M/s. Shri Vedavyas Co-operative Credit Society Limited, Hubli v. The Income Tax Officer, Ward - 3(3), Hubballli

ITA 1195/BANG/2019 | 2014-2015
Pronouncement Date: 05-11-2019 | Result: Allowed

Appeal Details

RSA Number 119521114 RSA 2019
Assessee PAN AAIAS1833N
Bench Bangalore
Appeal Number ITA 1195/BANG/2019
Duration Of Justice 5 month(s) 8 day(s)
Appellant M/s. Shri Vedavyas Co-operative Credit Society Limited, Hubli
Respondent The Income Tax Officer, Ward - 3(3), Hubballli
Appeal Type Income Tax Appeal
Pronouncement Date 05-11-2019
Appeal Filed By Assessee
Order Result Allowed
Bench Allotted A
Tribunal Order Date 05-11-2019
Last Hearing Date 27-08-2019
First Hearing Date 30-09-2019
Assessment Year 2014-2015
Appeal Filed On 27-05-2019
Judgment Text
IN THE INCOME TAX APPELLATE TRIBUNAL SMC A BENCH : BANGALORE BEFORE SHRI B.R BASKARAN ACCOUNTANT MEMBER ITA NO.1195/BANG/2019 ASSESSMENT YEAR : 2014-15 M/S SHRI VEDAVYAS CO-OP. CREDIT SOCIETY LTD. 2 ND FLOOR SHRI LAXMI BALAKRISHNA SQUARE STATION ROAD HUBLI-580 020. PAN AAIAS 1833 N VS. THE INCOME-TAX OFFICER WARD-3(3) HUBBALLI. APPELLANT RESPONDENT APPELLANT BY : SMT. SOWMYA ADVOCATE RESPONDENT BY : SHRI GANESH R GHALE ADVOCATE STANDING COUNSEL TO D EPT. DATE OF HEARING : 05.11.2019 DATE OF PRONOUNCEMENT : 05.11.2019 O R D E R PER B.R BASKARAN ACCOUNTANT MEMBER THE APPEAL FILED BY THE ASSESEE IS DIRECTED AGAINST THE ORDER DATED 29/3/2019 PASSED BY LD CIT(A) HUBALLI AND IT RELATES TO ASST. YEAR 2014-15. 2. THE ISSUE CONTESTED IN THIS APPEAL RELATES TO DI SALLOWANCE OF DEDUCTION CLAIMED U/S 80P(2)(A)(I) OF THE ACT IN RE SPECT OF INCOME DERIVED FROM INVESTMENTS BY WAY OF DEPOSITS WITH BA NKS. 3. THE LD AR SUBMITTED THAT THE ASSESSEE IS A CREDI T COOPERATIVE SOCIETY PROVIDING CREDIT FACILITIES TO ITS MEMBERS. DURING THE YEAR ITA NO.1195 /BANG/2019 PAGE 2 OF 6 UNDER CONSIDERATION THE ASSESSEE EARNED INTEREST IN COME OF RS.9.14 LAKHS ON THE INVESTMENT MADE WITH BANK. THE ASSESS EE HAD ALSO EARNED INTEREST INCOME OF RS.43.14 LAKHS ON THE CR EDIT FACILITIES PROVIDED TO ITS MEMBERS. THE ASSESSEE HAD CLAIMED DEDUCTION U/S 80P(2)(A)(I) OF THE ACT TO THE TUNE OF RS.15.65 LAK HS. THE AO DISALLOWED THE SAME. IN THE APPELLATE PROCEEDINGS THE LD CIT(A) ALLOWED DEDUCTION U/S 80P(2)(A)(I) IN RESPECT OF IN TEREST INCOME EARNED ON CREDIT FACILITIES PROVIDED TO ITS MEMBER S AND CONFIRMED THE DISALLOWANCE IN RESPECT OF INTEREST INCOME EARN ED FROM BANK DEPOSITS. 4. AGGRIEVED THE ASSESSEE HAS FILED THIS APPEAL BE FORE THE TRIBUNAL. 5. AT THE TIME OF HEARING BOTH THE PARTIES SUBMITTE D THAT THIS ISSUE IS COVERED BY THE DECISION OF COORDINATE BENC H RENDERED IN MANY CASES WHEREIN THIS ISSUE IS RESTORED TO THE FI LE OF AO WITH CERTAIN DIRECTION. THE LD AR HAS PLACED HIS RELIANC E ON THE DECISION RENDERED BY SMC A BENCH IN THE CASE OF THE GRADUA TES CO- OPERATIVE SOCIETY LTD. VS. ITO (ITA NO.2787 TO279 2/BANG/2018) DATED 21/12/2018. 6. THE LD DR PLACED HIS RELIANCE ON THE DECISION RE NDERED BY COORDINATE BENCH IN THE CASE OF GAYATHRI CREDIT CO- OPERATIVE SOCIETY LTD. VS. ITO (ITA NO.287/BANG/2019) DATED 26/7/2019. 7. I HEARD THE PARTIES AND PERUSED THE RECORD. I N OTICED THAT THE IMPUGNED ISSUE IS COVERED BY THE DECISION RENDERED BY COORDINATE ITA NO.1195 /BANG/2019 PAGE 3 OF 6 BENCHES. FOR THE SAKE OF CONVENIENCE I EXTRACT BE LOW THE DECISION RENDERED IN THE CASE OF GRADUATES COOPERATIVE SOCIE TY LTD. (SUPRA). 11. I HAVE HEARD THE RIVAL SUBMISSIONS. THE LEAR NED AR RELIED ON THE DECISION OF THE HON'BLE KARNATAKA 11.HIGH COURT IN THE CASE OF TUMKUR MERCHANTS SOUHARDA CREDIT CO-OPERATIVE SOCIETY LTD. VS. ITO 2 30 TAXMAN 309 (KAM) WHEREIN THE HON'BLE KARNATAKA HIGH COURT CONSIDERED THE DECISION OF THE HON'BLE APEX COURT IN THE CASE OF THE TOTGARS CO-OPERATIVE ITA NOS.2787 - 2792/13/18 SALES SOCIETY (SUPRA) AND HELD THAT INTEREST INCOME IN RESPECT OF TEMPORARY PARKING OF OWN SURPLUS FUNDS NOT IMMEDIATELY REQUIRED IS ELIGIBLE FOR DEDUCTION U/S.80P(2)(A)(I) OF THE ACT. THE LEARNED DR RELIED ON A SUBSEQUENT DECISION OF THE HON'BLE KARNATAKA HIGH COURT IN THE CASE OF PCI T VS. TOTGARS CO- OPERATIVE SALE SOCIETY LTD. 395 ITR OIL (KARN.). 12. WE HAVE CAREFULLY GONE THROUGH THE JUDGMENT RELIED BY THE LEARNED DR. THE FACTS OF THE CASE BEF ORE THE HON'BLE KARNATAKA HIGH COURT IN THE DECISION CI TED BY THE LEARNED DR WAS THAT THE HON'BLE COURT WAS CONSIDERING A CASE RELATING TO ASSESSMENT YEARS 2007-2008 TO 2011- 2012. IN CASE DECIDED BY THE HONBLE SUPREME COURT IN THE CASE OF THE VERY SAME ASSESSEE THE ASSESSMENT YEARS INVOLVED WAS AY 991-92 TO 1999-2000. THE NATURE OF INTEREST INCOME FOR ALL THE AYS WAS IDENTICAL. THE BONE OF OPONTENTION OF THE ASSESSEC IN AY 2007-08 TO 2011-1 2 WAS THAT THE DEDUCTION UNDER SECTION 80P(2) OF THE ACT IS CLAIMED BY THE RESPONDENT ASSESSEE UNDER SECTION 80P(2)(D) OF THE ACT AND NOT UNDER SECTION 80P(2)(A ) OF' THE ACT WHICH WAS THE CLAIM IN AY 1991-92 TO 1999- 2000. THE REASON GIVEN BY THE ASSESSEE WAS THAT IN AY 2007-08 TO 2011-12 INVESTMENTS AND DEPOSITS AFTER THE SUPREME COURT'S DECISION AGAINST THE ASSESSEE TOTGAR'S CO-OPERATIVE SALE SOCIETY LTD. (SUPRA) WERE SHIFTED FROM SCHEDULE BANKS TO CO- OPERATIVE BANK. U/S.80P(2)(D) OF THE ACT INCOME BY ITA NO.1195 /BANG/2019 PAGE 4 OF 6 WAY OF INTEREST OR DIVIDENDS DERIVED BY A CO-OPERAT IVE SOCIETY FROM ITS INVESTMENTS WITH ANY OTHER CO- OPERATIVE SOCIETY IS ENTITLED TO DEDUCTION OF THE W HOLE OF SUCH INTEREST OR DIVIDEND INCOME. THE CLAIM OF T HE ASSESSEE WAS THAT CO-OPERATIVE BANK IS ESSENTIALLY A CO-OPERATIVE SOCIETY AND THEREFORE DEDUCTION HAS TO BE ALLOWED UNDER CLAUSE (D) OF SEC.80P(2) OF THE ACT. THE HON'BLC KARNATAKA HIGH COURT FOLLOWED THE DECISION OF THE SUPREME COURT IN THE TOTGARS CO-OPERATIVE SALES SOCIETY LTD. (SUPRA) AND HELD THAT INTEREST EARNED FROM SCHEDULE BANK OR CO- OPERATIVE BANK IS ASSESSABLE UNDER THE HEAD INCOME FROM OTHER SOURCES AND THEREFORE THE PROVISIONS OF SEC.80P(2)(D)OF THE ACT WAS NOT APPLICABLE TO SUCH ITA NOS.2787 - 2792/B/L8 INTEREST INCOME. IT IS THUS CLEAR THAT THE SOURCE O F FUNDS OUT OF WHICH INVESTMENTS WERE MADE REMAINED THE SAME IN AY 2007-08 TO 2011-12 AND IN AY 1991- 92 TO 1999-2000 DECIDED BY THE HONBLE SUPREME COURT. THEREFORE WHETHER THE SOURCE OF FUNDS WERE ASSESSEES OWN FUNDS OR OUT OF LIABILITY WAS NOT SUBJECT MATTER OF THE DECISION OF THE HON'BLE KARNATAKA HIGH COURT IN THE DECISION CITED BY THE LEARNED DR. TO THIS EXTENT THE DECISION OF THE HON BLE KARNATAKA HIGH COURT IN THE CASE OF TURNUKUR MERCHANTS SOUHARDA CO- OPERATIVE LTD. (SUPRA) STILL HOLDS GOOD. HENCE ON THIS ASPECT THE ISSUE SHOULD BE RESTORED BACK TO THE AO FOR A FRESH DECISION AFTER EXAMINING THE FACTS IN THE LIGHT OF THESE JUDGMENT OF THE HON'BLE APEX COURT RENDERED IN THE CASE OF THE TOTGARS CO-OPERATIVE SALE SOCIETY LTD. (SUPRA) AND OF HON'BLE KARNATAKA HIGH COURT RENDERED IN THE CASE O F TURNUKUR MERCHNTS SOUHARDA CO-OPERATIVE LTD. (SUPRA). 13. THE AO WILL AFFORD OPPORTUNITY OF BEING HEARD T O THE ASSESSEE AND FILING APPROPRIATE EVIDENCE IF DESIRED BY THE ASSESSEE TO SUBSTANTIATE ITS CASE BEFORE DECIDING THE ISSUE . ITA NO.1195 /BANG/2019 PAGE 5 OF 6 8. FOLLOWING THE ABOVE SAID DECISION I SET ASIDE T HE ORDER PASSED BY LD CIT(A) ON THIS ISSUE AND RESTORE THE SAME TO THE FILE OF AO FOR EXAMINING THIS ISSUE AFRESH IN THE LIGHT OF DISCUSS ION MADE IN THE ABOVE SAID CASE. 9. IN THE RESULT THE APPEAL OF THE ASSESSEE IS TREATED AS ALLOWED FOR STATISTICAL PURPOSES. ORDER PRONOUNCED IN THE OPEN COURT ON 5 TH NOVEMBER 2019. SD/- (B.R BASKARAN) ACCOUNTANT MEMBER BANGALORE DATED THE 5TH NOVEMBER 2019. /VMS/ COPY TO: 1. APPELLANT (S) / CROSS OBJECTOR(S) 2. RESPONDENT(S) 3. CIT 4. CIT(A) 5. DR ITAT BANGALORE. 6. GUARD FILE BY ORDER ASST. REGISTRAR ITAT BANGALORE ITA NO.1195 /BANG/2019 PAGE 6 OF 6 1. DATE OF DICTATION 2. DATE ON WHICH THE TYPED DRAFT IS PLACED BEFORE THE DICTATING MEMBER . 3. DATE ON WHICH THE APPROVED DRAFT COMES TO SR.P.S .. 4. DATE ON WHICH THE FAIR ORDER IS PLACED BEFORE THE DICTATING MEMBER .. 5. DATE ON WHICH THE FAIR ORDER COMES BACK TO THE S R. P.S. .. 6. DATE OF UPLOADING THE ORDER ON WEBSITE.. 7. IF NOT UPLOADED FURNISH THE REASON FOR DOING SO .. 8. DATE ON WHICH THE FILE GOES TO THE BENCH CLERK .. 9. DICTATION NOTE ENCLOSED DATE ON WHICH ORDER GOES FOR XEROX & ENDORSEMENT 10. DATE ON WHICH THE FILE GOES TO THE HEAD CLERK . 11. THE DATE ON WHICH THE FILE GOES TO THE ASSISTANT REGISTRAR FOR SIGNATURE ON THE ORDER . 12. THE DATE ON WHICH THE FILE GOES TO DISPATCH SEC TION FOR DISPATCH OF THE TRIBUNAL ORDER . 13. DATE OF DESPATCH OF ORDER. .. 14. DICTATION NOTE ENCLOSED