M/s National Coal Development Corporation Staff Co-operative Credit Society Ltd., Kolkata V. ITO, WD-32(2), KOLKATA, Kolkata

ITA 1378/KOL/2014

• Counselvise Citation: [2016] 131 COUNSELVISE.COM (IT) 4588 (ITAT-KOLKATA)
• Duration Of Justice: 2 year(s) 2 month(s) 15 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 02-09-2016
• Appeal Filed By: Assessee
• Bench Allotted: SMC
• Next Hearing Date: 29-08-2016
• Assessment Year: 2010-2011
• Appeal Filed On: 17-06-2014
• Court: TRIBUNAL
• Keywords: Business income; Opportunity of being heard

Judgement Text

I.T.A. NO. 1378/KOL./2014 ASSESSMENT YEAR: 2010-2011 PAGE 1 OF 5 IN THE INCOME TAX APPELLATE TRIBUNAL, KOLKATA SMC BENCH, KOLKATA BEFORE SHRI P.M. JAGTAP, ACCOUNTANT MEMBER I.T.A. NO. 1378 /KOL/ 2014 ASSESSMENT YEAR: 2010-2011 M/S. NATIONAL COAL DEVELOPMENT CORPORATION STAFF COOPERATIVE CREDIT SOCIETY LIMITED,................ ...........................APPELLANT THAPAR HOUSE, 5 TH FLOOR, 25, BRABOURNE ROAD, KOLKATA-700 001 [PAN : AAALN 0409 N] -VS.- INCOME TAX OFFICER,................................ .....................................RESPONDENT WARD-32(2), KOLKATA APPEARANCES BY: SHRI SUBASH AGARWAL, ADVOCATE, FOR THE ASSESSEE SHRI SALLONG YADEN, ADDL. CIT, D.R., FOR THE DEPARTMENT DATE OF CONCLUDING THE HEARING : AUGUST 29, 2016 DATE OF PRONOUNCING THE ORDER : SEPTEMBER 02, 2016 O R D E R THIS APPEAL FILED BY THE ASSESSEE IS DIRECTED AGAIN ST THE ORDER OF THE LD. COMMISSIONER OF INCOME TAX (APPEALS)-XIX, KOLKA TA DATED 07.04.2014 AND THE SOLITARY ISSUE INVOLVED THEREIN RELATES TO THE DISALLOWANCE OF ASSESSEES CLAIM FOR DEDUCTION UNDER SECTION 80P IN RESPECT OF INTEREST INCOME EARNED ON FIXED DEPOSITS (GENERAL). 2. THE ASSESSEE IN THE PRESENT CASE IS A CREDIT COO PERATIVE SOCIETY, WHICH IS ENGAGED IN THE BUSINESS OF PROVIDING LOANS TO THE STAFF MEMBERS OF THE NATIONAL COAL DEVELOPMENT CORPORATION. THE R ETURN OF INCOME FOR THE YEAR UNDER CONSIDERATION WAS FILED BY IT ON 01. 04.2011 DECLARING TOTAL INCOME AT NIL AFTER CLAIMING DEDUCTION UNDER SECT ION 80P IN RESPECT OF ITS ENTIRE INCOME. DURING THE COURSE OF ASSESSMENT PROCEEDINGS, IT WAS NOTICED BY THE ASSESSING OFFICER THAT THE ASSESSEE HAS CLAIMED DEDUCTION UNDER SECTION 80P, INTER ALIA, ON THE INTEREST RECE IVED ON FIXED DEPOSITS I.T.A. NO. 1378/KOL./2014 ASSESSMENT YEAR: 2010-2011 PAGE 2 OF 5 (GENERAL) AMOUNTING TO RS.37,33,299/-. ACCORDING TO HIM, THE SAID INTEREST WAS ASSESSABLE TO TAX IN THE HANDS OF THE ASSESSEE UNDER THE HEAD INCOME FROM OTHER SOURCES AND, THEREFORE, THE DED UCTION UNDER SECTION 80P WAS NOT ALLOWABLE IN RESPECT OF THE SAID INCOME . IN THIS REGARD, THE EXPLANATION OFFERED BY THE ASSESSEE THAT THE INVEST MENT IN FIXED DEPOSITS WAS MADE FOR THE PURPOSE OF ITS BUSINESS IN ORDER T O MAINTAIN THE LIQUID ASSETS, WAS NOT FOUND ACCEPTABLE BY THE ASSESSING O FFICER. HE HELD THAT MAKING INVESTMENT IN FIXED DEPOSITS WITH BANKS WAS NOT THE BUSINESS ACTIVITY OF THE ASSESSEE AND SINCE SUCH INVESTMENT WAS MADE BY THE ASSESSEE OUT OF SURPLUS FUNDS, THE INTEREST RECEIVE D THEREON WAS ASSESSABLE TO TAX UNDER THE HEAD INCOME FROM OTHER SOURCES. ACCORDINGLY, THE CLAIM OF THE ASSESSEE FOR DEDUCTIO N UNDER SECTION 80P IN RESPECT OF THE INTEREST RECEIVED ON FIXED DEPOSITS (GENERAL) WAS DISALLOWED BY THE ASSESSING OFFICER. 3. ON APPEAL, THE LD. CIT(APPEALS) UPHELD THE ACTIO N OF THE ASSESSING OFFICER ON THIS ISSUE BY OBSERVING THAT THE INTERES T EARNED BY THE ASSESSEE ON FIXED DEPOSITS MADE WITH BANKS OUT OF ITS OWN SU RPLUS FUNDS WAS CHARGEABLE TO TAX UNDER THE HEAD INCOME FROM OTHER SOURCES AND THE SAME, THEREFORE, WAS NOT ELIGIBLE FOR DEDUCTION UND ER SECTION 80P. AGGRIEVED BY THE ORDER OF THE LD. CIT(APPEALS), THE ASSESSEE HAS PREFERRED THIS APPEAL BEFORE THE TRIBUNAL. 4. I HAVE HEARD THE ARGUMENTS OF BOTH THE SIDES AND ALSO PERUSED THE RELEVANT MATERIAL AVAILABLE ON RECORD. IT IS OBSERV ED THAT A SIMILAR ISSUE WAS INVOLVED IN ASSESSEES OWN CASE FOR A.YS. 2006- 07, 2007-08 AND 2009-10 AND VIDE ITS ORDER DATED 02.03.2016 PASSED IN ITA NOS. 1792/KOL/2012 & OTHERS, THE SAME WAS DECIDED BY THE TRIBUNAL AS PER PARAGRAPHS NO. 6 & 7 OF ITS ORDER, WHICH READ AS UN DER:- 6. AS REGARDS THE COMMON ISSUE INVOLVED IN THE CROS S OBJECTIONS OF THE ASSESSEE RELATING TO ASSESSEES CLAIM FOR DEDUCTION UNDER SECTION 80P(2)(A)(I) IN RESPECT OF INTEREST ON BANK FIXED DEPOSITS (GENERAL ), THE LD. COUNSEL FOR THE ASSESSEE HAS SUBMITTED THAT EVEN THOUGH THE SAME HAS BEEN DECIDED BY THE TRIBUNAL IN ASSESSEES OWN CASE FOR ASSESSMENT YEAR 2008-09 BY RELYING ON THE I.T.A. NO. 1378/KOL./2014 ASSESSMENT YEAR: 2010-2011 PAGE 3 OF 5 DECISION OF THE HONBLE SUPREME COURT IN THE CASE OF TOTGARS CO-OPERATIVE SALE SOCIETY LIMITED (SUPRA), THE HONBLE KARNATAKA HIGH COURT IN THE DECISION RENDERED SUBSEQUENTLY IN THE CASE OF T UMKUR MERCHANTS SOUHARDA CREDIT COOPERATIVE LTD. VS- ITO [2015] 55 TAXMANN.COM 447 HAS DISTINGUISHED THE DECISION OF T HE HONBLE SUPREME COURT IN THE CASE OF TOTGARS CO-OPERATIVE SALE SOCIETY LIMITED (SUPRA) ON CERTAIN SPECIFIC ASPECTS AND AFT ER TAKING INTO CONSIDERATION THIS DISTINCTION POINTED OUT BY THE H ONBLE KARNATAKA HIGH COURT IN THE CASE OF TUMKUR MERCHANT S SOUHARDA CREDIT COOPERATIVE LTD. (SUPRA), THE TRIBUNAL IN TH E CASE OF ITO-VS- THE BASKARA COOPERATIVE CREDIT SOCIETY LTD. DECIDED VIDE ITS ORDER DATED 18 TH NOVEMBER, 2015 PASSED IN ITA NO.1890/KOL/2012 HAS RESTORED THE SIMILAR ISSUE TO THE FILE OF THE AO AF TER RECORDING ITS OBSERVATIONS IN PARAGRAPH NOS.11 AND 12 AS UNDER: 11. WE HAVE CONSIDERED THE RIVAL SUBMISSIONS AND CAR EFULLY PERUSED THE RELEVANT MATERIAL AVAILABLE ON RECORD. I N THE CASE OF TOTGARS COOPERATIVE SALE SOCIETY LIMITED (SUPRA) C ITED BY THE LD. D.R. IN SUPPORT OF THE REVENUES CASE ON THE ISSUE UND ER CONSIDERATION, THE ASSESSEE-SOCIETY BESIDES CARRYING ON THE BUSINESS OF PROVIDING CREDIT FACILITIES TO ITS MEMB ERS WAS ALSO MARKETING ITS AGRICULTURAL PRODUCE. THE SALE PROCEED OF SUCH AGRICULTURAL PRODUCE, WHICH WAS PAYABLE TO ITS MEMBER S, IN MANY CASES, WAS RETAINED BY THE ASSESSEE-SOCIETY AND THE S AME WAS INVESTED IN SHORT-TERM DEPOSITS/SECURITIES. IN THESE FACTS AND CIRCUMSTANCES OF THE CASE, INTEREST INCOME RECEIVED ON SHORT-TERM DEPOSITS/SECURITIES WAS HELD TO BE CHARGEABLE TO TAX UNDER THE HEAD INCOME FROM OTHER SOURCES BY THE HONBLE SUPRE ME COURT OBSERVING THAT THE AMOUNT INVESTED BY THE ASSESSEE WAS A LIABILITY PAYABLE TO ITS MEMBERS, AND, THEREFORE, THE INTERES T INCOME COULD NOT BE SAID TO BE ATTRIBUTABLE TO THE ACTIVITY MENTI ONED IN SECTION 80P(2)(A)(I). IN THE CASE OF TUMKUR MERCHANTS SOUHARD A CREDIT COOPERATIVE LIMITED (SUPRA) CITED BY THE LD. COUNSEL FOR THE ASSESSEE, THE AMOUNT, WHICH WAS INVESTED IN BANK TO E ARN INTEREST, WAS NOT AN AMOUNT DUE TO ANY MEMBER AND WHICH WAS NOT THE LIABILITY SHOWN IN THEIR ACCOUNTS. IN FACT, THE SAID A MOUNT, WHICH WAS IN THE NATURE OF PROFIT AND GAINS, WAS NOT IMMED IATELY REQUIRED BY THE ASSESSEE FOR LENDING MONEY TO THE ME MBERS AS THERE WERE NO TAKERS AND THE SAME, THEREFORE, HAD BEE N DEPOSITED IN A BANK SO AS TO EARN INTEREST. IN THESE FACTS AN D CIRCUMSTANCES OF THE CASE, AS INVOLVED IN THE CASE OF TUMKUR MERCHANTS SOUHARDA CREDIT COOPERATIVE LIMITED (SUPRA), THE DECISION OF THE HONBLE SUPREME COURT IN THE CASE OF TOTGARS COOPERATIVE S ALE SOCIETY LIMITED WAS FOUND TO BE DISTINGUISHABLE ON FACTS BY THE HONBLE KARNATAKA HIGH COURT AND THE INTEREST INCOME RECEIVED BY THE ASSESSEE-SOCIETY ON BANK DEPOSITS WAS HELD TO BE ITS BUSINESS INCOME BEING ATTRIBUTABLE TO CARRYING ON THE BUSINE SS OF BANKING ELIGIBLE FOR DEDUCTION UNDER SECTION 80P(2)(A)(I) O F THE ACT. I.T.A. NO. 1378/KOL./2014 ASSESSMENT YEAR: 2010-2011 PAGE 4 OF 5 12. KEEPING IN VIEW THE DECISION OF THE HONBLE SUPRE ME COURT IN THE CASE OF TOTGARS COOPERATIVE SALE SOCIETY LIMITE D (SUPRA) CITED BY THE LD. D.R. AND THE DECISION OF THE HONBLE KARNATA KA HIGH COURT IN THE CASE OF TUMKUR MERCHANTS SOUHARDA CREDIT COOPERATIVE LIMITED (SUPRA) CITED BY THE LD. COUNSEL FOR THE ASSESSEE, THE QUESTION THAT ARISES IN THE CASE ON HAND, IS WHETHER THE INVESTMENT, WHICH IS MADE BY THE ASSESSEE-SOCIETY A ND WHICH HAS FETCHED INTEREST INCOME IN QUESTION, IS MADE OUT OF ITS OWN SURPLUS FUND, AS WAS THE CASE IN TUMKUR MERCHANT S SOUHARDA CREDIT COOPERATIVE LIMITED (SUPRA) OR THE SAME IS MA DE OUT OF THE AMOUNT PAYABLE BY THE ASSESSEE-SOCIETY TO ITS MEMBE RS, WHICH REPRESENT ITS LIABILITY AS WAS THE CASE IN TOTGARS COOPERATIVE SALE SOCIETY LIMITED. IN THIS REGARD, IT IS OBSERVED THAT THIS ASPECT HAS NOT BEEN SPECIFICALLY CONSIDERED EITHER BY THE ASSESS ING OFFICER OR BY THE LD. CIT(APPEALS) IN THEIR RESPECTIVE ORDERS AN D, THEREFORE, THERE IS NO FINDING SPECIFICALLY GIVEN BY THEM ON THIS RELEVANT ASPECT. IN THIS REGARD, A PERUSAL OF THE RELEVANT BAL ANCE-SHEET OF THE ASSESSEE AS ON 31.03.2009 (COPY OF WHICH AT PAGES 67 & 68 OF THE PAPER BOOK), SHOWS THAT THE TOTAL INVESTMENT MADE B Y THE ASSESSEE-SOCIETY WAS RS.22.08 CRORES AS ON 31.03.20 09, WHEREAS THE RESERVES & SURPLUS AND PROFIT & LOSS A/C. BALANCE AS ON THE SAID DATE WERE RS.1.76 CRORES AND 1.73 CRORES RESPE CTIVELY. THE MAJOR AMOUNT APPEARING ON THE LIABILITY SIDE OF THE B ALANCE-SHEET AS ON 31.03.2009 WAS DEPOSIT AND OTHER ACCOUNT AGGRE GATING TO RS.28.89 CRORES, WHICH COMPRISED OF VARIOUS FUNDS AND DEPOSITS. KEEPING IN VIEW THESE FACTS AND FIGURES, WE ARE OF T HE VIEW THAT THE ISSUE AS TO WHETHER THE RELEVANT INVESTMENT IS MADE B Y THE ASSESSEE OUT OF ITS OWN SURPLUS FUNDS OR OUT OF THE AMOUNT PA YABLE TO ITS MEMBERS, WHICH REPRESENT ITS LIABILITY, REQUIRES VERI FICATION IN ORDER TO DETERMINE THE EXACT HEAD OF INCOME UNDER WHIC H THE INTEREST ON SUCH INVESTMENT IS CHARGEABLE TO TAX IN T HE HANDS OF THE ASSESSEE BY APPLYING THE RELEVANT CASE LAWS. WE, THER EFORE, SET ASIDE THE IMPUGNED ORDER OF THE LD. CIT(APPEALS) ON T HIS ISSUE AND RESTORE THE MATTER TO THE FILE OF THE ASSESSING OFFIC ER FOR DECIDING THE SAME AFRESH AFTER VERIFYING THE RELEVANT FACTUAL P OSITION FROM RECORD AND AFTER GIVING THE ASSESSEE PROPER AND SUFF ICIENT OPPORTUNITY OF BEING HEARD. GROUND NO. 2 OF THE REVEN UES APPEAL IS ACCORDINGLY TREATED AS ALLOWED FOR STATISTICAL P URPOSES. 7. RELYING ON THE DECISION OF THE TRIBUNAL IN THE CAS E OF BAKSARA COOPERATIVE CREDIT SOCIETY LTD. (SUPRA), THE LD. COU NSEL FOR THE ASSESSEE HAS CONTENDED THAT THE SIMILAR ISSUE INVOLVED IN THE CASE OF THE ASSESSEE FOR ALL THE THREE YEARS UNDER CONSIDERATION MAY ALSO BE RESTORED TO THE FILE OF THE AO AND SINCE THE LD. DR HAS NOT RAISED ANY OBJECTION IN THIS REGARD, WE SET ASIDE THE IMPUGNED ORDERS OF THE LD. CIT(A) ON THIS ISSUE AND RESTORE THIS MATTER TO THE FILE OF THE AO FOR DECIDING THE SAME AFRESH AS PER THE SAME DIRECTION AS GIVEN IN I.T.A. NO. 1378/KOL./2014 ASSESSMENT YEAR: 2010-2011 PAGE 5 OF 5 THE CASE OF BAKSARA COOPERATIVE CREDIT SOCIETY LTD.( SUPRA). THE CROSS OBJECTIONS FILED BY THE ASSESSEE THUS ARE TREATED AS ALLOWED FO R STATISTICAL PURPOSES. AS THE ISSUE INVOLVED IN THE YEAR UNDER CONSIDERATI ON AS WELL AS ALL THE MATERIAL FACTS RELEVANT THERETO ARE SIMILAR TO A.YS . 2006-07, 2007-08 AND 2009-10, I RESPECTFULLY FOLLOW THE DECISION OF THE TRIBUNAL DATED 02.03.2016 FOR THE SAID YEARS AND RESTORE THIS ISSU E TO THE FILE OF THE ASSESSING OFFICER FOR DECIDING THE SAME AS PER THE SAME DIRECTIONS AS GIVEN FOR A.YS. 2006-07, 2007-08 AND 2009-10. 5. IN THE RESULT, THE APPEAL OF THE ASSESSEE IS TRE ATED AS ALLOWED FOR STATISTICAL PURPOSES. ORDER PRONOUNCED IN THE OPEN COURT ON SEPTEMBER 02, 2016. SD/- (P.M. JAGTAP) ACCOUNTANT MEMBER KOLKATA, THE 2 ND DAY OF SEPTEMBER, 2016 COPIES TO : (1) M/S. NATIONAL COAL DEVELOPMENT CORPORATION STAFF COOPERATIVE CREDIT SOCIETY LIMITED, THAPAR HOUSE, 5 TH FLOOR, 25, BRABOURNE ROAD, KOLKATA-700 001 (2) INCOME TAX OFFICER, WARD-32(2), KOLKATA (3) COMMISSIONER OF INCOME TAX (APPEALS)-XIX, KOL KATA; (4) COMMISSIONER OF INCOME TAX- , (5) THE DEPARTMENTAL REPRESENTATIVE (6) GUARD FILE BY ORDER ASSISTANT REGISTRAR, INCOME TAX APPELLATE TRIBUNAL, KOLKATA BENCHES, KOLKATA LAHA/SR. P.S.