Posun Credit Co. Op. Society Ltd., Anand V. ITO, Ward-4, , Anand

ITA 1306/AHD/2018

• Counselvise Citation: [2018] 125 COUNSELVISE.COM (IT) 7898 (ITAT-AHMEDABAD)
• Duration Of Justice: 1 month(s) 21 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 11-07-2018
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: SMC
• Assessment Year: 2013-2014
• Appeal Filed On: 21-05-2018
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: V K SINGH
• Assessee Lawyers: S N DIVETIA
• Keywords: Bonafide belief

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. 1306/AHD/2018 / ASSESSMENT YEAR: 2013-14 POSUN CREDIT CO-OP. SOCIETY LTD. 1 ST FLOOR, LILAWATI CENTRE M.G. ROAD, STATION ROAD ANAND 380 001. PAN : AAAAP 0756 P VS ITO, WARD-4 ANAND. / (APPELLANT) / (RESPONDENT) ASSESSEE BY : SHRI S.N. DIVETIA, AR REVENUE BY : SHRI V.K. SINGH, SR.DR / DATE OF HEARING : 27/06/2018 /DATE OF PRONOUNCEMENT : 11/07/2018 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)-4, VADODARA DATED 30.9.2016 PASSED FOR THE ASSESSMENT YEAR 2013-14. BY THIS APPEAL, THE ASSESSEE HAS CHALLENGED DENIAL OF DEDUCTION UNDER SECTION 80P(2)(A)(I) OF THE INCOME TAX ACT, 1961. 2. IT HAS BEEN POINTED OUT BY THE REGISTRY THAT APP EAL OF THE ASSESSEE IS BARRED BY LIMITATION BY 532 DAYS. THE ASSESSEE HAS FILED A DELAY CONDONATION APPLICATION IN THE FORM OF AN AFFIDAVIT DULY SWORN BY SHRI KANTIBHAI RAVJIBHAI PATEL, THE CHAIRMAN OF ASSESSEE -SOCIETY. IT IS PLEADED THAT DELAY IN FILING THE APPEAL BEFORE THE TRIBUNAL HAS OCCURRED ITA NO.1306/AHD/2018 - 2 - DUE TO LAXITY AND NON-COOPERATION ON THE PART OF EA RLIER APPOINTED CHARTERED ACCOUNTANT OF THE ASSESSEE. ASSESSEE WAS UNDER BONAFIDE BELIEF THAT THE EARLIER CHARTERED ACCOUNTANT WOULD HAVE TAKEN ALL THE STEPS FOR FILING SECOND APPEAL BEFORE THE TRIBUNAL. IT IS ONLY ON VERIFICATION OF THE RECORD, THE ASSESSEE CAME TO KN OW THAT NO STEPS WERE TAKEN BY THE EARLIER CHARTERED ACCOUNTANT AND THERE FORE CASE WAS TO BE ENTRUSTED TO NEW CHARTERED ACCOUNTANT FOR TAKING NE CESSARY STEPS. THEREFORE, ASSESSEE MAY NOT BE PUNISHED FOR DELAY C AUSED TO DUE INACTION OF THE ASSESSEES CA IN FILING THE APPEAL BEFORE THE TRIBUNAL, WHICH MAY BE CONDONED AND THE APPEAL BE DECIDED ON MERIT. 3. WE FIND THAT THOUGH THE REASONS ASSIGNED BY THE ASSESSEE FOR CONDONING THE DELAY ARE NOT CONVINCING, IN THE INTE REST OF JUSTICE, WE CONDONE THE DELAY AND ADMIT THE APPEAL. 4. 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 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. ITA NO.1306/AHD/2018 - 3 - 5. THE LD.COUNSEL FOR THE ASSESSEE CONTESTED THE SU BMISSIONS OF THE LD.DR. HE SUBMITTED THAT JUDGMENT RELIED UPON BY T HE DEPARTMENT IS DISTINGUISHABLE AND HENCE NOT APPLICABLE TO THE PRE SENT CASE. 6. 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(2)(A)(I) OF THE ACT FO R THE INTEREST INCOME EARNED ON FDRS. WITH THE FINANCIAL INSTITUTIONS. T HIS CLAIM WAS DENIED BY THE AO ON THE GROUND THAT PROVISIONS OF SECTION 80P(2) DOES NOT COVER ASSESSEE-SOCIETY. THE LD.CIT(A) CONCURRED WIT H THE ORDER OF THE AO BY RELYING UPON THE JUDGMENT OF HONBLE JURISDIC TIONAL HIGH COURT IN THE CASE OF STATE BANK OF INDIA CO-OPERATIVE SOC IETY (SUPRA). WE FIND THAT HONBLE JURISDICTIONAL HIGH COURT HAS HELD THA T INTEREST EARNED FROM INVESTMENT MADE IN NATIONALIZED BANK BY A COOPERATI VE SOCIETY ENGAGED IN PROVIDING CREDIT FACILITIES TO ITS MEMBERS, IS N OT 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 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 ITA NO.1306/AHD/2018 - 4 - TO BE EXCLUDED FROM THE ADMISSIBILITY OF DEDUCTION UNDER SECTION 80P(2)(A)(I) OF THE ACT. 7. IN THE RESULT, APPEAL OF THE ASSESSEE IS PARTLY ALLOWED FOR STATISTICAL PURPOSE. PRONOUNCED IN THE OPEN COURT ON 11 TH JULY, 2018. SD/- SD/- (AMARJIT SINGH) ACCOUNTANT MEMBER (RAJPAL YADAV) JUDICIAL MEMBER