Income-tax Officer, V. Shree Parshwanath Sahakari Pat Sanstha Ltd., Karad

ITA 1032/PUN/2016

• Counselvise Citation: [2018] 125 COUNSELVISE.COM (IT) 9238 (ITAT-PUNE)
• Duration Of Justice: 1 year(s) 9 month(s) 12 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 28-02-2018
• Appeal Filed By: Department
• Order Result: Allowed
• Bench Allotted: B
• Assessment Year: 2011-2012
• Appeal Filed On: 16-05-2016
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Department Lawyers: DR VIVEK AGGARWAL
• Assessee Lawyers: SHRIKANT B KELKAR MANAGER OF
• Keywords: Business income; Opportunity of being heard

Judgement Text

, IN THE INCOME TAX APPELLATE TRIBUNAL PUNE BENCH B, PUNE . , , BEFORE SHRI D.KARUNAKARA RAO, AM AND SHRI VIKAS AWASTHY, JM . / ITA NO.1032/PUN/2016 / ASSESSMENT YEAR : 2011-12 INCOME TAX OFFICER, WARD-1, SATARA . /APPELLANT VS. SHREE PARSHWANATH NAGARI SAHAKARI PAT SANSTHA LTD., 75,76,77/1, GURUWAR PETH, CHAWADI CHOWK, KARAD 415 110 PAN : AAAAP0511C . / RESPONDENT / APPELLANT BY : DR. VIVEK AGGARWAL, CIT-DR / RESPONDENT BY : SHRI SHRIKANT B. KELKAR (MANAGER OF THE ASSESSEE) / DATE OF HEARING : 26.02.2018 / DATE OF PRONOUNCEMENT: 28.02.2018 / ORDER PER D. KARUNAKARA RAO, AM : THIS APPEAL IS FILED BY THE REVENUE AGAINST THE ORDER OF C IT(A)-2, PUNE, DATED 14-12-2015 FOR THE ASSESSMENT YEAR 2011-12. 2. RELEVANT FACTS OF THE CASE ARE THAT THE ASSESSEE IS A COOPERATIVE SOCIETY ENGAGED IN THE BUSINESS OF BANKING/PROVIDING CREDIT FACILITIES TO ITS MEMBERS. DURING THE YEAR, THE ASSESSEE EARNED RS.3 .28 CRORES (ROUNDED OFF) FROM THE INVESTMENTS KEPT IN NATIONALIZED BANKS AND OTHER COOPERATIVE BANKS . OUT OF IT, THE ASSESSEE EARNED INTEREST INCOME OF RS.8,13,767/- FROM THE INVESTMENTS WITH THE NATIONALIZED BANKS . 2 3. REGARDING THE INTEREST INCOME EARNED FROM THE BANKS AND COOPERATIVE BANKS, ASSESSEE CLAIMED THE DEDUCTION U/S.80P (2)(D) OF THE ACT. THE SAID CLAIM OF DEDUCTION WAS DENIED BY THE AO IN T HE ASSESSMENT AND TREATED THE SAME AS INCOME FROM OTHER SOURCES. RELYING ON VARIOUS DECISIONS, CIT(A) ALLOWED THE CLAIM OF THE A SSESSEE. CIT(A) HELD THAT THE CLAIM OF DEDUCTION IS AVAILABLE TO ASSESS EE U/S.80P(2)(A)(I) OF THE ACT. HOWEVER, THE CIT(A) GRANTED RELIEF AS PER THE DISCUSSION GIVEN IN THE IMPUGNED ORDER DATED 14-12-2015. 4. AGGRIEVED WITH THE SAME, REVENUE RAISED THE FOLLOWING GR OUNDS AND THE SAME READ AS UNDER : 1.WHETHER THE ORDER OF THE LEARNED CIT (APPEALS) I S CONTRARY TO LAW AND TO THE FACTS AND CIRCUMSTANCES OF THE CASE. 2. WHETHER THE LEARNED CIT (APPEALS) HAS ERRED ON F ACTS AND IN LAW IN DELETING THE AGGREGATE ADDITION OF RS.3,36,06,75 2/- MADE IN ASSESSMENT ORDER ON ACCOUNT OF INTERESTS RECEIVED F ROM BANKS. 3. WHETHER ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE AND IN LAW, THE LD.CIT(A) HAS ERRED IN DELETING ADDITION O F RS.3,27,92,985/- BY WRONGLY APPLYING PROVISIONS OF SECTION 80P(2)(A)(I) RATHER THAN SECTION 80P(2)(D), WHEREBY ERRONEOUSLY TREATED OTHER SOURCE INCOME AS BUSINESS INCOME AND ALLOWED EXEMPTION U/S.80P(2)(A)(I) INSTEAD OF ALLOWING EXEM PTION UNDER SECTION 80P(2)(D) WHICH IS SPECIFICALLY MEANT FOR T HAT PURPOSE. 4. WHETHER ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE AND IN LAW, THE LD CIT (APPEALS) HAS ERRED IN DELETING THE ADDITION OF RS.8,13,767/- ON ACCOUNT OF INTEREST INCOME RECEIVE D FROM NON- MEMBERS AS WELL AS NATIONALIZED BANKS, WHEREBY TREA TING OTHER SOURCE INCOME AS BUSINESS INCOME AND ALLOWING DEDUC TION U/S.80P(2)(A)(I). 5. FOR THIS AND SUCH OTHER REASONS AS MAY BE URGED AT THE TIME OF HEARING, THE ORDER OF THE CIT(A) MAY BE VACATED AND THAT OF THE ASSESSING OFFICER BE RESTORED. 6. THE APPELLANT CRAVES LEAVE TO ADD, AMEND, ALTER OR DELETE ANY OF THE ABOVE GROUNDS OF APPEAL DURING THE COURSE OF AP PELLATE PROCEEDINGS BEFORE THE HON'BLE TRIBUNAL. 5. FROM THE ABOVE, IT IS EVIDENT THAT APART FROM THE GEN ERAL ISSUES RAISED IN GROUND NOS. 1, 5 AND 6, THE CORE ISSUES WERE RA ISED IN GROUND NOS. 2, 3 AND 4. GROUND NO.2 MENTIONS THAT THE WHOLE OF T HE INTEREST IS 3 RECEIVED FROM THE BANKS. GROUND NO.3 RELATES TO THE ISSU E RELATING TO APPLICABILITY OF THE CORRECT PROVISIONS OF SECTION 80P(2)(D) OF T HE ACT IN PLACE OF SECTION 80P(2)(A)(I) OF THE ACT AS HELD BY THE CIT(A). THE ISSUE RAISED IN GROUND NO.4 PERTAINS TO THE TREATMENT OF THE IN TEREST INCOME AS INCOME FROM OTHER SOURCES AND NOT AS BUSINESS INCOME AS HE LD BY THE CIT(A). 6. DURING THE PROCEEDINGS BEFORE US, THERE IS NONE ON BEH ALF OF THE RESPONDENT ASSESSEE. HOWEVER, IT IS A FACT THAT THE NOT ICE OF HEARING IS DULY SERVED ON THE ASSESSEE. HOWEVER, ASSESSEE CHOSE NOT TO APPEAR BEFORE US IN PERSON OR THROUGH THE AUTHORIZED REPRESEN TATIVE. HOWEVER, MANAGER OF THE ASSESSEE MADE AN APPEARANCE BEFORE THE TRIBUNAL. 7. BEFORE US, LD. DR FOR THE REVENUE SUBMITTED THAT THIS IS A CASE COVERED BY THE RATIO OF THE HONBLE SUPREME COURT JUDG MENT IN THE CASE OF M/S. THE TOTGARS COOPERATIVE SALE SOCIETY LIMITED VS. I TO VIDE CIVIL APPEAL NO.1622 OF 2010 DATED 08-02-2010. CONSIDERING THE SAME, WE PROCEED TO ADJUDICATE THE SAME. 8. ON HEARING THE FACTS AND THE PARTIES, WE FIND THAT THE RE IS NO DISPUTE ON THE SOURCE OF THE INTEREST INCOME FROM THE BA NKS AND COOPERATIVE BANKS. IT IS THE SCHEME OF THE PROVISIONS OF SECTION 80P OF THE ACT, THE DEDUCTION PROVISIONS DO NOT APPLY TO THE BANKS AND THE INTEREST INCOME EARNED FROM THE BANKS. THE JUDGMENTS CITED BY THE LD. DR FOR THE REVENUE IN THE CASES OF (1) MANTOLA CO-OPE RATIVE THRIFT & CREDIT SOCIETY LTD. VS. CIT (2014) 50 TAXMANN.COM 278 (DELHI) (2) SRI BASAVESHWARA CREDIT CO-OPERATIVE SOCIETY LTD. VS. CIT (20 14) 47 TAXMANN.COM 189 (BANGALORE-TRIB.) AND (3) MATOSHRI RAMABAI AMBEDKAR ARE RELEVANT. HOWEVER, CIT(A) GRANTED RELIEF TO THE ASSESSEE BY RELYING ON THE COORDINATE BENCH DECISION OF PUNE TRIBUNAL IN THE CASE OF I TO VS. 4 ASHOKRAO BANKER GRAMIN BIGER SETHI SAHAKARI PAT SAMSTHA LTD. WHICH IS RELEVANT FOR THE PROPOSITION THAT THE DEPOSITS KEPT WIT H THE COOPERATIVE BANKS CONSTITUTES BUSINESS INCOME OF THE AS SESSEE ENGAGED IN THE ACTIVITY OF THE CREDIT COOPERATIVE SOCIETIES. FOR T HE SAKE OF COMPLETENESS, THE CONTENTS OF SAID PARA ARE REPRODUCED HERE UNDE R : 6.2.1 I HAVE GONE THROUGH THE ARGUMENTS PUT FORT H ON BEHALF OF THE APPELLANT. IT IS SEEN THAT HON'BLE ITAT PUNE BE NCH IN THE CASE OF ITO VS. ASHOKRAO BANKER GRAMIN BIGER SETHI SAHAKARI PAT H SAMSTHA LTD. IN ITA NO.1584/PN/2012 DATED 30.04.2014 HAS HELD THAT INTEREST ON FIXED DEPOSITS KEPT BY THE CO-OPERATIVE SOCIETY WITH OTHE R BANKS IS TO BE TREATED AS BUSINESS INCOME AND THEREFORE THE SAME IS ELIGIB LE FOR DEDUCTION U/S.80P(2)(A)(I) OF THE I.T. ACT. RESPECTFULLY FOLL OWING THE DECISION OF HON'BLE ITAT PUNE BENCH, I HOLD THAT THE INTEREST I NCOME RECEIVED BY THE APPELLANT AMOUNTING TO RS.3,36,06,752/- IS BUSINESS INCOME AND THEREFORE, ELIGIBLE FOR DEDUCTION U/S.80P(2)(A)(I) OF THE I.T. ACT. THIS GROUND IS ACCORDINGLY ALLOWED. 9. CONSIDERING THE ABOVE, WE ARE OF THE VIEW THAT THE CIT (A) HAS NOT CONSIDERED THE EXISTING JUDGMENTS IN THE CASE LAWS CITED BY THE LD. DR FOR THE REVENUE ABOVE. IT IS EVIDENT THAT THE RELEVANT FACTS AND DECISIONS WERE NOT CONSIDERED BY THE CIT(A). FROM THE FAIR NESS POINT OF VIEW, WE FIND THE JUDGMENTS (SUPRA) RELIED ON BY THE LD. D R NEED TO BE CONSIDERED. FOR THIS REASON, WE REMAND THE ISSUE TO TH E FILE OF CIT(A) FOR FRESH ADJUDICATION. CIT(A) IS DIRECTED TO PASS A SPEAKIN G ORDER ON THIS ISSUE AND ADJUDICATE THE SAME AFTER GRANTING REASON ABLE OPPORTUNITY OF BEING HEARD TO THE ASSESSEE. ACCORDINGLY, ALL THE GR OUNDS RAISED BY THE REVENUE ARE ALLOWED FOR STATISTICAL PURPOSES. 10. IN THE RESULT, APPEAL OF THE REVENUE IS ALLOWED FOR STAT ISTICAL PURPOSES. ORDER PRONOUNCED IN THE OPEN COURT ON THIS 28 TH DAY OF FEBRUARY, 2018. SD/- SD/- (VIKAS AWASTHY) (D. KARUNAKARA RAO) /JUDICIAL MEMBER / ACCOUNTANT MEMBER PUNE; DATED : 28 TH FEBRUARY, 2018 5 / COPY OF THE ORDER FORWARDED TO : / BY ORDER, //TRUE COPY// //TRUE COPY// SENIOR PRI VATE SECRETARY , / ITAT, PUNE 1. / THE APPELLANT 2. / THE RESPONDENT 3. THE CIT(A)-2, PUNE 4. CIT-2, PUNE 5. , , B BENCH PUNE; 6. / GUARD FILE.