Sri Laxminarayana Swamy Co-operative Society Ltd.,, Channapatna v. ITO, Mandya

ITA 1194/BANG/2009 | 2004-2005
Pronouncement Date: 22-04-2010 | Result: Partly Allowed

Appeal Details

RSA Number 119421114 RSA 2009
Bench Bangalore
Appeal Number ITA 1194/BANG/2009
Duration Of Justice 4 month(s) 7 day(s)
Appellant Sri Laxminarayana Swamy Co-operative Society Ltd.,, Channapatna
Respondent ITO, Mandya
Appeal Type Income Tax Appeal
Pronouncement Date 22-04-2010
Appeal Filed By Assessee
Order Result Partly Allowed
Bench Allotted B
Tribunal Order Date 22-04-2010
Date Of Final Hearing 20-04-2010
Next Hearing Date 20-04-2010
Assessment Year 2004-2005
Appeal Filed On 15-12-2009
Judgment Text
THE INCOME TAX APPELLATE TRIBUNAL BANGALORE BENCH B BEFORE DR. O.K NARAYANAN VICE PRESIDENT AND SMT. P MADHAVI DEVI JUDICIAL MEMBER ITA NO.1194 1 195 & 1196 /BANG/2009 (ASST. YEA R - 2004-05 TO 2006-07) SRI LAXMINARAYANA SWAMY CO-OPERATIVE SOCIETY LTD. GARUDAGAMBADA BEEDHI CHENNAPATNA TOWN BANGALORE RURAL DISTRICT. . APPELLANT VS. THE INCOME-TAX OFFICER WARD-3 MANDYA. . RESPONDENT APPELLANT BY : SHRI B.P SACHIN KUMAR CHARTERED ACCOUNTANT RESPONDENT BY : SMT. V.S SREELEKHA ADDL. COMMISSI ONER OF INCOME-TAX O R D E R PER DR. O.K NARAYANAN VICE PRESIDENT THESE THREE APPEALS ARE FILED BY THE ASSESSEE. T HE RELEVANT ASSESSMENT YEARS ARE 2004-05 2005-06 AND 2006-07. THESE APPEALS ARE DIRECTED AGAINST THE ORDERS OF THE CIT(A) AT MY SORE ALL DATED 30/09/2009. THE APPEALS ARISE OUT OF THE ASSESSMEN TS COMPLETED U/S 143(3) OF THE INCOME-TAX ACT 1961. ITA NO.1194TO 1196/B/09 2 2. THE ASSESSEE SOCIETY HAS RAISED COMMON GROUNDS F OR ALL THESE THREE ASSESSMENT YEARS. 3. THE FIRST CONTENTION OF THE ASSESSEE IS THAT THE ASSESSEE IS A MUTUAL CONCERN AND THEREFORE ITS INCOME IS NOT CH ARGEABLE TO TAX. THOSE CONTENTION HAS TO BE REJECTED OUT RIGHT. TH E ASSESSEE IS A SOCIETY REGISTERED UNDER THE CO-OPERATIVE SOCIETY S ACT AND IT HAS GOT SEPARATE JUDICIAL STATUS UNDER THE PROVISIONS OF TH AT ENACTMENT. THERE IS NO ASPECT OF MUTUALITY IN THE CASE OF THE ASSESS EE REGISTERED UNDER THE COOPERATIVE SOCIETY AS ONE OF THE OBJECTIVES OF A CO-OPERATIVE SOCIETY WILL BE TO MAKE PROFITS AND DECLARE DIVIDE NDS TO ITS MEMBERS. IN THE CASE OF MUTUALITY CONCERN THERE IS NO ROOM FOR SUCH INTENTION OF MAKING PROFITS AND DISTRIBUTE THE SAME AMONG THE ME MBERS. THEREFORE THIS ARGUMENT RAISED BY THE ASSESSEE IS QUITE UNKNOWN TO THE LAW OF INCOME-TAX ACT. THEREFORE IT IS REJECTE D. 4. THE SECOND GROUND RAISED BY THE ASSESSEE IS THAT THE CIT(A) HAS ERRED IN HOLDING THAT THE ASSESSEE IS NOT ELIGIBLE FOR DEDUCTIONS U/S 80P(2)(A)(III) AND (IV) OF THE INCOME-TAX ACT 1961. ITA NO.1194TO 1196/B/09 3 5. THE ABOVE SUB SECTION PROVIDE EXEMPTION IN THE CASE OF A CO- OPERATIVE SOCIETY FROM TAX IN RESPECT OF ITS INCOME ARISING FROM THE MARKETING OF AGRICULTURAL PRODUCE GROWN BY ITS MEMB ERS AND PURCHASE OF AGRICULTURAL IMPLEMENTS SEEDS LIVE STOCK ETC. FOR AGRICULTURAL PURPOSES AND FOR SUPPLYING THEM TO ITS MEMBERS. IN OTHER WORDS THESE TWO ITEMS ARE RELATED TO OPERATIONAL INCOME O F A CO-OPERATIVE SOCIETY. THIS ASPECT HAS TO BE LOOKED INTO BY THE AUTHORITY IN DETAIL. THE CONTENTION OF THE ASSESSEE IS THAT THE ASSESSEE IS A SOCIETY COMPRISING A FARMER MEMBERS WHO ARE WORKING BY THE MSELVES FOR THEIR COMMON BENEFIT AND THEREFORE THE OPERATIONA L INCOME IS ELIGIBLE FOR EXEMPTION. THIS ARGUMENT CANNOT BE BR USHED ASIDE LIGHTLY. THE ASSESSING AUTHORITY IS DIRECTED TO EX AMINE THE PARTICULARS OF THE SOCIETY AND ITS MEMBERS AND VERIFY THE ACTIV ITIES AND IF IT IS FOUND THAT THEY ARE CARRYING ON SUCH A SPECIFIED AC TIVITY FOR THE COMMON BENEFIT OF THE MEMBERS THE SAID OPERATIONAL INCOME MAY BE EXEMPT FROM TAXATION. 6. THE THIRD CONTENTION RAISED BY THE ASSESSEE IS T HAT THE INTEREST INCOME EARNED FROM FIXED DEPOSITS AND RECURRING DEP OSITS MUST BE ALLOWED AS DEDUCTION. THIS ASPECT HAS BEEN RECENTL Y CONSIDERED BY THE HONBLE SUPREME COURT IN THE CASE OF TOTCARS CO-OPE RATIVE SALES ITA NO.1194TO 1196/B/09 4 SOCIETY LTD. VS. ITO 229 CTR 209 (SC). THE HONBL E SUPREME COURT HAS HELD THAT IF INCOME ARISE OUT OF DEPOSITS THE SAME SHOULD BE BROUGHT TO TAX AS INCOME FROM OTHER SOURCES. THER EFORE THIS CONTENTION OF THE ASSESSEE IS REJECTED. 7. IN RESULT THE APPEALS FILED BY THE ASSESSEE ARE PARTLY ALLOWED. ORDER PRONOUNCED ON THURSDAY THE 22ND DAY OF APRIL 2010 AT BANGALORE. SD/- SD/- (P MADHAVI DEVI) (DR. O.K NARAYANAN) JUDICIAL MEMBER VICE PRESIDENT VMS. COPY TO : 1. THE ASSESSEE 2. THE REVENUE 3.THE CIT CONCERNED. 4.THE CIT(A) CONCERNED. 5.DR 6.GF 7..GF ITAT NEW DELHI. BY ORD ER ASST. REGISTRAR ITAT BANGALORE.