M/s Vazhappally Service Co-op Bank Ltd, Kottayam V. ITO, Thiruvalla

ITA 1/COCH/2011

• Counselvise Citation: [2012] 140 COUNSELVISE.COM (IT) 64732 (ITAT-COCHIN)
• Duration Of Justice: 1 year(s) 7 month(s) 7 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 10-08-2012
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: DB
• Next Hearing Date: 06-08-2012
• Assessment Year: 2007-2008
• Appeal Filed On: 03-01-2011
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: VENI RAJ
• Assessee Lawyers: JOSEPH MATHEW
• Keywords: Business income

Judgement Text

1 ITA NO. 01/COCH/2011 IN THE INCOME TAX APPELLATE TRIBUNAL COCHIN BENCH, COCHIN BEFORE SHRI N.R.S. GANESAN (JM) AND SHRI B.R. BASKARA N(AM) I.T.A NO. 01/COCH/2011 (ASSESSMENT YEAR 2007-08) M/S VAZHAPPALLY SERVICE V S ITO, WD.3 CO-OPERATIVE BANK LTD THIRUVALLA K-108, VAZHAPPALLY CHANGANACHERRY KOTTAYAM PAN : AAAAV1562B (APPELLANT) (RESPONDENT) APPELLANT BY : SHRI JOSEPH MATHEW RESPONDENT BY : SMT. VENI RAJ DATE OF HEARING : 06-08-2012 DATE OF PRONOUNCEMENT : 10-08-2012 O R D E R PER N.R.S. GANESAN (JM) THIS APPEAL OF THE ASSESSEE IS DIRECTED AGAINST TH E ORDER OF COMMISSIONER OF INCOME-TAX(A)-I, TRIVANDRUM DATED 26-10-2010 AND PER TAINS TO ASSESSMENT YEAR 2007-08. 2. THE ONLY ISSUE ARISES FOR CONSIDERATION IS DEDUC TION U/S 80P(2)(A)(I) OF THE ACT IN RESPECT OF INTEREST ON DEPOSIT WITH STATE TR EASURY. 2 ITA NO. 01/COCH/2011 3. WE HAVE HEARD SHRI JOSEPH MATHEW, THE LD.REPRESE NTATIVE FOR THE ASSESSEE AND MS. VENI RAJ, THE LD.DR. THE ISSUE OF DEDUCTIO N U/S 80P(2)(A)(I) WAS ELABORATELY CONSIDERED BY THIS TRIBUNAL IN RESPECT OF KERALA GOVERNMENT TREASURY SMALL SAVINGS FIXED DEPOSIT SCHEME IN THE CASE OF I TO VS THE MUTTOM SERVICE CO- OPERATIVE BANK LTD IN ITA NO.372/COCH/2010 DATED 20-0 1-2012. IN FACT, THIS TRIBUNAL HAS RECORDED ITS FINDINGS AS FOLLOWS AT PA RAGRAPH 5 OF ITS ORDER: 5. WE HAVE CONSIDERED THE RIVAL SUBMISSION ON EITHE R SIDE AND ALSO PERUSED THE MATERIAL AVAILABLE ON RECORD. WE HAVE ALSO CAREFULLY GONE THROUGH THE ORDER OF THE LOWER AUTHO RITY. NO DOUBT, THE LATEST JUDGMENT IN TOTGARS CO-OPERATIVE SALE SO CIETY LTD VS ITO (SUPRA), THE APEX COURT FOUND THAT THE DEPOSIT OF S URPLUS FUNDS BY THE CO-OPERATIVE SOCIETY IS NOT ELIGIBLE FOR DEDUCTI ON U/S 80P(2). IN THE CASE BEFORE THE APEX COURT IN TOTGARS CO-OPERAT IVE SALE SOCIETY LTD VS ITO (SUPRA), THE ASSESSEE CO-OPERATIVE SOCIET Y WAS TO PROVIDE CREDIT FACILITY TO ITS MEMBERS AND MARKET THE AGRICU LTURAL PRODUCE. THE ASSESSEE IS NOT IN THE BUSINESS OF BANKING. THE REFORE, THIS TRIBUNAL IS OF THE OPINION THAT THE JUDGMENT OF THE APEX COURT IN TOTGARS CO-OPERATIVE SALE SOCIETY LTD (SUPRA) IS NO T APPLICABLE IN RESPECT OF THE CO-OPERATIVE SOCIETY WHOSE BUSINESS I S BANKING. ADMITTEDLY, THE ASSESSEE HAS INVESTED FUNDS IN STAT E PROMOTED TREASURY SMALL SAVINGS FIXED DEPOSIT SCHEME. SINCE GOVERNMENT OF INDIA HAS WITHDRAWN INDIA VIKAS PATRA, AS A SMALL SA VINGS INSTRUMENT, FUNDS INVESTED AT THE DISCRETION OF THE BANK IS ONE OF THE ACTIVITIES OF THE BANKING AS PER THE BANKING REGU LATION ACT. SINCE THE ASSESSEE CO-OPERATIVE SOCIETY IS IN THE B USINESS OF BANKING THE INVESTMENT IN THE STATE PROMOTED TREASURY SMALL SAVINGS FIXED DEPOSIT CERTIFICATE SCHEME IS A BANKING ACTIVITY, TH EREFORE, THE INTEREST ACCRUED ON SUCH INVESTMENT HAS TO BE TREAT ED AS BUSINESS INCOME IN THE COURSE OF ITS BANKING ACTIVITY. ONCE IT IS A BUSINESS INCOME, THE ASSESSEE IS ENTITLED FOR DEDUCTION U/S 80P(2)((A)(I). THEREFORE, THIS TRIBUNAL IS OF THE OPINION THAT THE JUDGMENT OF THE LARGER BENCH OF THE APEX COURT IN KARNATAKA STATE CO-O PERATIVE APEX BANK (SUPRA) IS APPLICABLE TO THE FACTS OF THIS CASE. BY RESPECTFULLY FOLLOWING THE JUDGMENT OF THE APEX COU RT IN KARNATAKA STATE CO-OPERATIVE BANK (SUPRA), THE ORDER OF THE COM MISSIONER OF INCOME-TAX(A) IS UPHELD. 3 ITA NO. 01/COCH/2011 4. IN VIEW OF THE ABOVE FINDING OF THIS TRIBUNAL IN THE CASE OF THE MUTTOM SERVICE CO-OPERATIVE BANK LTD (SUPRA) THE ASSESSEE IS ELIGIBLE FOR DEDUCTION U/S 80P(2)(A)(I) IN RESPECT OF INTEREST ON FIXED DEPOSI T MAINTAINED WITH STATE TREASURY. THEREFORE, WE ARE UNABLE TO UPHOLD THE ORDER OF LOW ER AUTHORITIES. ACCORDINGLY THE SAME IS SET ASIDE AND THE ASSESSING OFFICER IS DIRECTED TO GRANT DEDUCTION U/S 80P(2)(A)(I) OF THE ACT. 5. IN THE RESULT, THE APPEAL OF THE ASSESSEE STANDS ALLOWED. ORDER PRONOUNCED IN THE OPEN COURT ON THIS 10 TH AUGUST, 2012. SD/- SD/- (B.R. BASKARAN) (N.R.S. GANESAN) ACCOUNTANT MEMBER JUDICIAL MEMBER COCHIN, DT : 10 TH AUGUST, 2012 PK/- COPY TO: 1. THE APPELLANT 2. THE RESPONDENT 3. THE COMMISSIONER OF INCOME-TAX 4. THE COMMISSIONER OF INCOME-TAX(A) 5. THE DR (TRUE COPY) BY ORDER ASSTT. REGISTRAR, INCOME-TAX APPELLATE TRIBUNAL, COCHIN BENCH