Sri Ganesh Credit Co-operative Society , Bangalore Vs Principal Commissioner of Income Tax-2, Bangalore

IN THE INCOME TAX APPELLATE TRIBUNAL
“A” BENCH : BANGALORE

BEFORE SHRI N.V. VASUDEVAN, VICE PRESIDENT
AND SHRI A K GARODIA, ACCOUNTANT MEMBER

ITA No. 695/Bang/2019
Assessment year: 2014-15

Sri Ganesh Credit Co-operative Society, No.47, Ground Floor, N.S. Iyengar Street, Seshadripuram,Bangalore – 560 020.PAN: AALAS 7645G
APPELLANT
Vs. 
The Principal Commissioner of Income Tax,Bangalore-2,Bangalore.
RESPONDENT

Appellant by : Shri C. Sandeep, CA
Respondent by : Smt. Vandana Sagar, CIT(DR)(ITAT), Bengaluru.
Date of hearing : 15.10.2020
Date of Pronouncement : 20.10.2020

O R D E R

Per N.V. Vasudevan, Vice President

This appeal by the assessee is against the order dated 31.3.2019 of the CIT(Appeals), Bangalore-2, Bangalore passed u/s. 263 of the Income-tax Act, 1961 [the Act].

2. The assessee is a credit co-operative society engaged in providing credit facilities to its members. For AY 2014-15, the assessee filed return of income on 30.9.2015 declaring total income at Nil, after claiming deduction of Rs.10,83,853 u/s.80P(2)(a)(i) of the Act. The assessment was completed accepting the claim of assessee for deduction u/s. 80P(2)(a)(i) in an order passed u/s. 143(3) of the Act date 9.12.2016.

3. The Pr.CIT in exercise of his powers u/s. 263 of the Act was of the view that the assessment order of the AO allowing deduction u/s.80P(2)(a)(i) to the assessee was erroneous and prejudicial to the interests of the revenue for the reason that while allowing deduction, the AO followed the decision of Hon’ble High Court of Karnataka in the case of Sri Biluru Gurubasava Sahakari Sangha Niyamitha, 369 ITR 86 (Karn) ITA No.5006/2013 dated 5.2.2014. The Pr.CIT, however, found that in the judgment rendered by the Hon’ble Supreme Court in the case of Citizen Co-operative Society Ltd. v. ACIT, 397 ITR 1 (SC), the Hon’ble Apex Court took the view that income derived from providing credit facilities to members who are primary members of the society alone would be eligible for deduction u/s. 80P(2)(a)(i) of the Act and if the income is derived from providing credit facilities to nominal members, such deduction should not be allowed. According to the Pr. CIT, the AO did not make any enquires with regard to whether the assessee provided credit facilities to its members who are regular members and not nominal members and therefore the order of AO was erroneous and prejudicial to the interests of the revenue. Accordingly, a show cause notice dated 11.2.2019 was issued u/s. 263 of the Act by the Pr. CIT.

To know more in details find the attachment file