Income Tax Appellate Tribunal - Bangalore
Income Tax Officer Ward-2 , Bagalkot , ... vs M/S Sri Prabhulingeshwar Souharda ... on 7 September, 2018
IN THE INCOME TAX APPELLATE TRIBUNAL
"A" BENCH : BANGALORE
BEFORE SHRI N.V. VASUDEVAN, JUDICIAL MEMBER AND
SHRI ARUN KUMAR GARODIA, ACCOUNTANT MEMBER
ITA Nos. 2881 & 2882/Bang/2017
Assessment Years :2012-13 & 2013-14
M/s. Shri Prabhulingeshwar
Souharda Credit Co-op. Ltd., The Income Tax
Siddapur, Officer,
Vs.
Jamakhandi, Ward - 2,
Bagalkot - 587 301. Bagalkot.
PAN: AAALS0495F
APPELLANT RESPONDENT
ITA Nos. 229 to 231/Bang/2018
Assessment Years : 2011-12 to 2013-14
M/s. Shri Prabhulingeshwar
Souharda Credit Co-op. Ltd.,
The Income Tax Officer,
Siddapur,
Ward - 2, Vs.
Jamakhandi,
Bagalkot.
Bagalkot - 587 301.
PAN: AAALS0495F
APPELLANT RESPONDENT
Assessee by : Shri Chaitanya V. Mudrabettu, Advocate
Revenue by : Shri Siddappaji R.N., Addl. CIT(DR)
Date of hearing : 28.08.2018
Date of Pronouncement : 07.09.2018
ORDER
Per Shri A.K. Garodia, Accountant Member
Out of this bunch of 5 appeals, there is only one appeal filed by the revenue for Assessment Year 2011-12 and the remaining 4 appeals are cross appeals filed by the assessee and revenue for Assessment Years 2012-13 and 2013-14. All these appeals were heard together and are being disposed of by way of this common order for the sake of convenience.
ITA Nos. 2881 & 2882/Bang/2017 & 229 to 231/Bang/2018 Page 2 of 7
2. The grounds raised by the assessee for Assessment Year 2012-13 in ITA No. 2881/Bang/2017 are as under.
"1. The learned Commissioner of Income Tax (Appeals), Belgaum has erred in passing the order treating the Interest on Long term Investments as income from other sources instead of Income from Business which is opposed to law and facts of the case.
2. The learned Commissioner of Income Tax (Appeals), Belgaum has erred in not allowing the deduction u/s 80P (2) (a) (i) of Income Tax Act 1961 on the Income derived from Interest on Investments, which are required to be invested as per statute and on some investments which are invested voluntarily out of surplus funds and Interest on such investments is attributable to Business.
3. The learned Commissioner of Income Tax (Appeals), Belgaum has erred in not following the Judgment of Honourable Karnataka High court, Dharwad Bench in our own case for the AY 2009-10 and 2010- 11 in ITA 10078/2015 and ITA 10079/2015 and Decision of jurisdictional ITAT in ITA No.817/2017,818/2017 & 819/2017 Dated
03.11.2017.
4. The learned commissioner of Income Tax (Appeals) has erred in following the order of the Honourable Karnataka High Court in Totagars Co-Op sale Society,Sirsi case in ITA 100066/2016 where in facts and nature of Business of that Assessee and ours are clearly distinguishable.
5. The appellant craves to leave, add/alter any of the grounds of appeal on or before the date of final hearing."
3. The grounds raised by the assessee for Assessment Year 2013-14 in ITA No. 2882/Bang/2017 are as under.
"1. The learned Commissioner of Income Tax (Appeals), Belgaum has erred in passing the order treating the Interest on Long term Investments as income from other sources instead of Income from Business which is opposed to law and facts of the case.
2. The learned Commissioner of Income Tax (Appeals), Belgaum has erred in not allowing the deduction u/s 80P (2) (a) (i) of Income Tax Act 1961 on the Income derived from Interest on Investments, which are required to be invested as per statute and on some investments which are invested voluntarily out of surplus funds and Interest on such investments is attributable to Business.
ITA Nos. 2881 & 2882/Bang/2017 & 229 to 231/Bang/2018 Page 3 of 7
3. The learned Commissioner of Income Tax (Appeals), Belgaum has erred in not following the Judgment of Honourable Karnataka High court, Dharwad Bench in our own case for the AY 2009-10 and 2010- 11 in ITA 10078/2015 and ITA 10079/2015 and Decision of jurisdictional ITAT in ITA No.817/2017,818/2017 & 819/2017 Dated 03.11.2017.
4. The learned commissioner of Income Tax (Appeals) has erred in following the order of the Honourable Karnataka High Court in Totagars Co-Op sale Society,Sirsi case in ITA 100066/2016 where in facts and nature of Business of that Assessee and ours are clearly distinguishable.
5. The appellant craves to leave, add/alter any of the grounds of appeal on or before the date of final hearing."
4. The grounds raised by the revenue for Assessment Year 2011-12 in ITA No. 229/Bang/2018 are as under.
"(1) In the facts and circumstances of the case, the CIT(Appeals) erred in admitting additional evidence in the form of Senior General Manager Affidavit in contravention of Rule 46A since the Assessing Officer was not provided with an opportunity to examine the contents of the Affidavit filed by the assessee.
(2) In the facts and circumstances of the case, the CIT(Appeals) erred in accepting as correct the affidavit of the Senior General Manager without examining the Balance-sheet wherein, the category of members dealt with by the assessee society clearly indicated that the assessee is not doing business with members alone.
(3) The Id CIT(A) in the facts and circumstances of the case of Hon'ble Apex Court ought to have called for remand report in regard to whether the assessee is a cooperative society meant for its members only and whether any income was earned by way of investment/loans etc to non-members (4) The ld.CIT(A) erred in not applying the ratio of the decision of Hon'ble Supreme Court in the case of Citizen Co-op Society Ltd v.
ACIT, C-9(1), Hyderabad in Civil Appeal No.10245 of 2017 (Arising out of SLP (C) No.20044 of 2015) dated 8.08.2017 (Reported in (2017)88 Taxman.com 279(SC)) since the assessee is also catering to the category of members called associate members which is not akin to regular member.
(5) The ld.CIT(A) erred in coming to the conclusion that the assessee society is a cooperative society meant only for its members and eligible for deduction under section 80P(2)(a)(i) ignoring the ratio ITA Nos. 2881 & 2882/Bang/2017 & 229 to 231/Bang/2018 Page 4 of 7 laid down by the Hon'ble Apex Court in the case of Citizen Co-op Society Ltd.
(6) For these and other grounds that may be urged at the time of hearing, the order of the learned CIT(Appeals) may be set aside and that the order of the Assessing Officer be restored."
5. The grounds raised by the revenue for Assessment Year 2012-13 in ITA No. 230/Bang/2018 are as under.
"(1) In the facts and circumstances of the case, the CIT(Appeals) erred in admitting additional evidence in the form of Senior General Manager Affidavit in contravention of Rule 46A since the Assessing Officer was not provided with an opportunity to examine the contents of the Affidavit filed by the assessee.
(2) In the facts and circumstances of the case, the CIT(Appeals) erred in accepting as correct the affidavit of the Senior General Manager without examining the Balance-sheet wherein, the category of members dealt with by the assessee society clearly indicated that the assessee is not doing business with members alone.
(3) The ld CIT(A) in the facts and circumstances of the case of Hon'ble Apex Court ought to have called for remand report in regard to whether the assessee is a cooperative society meant for its members only and whether any income was earned by way of investment/loans etc to non-members (4) The ld.CIT(A) erred in not applying the ratio of the decision of Hon'ble Supreme Court in the case of Citizen Co-op Society Ltd v.
ACIT, C-9(1), Hyderabad in Civil Appeal No.10245 of 2017 (Arising out of SLP (C) No.20044 of 2015) dated 8.O8.2017(Reported in (2017)88 Taxman.com 279(SC))since the assessee is also catering to the category of members called associate members which is not akin to regular member.
(5) The ld.C1T(A) erred in coming to the conclusion that the assessee society is a cooperative society meant only for its members and eligible for deduction under section 80P(2)(a)(i) ignoring the ratio laid down by the Hon'ble Apex Court in the case or Citizen Co-op Society Ltd.
(6) For these and other grounds that may be urged at the time of hearing, the order of the learned CIT(Appeals) may be set aside and that the order of the Assessing Officer be restored."
6. The grounds raised by the revenue for Assessment Year 2013-14 in ITA No. 231/Bang/2018 are as under.
ITA Nos. 2881 & 2882/Bang/2017 & 229 to 231/Bang/2018 Page 5 of 7 "(1) In the facts and circumstances of the case, the CIT(Appeals) erred in admitting additional evidence in the form of Senior General Manager Affidavit i) contravention of Rule 46A since the Assessing Officer was not provided with a; opportunity to examine the contents of the Affidavit filed by the assessee.
(2) In the facts and circumstances of the case, the CIT(Appeals) erred in accepting as correct the affidavit of the Senior General Manager without examining the Balance-sheet wherein, the category of members dealt with by the assessee, society clearly indicated that the assessee is not doing business with member alone.
(3) The Id CIT(A) in the facts and circumstances of the case of Hon'ble Apex Court ought to have called for remand report in regard to whether the assessee is a co-operative society meant for its members only and whether any income was earned by way of investment/loans etc to non-members (4) The ld.CIT(A) erred in not applying the ratio of the decision of Hon'ble Supreme Court in the case of Citizen Co-op Society Ltd v. ACIT, C-9(1), Hyderabad in Civil Appeal No.10245 of 2017 (Arising out of SLP (C) No.20044 of 2015) dated 8.08.2017(Reported in (2017)88 Taxman.com 279(SC))since the assessee is also catering to the category of members called associate member: which is not akin to regular member.
(5) The Id.CIT(A) erred in coming to the conclusion that the assessee society is a co- operative society meant only for its members and eligible for deduction under section 80P(2)(a)(i) ignoring the ratio laid down by the Hon'ble Apex Court in the case of Citizen Co-op Society Ltd.
(6) For these and other grounds that may be urged at the time of hearing, the order of the learned CIT(Appeals) may be set aside and that the order of the Assessing Officer be restored."
7. At the very outset, it was pointed out by the bench that in the present case, the assessee is a Souharda Credit Co-operative Ltd. and the Tribunal has taken a view in the case of M/s. Udaya Souharda Credit Co-operative Society Ltd. Vs. ITO in ITA No. 2831/Bang/2017 dated 17.08.2018 wherein it was held that no assessee can claim to be a co-operative society in the absence of proper registration under the Co-operative Societies Act. The Tribunal also held that if the creation of Co-operative Society under the Co-operative Societies Act is doubtful, the claim of deduction u/s. 80P cannot be allowed. In that case, the ITA Nos. 2881 & 2882/Bang/2017 & 229 to 231/Bang/2018 Page 6 of 7 matter was restored back to the file of AO to examine various aspects after making necessary enquiry and investigation and then for passing a reasoned order. Para 13 of this Tribunal order is relevant which is reproduced hereinbelow for ready reference.
"13. We have also carefully perused the cause title in the assessment order and in the cause title of the assessment order, we find that assessment order was passed in the name of Udaya Souharda Credit Co-operative Society Ltd., whereas no certificate of registration was placed before us in the name of Udaya Souhardha Credit Co- operative Society ltd. Therefore, we are unable to understand how the assessee can claim it to be the co-operative society in the absence of proper registration under the Karnataka Co-operative Societies Act. Creation of Co-operative Society under the co-operative societies Act is doubtful. Thus the claim of deduction under section 80P cannot be allowed. As per the provisions of section 80P of the Act, deduction can only be allowed to the co-operative societies registered under the co-operative societies Act. Without a proper registration under co-operative societies Act, nobody can claim it to be co-operative society as the activities of the co-operative societies are to be controlled under the co-operative societies Act through Registrar of the Cooperative Societies. Since all these new points have been raised during the course of hearing before us and according to us all these points goes to the root of the case, we are of the view that proper adjudication of the issues is required by the AO. We accordingly set aside the order of the CIT (A) and restore the matter to the AO to reexamine all these aspects by making necessary enquiry and investigation and also by passing a reasoned order in this regard. Since we have restored the matter to the AO, we find no justification to adjudicate the issue raised on merit. Accordingly, order of the CIT (A) is set aside and matter is restored to the AO for adjudication of the impugned issue in terms indicated above."
8. The bench pointed out that in the present case also, no certificate of registration was placed before us in the name of present assessee M/s. Shri Prabhulingeshwar Souharda Credit Co-op. Ltd. and therefore, the bench put forward a proposition that respectfully following this Tribunal order, in the present case also, the matter should be restored to AO for fresh decision with similar directions. In reply, both sides agreed to this proposition put forward by the bench. Hence, we set aside the order of ld. CIT (A) in all these three years and restore the matter back to the file of AO with the same directions as were given by Tribunal in that case as per Para 13 of that Tribunal order reproduced ITA Nos. 2881 & 2882/Bang/2017 & 229 to 231/Bang/2018 Page 7 of 7 above. We also hold that in view of this decision, no adjudication on merit is called for at the present stage.
9. In the result, all the appeals of assessee and revenue are allowed for statistical purposes.
Order pronounced in the open court on the date mentioned on the caption page.
Sd/- Sd/-
(N.V. VASUDEVAN) (ARUN KUMAR GARODIA)
Judicial Member 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.