Court Of Karnatakq In Ita v. The Income Tax Officer, Ward 1 (2), Belgaum]?

IN THE HIGH COURT OF KARNATAKA|DHARWAD BENCH DATED THIS THE 21 DAY OF NOVEMBER, 2017 PRESENT THE HON’BLE MRS.JUSTICE S.SUJATHA AND THE HON’BLE Dr. JUSTICE H. B. PRABHAKARA SASTRY I.T.A.No.100010/2015 BETWEEN LOKMANYA MULIIPURPOSE, CO-OPERATIVE SOCIETY LTD.,PLOT NO.8, R.S.NO.21/2,KHANAPUR ROAD, TILAKWADI,|BELGAUM, RPTD.BY ITS CEO,SHRI ABHIJEET S/O AVINASH DIXIT,AGE: ABOUT 40 YEARS,OCC: SERVICE, R/O. TILAKWADI,BBELGAUM-590006. _.. APPBLLANT (BY SRI.SANGRAM S.KULKARNI, ADV.) AND: 1.THE COMMISSIONER OF _INCOME TAX (APPEALS), |, FLOOR, PHIROZ KHIMJI COMPLEX,OPP.CIVIL HOSPITAL,DR.AMBEDKAR ROAD, BELGAUM-s90001. «|THE INCOME TAX OFFICER WARD 2 (2),OPP.CIVIL HOSPITAL,DR.AMBEDKAR ROAD,BBRLGAUM-59000 1._ RESPONDENTS (BY SRI.Y.V.RAVIRAJ, ADV. FOR R1 AND R2)_ THIS APPEAL IS FILED UNDER SECTION 260-A OF THE)INCOMB TAX ACT PRAYING TO ALLOW THR APPBAL BY.ANSWERING THE SUBSTANTIAL QUESTION OF LAW IN FAVOUR,OF THR APPBRLLANT AND SKIT ASIDE THR ORDEBR DAT26.09.2014, PASSED BY THE INCOME TAX APPELLATE TRIBUNAL, PANAJI, IN ITA NO.02/PNJ/2014 AND ETC.,| THIS APPEAL COMING ON FOR HEARING, THIS DAY,|S SUJATHAJ.,DELIVERED THE FOLLOWING: JUDGMENT This appeal is filed by the assessee challenging theorder passed by the Income Tax Appellate Tribunal,Panaji, (for short ‘ITAT’, in I.T.A.No.02/PNJ/2014, for theassessment year 2009-2010. 2.The assessee is a Multipurpose Co-operative Society|registeredunderthe KarnatakaStateCo-operativesocieties Act. For the assessment year 2009-2010, thereturn filed by the assessee was processed under Section143-(1) of the Income Tax Act, 1961 (for short ‘the Act’|and the case was selected for scrutiny and thereaiter theassessment was concluded disallowing the deductionunder Section 8O0P(2)(a)(i) of the Act. Being aggrieved, theassessee preferred an appeal before the Commissioner of Income Tax (Appeals) which came to be_ rejected.—Agegrieved by the same, an appeal was preferred before theITAT. The ITAT dismissed the same. Hence, this appeal ispreferred under Section 260-A of the Act, raising thefollowing substantial questions of law. | UWhether the orders under challengesuffer from infirmities so far as denyingexemption u/s SOP(2}(a)(t) of the IT Act,L961suffer from infirmities so far as denyingexemption u/s SOP(2}(a)(t) of the IT Act,L961 i)Whether the Tribunal was Justified in lawin holding that the provisions of SectionSOP(4) of the Income Tax Act, 1961 areapplicable to the assessee society whenthe Assessee Society is a MultipurposeCo-operative Society and not a PrimaryCo-operative Bank on the facts andcircumstances of the case? ult)Whether the orders under challengesuffer from infirmities in considering thefact that the Income Tax Act, 1961 doesnot define the word Co-operative Bankand it states that the Co-operative Bank w1lhavemeaningas|assignedin|Banking Regulation Act, 1949? Ww)Whether the appellant multipurpose Co-operativesocietyfalls|within,the|definition of the Primary AgriculturalCredit Co-operative Society under Section2 (h-2) of the Karnataka Co-operativesocieties Act, and is entitled to the benefitof deduction in respect of its incomeunder Section SOP (2)}(a)(t) of the Actregard being had to Section SOP(4) as perthe dictum laid down by the Hon’ble High Courtof|KarnatakqinITANo. 100042/ 201[Venugram|Multt-purpose Co-operative Credit Society Ltd.,vs. The Income Tax Officer, Ward 1 (2),Belgaum]? 3.LearnedcounselShri.sangramS.Kulkarni, appearing for the assessee submitted that in view of thedictum pronounced by the Hon’ble Apex Court in the case ot THE CITIZEN CO-OPERATIVE SOCIETY LIMITED,THROUGH ITS MANAGING DIRECTOR, HYDERABAD1n Civil Appeal No.10245/2017 (disposed of on 08.08.2017), Courtof|KarnatakqinITANo. 100042/ 201[Venugram|Multt-purpose Co-operative Credit Society Ltd.,vs. The Income Tax Officer, Ward 1 (2),Belgaum]? 3.LearnedcounselShri.sangramS.Kulkarni, appearing for the assessee submitted that in view of thedictum pronounced by the Hon’ble Apex Court in the case ot THE CITIZEN CO-OPERATIVE SOCIETY LIMITED,THROUGH ITS MANAGING DIRECTOR, HYDERABAD1n Civil Appeal No.10245/2017 (disposed of on 08.08.2017), what is required to be noticed by the Assessing Officer forallowing the deduction under Section 8O0P(2)(a)(i), is firstlythat the activities of the assessee is catering to two.distinct categories of people namely resident/ordinarymembers or the nominal members. Secondly, whether theactivities of the assessee comes within the ambit of co-operative society. These are the findings of fact whichrequires to be adjudicated by the Assessing Officer interms of the judgment of the Hon’ble Apex Court. Thus,the learned counsel seeks tor a remand to the AssessingOfficer setting aside the orders impugned herein. 4Learned counsel Shri Y.V.Raviraj, appearing for therevenue do not dispute the same. Learned counsel has noobjections to remand the matter to the Assessing Officer toredo the assessment in the light of the judgment of theHon'ble Apex Court in the case of)CITIZEN CO-OPERATIVESOCIETY’sCase supta. 5.In view of the aforesaid, without answering thequestions of law raised, the impugned orders are set asideand the matter is remanded to the Assessing Officer toredo the assessment in terms of the law enunciated by theHon’ble Apex Court in the case ofCitizen Co-operativeSoctety’s|case supra, as expeditiously as possible. | Appeal stands disposed of accordingly. Jm/- (Sd/-)JUDGE| (Sd/-)JUDGE