Gobindapur Samabay K.U.S. Ltd., Hooghly V. DCIT/ACIT, Circle - 1, Hooghly, Hooghly

ITA 1350/KOL/2010

• Counselvise Citation: [2011] 134 COUNSELVISE.COM (IT) 9338 (ITAT-KOLKATA)
• Duration Of Justice: 7 month(s) 11 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 11-02-2011
• Appeal Filed By: Assessee
• Bench Allotted: SMC
• Assessment Year: 2005-2006
• Appeal Filed On: 30-06-2010
• Court: TRIBUNAL
• Department Lawyers: S S KUMAR LD
• Assessee Lawyers: D K MITRA LD

Judgement Text

I.T.A NO. 1350/KOL/2010-BKH 1 , , , IN THE INCOME TAX APPELLATE TRIBUNAL B BENCH : KOLKATA () . . , , ! . '. # '$ , ,, , ) [BEFORE HONBLE SRI B.R.MITTAL, JM & HONBLE SRI B. K. HALDAR, AM] !% / I.T.A NO. 1350/KOL/2010 &' () / ASSESSMENT YEAR : 2005-06 GOBINDAPUR SAMABAY KRISHI VS. DCIT/ACIT,CIR-1 HO OGHLY UNNAYAN SAMITY LTD PAN: AAALG 0017B (+, /APPELLANT ) (-.+,/ RESPONDENT ) +, / FOR THE APPELLANT : / / SHRI D.K.MITRA, LD.AR -.+, / FOR THE RESPONDENT : / / SHRI S.S KUMAR, LD.DR '0 / ORDER .'.#, , , , '$ , ,, , SHRI B.K.HALDAR, ACCOUNTANT MEMBER . : THIS IS AN APPEAL FILED BY THE ASSESSEE AGAINST TH E ORDER OF THE LEARNED COMMISSIONER OF INCOME-TAX(APPEALS), XXXVI DATED 2 9-03-2010 FOR THE ASSESSMENT YEAR 2005-06. 2. THE APPELLANT HAS TAKEN FOLLOWING GROUNDS OF APP EAL:- THAT THE LD. C.I.T.(A) HAD ERRED IN LAW IN CONSIDER ING THE INVESTMENTS MADE BY THE APPELLANT TO BE OUT OF SPARE FUNDS AND INTEREST ON SUCH INVESTMENTS AMOUNTING TO RS.3,05,022/- NOT ELIGIBLE FOR DEDUCTION U/S. 80P. 2. THAT THE LD. C.I.T.(A) HAD ALSO WENT WRONG FACTU ALLY BY CONSIDERING THE INVESTMENTS MADE BY THE APPELLANT TO BE OUT OF SPARE FUNDS AND INTEREST ON SUCH INVESTMENTS AMOUNTING TO RS.3,05,002/- NOT ELI GIBLE FOR DEDUCTION U/S. 80P. 3. FOR THAT THE PURPORTED FINDINGS OF THE C.I.T.(A) DENYING RELIEF TO THE APPELLANT ARE ARBITRARY, UNREASONABLE AND PERVERSE. 4. THAT THE APPELLANT CRAVES LEAVE TO ADD TO, ALTER , AMEND AND/OR MODIFY THE GROUNDS TAKEN HEREIN. 3. THE ASSESSEE IS A COOPERATIVE SOCIETY PROVIDING CREDIT FACILITIES AND DEALING IN AGRICULTURAL AND OTHER ITEMS. DURING THE ASSESSMENT PROCEEDINGS, IT WAS NOTED BY THE AO I.T.A NO. 1350/KOL/2010-BKH 2 THAT THE ASSESSEE EARNED INTEREST INCOME ON INVESTM ENT MADE WITH UBI AMOUNTING TO RS.3,05,022/-. AS THIS DID NOT QUALIFY FOR DEDUCTIO N U/S.80P(2) THE IMPUGNED AMOUNT WAS ADDED BACK TO THE TOTAL INCOME OF THE ASSESSEE. 4. AGGRIEVED THE ASSESSEE FILED APPEAL BEFORE THE L D.CIT(A). 5. BEFORE THE LD.CIT(A) THE SUBMISSIONS OF THE ASSE SSEE WERE AS UNDER:- THE LD. A.O. HAD NOT APPRECIATED THE PROVISIONS OF CLAUSE - 28 OF BYE LAWS OF THE APPELLANT SOCIETY. THE INVEST MENT IN UBI WAS VERY MUCH PERMITTED UNDER THE SAID CLAUSE-28 AS THE UBI (UNITED BANK OF INDIA, SINGUR BRANCH) HAPPEN TO BE THE FINA NCING BANK OF THE APPELLANT SOCIETY WHICH HAD DULY BEEN MENTIONED IN THE AUDIT REPORT ISSUED BY THE AUDITOR APPOINTED UNDER THE WE ST BENGAL CO- OPERATIVE SOCIETY ACT, 1983. THE AUDITOR HAD NOT RE PORTED ANY IRREGULARITY IN THIS REGARD AS THE SUB-CLAUSE (D) O F CLAUSE-28 OF BYE LAWS EMPOWERED THE REGULARITY AUTHORITY I.E. THE RE GISTRAR OF CO- OPERATIVE SOCIETY FOR SUCH INVESTMENT IN COURSE OF CARRYING OUT OF BANKING BUSINESS BY THE APPELLANT SOCIETY . MOREOVE R, SURPLUS FUNDS WERE PARKED WITH UBI IN COURSE OF ITS CARRYING OUT OF BANKING BUSINESS BY THE APPELLANT SOCIETY . THE LD. A.O. WO ULD HAVE APPRECIATED THIS ON AN OBJECTIVE VERIFICATION OF SC HEDULE-L AND SCHEDULE M TO THE ACCOUNTS OF THE APPELLANT SOCIET Y FOR THE RELEVANT FINANCIAL YEAR. THE UBI SINGUR BRANCH, BEI NG THE FINANCING BANK HAD SANCTIONED A CASH CREDIT LIMIT (WORKING CA PITAL LOAN) TO THE APPELLANT SOCIETY FOR THE RELEVANT FINANCIAL YEAR. THE UBI SINGUR BRANCH , BEING THE FINANCING BANK HAD SANCTIONED A CASH CREDIT LIMIT (WORKING CAPITAL LOAN) TO THE APPELLANT SOCIETY AND THE SUMMARY OF THE CASH CREDIT ACCOUNT WAS DISCLOSED IN SCHEDULE-L TO THE ACCOUNTS. THE VOLUME OF TRANSACTIONS IN THE CASH CREDIT ACCOU NT WITH UBI WOULD OBVIOUSLY JUSTIFY THE KEEPING MONEY IN FIXED DEPOSIT ( OR INVESTMENT IN FD WITH UBI ) WITH UBI IT WAS PURE BANKING TRANSACTION AS THE F.D. WERE OFFERED AS SECURITY TO THE UBI - -THE FINANCING BANK. HENCE, THE INTEREST OF RS.3,05,0221 - WAS VERY MUCH EARNED IN COURSE OF CARRYING OUT OF BANKING BUSINES S AS PROVIDED IN SECTION 80P(2)(A)(I) AND THEREFORE SUCH INTEREST WA S PART OF PROFITS AND GAINS OF BUSINESS ATTRIBUTABLE TO BUSINESS OF B ANKING OR PROVIDING OF CREDIT FACILITIES(THROUGH CASH CREDIT ACCOUNT WITH UBI ) TO THE MEMBERS OF APPELLANT SOCIETY. AND DUE TO THI S FACTUAL CIRCUMSTANCES THE ADDITION OF RS. 3050221- WAS NOT JUSTIFIED AND BEING ILLEGAL SHOULD BE DELETED. 5.1 RELIANCE WAS PLACED ON THE DECISION IN THE CASE OF M/S. RATNAGIRI DISTRICT CENTRAL CO-OPERATIVE BANK LTD. 254 ITR 697(BOM) I.T.A NO. 1350/KOL/2010-BKH 3 6. THE LD.CIT(A) WAS OF THE OPINION THAT INTEREST I NCOME AROSE TO THE APPELLANT SOCIETY FROM THE SPARE FUNDS DEPOSITED WITH THE BAN K. ACCORDING TO HIM THE ISSUE WAS SQUARELY COVERED BY THE HONBLE APEX COURTS DECIS ION IN THE CASE OF M/S. TATGARS CO- OPERATIVE SALE SOCIETY LTD [322 ITR 283(SC)], WHERE IN THE HONBLE COURT HELD THAT INTEREST ON INVESTMENT OF SPARE FUNDS IS NOT ELIGIB LE FOR DEDUCTION U/S.80P OF THE ACT. HE, THEREFORE, HELD THAT THE ASSESSEE WAS NOT ELIGIBLE FOR DEDUCTION U/S.80P(2) OF THE ACT IN RESPECT OF IMPUGNED INTEREST INCOME FROM UBI BANK. 7. AGGRIEVED THE ASSESSEE HAS FILED APPEAL BEFORE T HE TRIBUNAL. 8. BEFORE US THE LD.AR FOR THE ASSESSEE CONTENDED T HAT EVEN THOUGH THE ASSESSEE IS A PRIMARY AGRICULTURAL SOCIETY, THE BUSINESS CARRIED ON BY IT IS AKIN TO BANKING. THUS, INTEREST EARNED FROM FUND DEPOSITED WITH UBI SHOULD BE ELIGIBLE FOR DEDUCTION U/S.80P OF THE ACT. 9 THE LD.DR ON THE OTHER HAND, RELIED ON THE ORDER S OF THE AUTHORITIES BELOW. 10. WE HAVE HEARD THE PARTIES AND PERUSED THE RECO RD. ACCORDING TO US PROVIDING CREDIT FACILITIES TO ITS MEMBERS BY A SOCIETY IS A DISTINCT ACTIVITY FROM THAT OF CARRYING ON BANKING BUSINESS BY A SOCIETY. IN THE PRESENT CASE THE APPELLANT IS ONLY A CREDIT SOCIETY FOR PROVIDING CREDIT FACILITIES TO ITS MEMBERS, IT DOES NOT CARRY OUT ANY BANKING BUSINESS. IN THIS VIEW OF THE MATTER, WE ARE OF THE CONSIDERED O PINION THAT THE ISSUE IS SQUARELY COVERED BY THE HONBLE APEX COURTS DECISION IN THE CASE OF TOTGARS CO-OPERATIVE SALE SOCIETY LTD. (SUPRA). THUS, WE DO NOT FIND ANY INFI RMITY IN THE IMPUGNED ORDER OF THE LD.CIT(A) IN CONFIRMING THE IMPUGNED ADDITION AND U PHOLD THE SAME. 11. IN THE RESULT, THE APPEAL OF THE ASSESSEE IS DI SMISSED. # '0 $1' 2 1& 3 #4 5$ -02-2011 ORDER PRONOUNCED IN THE OPEN COURT ON 11-02-2011 SD/- SD/- [ . . , ] [ . ' . # , '$ ] (B.R.MITTAL ) (B. K. HALDAR) JUDICIAL MEMBER ACCOUNTANT MEMBER (5$) DATED :11-02-2011 I.T.A NO. 1350/KOL/2010-BKH 4 *PP 67 &89 : /SR.P.S. '0 ; -< ='<(>- COPY OF THE ORDER FORWARDED TO: 1. +, /APPELLANT- M/S. GOBINDAPUR SAMABAY KRISHI UNNAY AN SAMITY LTD VILL & PO:NASIBPUR, DIST:HOOGHLY. 2 -.+, / RESPONDENT : DCIT/ACIT,CIR-1, CHINSURAH, HOOGHLY( WB). 3. 0&/ THE CIT, 4. 0& ()/ THE CIT(A), KOLKATA. 5. E3 -&/ DR, KOLKATA BENCHES, KOLKATA .< -/ TRUE COPY , '0&1/ BY ORDER , # !9 /ASSTT. REGISTRAR