×Latest Case Laws on Income Tax by various Income Tax Appellate Tribunals in India
These are the latest case laws decided by various Income Tax Appellate Tribunals (ITAT) of India on Income Tax which have been published recently. The case laws are open for discussion and we invite expert comments from our members on its applicability and effect on relevant issues.
07-10-2019, Karmaveer Bhaurao Patil, Section 80P(2), 2(1), Tribunal Pune
This appeal is filed by the assessee against the order of CIT(A)-1, Kolhapur dated 06.05.2019 for the Assessment Year 2016-17.
2. The grounds raised by the assessee are as under :-
“Issue no.1 - Disallowing the Deduction u/s 80P(2)(a)(i) of the Income Tax Act, 1961 on Interest Received on Loans given to Nominal Members (Disallowance of Rs.14,94,258 u/s 80P(2)(a)(i) of the Income Tax Act, 1961)
1. The learned Commissioner of Income Tax (Appeals)-1, Kolhapur (hereinafter referred to as “learned CIT(A)") erred in law and on facts in confirming the disallowance of deduction of Rs.14,94,258 made by Income Tax Officer, Ward 2(3), Sangli (hereinafter referred to as “learned AO”) u/s 80P(2)(a)(i) of the Income Tax Act, 1961 by treating the same as "Income from Other Sources"
2. The learned CIT(A) and learned AO erred in law and on facts in not appreciating the facts that Nominal Members is one of the category of members of the Co-operative Society as defined in State Legislature governing the appellant.
3. The learned CIT(A) and learned AO erred in law and on facts in not appreciating the difference between category of members as defined in applicable State Legislature governing the appellant society that from the State Legislature which was applicable to The Citizen Co-operative Society Ltd.
4. The appellant craves leave to add/modify/delete/amend all/any of the grounds of appeal.”
3. Briefly stated the relevant facts include that the assessee is a Cooperative Society registered under the Maharashtra Co-operative Societies Act, 1960. Assessee earned interest income apart from other miscellaneous income during the year. The assessee filed the return of income declaring Nil income after claiming of deduction of Rs.2,73 45,788/- u/s 80P of the Act. The Assessing Officer took the case for limited scrutiny in view of the CASS guidelines and found that the assessee is not entitled to claim the deduction u/s 80P of the Act. Further, the Assessing Officer noticed that the members/new members/family members are involved in this earning of receipt of income. Fo lowing the Hon’ble Supreme Court judgements in the case of Citizen Co operative Society Ltd. vs. ACIT in Civil Appeal No.10245/2017 dated 08.08.2017, the benefits of section 80P(2) of the Act was denied by the Assessing Officer.
4. During the first appellate proceedings, the CIT(A) examined the applicability of the judgement of the Hon’ble Supreme Court in the case of Citizen Co-operative Society Ltd. (supra), which recognizes the existence of two kinds of members of cooperative society and held that the assessee does not amount to cooperative bank and invoked the provisions of section 80P(2) of the Act.
5. Aggrieved with the above decision of the CIT(A), the assessee is in appeal before the Tribunal with above extracted grounds.
6. Before me, ld. Counsel for the assessee explained the above facts of the case through written note and submitted that the similar issue came up for adjudication before this Tribunal in the case of Sai Prerana Gramin Bigarsheti Sahakari Pat Sanshta Maryadit vs. ITO in ITA No.1431/PUN/2018 and many others dated 03 07.2019 and submitted that the issue is now covered one by the said order of the Tribunal. The contents of para 3 to 11 of the said order of the Tribunal (supra) are relevant in this regard. Al ernatively, ld. Counsel for the assessee submitted that at the relevant time when the matter was adjudicating, the said decision of the Tribunal (supra) was not available with the lower authorities. Further the ld. Counsel prayed that the issue may be remanded back to the file of the CIT(A) for deciding the issue afresh after considering the above settled nature on the issue at the level of the Tribunal.
7. On the other hand, ld. DR for the Revenue relied heavily on the orders of the revenue authorities.
8. Heard both the sides. On perusing the order of the Tribunal in the case of Sai Prerana Gramin Bigarsheti Sahakari Pat Sanshta Maryadit dated 03.07.2019 (supra), I find identical issue came up for adjudication before this Tribunal and the Tribunal, as per discussion given in para 3 to 11 of its order, decided the issue in favour of the assessee. For the sake of completeness, the contents of para 3 to 10 of the said order of the Tribunal (supra) are extracted hereunder :-
“3. The relevant facts as culled out from the material on record are as under :-
Assessee is a Co-operative Society registered under Maharashtra Cooperative Credit Societies Act, 1960 and is stated to be engaged in providing credit facilities to its Members and accepts deposits from its members. Assessee filed its return of income for A.Y. 2015-16 on 29 09.2015 declaring total income at Rs.Nil after claiming deduction of Rs 18,38,878/- u/s 80P of the Act. The case was selected for scrutiny and hereafter assessment was framed u/s 143(3) of the Act vide order dt.29 12.2017 and the claim of deduction u/s 80P of the Act was denied to the assessee and the total income was thus determined at Rs.18,38,878/-. Aggrieved by the order of AO, assessee carried the matter before Ld.CIT(A), who vide order dt.01.06.2018 (in appeal No.PN/CIT(A)-6/ITO Wd.10(5)/10297/2017-18) dismissed the appeal of the assessee. Aggrieved by the order of Ld.CIT(A), assessee is now in appeal before us and has raised the following grounds :
“1. The Ld.CIT(A) – 6 Pune erred in law and on facts, in confirming the action of the learned AO in denying the deduction u/s 80P(2)(a)(i) of the ITA, 1961 amounting to Rs.18,38,878/-.
2. The learned CIT(A)-6, Pune and the learned AD erred in law and on facts in denying deduction u/s 80P of the ITA, 1961 amounting to Rs. 18 38 878/-. The IT authorities erred in treating the appellant as a 'Business Financer' instead of a mere Credit Co-operative Society (i.e. PAT-SANSTHA) dealing with members.
3. Further, the learned CIT(A)-6, Pune erred in law and on facts in not allowing the deduction u/s 80P(2)(d) of the ITA,1961 on account of the interest received from Pune District Central Co-operative Bank. The learned IT-Authorities ought to have appreciated that deposits were kept with co-operative banks from safety and prudence perspective.
4. Alternatively and without prejudice to Ground No. 1, 2 & 3, the learned IT Authorities erred in law and on facts by not allowing proportionate deduction u/s 80P of the ITA, 1961 to the extent of eligible income earned; against the taxation of total income of Rs. 18,38,878/-.”
4. Similar grounds have been raised in the all the remaining appeals by different assessees i.e., ITA Nos.1361, 1386,1430 & 1517/PUN/2018 for A.Y. 2015-16 and ITA No.1940/PUN/2018 for A.Y. 2014-15. Though the