M/S SRI NAGENDRA CREDIT CO OPERATIVE vs. THE INCOME TAX OFFICER

Without prejudice, whether the Tribunal was justified in law in not granting relief in respect of the income earned from co-operative banks which are primarily cooperative societies and consequently ought to have allowed deduction under Section 80P(2)(d) of the Act, on the facts and circumstances of the case?

Heard Shri Chandrashekar, learned advocate for the appellant-Assessee and Shri E.I.Sanmathi, learned Standing Counselz for the respondent-Revenue.

Shri Chandrashekar for the Assessee submitted that Assessee-Society had deposited its own funds in the banks. Therefore, it was entitled for the benefit of deduction under Section 80P(2)(a)(i) of the Act.2 However, the ITAT has remanded the matter on the file of CIT (A)3 though the issue is covered by the decision of this Court in Tumkur Merchants Souharda Credit Cooperative Ltd. Vs. Income-tax officer, Word-V, Tumkur4 .

Opposing the appeal, Shri Sanmathi for the Revenue adverting to para 5 of ITAT's order, submitted that the ITAT has only remanded the matter to the CIT(A) and therefore, no question of law arises for consideration. 5. In reply, Shri Chandrashekar submitted that if at all the remand order is to be sustained, the matter will have to be sent back on the file of the AO5 to examine whether the deposit made

We have carefully considered rival submissions and perused the records.

In the operative portion of the order, ITAT has remanded the matter to the CIT(A) and also observed that if it is found that facts are inline with the facts in PCIT and another Vs. Totagars Co-operative Sale Society6, then the issue shall be decided against the Assessee and if it is found inline with facts in Tumkur Merchants' case, then it shall be decided in favour of the Assessee. It is not in dispute that position of law has been decided in Totagars Co-operative Society and Tumkur Merchants' cases. Thus, ITAT's remand order is for examination of facts of the case and application of relevant laws. Therefore, in our view, it would be more appropriate to remand the matter on the file of the Assessing Officer instead of CIT(A) for fresh adjudication.

In the light of the above discussions, we modify the order passed by the ITAT to the extent of remanding the matter on the file of the CIT(A) and direct that the matter shall be remanded on the file of the AO for fresh consideration, in accordance with law.

The appeal is accordingly disposed of. Since the matter is remanded, the questions of law do not require any answer and they are not answered. The AO shall pass fresh order in accordance with law without being influenced by the observations made by the ITAT or this Court. No costs.