M/s. Harichandranpur Lamps , Keonjhar V. ITO, Keonjhar, Keonjhar

ITA 142/CTK/2019

• Counselvise Citation: [2019] 116 COUNSELVISE.COM (IT) 2401 (ITAT-CUTTACK)
• Duration Of Justice: 3 month(s) 18 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 04-09-2019
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: DB
• Assessment Year: 2011-2012
• Appeal Filed On: 16-05-2019
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Assessee Lawyers: B.R.Panda/S.Nanda
• Keywords: Business income; Set aside
• Section: 148; 56; 12; 80P; 201

Judgement Text

P A G E 1 | 5 IN THE INCOME TAX APPELLATE TRIBUNAL, CUTTACK BENCH, CUTTACK BEFORE SHRI CHANDRA MOHAN GARG , JUDICIAL MEMBER AND LAXMI PRASAD SAHU, ACCOUNTANT MEMBER ITA NO S . 142 & 143 /CTK/201 9 ASSESSMENT YEAR S : 2011 - 12 & 2012 - 13 M/S. HARICHANDANPUR LAMPS, AT/PO: HARICHANDANPUR, KEONJHAR VS. ITO, KEONJHAR PAN/GIR NO. AAAAH 5138 H (APPELLANT ) .. ( RESPONDENT ) ASSESSEE BY : SHRI B.R.PANDA/S.NANDA , AR S REVENUE BY : SHRI SUBHENDU DUTTA, DR DATE OF HEARING : 20 / 0 8 / 201 9 DATE OF PRONOUNCEMENT : 4 / 0 9 / 201 9 O R D E R PER C.M.GARG,JM TH ESE ARE APPEAL S FILED BY THE ASSESSEE AGAINST THE SEPARATE ORDER S OF THE CIT(A) CUTTACK FOR THE ASSESSMENT YEAR S 2011 - 2 & 2012 - 13. 2. I N BOTH THE APPEALS, ALTHOUGH ASSESSEE HAS RAISED MULTIPLE GROUNDS OF APPEAL BUT ALL THE GROUNDS ESSENTIALLY RELATES TO ONE ISSUE I.E. ALLOWANCE OF CLAIM OF DEDUCTION U/S. 80P(2)(A)(I)/80P(2)(D) OF THE ACT. 3. THE FACTS OF THE CASE, AS EMANATING FROM THE O RDER OF THE CIT(A) ARE THAT THE ASSESSEE IS A CO - OPERATIVE SOCIETY REGISTERED UNDER THE CO - OPERATIVE SOCIETIES ACT.. IT IS ENGAGED IN THE ACTIVITY OF CARRYING ON THE BUSINESS OF PROVIDING CREDIT FACILITIES TO ITS MEMBERS GOVERNED UNDER THE ITA NOS.142 & 143/CTK/2019 ASSESSMENT YEARS : 2011 - 12 & 2012 - 13 P A G E 2 | 5 ODISHA CO - OPERAT IVE SOCIE T Y ACT, 1963. IN BOTH THE ASSESSMENT YEARS, NO RETURN OF INCOME WAS FILED. ON RECEIPT OF INFORMATION THAT THE ASSESSEE SOCIETY HAD RECEIVED INTEREST INCOME AND NO TAX WAS PAID, THE ASSESSING OFFICER REOPENED THE ASSESSMENT U/S.147 OF THE ACT AND NOTICE UNDER SECTION 148 OF THE ACT WAS ISSUED TO THE ASSESSEE. IN RESPONSE TO NOTICE U/S.148 OF THE ACT, THE ASSESSEE SOCIETY FILED THE RETURN OF INCOME ON 26.6.2015 FOR BOTH THE ASSESSMENT YEARS. DURING THE COURSE OF ASSESSMENT PROCEEDINGS, THE ASSES SING OFFICER OBSERVED THAT THE ASSESSEE HAD SHOWN A GROSS TOTAL INCOME OF RS.10,77,991/ - FOR THE ASSESSMENT YEAR 2011 - 12 AND RS.3,48,310/ - FOR THE ASSESSMENT YEAR 2012 - 13 AFTER AVAILING DEDUCTION U/S.80P, THE ASSESSEE RETURNED AN INCOME OF NIL. THE ASSESS ING OFFICER OBSERVED THAT INTEREST INCOME TO THE EXTENT OF RS.1,14,30,713/ - HAD ACCRUED TO THE ASSESSEE IN ASSESSMENT YEAR 2011 - 2012 AND RS.1,29,88,378/ - IN THE ASSESSMENT YEAR 2012 - 13, WHICH CONSISTED OF INTEREST EARNED FROM LOANS AND ADVANCES AND INTERES T EARNED FROM DEPOSITS WITH BANKS/INSTITUTIONS. THE ASSESSING OFFICER HELD THAT INTEREST EARNED FROM DEPOSIT WITH BANKS/INSTITUTIONS COULD NOT BE CONSIDERED AS PROFIT/GAIN ATTRIBUTABLE TO ANY OF THE ACTIVITIES MENTIONED IN SECTION 80P(2) BUT WOULD BE TAXA BLE U/S.56 OF THE I.T.ACT, 1961 AS INCOME FROM OTHER SOURCES. WHILE TAKING THIS VIEW, THE ASSESSING OFFICER RELIED ON THE DECISION OF HONBLE SUPREME COURT IN THE CASE OF TOTGARS CO - OPERATIVE SALE SOCIETY VS ITO, 188 TAXMAN 282(SC), WHEREIN, THE HONBLE S UPREME COURT HELD THAT INTEREST EARNED ON FUNDS NOT REQUIRED ITA NOS.142 & 143/CTK/2019 ASSESSMENT YEARS : 2011 - 12 & 2012 - 13 P A G E 3 | 5 IMMEDIATELY FOR THE BUSINESS OF PROVIDING CREDIT FACILITIES TO MEMBERS WOULD FALL UNDER THE CATEGORY OF INCOME FROM OTHER SOURCES TAXABLE UNDER SECTION 56 OF THE ACT AND SAME WOULD NOT QUALIFY FOR DEDUCTION AS BUSINESS INCOME UNDER SECTION 80P OF THE ACT. THE ASSESSING OFFICER, ACCORDINGLY, DISALLOWED THE SAME. 4. ON APPEAL, ALTHOUGH THE CIT(A) HELD THAT THE ASSESSEE SOCIETYS ACTIVITY IS NOT IN THE NATURE OF BANKING AND CONSEQUENTLY, IT IS ENT ITLED TO DEDUCTION U/S.80P(2)(A)(I) OF THE ACT BUT SO FAR AS THE INTEREST IS CONCERNED, IT IS LIABLE TO BE TAXABLE U/S.80P(2)(A) OF THE ACT. 5. STILL AGGRIEVED, THE ASSESSEE IS IN APPEALS BEFORE US. 6. AT THE TIME OF HEARING REITERATED THE SUBMISSIONS MADE IN THE GROUNDS OF APPEAL AND FURTHER SUBMITTED THAT THE AMOUNT WHICH WAS INVESTED IN THE BANK TO EARN WAS NOT AN AMOUNT DUE TO ANY MEMBERS AND NOT SHOWN THE LIABILITY OF ANY MEMBERS IN THEIR ACCOUNT. THE AMOUNT IS IN THE NATURE OF PROFIT AND GAIN WAS NOT REQUIRED BY THE ASSESSEE IMMEDIATELY FOR LENDING MONEY TO ITS MEMBERS. THEREFORE, THE SAID INTEREST INCOME IS ATTRIBUTABLE TO CARRYING ON THE BUSINESS OF THE ASSESSEE WHICH IS LIABLE TO BE DEDUCTED IN TERMS OF SECTION 8PP(2)(D) OF THE ACT. 7. LD A.R. OF THE ASSESSEE PRODUCED A DECISION OF ITAT MUMBAI IN THE CASE OF ITO VS. PRESIDENCY CO.OP. HSG. SOCIETY LTD., (2018) TAXPUB (DT) 1870 (MUM - TRIB) AND SUBMITTED THAT THE ISSUE IS COVERED IN FAVOUR OF ITA NOS.142 & 143/CTK/2019 ASSESSMENT YEARS : 2011 - 12 & 2012 - 13 P A G E 4 | 5 THE ASSESSEE. 8. ON THE OTHER HAND, LD D.R. SUPPORTED THE O RDER OF THE CIT(A). 9. WE HAVE HEARD THE RIVAL CONTENTIONS AND PERUSED THE RECORD OF THE CASE AS WELL AS THE DECISION OF MUMBAI TRIBUNAL IN THE CASE OF PRESIDENCY CO - OP HSG. SOCIETY LTD (SUPRA). IN THAT CASE, THE ONLY REQUIREMENTS FOR CLAIMING DEDUCTION UNDER SECTION 80P(2) WAS THAT THE INCOME SHOULD BE RECEIVED FROM THE INVESTMENTS MADE IN CO - OPERATIVE SOCIETY AND CO - OPERATIVE BANKS, WHICH WAS COMPLIED BY THE ASSESSEE. HENCE, THE TRIBUNAL HELD THAT THE ASSESSEE IS ENTITLED TO DEDUCTION IN RESPECT OF INTEREST RECEIVED OR DERIVED BY IT ON FIXED DEPOSITS WITH CO - OPERATIVE BANKS. 10. IN THE CASE AT HAND, THE FACTS ARE THAT THE INTEREST INCOME WAS ARISING OUT OF SURPLUS FUNDS , NOT REQUIRED IMMEDIATELY FOR LENDING THE MONEY TO ITS MEMBERS BY THE ASSESSEE SOCIETY AND THE INTEREST EAR NED OUT OF THAT MONEY. HENCE, THE DECISION OF MUMBAI TRIBUNAL IS COVERED IN FAVOUR OF THE PRESENT ASSESSEE. WE, THEREFORE, SET ASIDE THE ORDER OF THE CIT(A) AND ALLOW THE ASSESSEE THE BENEFIT OF DEDUCTION U/S.80P(2)(A) OF THE ACT . ITA NOS.142 & 143/CTK/2019 ASSESSMENT YEARS : 2011 - 12 & 2012 - 13 P A G E 5 | 5 11. IN THE RESULT, BOTH THE APPEALS OF THE ASSESSEE ARE ALLOWED. ORDER PRONOUNCED ON 4 / 0 9 /201 9 . SD/ - SD/= - (LAXMI PRASAD SAHU) ( CHANDRA MOHAN GARG) ACCOUNTANT MEMBER JUDICIAL MEMBER CUTTACK; DATED 4 / 0 9 /20 9 B.K.PARIDA, SPS COPY OF THE ORDER FORWARDED TO : BY ORDER SR . PVT. S ECRETARY ITAT, CUTTACK 1. THE APPELLANT : M/S. HARICHANDANPUR LAMPS, AT/PO: HARICHANDANPUR, KEONJHAR 2. THE RESPONDENT. ITO, KEONJHAR 3. THE CIT(A) - CUTTACK 4. PR.CIT - CUTTACK 5. DR, ITAT, CUTTACK 6. GUARD FILE. //TRUE COPY//