ACIT-1(1), BHOPAL V. M P STATE CO-OP HOUSING FEDERATION LTD, BHOPAL

ITA 363/IND/2023

AI Insights

The case involves appeals by the Assistant Commissioner of Income Tax, Bhopal against the M.P. State Co-operative Housing Federation Limited concerning the assessment years 2017-18 and 2018-19. The primary issue was the eligibility of the assessee to claim deductions under Section 80P(2)(a)(i) for interest income earned from FDRs and Saving Bank Accounts, which the Assessing Officer had disallowed. The CIT(A) reversed the AO's decision, citing precedents from earlier ITAT decisions favoring the assessee. The Tribunal, referencing these precedents and the absence of any contrary higher forum decision, upheld the CIT(A)'s decision.

• Counselvise Citation: [2024] 140 COUNSELVISE.COM (IT) 36931 (ITAT-INDORE)
• Duration Of Justice: 1 year(s) 15 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 11-10-2024
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: DB
• Next Hearing Date: 12-09-2024
• Assessment Year: 2018-2019
• Appeal Filed On: 26-09-2023
• Other Referred Cases: ACIT, 1(2), Bhopal vs. M/s. M.P. State Coop. Housing Federation Society, Bhopal for A.Y. 2009-10 in I.T.A.No. 7/Ind/2013 dated 09.05.2013 (ITAT, Indore), DCIT, 1(1), Bhopal vs. M/s. M.P. State Coop. Housing Federation Society, Bhopal for A.Ys. 2010-11, 2011-12 and 2012-13 in I.T.A.Nos. 560, 607/Ind/2014 and 02/Ind/2016 dated 04.10.2016 (ITAT, Indore), ACIT, 1(1), Bhopal vs. M/s. M.P. State Coop. Housing Federation Society, Bhopal for A.Y. 2013-14 in I.T.A.No. 1051/Ind/2016 dated 27.03.2017 (ITAT, Indore), ITAT, Indore Bench for the assessment years 2003-04, 2006-07 and 2007-08 in the case of the appellant itself, CIT vs. Karnataka Coop. Bank Limited, Mehsana District Central Coop. Bank Limited vs. ITO
• Laws Referred To: Income-tax Act, 1961
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: RAM KUMAR YADAV
• Assessee Lawyers: VIPUL JAIN
• Section: 143(3)

Judgement Text

"Page 1 of 4 आयकर अपीलीय अिधकरण, इंदौर Ɋायपीठ, इंदौर IN THE INCOME TAX APPELLATE TRIBUNAL INDORE BENCH, INDORE BEFORE SHRI VIJAY PAL RAO, JUDICIAL MEMBER AND SHRI B.M. BIYANI, ACCOUNTANT MEMBER ITA No.358 & 363/Ind/2023 Assessment Year : 2017-18 & 2018-19 ACIT, 1(1), Bhopal बनाम/ Vs. M.P. State Co-operative Housing Federation Limited, Sahkar Bhawan, Opp. Rangmahal Talkies, T.T. Nagar, Bhopal (Revenue /Appellant) (Assessee /Respondent) PAN: AAAAM1593M Assessee by Shri Vipul Jain, AR Revenue by Shri Ram Kumar Yadav, CIT DR Date of Hearing 12.09.2024 Date of Pronouncement 11.10.2024 आदेश / O R D E R Per B.M. Biyani, A.M.: These two appeals are filed by assessee against two separate orders, both dated 31.07.2023 and both passed by learned Commissioner of Income-tax (Appeals), NFAC, Delhi [“CIT(A)”], which in turn arises out of respective assessment-orders dated 15.12.2019 for AY 2017-18 passed by learned DCIT/ACIT,1(1), Bhopal [“AO”] and dated 06.04.2021 for AY 2018-19 passed by learned National e-assessment Centre, Delhi [“AO”] u/s 143(3) of Income- tax Act, 1961 [“the Act”]. ACIT,1(1), Bhopal vs. M.P. State Co-op. Housing Federation, Bhopal ITA No. 358/Ind/2023 – AY 2017-18 Page 2 of 4 2. The grounds raised in these appeals are as under: ITA No. 358/Ind/2023 – AY 2017-18: “On the facts and in the circumstances of the case. The Ld. CIT(A), Bhopal, erred in deleting the addition of Rs. 7,00,11,534/- made on account of interest on FDRs and Saving Bank Accounts when the said interest income was no attributable to the business of the assessee of providing credit faci8lities to the members and was not exempt by virtue of provisions of Section 80P(2)(a)(i) and section 80P(2)(d) of the Income-tax Act, 1961.” ITA No. 363/Ind/2023 – AY 2018-19: “On the facts and in the circumstances of the case, the Ld. CIT(A)-I, Bhopal, erred in deleting the addition of Rs. 7,26,38,223/- made on account of interest on FDRs and Saving Bank Accounts when the said interest income was not attributable to the business of the assessee of providing credit facilities to the members and was not exempt by virtue of provisions of sec. 80P(2)(a)(i) and Section 80P(2(d) of the Income-tax Act, 1961.” 3. Thus, the issue involved in both years is identical with change of figures only. The revenue is claiming that the CIT(A) has erred in deleting the addition made by AO on account of disallowance of deduction claimed by assessee u/s 80P(2)(a)(i) of the Act qua the interest income from FDRs and Saving Bank A/cs. 4. On hearing learned Representatives of both sides, we find that the assessee is a co-operative society engaged in the activity of providing credit facility to its members by way of housing loans. The assessee earned interest income from FDRs and Saving A/cs with Banks by investing surplus funds available with it and claimed the same as eligible for deduction u/s 80P(2)(a)(i). This issue of allowability of deduction is recurring year after year. The AO has disallowed deduction but in first-appeal, the CIT(A) ACIT,1(1), Bhopal vs. M.P. State Co-op. Housing Federation, Bhopal ITA No. 358/Ind/2023 – AY 2017-18 Page 3 of 4 allowed the same by following the decision of ITAT in favour of assessee in earlier years. The relevant portion of CIT(A)’s order is re-produced below: “5.0 The most important point of the appellant is that the Hon'ble ITAT in appellant’s own case in similar facts have given decision in appellant’s favour, The list of ITAT orders is as follow:- . ACIT, 1(2), Bhopal vs. M/s. M.P. State Coop. Housing Federation Society, Bhopal for A.Y. 2009-10 in I.T.A.No. 7/Ind/2013 dated 09.05.2013 (ITAT, Indore). . The DCIT, 1(1), Bhopal vs. M/s. M.P. State Coop. Housing Federation Society, Bhopal for A.Ys. 2010-11, 2011-12 and 2012-13 in I.T.A.Nos. 560, 607/Ind/2014 and 02/Ind/2016 dated 04.10.2016 (ITAT, Indore). . The ACIT, 1(1), Bhopal vs. M/s. M.P. State Coop. Housing Federation Society, Bhopal for A.Y. 2013-14 in I.T.A.No. 1051/Ind/2016 dated 27.03.2017 ( ITAT, Indore.)” XXX 5.4 On identical issue has also been decided by ITAT, Indore Bench for the assessment years 2003-04, 2006-07 and 2007-08 in the case of the appellant itself. While deciding the appeal of the assessee for the assessment-year 2006-07, the Tribunal vide its order dated 21.2.2012 in I.T.A. No. 315/Ind/2011 has held that :- “8. The assessee was having income on the deposits with Bank, U.T.I. These deposits were made out of the surplus fund available with the assessee in the intervening period of making the advances and recovery of the loans. The ITAT, Indore Bench has decided in the case cited supra that interest on IDBI Bonds and FDRs quality for deduction u/s 80P. Even in the case of CIT vs. Karnataka Coop. Bank Limited (supra), the interest on Indira Vikas Patras, Kisan Vikas Patras, UTI and IDBI Bonds was found qualified for deduction u/s 80P. The Hon'ble Supreme Court in the case of Mehsana District Central Coop. Bank Limited vs. ITO, has held that there is nothing in phraseology, of section 80P(2)(a)(i), which makes it applicable only to income derived from working or circulating capital. Even interest income from IVPs has also, held eligible for deduction. Respectfully following the ratio of the Hon'ble Supreme Court and Hon'ble High Courts and also ITAT, we hold that the assessee was eligible for deduction u/s 80P(2)(a)(i) of the Act, on the interest income from fixed deposits with the Banks and interest from S. B. Account, interest on deposits with U.T.I.” 5.5 Respectfully following all above judicial pronouncements, in the sake of the facts of the case, held that this issue is squarely covered by various ACIT,1(1), Bhopal vs. M.P. State Co-op. Housing Federation, Bhopal ITA No. 358/Ind/2023 – AY 2017-18 Page 4 of 4 decisions of the Tribunal in favour of the assessee wherein it was categorically held that “the interest earned on deposits with bank, FDRs and saving bank accounts is an integral part of business activity of providing credit facilities to its members and, therefore, covered u/s 80P(2)(a)(i) of the Act”. Therefore, all the grounds of appeal filed by the appellant is allowed.” 5. Therefore, the CIT(A) has passed impugned order in favour of assessee following the view taken by ITAT in earlier years. Ld. DR for revenue has not shown that the decision given by ITAT in earlier years has been reversed by higher forum. Being so, we do not find any error in the impugned orders passed by CIT(A). Consequently, the same are upheld. The revenue fails in these appeals. 6. Resultantly, these appeals are dismissed. Order pronounced in open court on 11.10.2024 Sd/- Sd/- (VIJAY PAL RAO) (B.M. BIYANI) JUDICIAL MEMBER ACCOUNTANT MEMBER Indore िदनांक /Dated : 11.10.2024 CPU/Sr. PS Copies to: (1) The appellant (2) The respondent (3) CIT (4) CIT(A) (5) Departmental Representative (6) Guard File By order UE COPY Assistant Registrar Income Tax Appellate Tribunal Indore Bench, Indore "