ITO, WD-35(3), KOLKATA, Kolkata V. Kolkata Reserve Bank Employees Co-operative Credit Society Ltd., Kolkata

ITA 1340/KOL/2015

• Counselvise Citation: [2017] 127 COUNSELVISE.COM (IT) 1212 (ITAT-KOLKATA)
• Duration Of Justice: 1 year(s) 11 month(s) 19 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 18-10-2017
• Appeal Filed By: Department
• Order Result: Partly Allowed
• Bench Allotted: B
• Assessment Year: 2012-2013
• Appeal Filed On: 29-10-2015
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: SAURBH KUMAR
• Keywords: Business income; Rule of consistency; Question of law
• Section: 56; 10

Judgement Text

ITA NO.1340/KOL/2015 KOLKATA RESERVE BANK EMPLOYEES CO-OPERATIVE CREDIT SOCIETY LTD.. A.Y.2012-13 1 IN THE INCOME TAX APPELLATE TRIBUNAL KOLKATA BENCH B KOLKATA BEFORE HONBLE SHRI WASEEM AHMED, ACCOUNTANT MEMBER AND SHRI S.S.VISWANETHRA RAVI, JUDICIAL MEMBER I.T.A. NO.1340/KOL/2015 ASSESSMENT YEAR : 2012-13 I.T.O., WARD-35(3), AAYAKAR BHAWAN POORVA, 8 TH FLOOR, 110, SHANTIPLLY,KOLKATA-700107. V/S . KOLKATA RESERVE BANK EMPLOYEES CO-OPERATIVE CREDIT SOCIETY LTD., 13, NETAJI SUBHAS ROAD, RBI BUILDING (ANNEXE), KOLKATA-700001. /APPELLANT .. / RESPONDENT /BY APPELLANT SHRI SAURBH KUMAR, ADDL. CIT(DR) /BY RESPONDENT SHRI ANIL KOCHAR, ADVOCATE /DATE OF HEARING 18.09.2017. /DATE OF PRONOUNCEMENT 18.10.2017 / O R D E R PER WASEEM AHMED, AM THIS APPEAL BY THE REVENUE IS AGAINS T THE ORDER OF COMMISSIONER OF INCOME TAX (APPEALS)-10, KOLKATA DATED 24.08.2015. ASSESSMENT WAS FRAMED BY I.T.O., WARD-35(3), KOLKATA U/S.143(3) OF THE INCOM E TAX ACT, 1961 (HEREINAFTER REFERRED TO AS THE ACT ) VIDE HIS ORDER DATED 24. 02.2015 FOR ASSESSMENT YEAR 2012-13. 2. THE REVENUE HAS RAISED THE FOLLOWING GROUNDS O F APPEAL : 1. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CA SE, THE LD, CIT(A) HAS ERRED IN DELETING THE ADDITION ON INTEREST INCOME E ARNED FROM NATIONALIZED BANKS ON THE BASIS OF THE DECISION OF THE CASE LAW OF TOTGARS CO-OPERATIVE SOCIETY LTD.-VS.-ITO [2010] 188 TAXMAN 282 (SC) AND SOME OTHER CASE LAWS, WITHOUT GOING THROUGH THE DECISION PROPERLY. ITA NO.1340/KOL/2015 KOLKATA RESERVE BANK EMPLOYEES CO-OPERATIVE CREDIT SOCIETY LTD.. A.Y.2012-13 2 2. THE LD. CIT(A) HAS IGNORED THE FACT THAT IN THE CASE OF TOTGARS CO- OPERATIVE SOCIETY LTD.-VS.-ITO [2010] 188 TAXMAN 28 2 (SC), HON'BLE APEX COURT HAS DISMISSED THE APPEAL FILED BY THE ASSESSE E AND CONFIRMED THE ITAT'S VIEW THAT THIS INTEREST INCOME WOULD FALL UN DER THE 'INCOME FROM OTHER SOURCES' AND NOT FROM 'INCOME FROM BUSINESS AND PRO FESSION'. THUS, ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE, THE LD. CIT(A) HAS ERRED IN DELETING THE ADDITION ON INTEREST INCOME I GNORING THE PROVISIONS OF SECTION 80P(1), 80P(2) AND 80P(2)(D) OF THE INCOME TAX ACT, 1961. 3. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CAS E, THE LD. CIT(A) HAS ERRED IN DELETING THE ADDITION MADE BY THE A.O. ON PROFIT FROM THE BUSINESS OF HOLIDAY HOMES ON THE DECISION OF SOME OTHER CASE LA WS WHICH ARE NOT AT ALL RELEVANT IN THE INSTANT CASE. THOSE CASES ARE BASED ENTIRELY ON DIFFERENT FACTS AND NOT SQUARELY APPLICABLE IN THIS CASE. 4. THE APPELLANT CRAVES THE LEAVE TO ADD, ALTER OR AMEND ANY GROUND BEFORE OR AT ANY TIME OF HEARING. 3. THE FIRST ISSUE RAISED BY THE REVENUE IN GROUND NO.1 AND 2 IS THAT THE LD. CIT(A) ERRED IN DELETING THE ADDITION MADE BY THE AO FOR R S.1,60,76,939/- ON ACCOUNT OF INTEREST INCOME FROM OTHER SOURCES. 4. BRIEFLY STATED FACTS ARE THAT THE ASSESSEE IS A CO-OPERATIVE CREDIT SOCIETY AND REGISTERED UNDER THE WEST BENGAL COOPERATIVE SOCIET Y W.E.F. 15 TH JULY, 1972. THE ASSESSEE IS ENGAGED IN THE BUSINESS OF PROVIDED CRE DIT FACILITIES TO ITS MEMBERS OUT OF THE DEPOSITS ACCEPTED FROM ITS MEMBERS. THE ASSESSEE FOR THE YEAR UNDER CONSIDERATION HAS DECLARED GROSS TOTAL INCOME OF RS .1,68,45,861/- AND CLAIMED DEDUCTION FOR THE SAME AMOUNT U/S 80P(2)(A)(I) OF T HE ACT. 5. THE ASSESSEE DURING THE YEAR HAS SHOWN GROSS INC OME FROM INTEREST FOR RS.8.35 CRORES WHICH INCLUDES INTEREST INCOME OF RS .1,60,76,339/-ON THE MONEY DEPOSITED IN CURRENT, SAVINGS AND FIXED DEPOSITS WI TH THE BANK. HOWEVER, THE AO WAS OF THE VIEW THAT DEDUCTION U/S 80P(2)(A)(I) OF THE ACT IS NOT AVAILABLE TO THE ASSESSEE ON THE AMOUNT OF INTEREST INCOME EARNED ON THE AMOUNT DEPOSITED WITH THE BANK. ACCORDINGLY THE AO CALLED UPON THE ASSESS EE TO EXPLAIN WHY DEDUCTION ITA NO.1340/KOL/2015 KOLKATA RESERVE BANK EMPLOYEES CO-OPERATIVE CREDIT SOCIETY LTD.. A.Y.2012-13 3 U/S 80P(2)(A)(I) OF THE ACT IS ALLOWED TO THE ASSES SEE ON SUCH INCOME. IN COMPLIANCE THERETO THE ASSESSEE SUBMITTED THAT DEDU CTION ON ACCOUNT OF INTEREST INCOME ON THE MONEY DEPOSITED WITH THE BANK IS AVAI LABLE IN VIEW OF THE JUDGMENT OF THE HONBLE UTTARAKHAND HIGH COURT IN T HE CASE OF CIT VS IQBALPUR COOPERATIVE BANK DEVELOPMENT UNION LTD (2009) 315 I TR 441 (UTTARAKHAND). THE ASSESSEE FURTHER SUBMITTED THAT IDENTICAL ISSUE WAS ALSO DECIDED IN FAVOUR OF THE ASSESSEE BY THE HONBLE PATNA HIGH COURT IN THE CASE OF BIHAR STATE HOUSING COOPERATIVE FEDERATION LTD. VS CIT(2009) 315 ITR 28 6 (PAT). HOWEVER, THE AO DISREGARDED THE CONTENTION OF THE A SSESSEE BY OBSERVING AS UNDER :- (I) THE HONBLE SUPREME COURT IN THE CASE OF TOTGAR S CO-OPERATIVE SALE SOCIETY LTD. VS ITO REPORTED IN 188 TAXMAN 282 HAS HELD THAT INTEREST EARNED ON INVESTMENT OF FUNDS NOT REQUIRED IMMEDIAT ELY FOR THE PURPOSE OF BUSINESS CANNOT FALL UNDER THE HEAD BUSINESS AN D PROFESSION. THEREFORE THE SAME WOULD BE TREATED AS INCOME FROM OTHER SOURCES. (II) AS PER THE PROVISION OF SECITON 80P(2)(A)(I) O F THE ACT THE DEDUCTION IS AVAILABLE TO THE AMOUNT OF INTEREST EARNED BY THE A SSESSEE WHICH IS GIVEN TO ITS MEMBERS. THUS THE AMOUNT DEPOSITED WIT H THE BANK CANNOT BE TERMED AS LOAN GIVEN TO THE MEMBERS. THUS FROM THE ABOVE IT IS CLEAR THAT THE ASSESSEE H AS PARKED ITS SURPLUS FUNDS BY WAY OF DEPOSITING THE SAME IN THE CURRENT, SAVINGS AND FIXED DEPOSITS ACCOUNT WITH THE BANK. THEREFORE THE INTEREST INCOME EARNED THERETO IS NOT ELIGIBLE FOR DEDUCTION U/S 80P(2)(A)(I) OF THE ACT. ACCORDINGLY THE AO DISALLOWED DEDUCTION MADE BY THE ASSESSEE FOR RS.1,60,76,339/- AND ADDED TO THE TOTAL INCOME OF THE ASSESSEE. 6. AGGRIEVED ASSESSEE PREFERRED AN APPEAL BEFORE TH E LD. CIT(A). ITA NO.1340/KOL/2015 KOLKATA RESERVE BANK EMPLOYEES CO-OPERATIVE CREDIT SOCIETY LTD.. A.Y.2012-13 4 THE ASSESSEE BEFORE THE LD. CIT(A) SUBMITTED THAT T HE SURPLUS FUNDS WAS KEPT WITH THE BANKS FOR THE PURPOSE OF PROVIDING LOAN TO THE MEMBERS. THE ASSESSEE ALSO SUBMITTED THAT IN THE IDENTICAL ISSUE THE HON BLE TRIBUNAL OF KOLKATA IN THE CASE OF S.E, S.E.C. AND E.C.O.RAILWAY EMPLOYEES COO PERATIVE CREDIT SOCIETY LTD. IN ITA NO.1693/KOL/2012 FOR A.Y.2008-09 AFTER DISTINGUISHING THE FACTS OF TOTGARS COOPERATIVE SALES SOCIETY LTD. (SUPRA) HAS DECIDED THE ISSUE IN FAVOUR OF THE ASSESSEE. THUS THE INTEREST INCOME EARNED ON THE MONEY DEPOSITED WITH THE BANK IS ACCORDINGLY ELIGIBLE FOR DEDUCTION U/S 80P(2)(A)(I) OF THE ACT AS PER THE PROVISION OF SECTION 80P(2)(A)(I) OF THE ACT THE DEDUCTION IS AVAILABLE TO THE ASSESSEE IF IT FULFILLS THE FOLLOWING CONDITION S :- (I) IT IS ENGAGED IN CARRYING ON THE BUSINESS OF BA NKING (II) IT IS ENGAGED IN THE BUSINESS OF PROVIDING CRE DIT FACILITIES TO ITS MEMBERS. THUS ONE OF THE ACTIVITIES OF THE ASSESSEE TO PROVI DE CREDIT FACILITY TO THE MEMBERS HAS BEEN FULFILLED IN THE INSTANT CASE. THE REFORE THE PRIMARY ACTIVITY OF PROVIDING CREDIT FACILITIES TO THE MEMBERS HAS BEEN DULY COMPLIED WITH. THE LD. CIT(A) AFTER CONSIDERING THE SUBMISSIONS OF THE ASS ESSEE HAS ALLOWED DEDUCTION TO THE ASSESSEE U/S 80P(2)(A)(I) OF THE ACT BY OBSE RVING AS FOLLOWS :- OTHER THAN THE JUDGMENT OF THE JURISDICTIONAL HIGH COURT, AS FOLLOWED BY THE HONBLE JURISDICTIONAL ITAT, I FIND THAT THERE ARE A CATENA OF JUDGMENTS WHEREIN THE CASE OF TOTGARS CO-OPERATIVE SALE SOCIE TY LTD. (SUPRA) HAS BEEN CLEARLY DISTINGUISHED ON FACTS, AND IT HAS BEEN HEL D THAT THE INTEREST EARNED BY ASSESSES., SUCH AS THE ONE AT HAND, NAMELY A CRE DIT CO-OPERATIVE SOCIETY THAT CARRIES ON THE BUSINESS OF PROVIDING C REDIT FACILITIES TO ITS MEMBERS AND EARNED INTEREST BY DEPOSITS MADE IN NAT IONALIZED BANKS, WOULD BE ELIGIBLE FOR THE DEDUCTION ENVISAGED UNDER SEC 8 0 P OF THE INCOME TAX ACT, 1961. THE HON'BLE HIGH COURT OF KARNATAKA IN T HE CASE OF TUMKUR MERCHANTS SOUHARDA CREDIT CO-OPERATIVE SOCIETY LTD. IN ITA NO.307 OF 2014 DT.28.10.2014, WHEREIN THEIR LORDSHIPS AFTER CONSID ERING THE JUDGMENT OF THE HON'BLE APEX COURT IN THE CASE OF TOTAGARS CO-OPERA TIVE SALE SOCIETY LTD. (SUPRA), HAVE HELD THAT THE INTEREST EARNED BY A CO -OPERATIVE SOCIETY ENGAGED IN THE BUSINESS OF PROVIDING CREDIT FACILIT IES TO ITS MEMBERS HAS TO ITA NO.1340/KOL/2015 KOLKATA RESERVE BANK EMPLOYEES CO-OPERATIVE CREDIT SOCIETY LTD.. A.Y.2012-13 5 BE REGARDED AS INCOME ELIGIBLE FOR DEDUCTION UNDER SECTION 80P(2) OF THE ACT. THE REVENUE, BEING AGGRIEVED, IS IN APPEAL BEFORE U S. 7. BEFORE US BOTH THE PARTIES RELIED ON THE ORDERS OF THE AUTHORITIES BELOW AS FAVOURABLE TO THEM. 8. WE HAVE HEARD THE RIVAL CONTENTIONS AND PERUSED THE MATERIALS ON RECORD. AT THE OUTSET, WE FIND THAT THE HONBLE TRIBUNAL OF KOLKATA BENCHES IN ITA NO.2058/KOL/2014 HAS DECIDED THE IDENTICAL ISSUE IN FAVOUR OF THE ASSESSEE AFTER DISTINGUISHING THE FACTS OF TOTAGARS COOPERATIVE SA LE SOCIETY LTD. REPORTED IN 188 TAXMAN 282. THE RELEVANT EXTRACT OF THE ORDER IS RE PRODUCED BELOW : 3. AFTER HEARING THE RIVAL CONTENTIONS, I FIND THAT SIMILAR ISSUE HAS BEEN ADJUDICATED BY THE JURISDICTIONAL HIGH COURT IN THE CASE OF COM MISSIONER OF INCOME TAX-X, KOLKATA VS. SOUTH EASTERN RAILWAY EMPLOYEES CO-OPER ATIVE CREDIT SOCIETY IN ITAT NO. 135 OF 2010 JUDGMENT DT. 22.07.2010. THE QUESTI ON BEFORE THE HON'BLE COURT WAS AS FOLLOWS: 'I) WHETHER ON THE FACTS AND CIRCUMSTANCES OF THE C ASE, THE INTEREST EARNED BY THE ASSESSEE TO THE TUNE OF RS.1,18,07,645/- OUT OF ITS INVESTMENT IN BANKS IS NOT THE ACTIVITY THAT AROSE FROM THE ACTIVITY OF PROVIDING LOAN AND CREDIT FACILITIES TO ITS MEMBERS AS THE SOCIETY IS NOT ENGAGED IN THE BUSINE SS OF BANKING AND IS THEREFORE NOT QUALIFYING FOR DEDUCTION U/S.80P(2A)(A)(I) OF T HE ACT, THE LEARNED TRIBUNAL IS CORRECT IN LAW IN HOLDING THAT INTEREST EARNED ON S UCH INVESTMENT IS WITHIN THE PURVIEW OF SECTION 80P OF THE ACT 7' THE HON'BLE COURT HELD AS FOLLOWS:- 'IT WAS FOUND BY THE TRIBUNAL WHILE AFFIRMING THE O RDER OF THE COMMISSIONER OF INCOME TAX (APPEAL) THAT THERE IS NO CHANGE IN THE FACTS AND CIRCUMSTANCES OF THIS CASE AND IT WAS HELD THAT THE ASSESSEE WAS ELIGIBLE FOR DEDUCTION UNDER SECTION 80P(2 )(A )(I) ON INTEREST ON INVESTMENT AMOUNTING TO RS. 1;18,07,645/- IN THIS ASSESSMENT 'YEAR ALSO. SINCE THE TRIBUNAL FOUND THA T THIS DECISION OF THE TRIBUNAL WAS FOLLOWED BY CIT (A) THERE IS NO REASON TO TAKE A DIFFERENT VIEW. UNDER THESE CIRCUMSTANCES, WE FEEL THAT WHEN THE CO MMISSIONER OF INCOME TAX (A) AS WELL AS THE TRIBUNAL HAS FOLLOWED THE EARLIE R UNCHALLENGED DECISION NO QUESTION OF LAW IS INVOLVED IN THIS MATTER. NOTHING HAS BEEN PRODUCED BEFORE US TO SHOW SUBSEQUENT DECISION OF THE TRIBUNAL IN RELATIO N TO THE ASSESSMENT YEARS 1998-99 TO 2002-03 AND 2003-04 HAVE BEEN CHALLENGED BY ANY OF THE PARTIES BEFORE THIS COURT. ' ITA NO.1340/KOL/2015 KOLKATA RESERVE BANK EMPLOYEES CO-OPERATIVE CREDIT SOCIETY LTD.. A.Y.2012-13 6 FOLLOWING THIS THE APPEAL OF THE REVENUE HAD BEEN DISMISSED. 3.1. THE ITAT 'C' BENCH, KOLKATA, IN THE CASE OF S. E.,S.E.C & E.CO.RAILWAYS EMPLOYEES' CO-OPERATIVE CREDIT SOCIETY LTD., KOLKAT A VS. A.C.I.T., CIRCLE-28, KOLKATA IN ITA NO. 1693/KO1J2012 FOR ASSESSMENT YEA R 2008-09, ORDER DT. 30/10/2014 AT PARA 7.2 TO 7.5 HELD AS FOLLOWS: '7.2. CONSIDERING THE ABOVE WE FIND THAT THIS ISSUE IS SQUARELY COVERED IN FAVOUR OF THE ASSESSEE BY THE DECISION OF THE HON'BLE JURI SDICTIONAL HIGH COURT IN ASSESSEE'S OWN CASE. IN THIS REGARD WE WOULD LIKE T O PLACE RELIANCE UPON THE. DECISION OF THE HON 'BLE APEX COURT IN THE CASE OF CIT VS EXCEL INDUSTRIES 358 ITR 295 WHEREIN THE PRINCIPLE OF CONSISTENCY HAS BE EN REITERATED. HENCE WHEN THE ISSUE HAS BEEN DECIDED BY THE JURISDICTIONAL HI GH COURT NO CONVINCING REASON HAS BEEN POINTED TO TAKE A DIFFERENT VIEW, A NY DEVIATION IS NOT PERMITTED. 7.3. NOW WE COME TO THE CASE LAWS RELIED UPON BY TH E ID. CIT(A). AS REGARDS THE DECISION OF THE HON 'BLE APEX COURT IN THE CASE OF TOTGARS CO-OPERATIVE SALE SOCIETY LTD. (SUPRA) WE FIND THAT THE SAID DECISION IS NOT APPLICABLE IN THE FACTS OF THE CASE. WE FIND THAT THE HON'BLE APEX COURT IN TH E SAID DECISION IN PARA 11 HAS ITSELF MENTIONED THAT 'WE ARE CONFINING THE JUDGMEN T TO THE FACTS OF THE PRESENT CASE.' THE FACTS OF THE CASE WERE THAT ASSESSEE'S B USINESS WAS TO PROVIDE CREDIT FACILITIES TO ITS MEMBERS AND TO MARKET THEIR AGRIC ULTURAL PRODUCE. IN MANY CASES ASSESSEE RETAINED SALE PROCEEDS OF MEMBERS WHOSE PR ODUCE WAS MARKETED BY IT AND SINCE FUNDS CREATED BY SUCH RETENTION WERE NOT REQUIRED IMMEDIATELY FOR BUSINESS PURPOSES, IT INVESTED SAME IN SPECIFIED SE CURITIES AND EARNED INTEREST INCOME. IN THESE CIRCUMSTANCES THE HONBLE APEX CO URT HAD HELD THAT INTEREST EARNED WOULD COME IN CATEGORY OF 'INCOME FROM OTHER SOURCES' TAXABLE U/S 56 OF THE ACT AND WOULD NOT QUALIFY FOR DEDUCTION AS BUSI NESS INCOME U/S BOP(2)(A)(I). FROM THE ABOVE IT IS AMPLY EVIDENT IN THE PRESENT C ASE THE ASSESSEE HAS NOT RETAINED ANY AMOUNT DUE TO ITS MEMBERS AND INSTEAD OF PAYING THE SAME HAD INVESTED THE SAME AND EARNED INTEREST. THUS THIS CA SE LAW IS NOT APPLICABLE ON THE FACTS OF THE PRESENT CASE. 7.4. AS REGARDS THE DECISION OF HON'BLE PATNA HIGH COURT IN THE CASE OF BIHAR RAJYA SAHKARI BHOOMI BIKASH CO-OP. BANK LTD. (SUPRA ) THE SAME IS ALSO NOT APPLICABLE TO THE FACTS OF THE PRESENT CASE. IN THA T CASE THE QUESTION WAS THE TREATMENT OF INTEREST EARNED ON PROVIDENT FUND AND RENTAL INCOME AS ATTRIBUTABLE TO BANKING BUSINESS 'AND THIS QUALIFYING FOR DEDUCT ION U/S BOP(2)(A)(I) OF THE ACT. 7.5. IN THE BACKGROUND OF THE AFORESAID DISCUSSION AND PRECEDENT WE HOLD THAT THE ISSUE IS SQUARELY COVERED IN FAVOUR OF THE ASSE SSEE BY THE DECISION OF THE TRIBUNAL AND THE JURISDICTIONAL HIGH COURT IN ASSES SEE'S OWN CASE. THE DECISION RELIED UPON BY THE ID. CIT(A) ARE NOT APPLICABLE IN THE FACTS OF THE CASE. THE PRINCIPLE OF CONSISTENCY AS CONVEYED BY THE HON'BLE APEX COURT MANDATES THAT THE REVENUE DOES NOT TAKE A DIFFERENT STAND. ACCORD INGLY WE SET ASIDE THE ORDERS OF THE AUTHORITIES BELOW AND DECIDE THE ISSUE IN FA VOUR OF THE ASSESSEE. ITA NO.1340/KOL/2015 KOLKATA RESERVE BANK EMPLOYEES CO-OPERATIVE CREDIT SOCIETY LTD.. A.Y.2012-13 7 4. IN VIEW OF THE ABOVE DISCUSSION, RESPECTFULLY FO LLOWING THE BINDING JUDGMENT OF THE JURISDICTIONAL HIGH COURT, WE DIRECT THE LD. AO TO ALLOW DEDUCTION U/S 80N THE ACT, TO THE ASSESSEE ON THE INTEREST INCOME OF RS.1 7,85,173/-. RESPECTFULLY FOLLOWING THE SAME WE DIRECT THE AO TO ALLOW THE DEDUCTION AS CLAIMED BY THE ASSESEE U/S 80P(2)(A)(I) OF THE ACT. 9. THE SECOND ISSUE RAISE BY THE REVENUE IN THIS AP PEAL IS THAT THE LD. CIT(A) ERRED IN PROVIDING DEDUCTION U/S 80P(2)(A)(I) OF TH E ACT FROM BUSINESS OF HOLIDAY HOMES. 10. THE ASSESSEE IN THE YEAR UNDER CONSIDERATION HA S EARNED PROFIT OF RS.5,11,100/- FROM THE MAINTENANCE OF HOLIDAY HOMES WHICH WAS CLAIMED AS DEDUCTION U/S 80P(2)(A)(I) OF THE ACT. HOWEVER, THE AO REJECTED THE CLAIM OF THE ASSESSEE FOR THE DEDUCTION U/S 80P(2)(A)(I) OF THE ACT ON THE GROUND THAT DEDUCTION IS AVAILABLE ON THE INCOME ATTRIBUTABLE T O THE BUSINESS PROVIDING CREDIT FACILITIES TO THE MEMBERS. AS SUCH THE ACTIVITY OF HOLIDAY HOME IS NOT ELIGIBLE FOR DEDUCTION U/S 80P(2)(A)(I) OF THE ACT. ACCORDINGLY THE AO DISALLOWED DEDUCTION CLAIMED BY THE ASSESSEE FOR RS.5,11,100/- AND ADDED TO THE TOTAL INCOME OF THE ASSESSEE. 11. AGGRIEVED THE ASSESSEE PREFERRED AN APPEAL BEFO RE THE LD. CIT(A). THE ASSESSEE BEFORE THE LD. CIT(A) SUBMITTED THAT IT HA S BEEN RUNNING HOLIDAY HOME FOR THE MUTUAL BENEFIT OF THE MEMBERS. THE SURPLUS EARNED BY THE ASSESSEE FROM THE HOLIDAY HOMES IS USED FOR PROVIDING CREDIT FACI LITIES TO THE MEMBERS. THEREFORE THE ACTIVITY OF RUNNING THE HOLIDAY HOME IS ANCILLARY AND SUPPORTIVE TO THE IMPUGNED OBJECTS OF THE SOCIETY. THUS THE ASSES SEE IS ENTITLED FOR DEDUCTION U/S 80P(2)(A)(I) OF THE ACT ON THE INCOME EARNED FR OM THE HOLIDAY HOMES. THE LD. CIT(A) AFTER CONSIDERING THE SUBMISSIONS OF THE ASS ESSEE HAS ALLOWED DEDUCTION U/S 80P(2)(A)(I) OF THE ACT BY OBSERVING AS UNDER : - ITA NO.1340/KOL/2015 KOLKATA RESERVE BANK EMPLOYEES CO-OPERATIVE CREDIT SOCIETY LTD.. A.Y.2012-13 8 I HAVE CAREFULLY CONSIDERED THE ARGUMENT OF THE AS SESSING OFFICER IN MAKING THIS ADDITION. THE AO HAS STATED THAT THE 'APPELLAN T HAS DISCLOSED RENT RECEIVED FROM HOLIDAY HOME OF RS14,50,622/-, AND CL AIM CORRESPONDING EXPENSES OF RS.9, 39, 522/-. FROM THIS SOURCE OF IN COME THE APPELLANT HAS DISCLOSED THE NET PROFIT OF RS.5,11,100/-. THE AO H AS OPINED THAT THE ACTIVITY OF RUNNING A HOLIDAY HOME IS NOT ATTRIBUTE EVEN CLO SELY TO THE PRIMARY BUSINESS OF PROVIDING CREDIT FACILITY, AND THEREFOR E THE DEDUCTION U/S BOP WOULD NOT BE ALLOWABLE. IN APPEAL, THE APPELLANT HA S TAKEN THE POSITION THAT THE HOLIDAY HOME WAS BEING RUN FOR THE BENEFIT OF T HE MEMBERS OF THE COOPERATIVE CREDIT SOCIETY. HE HAS ARGUED THAT AS S UCH A FACILITY WAS FOR THE MUTUAL BENEFIT OF THE MEMBERS, AS A RESULT OF MUTUA LITY, THE RESULTANT SURPIUS OUGHT TO BE TREATED AS BUSINESS INCOME. SUCH BUSINE SS INCOME ACCORDING TO HIM WAS GENERATED FOR PROVIDING SERVICES TO THE MEM BERS, AND SUCH AN ACTIVITY IS ANCILLARY AND/OR SUPPORTIVE TO THE MAIN OBJECT OF THE APPELLANT SOCIETY. FROM THE ORDER OF THE ASSESSING OFFICER, AND THE FA CTS AVAILABLE, IT IS SEEN THAT THE APPELLANT RECEIVES RENTAL INCOME FROM GIVI NG A GUEST HOUSE TO ITS MEMBER/HOLIDAY HOME TO ITS MEMBER, AND THAT THIS FA CILITY IS RESTRICTED TO ITS MEMBERS ONLY. THE AMOUNT OF RS.5, 11,100/- WHICH HA S BEEN DISALLOWED BY THE AO ACTUALLY REPRESENT SURPLUS FROM THE BUSINESS OF LETTING OUT THE HOLIDAY HOME TO ITS OWN MEMBERS BY THE APPELLANT CO-OPERATI VE SOCIETY. IT APPEARS THAT A SIMILAR MATTER CAME UP BEFORE THE HON'BLE IT AT INDORE BENCH IN ITA NO 315/IND/2011(ACIT BHOP.AL VS MP STATE COOPERATIV E HOUSING FEDERATION) RELEVANT FOR A.Y. 2006-07. IN THAT CASE ALSO THE HON'BLE ITAT HAS HELD THAT INCOME FROM GUEST HOUSE WOULD QUALIFY FOR DEDUCTION U/S 80P. AT PARA 9 OF THE SAID ORDER THE HON'BLE ITAT HAD ADJUD ICATED AS UNDER '9. REGARDING MISCELLANEOUS INCOME, INCOME FROM GUE ST HOUSE, WE ALSO HOLD THAT THIS INCOME ALSO QUALIFY FOR DEDUCTION U/ S 80-P(2)(A)(I), IN VIEW OF THE DECISION OF HON'BLE KARNATAKA HIGH COURT IN THE CASE OF CIT VS. GRAIN MERCHANTS CO-OP. BANK LIMITED (SUPRA), WHERE THE HO N'BLE HIGH COURT HAS HELD THAT FROM LETTING OUT A PART OF THE PROPERTY W AS TREATED AS INCOME FROM BANKING BUSINESS AND HELD TO BE QUALIFIED FOR DEDUC TION U/S 80- P(2)(A)(I). WE ALSO GET STRENGTH ON THIS ISSUE FROM THE DECISIO N OF HON'BLE BOMBAY HIGH COURT IN THE CASE OF CIT VS. AHMEDNAGAR DISTRI CT CENTRAL CO-OP. BANK LIMITED & OTHERS, ( CITED SUPRA), WHERE THE HO N'BLE HIGH COURT HAS HELD THAT THE COMMISSION COLLECTED FROM ELECTRICITY BILLS WAS HELD TO COME QUALIFYING FOR DEDUCTION U/S 80- P(2)(A)(I).' I FIND MYSELF IN AGREEMENT WITH THE CONTENTION OF T HE APPELLANT THAT IT IS A CO- OPERATIVE SOCIETY FORMED UNDER THE RELEVANT LAW LAI D DOWN, AND THAT IT HAD STARTED ITS ACTIVITIES IN THE YEAR WHEN THE HOLIDAY HOME WAS ACQUIRED. AS THE SAME WAS BEING CONTINUOUSLY MAINTAINED FOR THE COMF ORT OF THE MEMBERS ITA NO.1340/KOL/2015 KOLKATA RESERVE BANK EMPLOYEES CO-OPERATIVE CREDIT SOCIETY LTD.. A.Y.2012-13 9 AND THAT WHATEVER SURPLUS REMAINS IT IS NOTHING BUT PART OF ITS ACTIVITIES IN THE MATTER OF CARRYING ON ITS ACTIVITIES FOR PROVIDING AMENITIES TO ITS MEMBERS, THERE OUGHT TO BE NO DISALLOWANCE OF THE THIS AMOUN T OF RS.5,11,100/-. THE AO IS DIRECTED ACCORDINGLY. ' THE REVENUE, BEING AGGRIEVED, IS IN SECOND APPEAL B EFORE US. 12. BEFORE US BOTH THE PARTIES RELIED ON THE ORDER OF AUTHORITIES BELOW AS FAVOURABLE TO THEM. 13. WE HAVE HEARD THE RIVAL CONTENTIONS AND PERUSED THE MATERIAL AVAILABLE ON RECORD. IN THE INSTANT CASE THE ASSESSEE HAS EARNED INCOME FOR RS.5,11,100/- ON THE MAINTENANCE OF HOLIDAY HOMES EXCLUSIVELY FOR TH E MEMBERS. THE AO WAS OF THE VIEW THAT THE IMPUGNED ACTIVITY IS NOT ELIGIBLE FOR DEDUCTION UNDER THE PROVISION OF SECTION 80P(2)(A)(I) OF THE ACT. HOWEV ER THE LD. CIT(A) REVERSED THE ORDER OF THE AO. 13.1 NOW THE QUESTION BEFORE US ARISE FOR OUR ADJUD ICATION WHETHER THE ASSESSEE IS ELIGIBLE FOR DEDUCTION U/S 80P(2)(A)(I) OF THE ACT ON THE INCOME EARNED FROM HOLIDAY HOMES IN THE GIVEN FACTS AND CI RCUMSTANCES. AT THIS JUNCTURE WE WOULD LIKE TO REPRODUCE THE PROVISION OF SECTION 80P(2)(A)(I) WHICH READS AS FOLLOWS :- 80P(2) THE SUMS REFERRED TO IN SUB-SECTION (1) SHALL BE T HE FOLLOWING NAMELY :- (A) IN THE CASE OF A CO-OPERATIVE SOCIETY ENGAGED I N- (I) CARRYING ON THE BUSINESS OF BANKING OR PROVIDIN G CREDIT FACILITIES TO ITS MEMBERS FROM THE ABOVE PROVISION, IT IS CLEAR THAT THE DEDU CTION IS AVAILABLE TO THE ASSESSEE FROM THE BUSINESS OF BANKING OR PROVIDING CREDIT FACILITIES THE MEMBERS. THE ISSUE BEFORE US IS WITH REGARD TO THE INCOME EA RNED BY THE ASSESSEE FROM THE RUNNING AND MAINTENANCE OF HOLIDAY HOMES FOR TH E MEMBERS. THUS, IN OUR CONSIDERED VIEW THE SAME CANNOT BE ALLOWED AS DEDUC TION UNDER THE PROVISIONS ITA NO.1340/KOL/2015 KOLKATA RESERVE BANK EMPLOYEES CO-OPERATIVE CREDIT SOCIETY LTD.. A.Y.2012-13 10 OF SECTION 80P(2)(A)(I) OF THE ACT. THUS, THE GROUN D OF APPEAL OF REVENUE IS ALLOWED. 14. IN THE RESULT, REVENUES APPEAL STANDS PARTLY ALLOW ED. ORDER PRONOUNCED IN THE OPEN COURT 18/10/2017 SD/- SD/- ( ') ( ') (S.S.VISWANETHRA RAVI) ( WASEEM AHMED) (JUDICIAL MEMBER) (ACCOUNTANT MEMBER) *RG.SR.PS $- 18/10 //201 7 / COPY OF ORDER FORWARDED TO:- 1. / APPELLANT 2. / RESPONDENT 3. / 2 / CONCERNED CIT 4. 2- / CIT (A) 5. 5 /, /, KOLKATA / DR, ITAT, KOLKATA 6. ; / GUARD FILE. BY ORDER/ , / /,