Malataj Co. Op. Credit Society. Ltd., Anand V. ITO, Ward-1(3)(1), Petlad

ITA 1305/AHD/2018

• Counselvise Citation: [2018] 125 COUNSELVISE.COM (IT) 7813 (ITAT-AHMEDABAD)
• Duration Of Justice: 1 month(s) 19 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 10-07-2018
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: SMC
• Assessment Year: 2015-2016
• Appeal Filed On: 21-05-2018
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: V.K. SINGH
• Section: 80P; 64; 72

Judgement Text

, - IN THE INCOME TAX APPELLATE TRIBUNAL AHMEDABAD BENCH D BEFORE SHRI RAJPAL YADAV, JUDICIAL MEMBER AND SHRI AMARJIT SINGH, ACCOUNTANT MEMBER ./ ITA NO. 1305/AHD/2018 / ASSESSMENT YEAR: 2015-16 MALATAJ CO-OP. CREDIT SOCIETY LTD. SARDA PATEL BHAVAN TOWER ROAD, AT: MALTAJ TAL: SOJITRA, DIST. ANAND. PAN : AAAAM 6968 J VS ITO, WARD-1(3)(1) PETLAD. / (APPELLANT) / (RESPONDENT) ASSESSEE BY : MRS.ARTI N. SHAH, AR REVENUE BY : SHRI V.K. SINGH, SR.DR / DATE OF HEARING : 27/06/2018 /DATE OF PRONOUNCEMENT : 10/07/2018 O R D E R PER RAJPAL YADAV, JUDICIAL MEMBER : PRESENT APPEAL IS DIRECTED AT THE INSTANCE OF THE ASSESSEE AGAINST OR DER OF LD.CIT(A)-3, VADODARA DATED 15.3.2018 PASSED FOR THE ASSESSMENT YEAR 2015-16. BY THIS APPEAL, THE ASSESSEE HAS CHALLENGED DENIAL OF DEDUCTION UNDER SECTION 80P OF THE INCOME TAX ACT, 1961. 2. AT THE OUTSET, THE LD.DR SUBMITTED THAT ISSUE IS COVERED IN FAVOUR OF THE REVENUE BY THE JUDGMENT OF THE HONBLE JURIS DICTIONAL HIGH COURT IN THE CASE OF STATE BANK OF INDIA CO-OPERATIVE SOC IETY VS. CIT, 72 TAXMANN.COM 64 (GUJ) WHEREIN IT HAS BEEN HELD THAT COOPERATIVE SOCIETY ENGAGED IN THE BUSINESS OF PROVIDING CREDIT FACILIT IES TO ITS MEMBERS ITA NO.1305/AHD/2018 - 2 - WHICH EARNS INTEREST INCOME ON THE SURPLUS FUNDS PA RKED WITH THE FINANCIAL INSTITUTIONS, IS NOT ELIGIBLE FOR DEDUCTI ON UNDER SECTION 80P OF THE ACT. SINCE IMPUGNED ORDERS OF REVENUE AUTHORIT IES ARE IN TERMS OF JUDGMENT OF THE HONBLE HIGH COURT CITED SUPRA, NO INTERFERENCE THEREOF IS REQUIRED AND THE APPEAL OF THE ASSESSEE MAY BE D ISMISSED. HOWEVER, THE LD.COUNSEL FOR THE ASSESSEE DOES NOT CONTEST JU DGMENT OF HONBLE GUJARAT HIGH COURT, BUT SUBMITTED THAT IN CASE CLAI M OF THE ASSESSEE IS NOT FOUND TO BE ADMISSIBLE, THEN PROPORTIONATE ADMI NISTRATIVE AND FINANCIAL EXPENSES INCURRED FOR EARNING SUCH INTERE ST/INVESTMENT INCOME BE ALLOWED TO THE ASSESSEE. 3. HAVING HEARD BOTH THE PARTIES AND ON PERUSAL OF THE RECORD, WE FIND THAT ASSESSEE IS A COOPERATIVE SOCIETY REGISTE RED UNDER GUJARAT CO- OPERATIVE SOCIETIES ACT, 1961 AND ENGAGED IN PROVID ING CREDIT FACILITIES TO ITS MEMBERS. IN THE RETURN OF INCOME, THE ASSESSEE HAS CLAIMED DEDUCTION UNDER SECTION 80P FOR THE INTEREST INCOME EARNED ON FDRS. WITH THE FINANCIAL INSTITUTIONS. THIS CLAIM WAS DE NIED BY THE AO ON THE GROUND THAT PROVISIONS OF SECTION 80P(2) DOES NOT C OVER ASSESSEE-SOCIETY. THE LD.CIT(A) CONCURRED WITH THE ORDER OF THE AO BY RELYING UPON THE JUDGMENT OF HONBLE JURISDICTIONAL HIGH COURT IN TH E CASE OF STATE BANK OF INDIA CO-OPERATIVE SOCIETY (SUPRA). WE FIND THA T HONBLE JURISDICTIONAL HIGH COURT HAS HELD THAT INTEREST EA RNED FROM INVESTMENT MADE IN NATIONALIZED BANK BY A COOPERATIVE SOCIETY ENGAGED IN PROVIDING CREDIT FACILITIES TO ITS MEMBERS, IS NOT ELIGIBLE FOR DEDUCTION UNDER SECTION 80P(2)(A)(I) SINCE THE INTEREST INCOM E EARNED FROM INVESTMENT MADE IN THE BANKS IS NOT ATTRIBUTABLE TO THE ACTIVITIES OF THE SOCIETY. THE TRIBUNAL IN EARLIER OCCASIONS ON SIMI LAR ISSUE HAS TAKEN A CONSISTENT VIEW BY FOLLOWING ABOVE JUDGMENT OF THE HONBLE ITA NO.1305/AHD/2018 - 3 - JURISDICTIONAL HIGH COURT. SINCE ORDERS OF THE REVE NUE AUTHORITIES ARE IN ACCORDANCE WITH THE JUDGMENT OF THE HONBLE JURISDI CTIONAL HIGH COURT CITED SUPRA, NO INTERFERE IS CALLED FOR IN THE IMPU GNED ORDERS, WHICH WE CONFIRM. HOWEVER, ANY EXPENDITURE INCURRED BY THE A SSESSEE FOR EARNING SUCH INCOME SHOULD BE ALLOWED TO IT, IF NOT ALREADY ALLOWED. IN OTHER WORDS, THE LD.AO HAS TO DETERMINE THE NET INTEREST INCOME AS WELL AS MISC. INCOME EARNED BY THE ASSESSEE, AND ONLY THERE AFTER THAT INCOME HAS TO BE EXCLUDED FROM THE ADMISSIBILITY OF DEDUCTION UNDER SECTION 80P OF THE ACT. 4. IN THE RESULT, APPEAL OF THE ASSESSEE IS PARTLY ALLOWED FOR STATISTICAL PURPOSE. PRONOUNCED IN THE OPEN COURT ON 10TH JULY, 2018. SD/- SD/- (AMARJIT SINGH) ACCOUNTANT MEMBER (RAJPAL YADAV) JUDICIAL MEMBER AHMEDABAD; DATED, 10/07/2018