Income Tax Appellate Tribunal - Bangalore
M/S Taluk Agricultural Producers ... vs The Assistant Commissioner Of Income ... on 7 September, 2018
IN THE INCOME TAX APPELLATE TRIBUNAL
"SMC-A" BENCH : BANGALORE
BEFORE SHRI ARUN KUMAR GARODIA, ACCOUNTANT MEMBER
ITA No.2251/Bang/2018
Assessment Year :2015-16
M/s. Taluk Agricultural
The Assistant
Producers Co-operative
Commissioner of
Marketing Society Ltd.,
Vs. Income Tax,
Gumchi Square,
Circle - 1,
Tumakuru - 572 101.
Tumakuru.
PAN: AABAT0237C
APPELLANT RESPONDENT
Appellant by : Shri Prathik Patil, Advocate
Respondent by : Shri N. Sukumar, Addl. CIT (DR)
Date of hearing : 27.08.2018
Date of Pronouncement : 07.09.2018
ORDER
Per Shri A.K. Garodia, Accountant Member
This appeal is filed by the assessee and the same is directed against the order of ld. CIT(A)-7, Bangalore dated 20.06.2018 for Assessment Year 2015-16.
2. The grounds raised by the assessee are as under.
"The order passed by the Learned Commissioner of Income Tax (Appeals) is grossly opposed to law and facts of the case.
2. The learned Commissioner of Income Tax (Appeals) ought to have adjudicated the appeal on its merits having regard to the grounds urged in appeal by the appellant, and passed a speaking order on the issues contested in appeal, and therefore the impugned order passed by the learned Commissioner does not meet the requirements of Sec.250(6).
3. The Learned Commissioner of Income Tax (Appeals) was in error in confirming the order of the learned Assessing Officer disallowing the claim of deduction u/s. 80P(2)(d) as claimed by the appellant on account of it being entitled to do so.
4. The Learned Commissioner of Income-tax (Appeals) ought to have ITA No. 2251/Bang/2018 Page 2 of 3 appreciated that the interest derived by the appellant from the deposits maintained by it with the DCC Bank was on account of the statutory Reserve Fund mandatorily required to be maintained by it in accordance with the provisions of section 57(2), 58 of the Karnataka Co-operative Societies Act. 1959 r/w. Rule 22 or the Karnataka Co- operative Societies Rules, 1960.
5. The Learned Commissioner of Income Tax (Appeals) was in error in confirming the action of the Learned Assessing Officer in relying on the decision of the Hon'ble Karnataka High Court in the case of the Totagar's Co-operative Sale Society, (ITA No.100066 of 2016), when the facts in the case before the Karnataka High Court, as well as the facts in the case before the Hon'ble Supreme Court in Totagar's Co- operative Sale Society Ltd. vs. ITO (323 ITR 283) on which reliance was placed by the High Court, were clearly distinguishable from the facts of the present case, in so far as whereas in the decided cases, the interest was derived from short term deposits created out of surplus funds generated during the course of the activities, in the present case, the interest was derived from the statutory reserve fund required to be maintained by the appellant Society as a precondition for carrying on business.
6. It should have been held that as the maintenance of the deposits representing the reserve fund was a statutory obligation cast upon the appellant Society to carry on its activity, any income derived therefrom would naturally assume the character of business income and be entitled to deduction u/s. 80P(2)(a) of the Act.
7. Without prejudice, the learned Commissioner of Income-tax (Appeals) ought to have held that the interest earned on its deposits with the District Co-operative Bank was still deductible under Sec. 80P(2)(d) of the Act.
8. In the alternative, and without prejudice, assuming without admitting that the interest earned on the deposits representing the statutory reserve fund was deductible under Sec. 80P(2),a and not Sec.80P(2)(d) of the act, the Learned Assessing Officer was under a bounden duty to educate the appellant regarding the deduction available in respect of such interest which had assumed the character of business income u/s. 80P(2)(a) of the Act.
9. The appellant prays for leave of this Hon'ble Tribunal to add to, to delete from and/or to amend the grounds of appeal."
3. At the very outset, it was pointed out by the bench that the order of CIT(A) is ex-parte qua the assessee. The bench wanted to know as to how many opportunities were provided by CIT (A). In reply, it was submitted by ld. AR of assessee that it is noted by CIT (A) in para 2 of his order that the first date of ITA No. 2251/Bang/2018 Page 3 of 3 hearing was fixed on 06.06.2018 and the second date of hearing was on 18.06.2018 and in this manner, only two dates of hearing were fixed by CIT(A) and thereafter, the order was passed by him on 20.06.2018. Under these facts, I feel that sufficient opportunity was not provided by CIT(A) and therefore, I set aside the order of CIT(A) and restore the matter back to his file for fresh decision after providing adequate opportunity of being heard to both sides. In view of this decision, no adjudication is called for on merit at the present stage.
4. 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.
Sd/-
(ARUN KUMAR GARODIA) Accountant Member Bangalore, Dated, the 07th September, 2018.
/MS/ Copy to:
1. Appellant 4. CIT(A)
2. Respondent 5. DR, ITAT, Bangalore
3. CIT 6. Guard file By order Senior Private Secretary, Income Tax Appellate Tribunal, Bangalore.