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2020 (12) TMI 666 - AT - Income TaxRectification u/s 254 - co-operative society entitled to benefit of deduction u/s.80P(2)(a)(i) or not? - Tribunal powers to review its order u/s.254(2) - HELD THAT - Under Sec.254(2) of the Act, what can be rectified is only a mistake that is apparent on the face of the record. The expression mistake apparent on the face of the record will not include a mistake which can be identified only by a difficult process of long drawn reasoning. The tribunal does not have powers to review its order u/s.254(2) - present MP is devoid of any merit as what the Revenue seeks through this MP u/s.254(2) of the Act is only a review of the order of the Tribunal. As to whether the decision in the case of Udaya Souhardha Credit Co-operative society Ltd. 2018 (8) TMI 1063 - ITAT BANGALORE has only remanded the issue to the AO for fresh consideration or has laid down the law on the issue is a debatable issue. Such debatable issues cannot be subject matter of an MP u/s.254(2) of the Act. Decision of the Tribunal in the case of Udaya Souhardha Credit Co-operative Society Ltd. (supra) does not lay out any law that a souharda registered under the Karnataka Souharda Sahakari Act, 1997 cannot be regarded as co-operative society entitled to benefit of deduction u/s.80P(2)(a)(i) of the Act. The Tribunal in the said order has only remanded the issue to the AO for fresh consideration because the issue was raised for the first time before tribunal and required a deeper examination. In the appeal decided by the Tribunal the Tribunal has in paragraph-5 of the order which is subject matter of this MP, has clearly given the reason as to why they cannot remand the issue to the revenue authorities because in the case which was subject matter of the appeal, the AO and CIT(A) have already considered this issue in the light of the Karnataka Souharda Sahakari Act, 1997 -there is no error in the order of the Tribunal which calls for any interference u/s.254(2) of the Act. MP is without any merit and the same is dismissed.
Issues Involved
1. Eligibility of a souharda sahakari registered under the Karnataka Souharda Sahakari Act, 1997 for deduction under Section 80P(2)(a)(i) of the Income Tax Act, 1961. 2. Whether the Tribunal's decision in a Single Member Bench can contradict a Division Bench's ruling. 3. The scope of rectification under Section 254(2) of the Income Tax Act, 1961. Detailed Analysis 1. Eligibility for Deduction under Section 80P(2)(a)(i) The primary issue was whether a souharda sahakari registered under the Karnataka Souharda Sahakari Act, 1997 qualifies as a "co-operative society" entitled to the benefits of deduction under Section 80P(2)(a)(i) of the Income Tax Act, 1961. The Assessing Officer (AO) and the Commissioner of Income Tax (Appeals) [CIT(A)] had denied this benefit, arguing that a souharda sahakari is not the same as a co-operative society as defined under the Karnataka Co-operative Societies Act, 1959. The Tribunal examined the relevant provisions and concluded that: - As per Section 2(19) of the Income Tax Act, 1961, a "co-operative society" includes any co-operative society registered under any state law for the registration of co-operative societies. - Souharda sahakaris operate on the principles of co-operation and are registered under a state law, specifically the Karnataka Souharda Sahakari Act, 1997. - The Tribunal held that souharda sahakaris are a form of co-operative societies and thus eligible for the deduction under Section 80P(2)(a)(i) of the Income Tax Act, 1961. 2. Tribunal's Decision and Division Bench Ruling The Revenue contended that the Single Member Bench should follow the decision of the Division Bench or refer the matter to a larger bench if there were any doubts. The Tribunal noted that the Division Bench in the case of Udaya Souharda Credit Co-operative Society Ltd. had remanded the issue to the AO for fresh consideration, as the issue was raised for the first time before the Tribunal and required deeper examination. The Tribunal clarified that: - The facts and circumstances of the present case were different, as the AO and CIT(A) had already considered the issue in light of the Karnataka Souharda Sahakari Act, 1997. - Therefore, the Tribunal decided the case on its merits rather than remanding it to the AO. 3. Scope of Rectification under Section 254(2) The Revenue filed a miscellaneous application under Section 254(2) of the Income Tax Act, 1961, seeking rectification of what it claimed to be an apparent mistake in the Tribunal's order. The Tribunal analyzed whether there was a "mistake apparent on the face of the record" that could be rectified under this section. The Tribunal held that: - The expression "mistake apparent on the face of the record" does not include a mistake that requires a long drawn reasoning process. - The Tribunal does not have the power to review its order under Section 254(2). - The Revenue's application essentially sought a review of the Tribunal's order, which is not permissible under Section 254(2). The Tribunal concluded that there was no error in its order and dismissed the miscellaneous application filed by the Revenue. Conclusion The Tribunal's judgment clarified that a souharda sahakari registered under the Karnataka Souharda Sahakari Act, 1997 qualifies as a co-operative society eligible for deduction under Section 80P(2)(a)(i) of the Income Tax Act, 1961. It also emphasized that the Tribunal's Single Member Bench is not bound to follow a Division Bench's ruling if the facts and circumstances of the case differ. Lastly, it highlighted the limited scope of rectification under Section 254(2), rejecting the Revenue's application for review.
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