ITO, Ward-4(2), Hyderabad V. M/s A.P. Co-op Housing Societies Federation, Hyderabad

ITA 1246/HYD/2014

• Counselvise Citation: [2016] 133 COUNSELVISE.COM (IT) 5909 (ITAT-HYDERABAD)
• Duration Of Justice: 1 year(s) 8 month(s) 29 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 24-03-2016
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: B
• Next Hearing Date: 16-03-2016
• Assessment Year: 2009-2010
• Appeal Filed On: 25-06-2014
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: B KURMI NAIDU
• Assessee Lawyers: J V RAO
• Section: 56

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL HYDERABAD BENCHES B : HYDERABAD BEFORE SMT. P. MADHAVI DEVI, JUDICIAL MEMBER AND SHRI S. RIFAUR RAHMAN, ACCOUNTANT MEMBER ITA.NO.1246/HYD/2014 ASSESSMENT YEAR 2009-2010 THE INCOME TAX OFFICER, WARD-4(2), HYDERABAD. VS. M/S. A. P . CO - OP HOUSING SOCIETIES FEDERATION, HYDERABAD. PAN AAATT 3167F (APPELLANT) (RESPONDENT) FOR REVENUE : MR. B. KURMI NAIDU FOR ASSESSEE : MR. J.V. RAO DATE OF HEARING : 16.03.2016 DATE OF PRONOUNCEMENT : 24 .03.2016 ORDER PER SMT. P. MADHAVI DEVI, J.M. THIS IS REVENUES APPEAL FOR THE A.Y. 2009- 2010. IN THIS APPEAL, THE REVENUE IS AGGRIEVED BY T HE ORDER OF THE CIT(A) IN HOLDING THAT THE INTEREST IN COME EARNED BY THE ASSESSEE ON FIXED DEPOSITS IS EXEMPT FROM TAXATION UNDER SECTION 80P(2)(A)(I) OF THE I.T. ACT , 1961. 2. BRIEF FACTS OF THE CASE ARE THAT THE ASSESSEE, A COOPERATIVE HOUSING SOCIETY, FILED ITS RETURN OF IN COME FOR THE A.Y. 2009-2010 ON 30.09.2009 DECLARING TOTAL IN COME OF RS.2,94,529 AFTER CLAIMING OF RS.6,80,17,623 AS A DEDUCTION UNDER SECTION 80P OF THE ACT. DURING THE ASSESSMENT PROCEEDINGS UNDER SECTION 143(1) OF THE ACT, 2 ITA.NO.1246/HYD/2014 M/S. A.P. CO-OP HOUSING SOCIETIES FEDERATION, HYDERABAD. THE A.O. OBSERVED THAT THE ASSESSEE-SOCIETY, IN ADD ITION TO PROVIDING HOUSING FINANCE TO ITS MEMBERS, INVESTED FUNDS NOT IMMEDIATELY REQUIRED BY IT FOR ITS BUSINESS PUR POSES, IN SHORT TERM FIXED DEPOSITS AND IN S.B. ACCOUNTS I N COMMERCIAL BANKS AND HAD RECEIVED INTEREST THEREON. HE OBSERVED THAT ASSESSEE HAD RECEIVED INTEREST OF RS.47,44,382 DURING THE RELEVANT FINANCIAL YEAR AND THAT THIS INTEREST INCOME IS NOT RECEIVED FROM ITS MEMBE RS; THUS, HE FORMED AN OPINION THAT ASSESSEE WAS NOT EL IGIBLE FOR DEDUCTION UNDER SECTION 80P(2)(A)(I) OF THE I.T . ACT OF THIS AMOUNT. A SHOW CAUSE NOTICE WAS ACCORDINGLY IS SUED TO THE ASSESSEE AS TO WHY THE SUM OF RS.47,44,382 S HOULD NOT BE TAXED UNDER SECTION 56 OF THE I.T. ACT. THE ASSESSEE FILED ITS EXPLANATION AND PLACED RELIANCE UPON VARI OUS JUDICIAL PRECEDENTS ON THE ISSUE. THE A.O. HOWEVER, WAS NOT CONVINCED WITH THE ASSESSEES CONTENTIONS AND H ELD THAT INTEREST INCOME EARNED BY THE ASSESSEE IS NOT ELIGIBLE FOR DEDUCTION UNDER SECTION 80P(2)(A)(I) OF THE ACT AS IT IS NOT INTEREST RECEIVED FROM ITS MEMBERS. FOR THIS PU RPOSE, HE PLACED RELIANCE UPON THE JUDGMENT OF THE HONBLE SUPREME COURT IN THE CASE OF THE TOTGARS COOPERATIV E SALE SOCIETY LTD., VS. INCOME TAX OFFICER REPORTED IN (2010) 322 ITR 283. AGGRIEVED, ASSESSEE PREFERRED A N APPEAL BEFORE THE CIT(A), WHO ALLOWED THE SAME BY FOLLOWING THE DECISION OF THE JURISDICTIONAL HIGH C OURT IN THE CASE OF CIT VS. A.P. STATE COOPERATIVE BANK LTD ., REPORTED IN (2011) 336 ITR 516. AGGRIEVED BY THE ORDER OF THE LD. CIT(A), THE REVENUE IS IN APPEAL B EFORE US. 3 ITA.NO.1246/HYD/2014 M/S. A.P. CO-OP HOUSING SOCIETIES FEDERATION, HYDERABAD. 3. THE LD. D.R. SUPPORTED THE ORDERS OF THE A.O., WHILE THE LD. COUNSEL FOR THE ASSESSEE PLACED RELIA NCE UPON THE ORDER OF THE CIT(A) AND HAS ALSO FILED A C OPY OF THE DECISION OF THE JURISDICTIONAL HIGH COURT IN TH E CASE OF CIT VS. A.P. STATE COOPERATIVE BANK LTD., (2011) 33 6 ITR 516. 4. HAVING REGARD TO THE RIVAL CONTENTIONS AND THE MATERIAL AVAILABLE ON RECORD, WE FIND THAT THE HON BLE SUPREME COURT IN THE CASE OF THE TOTGARS COOPERATIV E SALE SOCIETY LTD., VS. INCOME TAX OFFICER REPORTED IN (2010) 322 ITR 283 HAS HELD THAT THE INTEREST ON SU RPLUS FUNDS INVESTED IN SHORT TERM DEPOSITS, NOT BEING ATTRIBUTABLE TO THE BUSINESS OF PROVIDING CREDIT FA CILITIES TO THE MEMBERS OR MARKETING OF AGRICULTURAL PRODUCE OF THE MEMBERS, IS ASSESSABLE AS OTHER INCOME AND NOT AS BUSINESS PROFITS. THE JURISDICTIONAL HIGH COURT I N THE CASE OF A.P. STATE COOPERATIVE BANK (CITED SUPRA) H AS CONSIDERED THE DECISION OF THE HONBLE SUPREME COUR T IN THE ABOVE CASE AND HELD THAT THE SAID DECISION WAS CONFINED TO THE FACTS OF THE SAID CASE AND AS THEIR LORDSHIPS ARE DEALING THE CASES RELATING TO A COOPE RATIVE BANK, HELD THAT THE INTEREST EARNED FROM DEPOSITS I N THE BANKS INCLUDING THE RESERVES WERE PART OF THE BANKI NG ACTIVITIES SINCE NO BANK WOULD LIKE ITS RESERVE FUN DS TO REMAIN IDLE AND NOT EARN ANY INTEREST THEREON AND THEREFORE, THE INTEREST EARNED ON SUCH DEPOSITS IS DIRECTLY ATTRIBUTABLE TO THE BUSINESS OF A BANK. SINCE THE L D. CIT(A) HAS FOLLOWED THE DECISION OF THE JURISDICTIO NAL HIGH 4 ITA.NO.1246/HYD/2014 M/S. A.P. CO-OP HOUSING SOCIETIES FEDERATION, HYDERABAD. COURT IN SIMILAR SET OF FACTS AFTER CONSIDERING THE JUDGMENT OF THE HONBLE SUPREME COURT IN THE CASE O F THE TOTGARS COOPERATIVE SALE SOCIETY LTD., VS. INCO ME TAX OFFICER (CITED SUPRA), WE DO NOT SEE ANY REASON TO INTERFERE WITH THE SAME. 4. IN THE RESULT, APPEAL OF THE REVENUE IS DISMISSED. ORDER PRONOUNCED IN THE OPEN COURT ON 24.03.201 6. SD/- SD/- (S. RIFAUR RAHMAN) (SMT. P. MADHAVI DEVI) ACOUNTANT MEMBER JUDICIAL MEMBER HYDERABAD, DATED 24 TH MARCH, 2016 VBP/- COPY TO : 1. THE INCOME TAX OFFICER, WARD - 4(2), 5 TH FLOOR, AAYAKAR BHAVAN, BASHEERBAGH, HYDERABAD. 2. M/S. A.P. CO - OP HOUSING SOCIETIES FEDERATION, 1 - 8 - 1/B/26, BAGHLINGAMPALLY, HYDERABAD. 3. CIT(A) - V, HYDERABAD 4. CIT - I V, HYDERABAD. 5. D.R. ITAT B BENCH, HYDERABAD. 6. GUARD FILE