Kharel Vibhag Vividh Karyakari Sahkari Mandli Ltd., Navsari V. The Income tax Officer,Ward-2, Navsari

ITA 1346/AHD/2013

• Counselvise Citation: [2016] 133 COUNSELVISE.COM (IT) 1836 (ITAT-AHMEDABAD)
• Duration Of Justice: 2 year(s) 10 month(s) 29 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 06-04-2016
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: B
• Next Hearing Date: 04-04-2016
• Assessment Year: 2009-2010
• Appeal Filed On: 08-05-2013
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: NARENDRA SINGH
• Assessee Lawyers: P B PARMAR
• Keywords: Principle of natural justice; Question of law
• Section: 143(3)

Judgement Text

I.T.A. NO . 1346 /AHD/ 20 13 ASSESSMENT YEAR: 200 9 - 10 PAGE 1 O F 4 IN THE INCOME TAX APPELLATE TRIBUNAL, AHMEDABAD B BENCH, AHMEDABAD [CORAM : PRAMOD KUMAR AM AND S S GODARA JM ] I.T.A. NO. 1346 /AHD/ 20 13 ASSESSMENT YEAR : 200 9 - 10 KHAREL VIBHAG VIVIDH KARYAKARI SAHKARI MAN D AL LTD. .APPELLANT AT & POST KHAREL , TAL. GANDEVI, DIST. NAVSARI. [PAN: AAAAK 0870 D] VS. INCOME TAX OFFICER , WARD 2, NAVSARI . ........... . . RESPONDENT APPEARANCES BY: P.B. PARMAR , FOR THE APPELLANT NARENDRA SINGH , FOR THE RESPONDENT D ATE OF CONCLUDING THE HEARING : APRIL 4 TH , 201 6 DATE OF PRONOUNCING THE ORDER : APRIL 6 TH , 201 6 O R D E R PER PRAMOD KUMAR AM : 1. BY WAY OF THIS APPEAL, THE A SSESS EE APPELLANT HAS CHALLENGED CORRECTNESS OF THE ORDER DATED 1 5 TH MARCH , 2013 , PASSED BY THE LD. CIT (A) , IN THE MATTER OF ASSESSMENT UNDER SECTION 143(3) OF THE INCOME TAX ACT, 1961 ( THE ACT HEREINAFTER) FOR THE ASSESSMENT YEAR 200 9 - 10 , ON THE FOLLOWING GROUNDS : - 1. THE LEARNED CIT(A) HAS ERRED BOTH IN LAW AND ON THE FACTS OF THE CASE IN CONFIRMI NG THE ACTION OF AO IN NOT ALLOWING CLAIM OF DEDUCTION U/S 80P OF THE ACT IN THE SUM OF RS.27,40,035 / - AND FURTHER ERRED IN HOLDING THAT THE SAID INCOME IS TAXABLE IN HANDS OF THE APPELLANT SEPARATELY AS INCOME FROM OTHER SOURCES. 2. BOTH THE LOWER AUTHO RITIES HAVE ERRED IN NOT APPRECIATING THAT INVESTMENTS IS AN INTEGRAL PART OF PROVIDING CREDIT FACILITIES AND THEREFORE, ANY INCOME EARNED BY CARRYING OUT THE SAID ACTIVITIES QUALIFIES FOR CLAIM OF DEDUCTION U/S 80 P OF THE ACT. I.T.A. NO . 1346 /AHD/ 20 13 ASSESSMENT YEAR: 200 9 - 10 PAGE 2 O F 4 3. ALTERNATIVELY AND WITHO UT PREJUDICE, BOTH THE LOWER AUTHORITIES OUGHT TO HAVE ALLOWED EXPENDITURE INCURRED FOR EARNING SUCH INCOME AND OUGHT TO HAVE TAXED ONLY THE NET INCOME INSTEAD OF GROSS RECEIPT AS HAS BEEN DONE. 4. BOTH THE LOWER AUTHORITIES HAVE PASSED THE ORDERS WITHOU T PROPERLY APPRECIATING THE FACT AND THAT THEY FURTHER ERRED IN GROSSLY IGNORING VARIOUS SUBMISSIONS, EXPLANATIONS AND INFORMATION SUBMITTED BY THE APPELLANT FROM TIME TO TIME WHICH OUGHT TO HAVE BEEN CONSIDERED BEFORE PASSING THE IMPUGNED ORDER. THIS ACTI ON OF THE LOWER AUTHORITIES IS IN CLEAR BREACH OF LAW AND PRINCIPLES OF NATURAL JUSTICE AND THEREFORE DESERVES TO BE QUASHED. 5. THE LEARNED CIT(A) HAS ERRED IN LAW AND ON FACTS OF THE CASE IN CONFIRMING ACTION OF THE ID. AO IN LEVYING INTEREST U/S 234A/ B/C OF THE ACT. 6. THE LEARNED CIT(A) HAS ERRED IN LAW AND ON FACTS OF THE CASE IN CONFIRMING ACTION OF THE ID. AO IN INITIATING PENALTY U/S 271(L)(C) OF THE ACT. 2. LEARNED REPRESENTATIVES FAIRLY AGREE THAT THE ISSUE IN APPEAL IS NOW COVERED, IN FAVOU R OF THE ASSESSEE, BY THE DECISION OF SMC BENCH OF THIS TRIBUNAL IN THE CASE OF MAROLI BAZAR VIBHAG VIVIDH KARYAKARI SAHKARI MANDI LIMITED IN ITA NOS.3130/AHD/2014 AND 1834/AHD/2013. VIDE THIS DECISION DATED 8 TH DECEMBER, 2015 , THE SMC BENCH OF THE TRIBU NAL HAS, INTER ALIA, OBSERVED AS FOLLOWS : - 5. LEARNED REPRESENTATIVES FAIRLY AGREE THAT THE ISSUE IS COVERED IN FAVOUR OF THE ASSESSEE, BY A DECISION OF THE CO - ORDINATE BENCH OF THIS TRIBUNAL IN THE CASE OF AMAALSAD VIBHAG VIVIDH KARYAKARI SAHKARI KHEDUT MANDALI LIMITED VS. ITO IN ITA NOS.1710 & 1711/AHD/2011 WHEREIN V IDE ORDER DATED 13.08.2015, THE TRIBUNAL HAS, INTER ALIA, OBSERVED AS FOLLOWS : - 7. WE HAVE HEARD THE RIVAL SUBMISSIONS AND PERUSED THE MATERIAL ON RECORD. THE ISSUE IN THE PRESENT CASE IS WITH RESPECT TO GRANTING OF DEDUCTION UNDER 80P ON THE INTEREST EARNED ON THE DEPOSITS KEPT WITH BANK. IT IS AN UNDISPUTED FACT THAT THE ASSESSEE IS A CO - OPERATIVE SOCIETY. IT IS ASSESSEE S SUBMISSION THAT THE AMOUNTS THAT WERE NOT IMMEDIATELY REQUIRED BY THE ASSESSEE WERE DEPOSITED IN THE BANK SO AS TO EARN INTEREST. THE AFORESAID SUBMISSION OF THE ASSESSEE HAS NOT BEEN CONTROVERTED BY REVENUE. WE FIND THAT THE HON BLE KARNATAKA HIGH COURT IN THE CASE OF TUMKUR MERCHANTS SOUHARDA CREDIT CO - OP ERATIVE LTD. (SUPRA) HAD DECIDED THE ISSUE IN FAVOUR OF THE ASSESSEE BY OBSERVING AS UNDER: I.T.A. NO . 1346 /AHD/ 20 13 ASSESSMENT YEAR: 200 9 - 10 PAGE 3 O F 4 10. IN THE INSTANT CASE, THE AMOUNT WHICH WAS INVESTED IN BANKS TO EARN INTEREST WAS NOT AN AMOUNT DUE TO ANY MEMBERS. IT WAS NOT THE LIABILITY. IT WAS NOT SHOWN AS LIABILITY IN THEIR ACCOUNT. IN FACT THIS AMOUNT WHICH IS IN THE NATURE OF PROFITS AND GAINS, WAS NOT IMMEDIATELY REQUIRED BY THE ASSESSEE FOR LENDING MONEY TO THE MEMBERS, AS THERE WERE NO TAKERS. THEREFORE, THEY HAD DEPOSITED THE MONEY IN A BANK SO AS TO EARN INTEREST. THE SAID INTEREST INCOME IS ATTRIBUTABLE TO CARRYING ON THE BUSINESS OF BANKING AND THEREFORE IT IS LIABLE TO BE DEDUCTED IN TERMS OF SECTION 80P (1) OF THE ACT. I FACT SIMILAR VIEW IS TAKEN BY THE ANDHRA PRADESH HIGH COURT IN THE CASE OF CIT V/S. ANDHRA PRADESH STATE CO - OPERATIVE BANK LTD., [2011] 200 TAXMAN 220/12 TAXMANN.COM 66. IN THAT VIEW OF THE MATTER, THE ORDER PASSED BY THE APPELLATE AUTHORITIES DENYING THE BENEFIT OF DEDUCTION OF THE AFORESAID AMOUNT IS UNSUSTAINABLE IN LAW. ACCO RDINGLY IT IS HEREBY SET ASIDE. THE SUBSTANTIAL QUESTION OF LAW IS ANSWERED IN FAVOUR OF THE ASSESSEE AND AGAINST THE REVENUE. 8. WE ARE OF THE VIEW THAT THE FACTS OF THE CASE ARE IDENTICAL TO THAT IN THE CASE OF TUMKAR MERCHANTS SOUHARDA CREDIT CO - OPERA TIVE LTD. (SUPRA) WHICH HAS BEEN DECIDED BY HON BLE KARNATAKA HIGH COURT AND THEREFORE CONSIDERING THE FACTS OF THE PRESENT CASE IN THE LIGHT OF THE AFORESAID DECISION OF HON BLE KARNATAKA HIGH COURT AND IN THE ABSENCE OF ANY CONTRARY BINDING DECISION POIN TED OUT BY REVENUE, WE ARE OF THE VIEW THAT THE INTEREST EARNED BY THE ASSESSEE IS ELIGIBLE FOR DEDUCTION UNDER SECTION 80P. WE THEREFORE SET ASIDE THE ORDER OF A.O. IN THE RESULT THE GROUND OF THE ASSESSEE IS ALLOWED. 6. I SEE NO REASONS TO TAKE ANY O THER VIEW OF THE MATTER THAN THE VIEW SO TAKEN BY THE CO - ORDINATE BENCH. THEREFORE, RESPECTFULLY FOLLOWING THE ABOVE DECISION OF THE TRIBUNAL DATED 13.08.2015, I APPROVE THE ORDER OF THE LD. CIT(A) AND DECLINE TO INTERFERE IN THE MATTER. THUS, APPEAL FI LED BY THE ASSESSEE FOR ASSESSMENT YEAR 2010 - 11 IS ALLOWED. 3. WE SEE NO REASONS TO TAKE ANY OTHER VIEW OF THE MATTER THAN THE VIEW SO TAKEN BY THE SMC BENCH OF THIS TRIBUNAL (SUPRA) . 4. RESPECTFULLY FOLLOWING THE SAID DECISION DATED 8 TH DECEMBER, 201 5 , WE DISAPPROVE THE ORDER OF THE LD. CIT(A) . I.T.A. NO . 1346 /AHD/ 20 13 ASSESSMENT YEAR: 200 9 - 10 PAGE 4 O F 4 5 . IN THE RESULT, APPEAL FILED BY THE ASSESSEE IS ALLOWED . PRONOUNCED IN THE OPEN COURT TODAY ON THE 6 TH DAY OF APRIL , 2016. SD/ - SD/ - S S GODARA PRAMOD KUMAR (JUDICIAL MEMBER) (ACCOUNTANT MEMBER) DATED: THE 6 TH DAY OF APRIL, 2016. COPIES TO: (1) THE APPELLANT (2) THE RESPONDENT (3) CIT (4) CIT(A) (5) DR (6) GUARD FILE BY ORDER ASSISTANT REGISTRAR INCOME TAX APPEL LATE TRIBUNAL AHMEDABAD BENCHES, AHMEDABAD