MURUDE SAHKARI PATSANSTHA MARYADIT, MUMBAI V. ITO 21(2)(3), MUMBAI

ITA 1058/MUM/2017

• Counselvise Citation: [2017] 127 COUNSELVISE.COM (IT) 0373 (ITAT-MUMBAI)
• Duration Of Justice: 6 month(s) 5 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 21-08-2017
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: SMC
• Assessment Year: 2010-2011
• Appeal Filed On: 15-02-2017
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: N HEMALATHA
• Keywords: Reopening of assessment; Business income
• Section: 143(3); 148

Judgement Text

THE INCOME TAX APPELLATE TRIBUNAL SMC BENCH, MUMBAI BEFORE SHRI B.R. BASKARAN (AM) I.T.A. NO. 1058 /MUM/ 2 017 (ASSESSMENT YEAR 20 10 - 11 ) MURUDE SAHAKARI PATSANSTHA MARYADIT 58, SHIVAJI NAGAR N.M. JOSHI MARG MUMBAI - 400 013. VS. ITO 21(2)(3) MUMBAI ( AP PELLANT ) ( RESPONDENT ) PAN NO . AAHFM6358C ASSESSEE BY SHRI DEVENDRA JAIN DEPARTMENT BY MS. N. HEMALATHA DATE OF HEARING 21 . 8 . 201 7 DATE OF PRONOUNCEMENT 21 . 8 . 201 7 O R D E R THE APPEAL FILED BY THE ASSESSEE IS DIRECTED AGAINST THE ORDER DATED 8.12.2016 PASSED BY THE LEARNED CIT(A) - 33, MUMBAI AND IT RELATES TO A.Y. 2010 - 11. 2. THE ASSESSEE IS AGGRIEVED BY THE DECISION OF THE LEARNED CIT(A) IN CONFIRMING THE ORDER OF THE ASSESSING OFFICER IN REJECTING THE CLAIM FOR DEDUCTION U/S. 80P OF T HE ACT. THE ASSESSEE HAS ALSO CHALLENGED THE VALIDITY OF REOPENING OF ASSESSMENT. 3. FACTS RELATING TO THE ISSUE ARE STATED IN BRIEF. THE ASSESSEE IS A COOPERATIVE CREDIT SOCIETY CARRYING ON BUSINESS OF A CCEPTI NG DEPOSITS FROM ITS M EMBERS AND LENDING THE FUNDS TO ITS MEMBERS. THERE IS NO DISPUTE THAT THE OPERATIONS OF THE ASSESSEE ARE CONFINED WITH ITS MEMBERS. THE ASSESSEE FILED ITS RETURN OF INCOME DECLARING NIL INCOME AFTER CLAIMING DEDUCTION U/S. 80P OF THE ACT . ASSESSMENT WAS COMPLETED ORIGINALLY U /S. 143(3) OF THE ACT ACCEPTING THE INCOME RETURNED BY THE ASSESSEE. S UBSEQUENTLY, THE ASSESSING OFFICER MURUDE SAHAKARI PATSANSTHA MARYADIT 2 REOPENED THE ASSESSMENT BY ISSUING NOTICE DATED 12.3.2015 U/S. 148 OF THE ACT. IN THE REOPENED ASSESSMENT, THE ASSESSING O FFICER HELD THAT THE ASSESSEE IS CARRYING ON THE BUSINESS OF BANKING AND IS HIT BY PROVISIONS OF SECTION 80P(4) OF THE ACT . ACCORDINGLY, HE DISALLOWED THE CLAIM FOR DEDUCTION U/S. 80P OF THE ACT AND ASSESSED A SUM OF ` 20,50,220/ - AS INCOME OF THE ASSESSEE . 4. BEFORE THE LEARNED CIT (A), THE ASSESSEE CHALLENGED THE REOPENING OF THE ASSESSMENT BUT THE SAME WAS REJECTED BY THE LEARNED CIT(A). T HE ASSESSEE CLAIMED BEFORE THE LEARNED CIT(A) THAT INCOME OF ` 20,50,220/ - ASSESSED BY THE ASSESSING OFFICER REPRSENT S INTEREST INCOME EARNED BY IT ON THE DEPOSITS KEPT WITH THE COOPERATIVE BANKS. ACCORDINGLY, THE ASSESSEE CLAIMED THAT TH E ASSESSEE SHOULD BE ALLOWED DEDUCTION U/S. 80P(2)(D) OF THE ACT AND NOT U/S. 80P(2)(A )( I) OF THE ACT. THE LEARNED CIT(A) PLACED RELIANCE ON THE DECISION RENDERED BY AHMEDABAD BENCH OF THE ITAT IN THE CASE OF SBI EMPLOYEES CO - OPERATIVE CREDIT SOCIETY LTD. (2015) 57 TAXMAN.COM 367 AND ALSO DECISION RENDERED BY MUMBAI BENCH OF THE ITAT IN THE CASE OF SHRI SAIDATTA COOPERATIVE CREDIT SOCIETY LTD. (ITA NO. 2379/MUM/2015 DATED 15.1.2016) AND TOOK THE VIEW THAT THE ASSESSEE IS NOT ELIGIBLE FOR DEDUCTION U/S. 80P(2)(D) OF THE ACT. 5. LEARNED AR SUBMITTED THAT THE ASSESSEE DECLARE D NIL BUSINESS INCOME DURING THE YEAR UNDER CONSIDERATION DUE TO SETTING OFF OF BROUGHT FORWARD BUSINESS LOSS . IN THIS REGARD, H E INVITED OUR ATTENTION TO PAGE NO. 3 OF THE PAPER BOOK, WHEREIN COMPUTATION OF TOTAL INCOME IS PLACED, AND SUBMITTED THAT INCOME OF ` 20,50,220/ - ASSESSED BY THE ASSESSING OFFICER ACTUALLY REPRESENTS INTEREST INCOME FROM D EPOSITS KEPT WITH COOPERATIVE BANKS. LEARNED A R SUBMITTED THAT HON'BLE KARNATAKA HIGH COURT HAS HELD IN THE CASE OF PRINCIPAL COMMISSIONER OF INCOME TAX VS. TOTAGARS COOPERATIVE SALE SOCIETY (392 ITR 74) THAT COOPERATIVE BANK SHOULD BE CONSIDERED AS A COO PERATIVE SOCIETY. ACCORDINGLY, HE SUBMITTED THAT THE DECISION RELIED UPON BY THE LEARNED CIT(A) SHOULD NOT BE APPLIED IN VIEW OF THE DECISION RENDERED BY HON'BLE KARNATAKA HIGH COURT IN THE ABOVE SAID CASE. ACCORDINGLY HE SUBMITTED THAT THE INTEREST MURUDE SAHAKARI PATSANSTHA MARYADIT 3 INCO ME EARNED BY THE ASSESSEE FROM CO - OPERATIVE BANKS IS DEDUCTIBLE U/S 80P(2)(D) OF THE ACT. 6. LEARNED DEPARTMENTAL REPRESENTATIVE, ON THE CONTRARY, PLACED RELIANCE ON THE ORDERS PASSED BY THE TAX AUTHORITIES. 7. HAVING HEARD THE RIVAL SUBMISSIONS, I AM O F THE VIEW THAT THERE IS MERIT IN THE CONTENTION S OF THE ASSESSEE . F ROM THE COMPUTATION OF TOTAL INCOME FURNISHED BY THE ASSESSEE AT PAGE NO. 3 OF THE PAPER BOOK, I NOTICED THAT AN AMOUNT OF ` 20,50,220/ - HAS BEEN ASSESSED BY THE ASSESSING OFFICER UNDER T HE HEAD INCOME FROM OTHER SOURCES. I NOTICE THAT THE SAME ACTUALLY REPRESENTS INTEREST RECEIVED FROM THE BANK DEPOSITS. I NOTICED THAT THE ASSESSEE HAD RECEIVED INTEREST FROM THE BANK DEPOSITS TO THE TUNE OF ` 22.61 LAKHS AND SET OFF OF BROUGHT FORWARD LOSS OF ` 2.11 LAKHS AND ACCORDINGLY, DECLARED NET INTEREST INCOME OF ` 20.50 LAKHS. LEARNED AR CONTENDS THAT THE ABOVE SAID AMOUNT OF ` 20.50 LAKHS REPRESENTS INTEREST RECEIVED FROM THE COOPERATIVE BANK S/ SOCIETIES . HOWEVER, I NOTICED THAT THE BREAKUP OF DETAILS OF INTEREST RECEIPT S HAS NOT BEEN FURNISHED BY THE ASSESSEE. HOWEVER, I AGREE IN PRINCIPL E WITH CONTENTION OF THE ASSESSEE THAT INTEREST RECEIVED FROM THE COOPERATIVE BANK IS ELIGIBLE FOR DEDUCTION U/S. 80P(2)(D) OF THE ACT IN VIEW OF THE DECISION RENDERED BY HON'BLE KARNATAKA HIGH COURT IN THE CASE OF TOTAGARS COOPERATIVE SALE SOCIETY (SUPRA) . HOWEVER THE BREAK - UP DETAILS OF INTEREST INCOME REQUIRE VERIFICATION. 8. ACCORDINGLY, I SET ASIDE THE ORDER PASSED BY TH E LEARNED CIT(A) AND RESTORE THIS ISSUE TO THE F ILE OF THE ASSESSING OFFICER FOR THE LIMITED PURPOSES O F VERIFYING THE BREAKUP DETAILS INTEREST INCOME RECEIVED BY THE ASSESSEE AND ALSO DIRECT THE ASSESSING OFFICER TO ALLOW DEDUCTION U/S. 80P(2)(D) OF THE ACT IN RESPECT OF INTEREST REC EIVED FROM THE COOPERATIVE BANKS /SOCIETIES . 9 . LEARNED AR DID NOT PUT UP HIS ARGUMENT ON THE VALIDITY OF REOPENING OF THE ASSESSMENT. IN ANY CASE, I HAVE AGREED WITH THE CONTENTION OF THE ASSESSEE MURUDE SAHAKARI PATSANSTHA MARYADIT 4 IN PRINCIPL E IN RESPECT OF GROUNDS URGED ON MERIT. ACCORD INGLY, I DO NOT FIND IT NECESSARY TO DISPOSE OF THE GROUND URGED ON VALIDITY OF REOPENING OF THE ASSESSM E NT. 10 . IN THE RESULT, APPEAL FILED BY THE ASSESSEE IS TREATED AS ALLOWED FOR STATISTICAL PURPO S ES. ORDER HAS BE EN PRONOUNCED IN TH E COURT ON 21 . 8 . 201 7. SD/ - (B.R.BASKARAN) ACCOUNTANT MEMBER MUMBAI ; DATED : 21 / 8 / 20 1 7 COPY OF THE ORDER FORWARDED TO : 1. THE APPE LLANT 2. THE RESPONDENT 3. THE CIT(A) 4. CIT 5. DR, ITAT, MUMBAI 6. GUARD FILE. BY ORDER, //TRUE COPY// ( DY./ASSTT. REGISTRAR) PS ITAT, MUMBAI