Sahyog Co. Op. Credit Society Ltd., Mahisagar V. DCIT, Panchmahal Circle, Godhra

ITA 1132/AHD/2018

• Counselvise Citation: [2019] 112 COUNSELVISE.COM (IT) 3525 (ITAT-AHMEDABAD)
• Duration Of Justice: 1 year(s) 6 month(s) 25 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 29-11-2019
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: B
• Next Hearing Date: 08-01-2020
• Assessment Year: 2014-2015
• Appeal Filed On: 04-05-2018
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: SHRIMUDIT NAGPAL
• Keywords: Principle of natural justice; Tax effect
• Section: 80P; 250; 64

Judgement Text

, B IN THE INCOME TAX APPELLATE TRIBUNAL B BENCH, AHMEDABAD BEFORE SHRI PRADIP KUMAR KEDIA, ACCOUNTANT MEMBER & SMT. MADHUMITA ROY, JUDICIAL MEMBER . / I.T.A. NO. 1132/AHD/2018 ( ASSESSMENT YEAR : 2014-15) SAHYOG CO. OP. CREDIT SOCIETY LTD. SAHYOG BHAVAN, VIRPUR ROAD, BALASINOR 388255 (DIST. MAHISAGAR) / VS. DCIT PANCHMAHAL CIRCLE, GODHRA ./ ./ PAN/GIR NO. : AABAS0346M ( APPELLANT ) .. ( / RESPONDENT ) & . / I.T.A. NO. 1277/AHD/2018 ( ASSESSMENT YEAR : 2014-15) DEPUTY COMMISSIONER OF INCOME-TAX PANCHMAHAL CIRCLE, GODHRA / VS. M/S. SAHYOG CO- OPERATIVE CREDIT SOCIETY LTD. LUHAR BAZAR, VIRPUR ROAD, BALASINOR, DIST. MAHISAGAR, GUJARAT ( APPELLANT ) .. ( / RESPONDENT ) / ASSESSEE BY : SHRI SULABH PADSHAH, A.R. / REVENUE BY : SHRIMUDIT NAGPAL, SR.D.R. DATE OF HEARING 27/11/2019 !'# / DATE OF PRONOUNCEMENT 29/11/2019 / O R D E R ITA NOS. 1132 & 1277/AHD/18 [SAHYOG CO.OP. CREDIT SOCIETY LTD.] A.Y. 2014-15 - 2 - PER PRADIP KUMAR KEDIA - AM: THE CAPTIONED CROSS APPEALS HAVE BEEN FILED BY THE ASSESSEE AND REVENUE CONCERNING AY 2014-15 AGAINST THE ORDER OF THE COMMISSIONER OF INCOME TAX (APPEALS)- 4, VADODARA (CIT(A) IN SHOR T), DATED 14.02.2018 ARISING FROM THE ASSESSMENT ORDER DATED 21.11.2016 PASSED BY THE AO UNDER S.143(3) OF THE INCOME TAX ACT, 1961 (THE ACT). 2. WE SHALL FIRST TAKE UP ASSESSEES APPEAL IN ITA NO. 1132/AHD/2018 CONCERNING AY 2014-15. ITA NO. 1132/AHD/2018 - AY 2014-15 (ASSESSEES APPE AL) 3. THE GROUNDS OF APPEAL RAISED BY THE ASSESSEE REA D AS UNDER: (1) THE ORDER PASSED U/S 250 OF THE ACT ON 14/02/ 2018 FOR A.Y. 2014-15 BY CIT (A)-4, VADODARA UPHOLDING THE DISALLOWANCE U/S 80P(2)(A)(I ) OF THE ACT RS.89,50,885/- MADE BY ASSESSING OFFICER IS ILLEGAL, UNLAWFUL AND AGAINST THE PRINCIPLES OF NATURAL JUSTICE. (2) THAT THE FACTS AND CIRCUMSTANCES OF THE CASE A S WELL AS IN LAW THE LEARNED CIT (A) OUGHT NOT TO HAVE UPHELD DISALLOWANCE OF RS.89,50,8 85/- U/S 80P(2)(A)(I) OF THE ACT, WHICH INCLUDES THE INTEREST FROM ANOTHER CO. O P. SOCIETY. (3) THAT LEARNED CIT (A) HAS GRIEVOUSLY ERRED IN LAW AND ON FACTS CONFIRMING THE DISALLOWANCE OF CLAIM OF RS. 14.74.399/- U/S 80P(2) (D) OF THE ACT. (4) THAT LEARNED CIT (A) HAS GRIEVOUSLY ERRED IN L AW AND ON FACTS CONFIRMING THE DISALLOWANCE OF CLAIM OF RS. 50,000/- U/S 80P(2)(C) OF THE ACT. (5) THAT ALTERNATIVELY THE DEDUCTION OF PROPORTIO NATE EXPENSES TO EARN THE INTEREST INCOME BE ALLOWED AS DEDUCTION. 4. WHEN THE MATTER WAS CALLED FOR HEARING, THE LEAR NED AR FOR THE ASSESSEE SUBMITTED THAT THE ASSESSEE IS CONCERNED O NLY WITH GROUNDS NOS. 3 & 4 NOTED ABOVE. GROUND NOS. 1, 2 & 5 ARE STATED T O BE NOT PRESSED. 5. GROUND NOS. 1, 2 & 5 ARE ACCORDINGLY DISMISSED A S NOT PRESSED. ITA NOS. 1132 & 1277/AHD/18 [SAHYOG CO.OP. CREDIT SOCIETY LTD.] A.Y. 2014-15 - 3 - 6. AS REGARDS GROUND NO.3, IT CONCERNS ELIGIBILITY OF DEDUCTION CLAIMED UNDER S.80P(2)(D) OF THE ACT ON ACCOUNT OF INTEREST INCOME RECEIVED FROM INVESTMENT MADE WITH CO-OPERATIVE BANKS. IT WAS SU BMITTED ON BEHALF OF THE ASSESSEE THAT THE ISSUE IS SQUARELY COVERED IN FAVOUR OF THE ASSESSEE IN THE CASE OF BANASKANTHA DISTRICT CO-OPERATIVE MILK PRODUCERS UN ION LTD. VS. ACIT ITA NO.1090/AHD/2015 WHEREIN THE CO-ORDINATE BENCH HAS HELD IN FAVOUR OF ASSESSEE BY MAKING REFERENCE TO THE DECIS ION OF THE HONBLE GUJARAT HIGH COURT IN THE CASE OF CIT VS. SABARKANTHA DISTRICT CO- OPERATIVE MILK PRODUCERS UNION LTD. TAX APPEAL NO. 473 OF 2014. IT WAS POINTED OUT ON BEHALF OF THE ASSESSEE THAT K.D.C.C. BANK IS A CO-OPERATIVE BANK REGISTERED UNDER CO-OPERATIVE SOCIETY ACT AND INVESTMENT MADE IN THIS BANK AND INTEREST EARNED. THIS INVESTMENT IS ELIGIBLE FOR DEDUCTION UNDER S.80P(2)(D) OF THE ACT. 7. IN THE GIVEN FACTS AS NOTED ABOVE, THE CLAIM OF THE ASSESSEE UNDER S.80P(2)(D) OF THE ACT APPEARS TO BE IN CONSONANCE WITH THE PLAIN LANGUAGE OF THE ACT. WE THUS FIND MERIT IN THE CLAIM OF THE ASSESSEE FOR DEDUCTION UNDER S.80P(2)(D) OF THE ACT IN RESPECT OF INCOME E ARNED FROM K.D.C.C. BANK. 8. GROUND NO.3 OF THE ASSESSEES APPEAL IS ALLOWED. 9. GROUND NO.4 CONCERNS ELIGIBILITY OF BASIC DEDUCT ION TO THE EXTENT OF RS.50,000/- UNDER S.80P(2)(C) OF THE ACT ON THE TAX ABLE INTEREST EARNED FROM NATIONALIZED BANKS AND NOT COVERED FOR DEDUCTI ON UNDER S.80P(2)(A)(I) OF THE ACT FROM THE GROSS TOTAL INCOME. IN THIS CO NNECTION, THE LEARNED AR FOR THE ASSESSEE SUBMITTED THAT THE INTEREST INCOME EARNED FROM NATIONALIZED BANKS DURING THE YEAR HAS BEEN TAXED BY LOWER AUTHO RITIES UNDER THE HEAD INCOME FROM OTHER SOURCES FOLLOWING THE DECISION OF HONBLE GUJARAT HIGH COURT IN THE CASE OF STATE BANK OF INDIA (SBI) VS. CIT (2016) 72 TAXMANN.COM 64 (GUJ.) . THE LEARNED AR THUS CONTENDED THAT INCOME TAXED UNDER THE HEAD INCOME FROM OTHER SOURCES IS CLEARLY ELIGIBLE FOR DEDUCTION UNDER S.80P(2)(C) OF THE ACT AS IT IS INC OME EARNED FROM ITA NOS. 1132 & 1277/AHD/18 [SAHYOG CO.OP. CREDIT SOCIETY LTD.] A.Y. 2014-15 - 4 - ACTIVITIES OTHER THAN WHAT IS SPECIFIED IN CLAUSE ( A) AND CLAUSE (B) OF SUB- SECTION (2) OF SECTION 80P OF THE ACT. 10. IN THE LIGHT OF THE DECISION OF HONBLE ALLAHAB AD HIGH COURT IN CHIEF CIT (ADMN.) VS. KISAN SAHKARI CHINI MILLS LTD. [200 5] 273 ITR 42 (ALL.) , CLAUSE (C) OF SECTION 80P(2) OF THE ACT WOULD COVER ENTIRE INCOME OF A CO- OPERATIVE SOCIETY NOT COVERED BY CLAUSE (A) AND (B) . THE INCOME EARNED BY THE ASSESSEE ON DEPOSITS OF NATIONALIZED BANKS WAS TREATED AS TAXABLE INCOME OF THE ASSESSEE IN VIEW OF ITS INELIGIBILITY TOWARDS DEDUCTION UNDER S.80P(2)(A)(I) OF THE ACT. CONSEQUENTLY, THE ASSES SEE IS ENTITLED FOR BASIC DEDUCTION AS PROVIDED UNDER S.80P(2)(C) OF THE ACT AGAINST SUCH INTEREST INCOME. 11. GROUND NO.4 OF THE ASSESSEES APPEAL IS ALLOWED . 12. IN THE RESULT, APPEAL OF THE ASSESSEE IS PARTLY ALLOWED. ITA NO. 1277/AHD/2018 - AY 2014-15 (REVENUES APPEA L) 13. THE SUBSTANTIVE GROUND OF APPEAL RAISED BY THE REVENUE READS AS UNDER:- 1 THE CIT(A) ERRED IN FACTS AND LAW IN DIRECTING A O TO VERIFY THE ASSESSEES CLAIM OF PRE-RATA/PROPORTIONATE EXPENDITURE FROM INTEREST IN COME SHOWN BY THE APPELLANT AND ALLOW THE SAID CLAIM OF EXPENDITURE AFTER DUE V ERIFICATION, AS THE ASSESSEE HAS FAILED TO PROVE THE NEXUS BETWEEN THE EXPENSES CLAI MED TO BE INCURRED TO EARN THE INTEREST INCOME DISALLOWED OF RS.89,50,885/-. 14. AT THE TIME OF HEARING, IT WAS SUBMITTED BY THE LD.AR FOR THE ASSESSEE THAT THE APPEAL FILED BY THE REVENUE IS HI T BY RECENTLY ISSUED CBDT CIRCULAR NO.17 OF 2019 DATED 08/08/2019 REVISI NG THE PREVIOUS THRESHOLDS PERTAINING TO TAX EFFECTS. IT IS INTER ALIA NOTICED THAT THE CBDT VIDE INSTRUCTION NO. F. NO. 279/MISC/M-93/2018-ITJ DT. 20/08/2019 HAS OBSERVED THAT CIRCULAR NO.17/2019 DATED 08/08/2019 RELATING TO ENHANCEMENT OF MONETARY LIMITS IS ALSO APPLICABLE T O ALL PENDING APPEALS. AS PER AFORESAID CIRCULAR READ WITH INSTRUCTION, AL L PENDING APPEALS FILED BY REVENUE ARE LIABLE TO BE DISMISSED AS A MEASURE FOR REDUCING LITIGATION ITA NOS. 1132 & 1277/AHD/18 [SAHYOG CO.OP. CREDIT SOCIETY LTD.] A.Y. 2014-15 - 5 - WHERE THE TAX EFFECT DOES NOT EXCEED THE PRESCRIBED MONETARY LIMIT WHICH IS NOW REVISED AT RS.50 LAKHS. IN THE INSTANT CASE, T HE TAX EFFECT ON THE DISPUTED ISSUES RAISED BY THE REVENUE IS STATED TO BE NOT EXCEEDING RS.50 LAKHS AND THEREFORE APPEAL OF THE REVENUE IS REQUIR ED TO BE DISMISSED IN LIMINE . 15. THE LEARNED DR FOR THE REVENUE FAIRLY ADMITTED THE APPLICABILITY OF THE CBDT CIRCULAR NO. 17 OF 2019. ACCORDINGLY, APP EAL OF THE REVENUE IS DISMISSED AS NOT MAINTAINABLE. HOWEVER, IT WILL BE OPEN TO THE REVENUE TO SEEK RESTORATION OF ITS APPEAL ON SHOWING INAPPLICA BILITY OF THE AFORESAID CBDT CIRCULAR IN ANY MANNER. 16. IN THE RESULT, THE APPEAL OF THE REVENUE IS DIS MISSED. 17. IN THE COMBINED RESULT, ASSESSEES APPEAL IS PA RTLY ALLOWED WHEREAS REVENUES APPEAL IS DISMISSED. SD/- SD/- (MADHUMITA ROY) (PRADIP KUMAR KEDIA) JUDICIAL MEMBER ACCOUNTANT MEMBER AHMEDABAD: DATED 29/11/2019 TRUE COPY S. K. SINHA !'#' / COPY OF ORDER FORWARDED TO:- &. / REVENUE 2. / ASSESSEE (. )*+ , / CONCERNED CIT 4. ,- / CIT (A) /. 012 33*+4 *+#4 56) / DR, ITAT, AHMEDABAD 7. 289 : / GUARD FILE. BY ORDER / 4 /5 *+#4 56) THIS ORDER PRONOUNCED IN OPEN COURT ON 29/11/201 9