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12-07-2019, Shri Dhanlaxmi Pattin, Section 80P(2)(a)(i), Tribunal Bangalore

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2 days 12 hours ago #10055 by amit
Section - 80P(2)(a)(i), 80P
Order Date - 12-07-2019
Favouring - Allowed for statistical purposes
Court - Tribunal Bangalore
Appellant - Shri Dhanlaxmi Pattin Sahakari Sangh Niyamit
Respondent - ITO
Justice - JASON P BOAZ AM
Citation - 719Taxpundit152
Appeal No. - ITA No.1032/Bang/2019
Asstt. Year - 2012-13

Order

PER : Jason P. Boaz

This appeal filed by the assessee is directed against the order of CIT(A) - Hubballi, dated 28.11.2018 for Assessment Year 2012-13.

2. Briefly stated, the facts of the case are as under:

2.1 The assessee, a Co-operative Society, providing credit facilities to its members, filed its return of income for Assessment Year 2012-13 on 27.09.2012 declaring NIL income after claiming deduction of Rs.21,58,094/- under section 80P(2)(a)(i) of the Income Tax Act, 1961 (in short ‘the Act’). The case was taken up for scrutiny for this Assessment Year and the assessment was concluded under section 143(3) of the Act vide order dated 22.12.2014, wherein the assessee’s income was determined at Rs.21,58,094/- in view of the Assessing Officer (AO) disallowing the assessee’s claim of deduction under section 80P(2)(a)(i) of the Act by following, inter alia, the decision of the Hon’ble Apex Court in the case of Totgars Co-operative Sale Society Ltd., Vs. ITO (2010) 322 ITR 283 (SC).

2.2 On appeal, the CIT(A), Hubballi, vide the impugned order dated 28.11.2018 allowed the assessee partial relief. In this order, the CIT(A) held that (1) the assessee is entitled to deduction under section 80P(a)(i) of the Act in respect of interest income attributable to its business but (2) upheld the AO’s rejection of the assessee’s claim for deduction under section 80P(2)(a)(i) of the Act in respect of interest received from other investments and deposits which was to be assessed under the head ‘Income from Other Sources’.

3. Aggrieved by the order of CIT(A), Hubballi, dated 28.11.2018 for Assessment Year 2012-13 the assessee has preferred this appeal before the Tribunal, wherein it has raised the following grounds:-

1. The learned Commissioner of Income Tax (Appeals), Hubballi has erred in passing order which is opposed to law and facts of the case.

2. The learned Commissioner of Income Tax (Appeals), Hubballi has erred in holding that income from regular members only is eligible for deduction and disallowed Rs 10,95,880/- as relating to Other members u/s 80P(2)(a)(i) which is opposed to law and judicial pronouncements with similar facts:

The Principal Commissioner of Income Tax Salem-7 Vs M/s S1308 Ammapet Primary Agricultural Cooperative bank Ltd Ammapet, Salem Tax Case Appeal No 882 & 891 of 2018 dt 6.12.2018 (Madras HC).

3. The learned Commissioner of Income Tax (Appeals),Hubballi has erred in applying Citizen Coop Society Vs CIT C-9 (1) Hyderabad Supreme Court case which facts are different from that of t appellant Society.

4. The learned Commissioner of Income Tax (Appeals),Hubballi has erred in not considering the provisions of Karnataka State Cooperative Societies Act 1959 regarding types of members eligible to become members as there is no classification/restriction under the Income Tax Act 1961. As held in the The Principal Commissioner of Income Tax Salem-7 Vs M/s S-1308 Ammapet Primary Agricultural Cooperative bank Ltd Ammapet, Salem

5. The learned Commissioner of Income Tax (Appeals),Hubballi has erred in treating Interest earned from Cooperative Banks as Income from Other Sources of Rs 5,09,310/- and disallowed claim u/s 80P(2)(a)(i) even when deposits are out of regular business funds.

6. The appellants craves leave to add/alter any of the grounds of appeal on or before the date of final hearing

4. Ground Nos. 1 and 6 (supra), being general in nature, no adjudication is called for thereon.

5. Ground Nos.2 and 3

5.1 In these grounds (supra), the assessee assails the action of the CIT(A) in holding that income from regular Members only is eligible for deduction under section 80P(2)(a)(i) of the Act, and not in respect of income from Associate Members. It is contended by the learned AR that the learned CIT(A) erred in applying the decision of the Hon’ble Apex Court in the case of Citizen Co-operative Society Ltd., Vs. ACIT (397 ITR 1) (SC) as the facts in the case on hand are totally different. According to the learned AR, the order of the CIT(A) is very cryptic without comparing the facts of the case on hand with the facts in the case of Citizens Co-operative Society Ltd., Vs. ACIT (supra). It was submitted that under similar fact situation, the Bangalore Bench in the case of Jyoti Co-operative Credit Society Ltd., Vs. ITO in its order in ITA No.50/Bang/2019 dated 08.05.2019 has restored

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