Limited, supra, a categorical finding was given by the Assessing Officer that the Reserve Bank of India has itself clarified that business of the appellant does not amount to that of a co-operative bank, the appellants therefore would not come within the mischief of sub-section (4) of Section 80P. It was held that the activities of the appellants therein was to cater two distinct categories of people namely, nominal members and the ordinary members. The activities of the assessee therein was construed to be financial business contrary to the provisions of the Co-operative Societies Act. As such, it was held that, the said assessee was not entitled to deduction under Section 80P(2)(a)(i) of the Act. 7. A cursory view of the order impugned herein would indicate that no finding is forthcoming regarding the aspect of the activities carried out by the respondent-assessee, whether as a co-operative society or not. In the absence of such factual finding, the legal propositions rendered by the Hon’ble Apex Court cannot be applied. As such, we are of the considered opinion that the matter requires reconsideration by the Assessing Officer to the effect whether the respondent-assessee comes within the realm of co-operative society to get entitlement of deduction under Section 80P(2)(a)(i) of the Act. 8. Hence, we remand the matter to the Assessing Officer to answer this question and then decide the matter in the light of the judgment of the Hon’ble Apex Court in the case of Citizen Co-operative Society Limited, supra, as expeditiously as possible. Thus, without rendering any finding on the .1624 & 1625/Bang/2017 CO Nos. 98 & 99/Bang/2017 Page 4 of 4 substantial question of law raised, order of the Income Tax Appellate Tribunal impugned herein, is set aside. We direct the Assessing Officer to reconsider the matter in the light of the observations aforesaid.”
In the light of the judgment of the jurisdictional High Court, I feel it proper to restore the matter to the file of the AO for readjudication of the issue afresh after affording opportunity of being heard to the assessee.
Accordingly, I set aside the order of the CIT(A) and restore the matter to the AO in terms indicated above.
In the result, appeals and COs of the Assessee as well as the Revenue are allowed for statistical purposes.
Pronounced in the open court on 14th December, 2017.