INCOME TAX ACT, 1961

Section 254(2)

Rectification - Under section 254(2) - No mistake apparent -

Assessee, a souharda, registered under the Karnataka Souharda Sahakari Act, 1997 claimed deduction under section 80P(2)(a)(i). AO held that benefit of deduction under section 80P(2)(a)(i) was available only to a cooperative society and since assessee was only a souharda sahakari registered under Karnataka Souharda Sahakari Act, 1997 and since under the said Act, Co-operative Societies were not being registered, assessee could not be allowed deduction under section 80P(2)(a)(i). Matter reached before Tribunal. Revenue relied on decisions rendered by the ITAT, Bangalore Division Bench, in case of Millennium Credit Co-operative Society Ltd. v. ITO ITA Nos. 2606 & 2607/Bang/2017 in which Tribunal followed decision of ITAT, Bangalore Bench in case of M.S. Udaya Souharda Credit Co-operative Society Ltd. ITA No. 2831/Bang/2017, Order dated 17-8-2018 : 2018 TaxPub(DT) 5483 (Bang-Trib). Tribunal considered the issue and concluded decisions cited by revenue were cases where Tribunal found that relevant provisions of Karnataka Souharda Sahakari Act, 1997, were not examined by revenue authorities and issue had to be remanded for fresh consideration to decide question as to whether a souharda registered under Karnataka Souharda Sahakari Act, 1997 could be regarded as co-operative society entitled to benefit of deduction under section 80P(2)(a)(i). Revenue by way of miscellaneous application filed under section 254(2) contended that Single Member had to follow the decision of Division Bench and could not take a contrary view. If Single Member has any doubts on the view expressed by Division Bench, proper course to follow would be to refer the matter for constitution of a larger Bench. It was also contention of revenue in the Miscellaneous Petition that misreading a decision of co-ordinate Bench was a mistake apparent from record. Held: Decision of Tribunal in the case of Udaya Souhardha Credit Co-operative Society Ltd. did not lay out any law that a souharda registered under the Karnataka Souharda Sahakari Act, 1997 could cannot be regarded as co-operative society entitled to benefit of deduction under section 80P(2)(a)(i) of the Act. Tribunal in the said order had only remanded the issue to AO for fresh consideration because the issue was raised for the first time before Tribunal and required a deeper examination. Therefore, decision rendered in the case of Udaya Souhardha Credit Co-operative Society Ltd. could not be regarded as a precedent and therefore, contentions of revenue in the Miscellaneous Petition that a Single Member had to follow the decision of Division Bench and could not take a contrary view and that if a Single Member had any doubts on the view expressed by a Division Bench, proper course to follow would be to refer the matter for constitution of a larger Bench, was without any merit and thus further stand of revenue in the Miscellaneous Petition that Single Member had misread decision of co-ordinate Bench and hence there is a mistake apparent from record, was also without any merit and there was no error in the order of Tribunal which called for any interference under section 254(2).

SUBSCRIBE FOR FULL CONTENT