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'u,_PASsED IN
V 'ASSESSMENT YEAR 1992-93 PRAYING THAT THIS HON'BLE:
'---SouRT
IN Tfifl HIGH COURT OF KARNATAKA<TWI*v
CIRCUIT BENCH AT DHARWAD,m »S*fj
DATED THIS THE Emfih DAY OF SEPTEMSSg«é05Sff"
pRESENT"*«fiL
THE HON'BLE MR.JUSfICE;§.G.§A§HRH1T{7,
'.§nD V1 .__
. 9N." , . g
THE Hon'BLESMR.JUSTtcE"S.SATYANARATANA
Triage.TV1Ss%§/%.2;g§§.L
M/S THE TOTQARS €O4OPERATIVE"SALE SQ€IETY LTD
NEW MARKET_IARD}.SIRSIx581 éfi2,
REPRESENTED.B¥*ITs{G£SSRAL,MANGAER
PRAKAsa.£SGDE;'ArfiS AEDUT 33 YRS, S/o SHRIDHAR
H£GDE,-- '*,«f%.'»_*__.§ ... APPELLANT
(33 s;iyutnSaRASfiugAMAN & CHYTHANYA --advs.)
AND :
VgTHE IScoMS*TAxMSFFTcER
AA ~wARn~«T,
' SIRS: e_5S1 402
. RESPONDENT
” _{By 5:: E V SESHACHALA – ADV.)
260.19: OF THE INCDME
9.11.2004
FOR THE
£ TSis I.T.A. FILED U/S.
TAX ACT, 1961 ARISING GUT OF ORDER DT.
ITA NO. 1461/sue/2903
MAY BE PLEASED TO A} FORMULATE THE
SUBSTANTIAL QUESTIONS OF LAW STATED THEREIN
BHXLLOW THE APPEAL AND SET ASIDE THE ORDER OF THE
INCOME TAX AP?ELLATE’. TRIBUNAL BEARING ITA N0.
11260/BANG/2003 DT. 9.11.2GO4 FOR THE ASSESSMENT
YEAR 1992-93 ETC.
THIS ITFL COMING ON FOR HEARING THIS EAY,
SABEEBIT J. , DELIVERED THE FOLLOWING:
JUDGM£NT
This appeal is filed by ‘tne{faeeee$ee,
being aggrieved by the order paeeai E? thetx
Income Tax Appellate Tricnnaii Bangalore Bench
‘A’ in ITA NO.1461/Behg/2603 date§:§Iii.200%
wherein the A§peiiateWTrinnnal ey”a1iowing the
appeal of the afiefieneealhaeogeegd that income
received.*byfi the Eaeseeeeeu front investment in
security anfi page defioeits would not qualify
for exea§tion_iunder~ Section 8OP(2)(a)(i) of
the Income Tar Act; 1961 (hereinafter referred
_§¢ ‘as ‘Chev Act’) and accordingly, has set
A’=,aei&e.the order passed by the First Appellate
‘7Au£n5;1§yé Commissioner of Income Tax
“(Ap§éais), Hubli dated 26.9.2003 and restored
i*:,the order passed by the Assessing Qfficer.
2. The essential facts of this case
leading up to the filing of this appeal are as
follows :–
\}3
The assessee is a Co-operat«i-V§£»..__’Scciety
registered under the Co-operative’:.A_iSo99’i~–9i2–. :to
return of the incomeflfor year
1992–93 was f’i’3.ed riiiscivosing the
income of the head of
‘incomef. exemption
for the {a} (1) of the
Act tttt return was ‘nil’ .
The was processed under
S_e_ctio’n ‘l.4_3=.{i”)_ of the Act on 9.9.1992
._’:}_a’ict..ing return, statement of income,
.,4’repsc}rt under section 4423.13 cf the Act,
titrading P 5: L a/<2: and balance sheet
we~re";. fiieci slang with the return of income.
_ The business carried on by the assesee was
marketing of agricultural produce of the
members of the society. The business activity
other than marketing of the agricuitural
produce resulted in net loss. The assessment
V51
deposits other than cowopertivew befits Wand
interest from bonds and securities, 'the,
Additional Commissioner Wof',InoomehrTe$i_heldz_t
that interest on bank deposits other tsshéoa
operative banks and inf3rest*oh=secfirities and
bonds, income ,is essesahle es "income from
other sources "rorR_%hiche oeduction under
Section 8OE(llTiii@ no$ooio': he admissible.
Further finéié wee he deauepiefi for explanation
that the entire income would be assessable as
income}
'»LAfteri_he3ring the representative of the
*=,_ assessée and considering the contention, the
'*$seesshenti; Officer by its order dated
held that the following directions
given in Section 144A of the Act that income
ftifrom deposit (other than Co–operative banks)
'and income from bonds and securities is
assessable as income front other sources and
the said income is assessable without
deductions for interest expenditurelfgnol no
deduction under section "8OE(fi)(a}ii) 'of »the l
Act is allowable and further there shalihfig no l
deduction of interest expenditure,RVm
Being aggrieeedgofl toe saga order of the
Asessment_t.Qffioer;;vLtfieLi7assesse preferred
appeal~oetore"t§e first Aroellate Pmthorityw
the ____ Hcomgiesioneri be Wlncome Tax {RpDeals)
Huolig ano the rirst appellate authority by
orderV_"vvl'arL"o:* in appeal
2:1 4/2i5~/i2,;,1§/,217/213M 26/218/HBL/CIT EA} /new
l".¢ITiRlf§2fO3 & O3/O4 allowed the appeal
'V."ae¢e§t1ng the contentions of the aseessee that
the*A income received from deposits and
'"Isecerities is attributable to profit gains of
Relassessee and therefore, entitled to exemption
l under Section 80P{2)(a){i) of the Act and set
aside the order passed by the Assessing
Authority. Being aggrieved by the order
oassed by the first appellate authority,
\,J~
Revenue preferred appeal u_dinofi*:TA
NO.1461/Bang/2003. The essessee hes aisoifilede
cross objections being "aggrievedoVby' the '
finding given by the First Aoneliste-Auenority
regarding validity of the notice issued under
Section 148 Qf_ the" e¢§;_ Tee "Income Tax
Appellate Tribufiai' 9.11.2004
allowed_tne ap§esi fiiei cg the Revenue and
dismissed fine crcssVo§jections by holding that
thev """ °Assessing"Ldefticer; was justified in
reopenind tee assessment under Section 147 of
the Ace and groper notice was issued under
_Section iéerwof the Act and consequently,
';iasessment~_under Section 143(3) read with
" Section £44 A of the Act is valid and fruther
held that income from securities and deposits
2"~i;inA business does not qualify for exemption
diunder Section 8OP(2)(a){i) of the Act as the
said income is not attributable to gains and
profits of the assesse as asseseee is not
doing any banking business and further held
\y%
that the first appellate Tribunai',w§st'fi§tV
justified in relying upcn. the.féeci3iefis'
wherein the assessee was a ed-operative bank
and since the assessee; waei not' floihgs any'
banking business¢_ the"eifi¢6me teceiVed from
deposits in bante wherein ifipfeepect of the
surplus iuh§$_ éfieiteafiefggti'ettributable to
profits éfi@_§eifig gfvbgeieess end accordingly,
helqw"tfiét' the teéfie "die not qualify for
exe$pti§n'iefifié§=i$e§ti¢n 80P{2){a){i) of the
Act' afid,aeeeteinely, set aside the order
peesefi thy' the .First Appellate Tribunal and
'.testoteda the order passed by the Assessing
.' f_ it
Being aggrieved by the order of the
elncome Tax .Appe1late Tribunal, the assessee
has preferred this appeal.
3. The appeal was admitted on 15.6.2005.
Kyfi.
10
4. We have heard the learned counmel for
the appellant and the learne¢.Hfioouoeelo
appearing for the respondentrrevenfie;ji°
5. Having regand itoictneiycontefitions
urged, the substantial Questione of law that
arise for determination in this appeal are :«
1) Whether the~ finding “5: =tne income tax
gflapoeiiatefifriopnaiwtnat interest received
the” the iaeeeeeee from securities and
-, de§C$itS in Beak is not attributable to
.tifthe anofint of profits and gains of the
i>;fe§$sigess and wherefore, does not qualify
tforVexemption under Section 8OP(2)(a)(i)
“.eof the Act and as assessed under Section
56 of the Act is contrary’ to law and
calls for interference in this appeal?
ii) Whether the finding of the income
tax appellate tribunal that the
“VJ
11
Q. e e
_esssssen proceedings LMreopening.3’Qf
assessing order under Section i4?fof toe r
Act was proper and notioe.issned under
Section 148 of _theviAct_ wasfl_fiali&}°<is,
contrary to EQQH and «f¢ai;s" for
interference in this $P$ea1 ?H
6. The.aboyesseio_snostantial questions
of law ¥§§%??%me Q? consieetation before this
Court in iéfi i558 of ésoé arising out of the
same coefion,jodgment_passed by the the Income
Tax App§1;gte”5T:isnh$1, Bangalore Bench ‘A’
defied; 9.l1téfiO4: which is impugned in the
i’ptesent appeal and this appeal pertains to the
year 1992-1993 and wherefore,
follokinfii the reasons assigned in ITA
.yid’nL568/2605, we answer the substantial questions
‘Iof”1aw against the appellant and in favour of
H’v*the Revenue.
12
Accordingly, we pass the followffifi 5r§ex
rs f