The DCIT, Circle 1, JUNAGADH V. Junagadh Commercial Co op Bank, JUNAGADH

ITA 1227/RJT/2010

• Counselvise Citation: [2011] 134 COUNSELVISE.COM (IT) 7368 (ITAT-RAJKOT)
• Duration Of Justice: 2 month(s) 17 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 07-01-2011
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: SMC
• Next Hearing Date: 04-01-2011
• Assessment Year: 2004-2005
• Appeal Filed On: 20-10-2010
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: JAI RAJ KUMAR
• Assessee Lawyers: DM RINDANI
• Section: 143(3)

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL RAJKOT BENCH SMC, RAJKOT BEFORE SHRI A.L. GEHLOT (AM) I.T.A. NO. 1227/RJT/2010 (ASSESSMENT YEAR 2004-05) THE DY.CIT, CIR.1 VS JUNAGADH COMMERCIAL CO-OP BA NK JUNAGADH CHOKSHI BAZAR, JUNAGADH PAN : AAAAJ2431R (APPELLANT) (RESPONDENT) REVENUE BY : SHRI JAI RAJ KUMAR ASSESSEE BY : SHRI DM RINDANI O R D E R A.L. GEHLOT : THIS APPEAL BY REVENUE IS DIRECTED AG AINST THE ORDER OF CIT(A)-IV, RAJKOT DATED 02-07-2010 FOR THE ASSESSMENT YEAR 200 4-05. THE FOLLOWING EFFECTIVE GROUNDS ARE RAISED IN THE APPEAL: 1. THE LD.CIT(A)-IV, RAJKOT HAS ERRED IN LAW AND O N FACTS IN DIRECTING THE AO TO ALLOW THE DEDUCTION U./S 80P(2) (A)(U) ON INTEREST RECEIVED FROM SSNNL BONDS AMOUNTING TO RS.253925/-. 2. THE LD.CIT(A)-IV, RAJKOT HAS ERRED IN LAW AND ON FACTS IN DIRECTING THE AO TO ALLOW THE DEDUCTION U/S 80P(2)( A)(I) ON INTEREST RECEIVED FROM HDFC CALL MONEY AMOUNTING TO RS.20412/-. 2. THE BRIEF FACTS OF THE CASE ARE THAT THE ASSESSE E, A CO-OPERATIVE BANK, REGISTERED UNDER THE CO-OPERATIVE SOCIETY ACT HAS F ILED ITS RETURN OF INCOME ON 19-10-2004 DECLARING TOTAL INCOME AT NIL. THE ASSE SSING OFFICER, HOWEVER, DETERMINED AN INCOME OF RS. 2,74,337 IN HIS ORDER D ATED 13-01-2006 PASSED U/S 143(3) OF THE ACT. THE ASSESSING OFFICER DISALLOWE D DEDUCTION U/S 80P(2)(A)(I) OF THE ACT CLAIMED ON INTEREST FROM SSNNL BONDS AMOUNT ING TO RS. 2,53,925 AND INTEREST FROM HDFC CALL MONEY AMOUNTING TO RS.20,41 2. THE CIT(A) ALLOWED THE CLAIM OF THE ASSESSEE FOLLOWING THE ORDER OF ITAT, RAJKOT IN THE CASE OF RAJKOT ITA NO.1227/RJT/2010 2 NAGRIK SAHAKARI BANK LTD V. ITO IN ITA NO.202 AND 2 01/RJT/2005 DATED 08-08- 2005 FOR AY 2001-02 AND 2000-01. THE RELEVANT FIND INGS OF THE CIT(A) ARE REPRODUCED AS BELOW: 3.3 I HAVE GONE THROUGH THE FACTS OF THE CAS E AND HAVE CONSIDERED THE SUBMISSIONS MADE BY THE AR. IN THE INSTANT CASE, IT WILL BE SEEN THAT APPELLANT IS A CO-OPERAT IVE SOCIETY ENGAGED IN THE BANKING BUSINESS. MAIN SOURCE OF IN COME IS INTEREST ON LOAN AND ALSO ADVANCES MADE TO ITS MEMB ERS. THE APPELLANT HAS ALSO TRADED IN SECURITIES AND THE INV ESTMENT IN SECURITIES IS ALSO MADE IN ACCORDANCE WITH THE STAT UTORY NORMS LAID DOWN BY THE R.B.I. NOT ONLY THIS, SECTION 6(1)(A) OF THE BANKING REGULATION ACT CLEARLY LAYS DOWN THAT DEALING IN SE CURITIES AND INVESTMENT OF ALL KINDS COME UNDER THE PREVIEW OF O RDINARY BANKING BUSINESS F A BANK. ALL THESE ISSUES HAVE BEEN VERY ELABORATELY DISCUSSED BY THE HONBLE ITAT IN THE CASE OF RAJKOT NAGRIK SAHAKARI BANK LTD (SUPRA), AND THE HONBLE ITAT VER Y CLEARLY LAID DOWN THAT WHEN THE BANK HAS DEALT IN GOVERNMENT SEC URITIES WHICH ARE APPROVED BY THE RBI AND TRADING IN THIS SECURIT IES IS LARGELY GOVERNED BY THE DIFFERENT LIQUIDATING REQUIREMENTS OF THE BANK THEREFORE, THE DEDUCTION U/S 80P(2)(A)(I) OF THE I. T. ACT IS TO BE ALLOWED IN VIEW OF THE FINDINGS CONTAINED ABOVE SAI D AND THE DECISION OF THE HONBLE ITAT, AS ALSO THE CASE LAWS DISCUSSED IN THE SAID ORDER. THEREFORE, I HOLD THAT THE AO WAS NOT CORRECT IN DENYING DEDUCTION U/S 80P(2)(A)(I) OF THE I.T. ACT IS TO BE ALLOWED IN VIEW OF THE FINDINGS CONTAINED ABOVE SAID AND THE D ECISION OF THE HONBLE ITAT, AS ALSO THE CASE LAWS DISCUSSED IN TH E SAID ORDER. THEREFORE, I HOLD THAT THE AO WAS NOT CORRECT IN DE NYING DEDUCTION U/S 80P(2)(A)(I) OF THE I.T. ACT. THE AO IS DIRECT ED TO ALLOW DEDU8CTIN U/S 80P(2)(A)(I) ON INTEREST RECEIVED FRO M SSNNL BONDS AND HDFC CALL MONEY INTEREST AMOUNTING TO RS.274337 /-. THIS GROUND OF APPEAL IS ALLOWED. 2. AT THE OUTSET, THE LD.AR OF THE ASSESSEE SUBMITT ED THAT THE ISSUE IS COVERED IN FAVOUR OF THE ASSESSEE BY VARIOUS ORDERS OF THE ITAT, SOME OF WHICH ARE ITA NO.800/RJT/2010 IN THE CASE OF AMRELIK NAGR IK SAHKARI BANK LTD ORDER DATED 19-08-2010; AND ITA NO.799/RJT.2010 IN THE CA SE OF AMRELI JILLA MADHYASTA SAHKARI BANK LTD VS ITO WD.2(3), AMRELI ORDER DATED 19-08-2010. THE LD.AR HAS ALSO RELIED UPON THE FOLLOWING OTHER JUDGMENTS: CIT VS BARODA PEOPLES CO-OPERATIVE BANK LTD 280 IT R 282 (GUJ); ITA NO.1227/RJT/2010 3 MEHSANA DISTRICT CENTRAL CO-OPERATIVE BANK LTD VS I TO251 ITR 522 (SC); CIT VS KARNATAKA STATE COOPERATIVE APEX BANK (2001) 169 CTR (SC) 486 MADHYA PRADESH CO-OPERATIVE BANK LTD VS ADDL CIT 21 8 ITR 438 (SC) 3. AFTER HEARING LEARNED REPRESENTATIVES OF THE PAR TIES, I FIND THAT THE ISSUE IS SQUARELY COVERED IN FAVOUR OF THE ASSESSEE BY VARIO US ORDERS OF ITAT CITED SUPRA AS ALSO BY THE OTHER JUDGEMENTS RELIED UPON BY THE LD.AR OF THE ASSESSEE. THE CIT(A) HAS FOLLOWED VARIOUS ORDERS OF ITAT. IN THE CIRCUMSTANCE, I DO NOT FIND ANY INFIRMITY IN THE ORDER OF CIT(A). THE ORDER OF CIT(A) IS UPHELD. THE APPEAL FILED BY THE REVENUE IS DISMISSED. ORDER PRONOUNCED IN THE OPEN COURT ON 07-01-2011. SD/- (A.L. GEHLOT) ACCOUNTANT MEMBER RAJKOT, DT : 07 TH JANUARY, 2011 PK/- COPY TO: 1. THE APPELLANT 2. THE RESPONDENT 3. THE CIT(A)-IV, RAJKOT 4. THE CIT-III, RAJKOT 5. THE DR (TRUE COPY) BY ORDER ASSTT.REGISTRAR, ITAT, RAJKOT