Banganga Nagri Sah. patsanstha Ltd., Nashik V. Income-tax Officer,

ITA 1521/PUN/2015

• Counselvise Citation: [2016] 133 COUNSELVISE.COM (IT) 2659 (ITAT-PUNE)
• Duration Of Justice: 3 month(s) 20 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 10-03-2016
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: SMC
• Assessment Year: 2010-2011
• Appeal Filed On: 20-11-2015
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: M K BIJU
• Keywords: Depreciation; Principle of natural justice

Judgement Text

] ]] ] ... IN THE INCOME TAX APPELLATE TRIBUNAL PUNE BENCH SMC, PUNE , !', $ % BEFORE MS. SUSHMA CHOWLA, JM AND SHRI PRADIP KUMAR KEDIA, AM ITA NOS.1521 & 1522/PN/2015 ASSESSMENT YEARS : 2010-11 & 2011-12 BANGANGA NAGRI SAH. PATSANSTHA LTD., GALA NO.8/9/10P, SHOPPING CENTER, NEAR S.T. STAND, A/P OZHAR, TAL. NIPHAD, NASHIK 422 006. PAN : AAAJB0550G . APPELLANT VS. THE INCOME TAX OFFICER, WARD 1(1), NASHIK. . RESPONDENT / APPELLANT BY : NONE / RESPONDENT BY : SHRI M. K. BIJU, JCIT / DATE OF HEARING : 03.02.2016 / DATE OF PRONOUNCEMENT: 10.03.2016 & / ORDER PER PRADIP KUMAR KEDIA, AM : BOTH THE CAPTIONED APPEALS PREFERRED BY THE ASSESSE E ARE AGAINST THE COMMON ORDER OF CIT(A)-I, NASHIK DATED 14.09.2015 R ELATING TO ASSESSMENT YEARS 2010-11 AND 2011-12 PASSED UNDER SECTION 143( 3) OF THE INCOME-TAX ACT, 1961 (IN SHORT THE ACT). 2. BOTH THE CAPTIONED APPEALS PREFERRED BY THE ASSE SSEE ARE ON IDENTICAL GROUNDS EXCEPT FOR THE DIFFERENCE IN QUANTUM. ACCO RDINGLY, WE SHALL TAKE-UP THE APPEAL FOR ASSESSMENT YEAR 2010-11 AS THE LEAD CASE. 2 ITA NOS.1521 & 1522/PN/2015 ITA NO.1521/PN/2015 (A.Y. 2010-11) 3. IN THIS APPEAL, THE ASSESSEE HAS RAISED THE FOLL OWING GROUNDS OF APPEAL :- 1. ON THE BASIS OF FACTS AND IN THE CIRCUMSTANCES OF THE CASE, THE COMMISSIONER OF INCOME TAX, (APPEALS)-I, NASHIK IS NOT JUSTIFIED IN TAXING THE INCOME ON ACCOUNT OF LOCKER RENT, AMBULANCE RENT, COMMISSION ON COLLECTI ON OF MSEB BILLS AND HEALTH CLUB FEES UNDER THE HEAD 'INCOME FROM OTHER SOURCES '. 2. ON THE BASIS OF FACTS AND IN THE CIRCUMSTANCES O F THE CASE, THE COMMISSIONER OF INCOME TAX, (APPEALS)-I, NASHIK IS NOT JUSTIFIED IN CONFIRMING THE DISALLOWANCE OF DEDUCTION CLAIMED U/S. 80P IN RESPECT OF LOCKER REN T, AMBULANCE RENT, COMMISSION ON COLLECTION OF MSEB BILLS, HEALTH CLUB FEES AND R ENT FROM PROPERTY. 3. WITHOUT PREJUDICE TO GROUND OF APPEAL NO. 1 & 2 AND ON THE BASIS OF FACTS AND IN THE CIRCUMSTANCES OF THE CASE, THE COMMISSIO NER OF INCOME TAX, (APPEALS)-I, NASHIK IS NOT JUSTIFIED IN RESTRICTING THE DEDUCTIO NS OF EXPENSES ATTRIBUTABLE TO AMBULANCE RENT RECEIVED AT 10% OF GROSS AMBULANCE R ENT RECEIVED INSTEAD OF ACTUAL EXPENSES INCURRED AT RS. 1,70,001/-. 4. WITHOUT PREJUDICE TO GROUND OF APPEAL NO. 1 & 2 AND ON THE BASIS OF FACTS AND IN THE CIRCUMSTANCES OF THE CASE, THE COMMISSIO NER OF INCOME TAX, (APPEALS)-I, NASHIK IS NOT JUSTIFIED IN RESTRICTING THE DEDUCTIO NS OF EXPENSES ATTRIBUTABLE TO MSEB COMMISSION AT 10% OF GROSS MSEB COMMISSION INSTEAD OF CALCULATING THE SAME ON THE BASIS OF PROPORTIONATE OF TAXABLE NET PROFIT OF GROSS RECEIPTS OF MSEB THAT BEARING TO THE GROSS RECEIPTS CREDITED TO PROFIT AN D LOSS ACCOUNT FOR THE YEAR UNDER APPEAL. 5. WITHOUT PREJUDICE TO GROUND OF APPEAL NO. 1 & 2 AND ON THE BASIS OF FACTS AND IN THE CIRCUMSTANCES OF THE CASE, THE COMMISSIO NER OF INCOME TAX, (APPEALS)-I, NASHIK IS NOT JUSTIFIED IN RESTRICTING THE DEDUCTIO NS OF EXPENSES ATTRIBUTABLE TO HEALTH CLUB INCOME RECEIVED AT 10% OF GROSS HEALTH CLUB IN COME RECEIVED INSTEAD OF ACTUAL EXPENSES INCURRED AT RS. 34,750/-. 6. ON THE BASIS OF FACTS AND IN THE CIRCUMSTANCES O F THE CASE, THE COMMISSIONER OF INCOME TAX, (APPEALS)-I, NASHIK IS NOT JUSTIFIED IN TAXING THE INCOME ON ACCOUNT OF RENT OF PROPERTY UNDER THE HEAD 'INCOME FROM HOUSE PROPERTY'. 7. ON THE BASIS OF FACTS AND IN THE CIRCUMSTANCES O F THE CASE, THE COMMISSIONER OF INCOME TAX, (APPEALS)-I, NASHIK IS NOT JUSTIFIED IN WITHDRAWING THE DEDUCTION GRANTED BY THE AO OF RS. 50,000/- UNDER SECTION 80P (2)(C)(II). 8. THE APPELLANT CRAVES FOR ADDITION TO, DELETION, ALTERATION, MODIFICATION, CHANGE ANY OF THE GROUNDS. 4. THE ASSESSEE IS A CO-OPERATIVE CREDIT SOCIETY ENGAGED IN THE BUSINESS OF GIVING LOANS/ADVANCES AND ACCEPTING DEPOSITS FRO M ITS MEMBERS. THE SOCIETY WAS INCORPORATED ON 25.07.2000 AND IS REGIS TERED UNDER MAHARASHTRA CO-OPERATIVE SOCIETIES ACT, 1980. THE ASSESSEE SOC IETY THUS IS ENGAGED IN THE BUSINESS AS A CREDIT SOCIETY CARRYING ON THE BUSINE SS OF PROVIDING BANKING 3 ITA NOS.1521 & 1522/PN/2015 SERVICES TO ITS MEMBERS. IN THE COURSE OF ASSESSME NT PROCEEDINGS UNDER SECTION 143(2) OF THE ACT, THE ASSESSING OFFICER NOTICED TH AT THE ASSESSEE SOCIETY HAS INTER-ALIA DECLARED CERTAIN INCOME UNDER HEAD OF : (I) LOCKER RENT OF RS.14,295/-; (II) AMBULANCE RENT OF RS.1,08,116/-; (III) MSEB BILL COLLECTION COMMISSION OF RS.1,85,624/-; (IV) SHOP RENT OF RS.4 0,900/-; AND (V) HEALTH CLUB FEES OF RS.38,400/-, WHICH WORKS OUT TO RS.3,8 7,335/- IN AGGREGATE WHICH IS NOT ATTRIBUTABLE TO THE MAIN ACTIVITY OF THE CO- OPERATIVE CREDIT SOCIETY. THE ASSESSING OFFICER THEREFORE OPINED THAT THE ASSESSE E IS NOT ENTITLED TO FULL DEDUCTION UNDER SECTION 80P OF THE ACT. HOWEVER, D EDUCTION UNDER SECTION 80P(2)(C)(II) OF THE ACT TO THE EXTENT OF RS.50,000 /- WAS GRANTED TO THE ASSESSEE BY THE ASSESSING OFFICER. 5. AGAINST THE DENIAL OF DEDUCTION UNDER SECTION 80 P ON INCOME EARNED UNDER VARIOUS HEADS NOTED ABOVE AND ALSO FOR ADOPTI NG THE GROSS AMOUNT OF RECEIPT IN VARIOUS HEADS AS NOTED ABOVE INSTEAD OF NET INCOME UNDER THE RESPECTIVE HEADS AFTER APPROPRIATION OF EXPENSES, T HE ASSESSEE PREFERRED APPEAL BEFORE THE FIRST APPELLATE AUTHORITY I.E. THE CIT(A ). 6. THE CIT(A) CONFIRMED THE ACTION OF THE ASSESSING OFFICER IN REJECTING THE CLAIM OF DEDUCTION UNDER SECTION 80P(2) OF THE ACT IN RESPECT OF INCOME UNDER THE HEAD LOCKER RENT, AMBULANCE RENT, MSEB BI LL COLLECTION COMMISSION, SHOP RENT, HEALTH CLUB FEES, ETC.. NOTE D ABOVE ON THE GROUND THAT SUCH ACTIVITIES ARE NOT PART OF THE BUSINESS A CTIVITIES OF THE ASSESSEE AND THEREFORE INCOME OUT OF THE SAME CANNOT BE ASSESSED UNDER THE HEAD INCOME FROM BUSINESS. HOWEVER, THE CIT(A) AGREED WITH TH E CONTENTION OF THE ASSESSEE THAT EXPENSES ATTRIBUTABLE TO THESE VARIOU S STREAMS OF INCOME SHOULD BE ALLOWED AS DEDUCTION WHICH WAS ESTIMATED AT 10% OF THE GROSS INCOME. AS REGARDS PROPERTY RENT INCOME OF RS.40,900/-, THE CI T(A) DIRECTED THE ASSESSING OFFICER TO TAX THE RENT INCOME UNDER THE HEAD INCO ME FROM HOUSE PROPERTY AND GRANT STATUTORY DEDUCTION OF 30% UNDER SECTION 24 AS PER LAW. THE CLAIM OF DEDUCTION UNDER SECTION 80P(2) OF THE ASSESSEE W AS DENIED BY THE CIT(A) ON 4 ITA NOS.1521 & 1522/PN/2015 THIS SOURCE OF INCOME ALSO. THE CIT(A) FURTHER WIT HDREW THE DEDUCTION OF RS.50,000/- AS GRANTED BY THE ASSESSING OFFICER UND ER SECTION 80P(2)(C)(II) OF THE ACT ON THE GROUND THAT THE AFORESAID DEDUCTION IS AVAILABLE TO THOSE SOCIETIES WHICH ARE NOT COVERED BY CLAUSE (A)OR CLA USE (B) OF SUB-SECTION (2) OF SECTION 80P OF THE ACT WHICH IS NOT THE CASE HERE. THE RELEVANT OPERATIVE PARA OF ORDER OF THE CIT(A) ADJUDICATING THE APPEAL IS E XTRACTED HEREUNDER :- 8. I HAVE CAREFULLY CONSIDERED THE FACTS OF THE CA SE, THE ASSESSMENT ORDER, JUDICIAL PRONOUNCEMENTS CITED AND ORAL AS WELL AS W RITTEN SUBMISSIONS ON BEHALF OF THE APPELLANT. THE A.O. HAS DISALLOWED THE DEDUCTI ON CLAIMED U/S. 80P(2) IN RESPECT OF CERTAIN CLASSES OF INCOME AS MENTIONED HEREINABO VE FOR THE REASON THAT THE SAID ACTIVITIES ARE NOT RELATED TO BUSINESS OF THE SOCIE TY AND HENCE NOT ELIGIBLE FOR DEDUCTION U/S 80P(2) OF THE ACT. THE JUDICIAL DECIS IONS RELIED UPON BE THE LD. A.R. ARE IN RESPECT OF CO-OPERATIVE BANK AND NOT CO-OPER ATIVE CREDIT SOCIETY. THEREFORE, THE SAID JUDICIAL DECISIONS CITED BY THE LD. A.R. A RE NOT APPLICABLE TO THE PRESENT CASE. BEFORE ME ALSO THE LD. A.R. ALSO COULD NOT SU BSTANTIATE ITS CLAIM OF DEDUCTION U/S. 80P(2) IN RESPECT OF SAID CLASSES OF INCOME AS MENTIONED ABOVE. I AM THEREFORE OF THE OPINION THAT THE CLAIM OF DEDUCTION U/S. 80P (2) HAS BEEN CORRECTLY DISALLOWED BY THE A.O. FURTHER, AS THE SAID ACTIVITIES ARE NOT PART OF THE BUSINESS ACTIVITY OF THE APPELLANT, THE INCOME OUT OF THE SAME CANNOT BE ASS ESSED UNDER THE HEAD 'INCOME FROM BUSINESS'. THEREFORE THE A.O. IS DIRECTED TO T AX THE INCOME OUT OF ABOVE CLASS OF ACTIVITIES I.E. LOCKER RENT RS.14,295/-, AMBULAN CE RENT RS.1,08,116/-, M.S.E.B. COMMISSION RS.1,85,624/- AND HEALTH CLUB INCOME RS. 38,400/- UNDER THE HEAD 'INCOME FROM OTHER SOURCES'. HOWEVER, ANOTHER CONTE NTION OF THE LD. A. R. TO TAX THE NET INCOME INSTEAD OF GROSS INCOME IN RESPECT OF AB OVE CLASS OF INCOME IS CORRECT. THE A.O. HAS DISALLOWED THE CLAIM OF DEDUCTION U/S. 80P(2) OF THE GROSS AMOUNT ON ACCOUNT OF ABOVE CLASS OF INCOME AS CREDITED TO PRO FIT AND LOSS ACCOUNT. THE A.O. HAS GROSSLY ERRED IN NOT ALLOWING THE EXPENSES ATTR IBUTABLE TO SAME. CONSIDERING THE TOTALITY OF FACTS OF THE CASE THE A.O. IS DIRECTED TO ALLOW THE CLAIM OF DEPRECIATION OUT OF LOCKER RENT, AMBULANCE INCOME AND HEALTH CLUB IN RESPECT OF THE ASSETS DIRECTLY ATTRIBUTABLE TO SUCH INCOME. THE A.O. IS ALSO FURTH ER DIRECTED TO ALLOW AN AD HOC DEDUCTION ON ACCOUNT OF OTHER EXPENSES @ 10% OF THE GROSS INCOME OUT OF LOCKER RENT, AMBULANCE RENT, M.S.E.B. COMMISSION AN D HEALTH CLUB INCOME FOR APPELLANT'S EXPENSES ON EARNING OF SUCH INCOME. THI S GROUND, THEREFORE IS PARTLY ALLOWED. 9. GROUND NO. 6 IS IN RESPECT OF DISALLOWANCE OF DE DUCTION CLAIMED U/S. 80P(2) IN RESPECT OF PROPERTY RENT INCOME OF R S.40,900/-. BRIEF FACTS OF THE ISSUE ARE THAT THE APPELLANT, DURING THE YEAR UNDER CONSIDERATION LEASED OUT CERTAIN PORTION OF ITS CONSTRUCTED PROPERTY AND REC EIVED TOTAL RENT OF RS.40,900/ - DURING THE YEAR UNDER CONSIDERATION. T HE A.O. DISALLOWED THE CLAIM OF THE APPELLANT U/S. 80P(2) IN RESPECT THEREOF FOR THE REASON THAT RENTING OUT OF PROPERTY IS NOT THE BUSINESS OF THE SOCIETY AND THEREFORE THE APPELLANT IS NOT ELIGIBLE FOR DEDUCTION U/S. 80P(2) IN RESPECT OF TH E SAME. THE LD. A.R. ARGUED THAT THE SAID INCOME IS ALSO ELIGIBLE FOR DEDUCTION U/S. 80P(2). ALTERNATIVELY HE ALSO REQUESTED TO ALLOW THE EXPENSES ATTRIBUTABLE T O SAID SOURCE OF INCOME AS DEDUCTION THERE FROM BECAUSE THE A.O. HAS DISALLOWE D THE GROSS INCOME INSTEAD OF NET INCOME OUT OF THE ABOVE CLASSES OF INCOME. 5 ITA NOS.1521 & 1522/PN/2015 9.1 THE RELEVANT SUBMISSION OF THE LD. A.R. FOR THE APPELLANT IS AS UNDER- DISALLOWANCE OF DEDUCTION CLAIMED U/S. 80P IN RESPE CT OF GROSS INCOME OF RS.40,900/- ON ACCOUNT OF SHOP RENT INCOME. THE A. O. HAS COMPLETELY ERRED IN NOT CONSIDERING THE EXPENSES INCURRED IN CONNECT ION WITH THE RENT INCOME FROM PROPERTY. WHAT HE HAS TAXED IS GROSS RENT INCO ME AND HE HAS EVEN NOT ALLOWED THE DEPRECIATION ON THE BUILDING AND EXPENS ES INCURRED ON REPAIRS AND MAINTENANCE OF BUILDING. AT LEAST THE A.O. SHOU LD HAVE ALLOWED STATUTORY DEDUCTION @ 30% AS PER SECTION 24 OF THE ACT. WITHO UT PREJUDICE TO ABOVE THE CONTENTION AS REGARDS PROPORTIONATE DISALLOWANC E AS EXPLAINED HEREINABOVE IS ALSO EQUALLY APPLICABLE HERE. THEREFORE ON THE BASIS OF ABOVE SUBMISSION THE A.R. FOR THE APPELLANT PLEADED TO DIRECT THE A.O. TO ALLOW THE CLAIM OF DEDUCTION U/S. 80P(2) IN RESPECT OF SAID RENT INCOME OR ALLOW THE EXPENSES ATTRIBUTABLE TO E ARN THE SAID INCOME. 10. I HAVE CAREFULLY CONSIDERED THE FACTS OF THE CA SE, THE ASSESSMENT ORDER, JUDICIAL PRONOUNCEMENTS CITED AND ORAL AS WELL AS W RITTEN SUBMISSIONS ON BEHALF OF THE APPELLANT. THE A.O. HAS DISALLOWED TH E DEDUCTION CLAIMED U/S. 80P(2) IN RESPECT OF PROPERTY RENT INCOME FOR THE R EASON THAT THE SAID ACTIVITY IS NOT RELATED TO THE BUSINESS OF THE APPELLANT. BEFORE ME ALSO THE LD. A.R. ALSO COULD NOT SUBSTANTIATE ITS CLAIM OF DEDUCTION U/S. 80P(2) IN RESPECT OF SAID RENT INCOME. THEREFORE THE CLAIM OF DEDUCTION U/S. 80P(2 ) HAS CORRECTLY BEEN DISALLOWED BY THE A.O.. FURTHER AS THE SAID ACTIVIT IES ARE NOT PART OF BUSINESS ACTIVITY OF THE SOCIETY, THE INCOME OUT OF THE SAME CANNOT BE ASSESSED UNDER THE HEAD 'INCOME FROM BUSINESS'. THEREFORE, THE A.O . IS DIRECTED TO TAX THE SAID PROPERTY RENT INCOME UNDER THE HEAD 'INCOME FR OM HOUSE PROPERTY'. HOWEVER, ANOTHER CONTENTION OF THE LD. A.R. TO TAX THE NET INCOME INSTEAD OF GROSS INCOME IN RESPECT OF ABOVE CLASS OF INCOME IS CORRECT. THE A.O. HAS DISALLOWED THE CLAIM OF DEDUCTION U/S. 80P OF THE G ROSS AMOUNT ON ACCOUNT OF RENT INCOME AS CREDITED TO PROFIT AND LOSS ACCOUNT. AS THE IMPUGNED INCOME IS DIRECTED TO TAX UNDER 'INCOME FROM HOUSE PROPERTY, THE APPELLANT IS ALSO ELIGIBLE FOR STATUTORY DEDUCTION OF 30% OF RS.12,27 0/- U/S. 24. THIS GROUND, THEREFORE IS PARTLY ALLOWED. 11. BEFORE PARTYING WITH THE ORDER, THE A.O. IS ALS O DIRECTED TO NOT ALLOW THE DEDUCTION OF RS.50,000/- AS GRANTED BY HIM U/S. 80P (2)(C)(II) BECAUSE THE APPELLANT IS NOT ELIGIBLE FOR THE SAME AS THIS DEDUCTION IS A VAILABLE TO THE SOCIETIES WHICH ARE NOT COVERED BY CLAUSE (A) OR CLAUSE (B) OF SUB-SECT ION (2) OF SECTION 80P. THE APPELLANT IS UNDISPUTEDLY COVERED BY CLAUSE (A) OF SUB-SECTION (2) OF SECTION 80P. THEREFORE, THE APPELLANT IS NOT ELIGIBLE FOR THE DE DUCTION U/S 80P(2)(C)(II). THE A.O. IS DIRECTED TO WITHDRAW THE SAID DEDUCTION OF RS.50 ,000/- GRANTED TO APPELLANT. 7. AGGRIEVED BY THE IMPUGNED ORDER OF THE CIT(A), T HE ASSESSEE IS IN APPEAL BEFORE US. 8. NONE APPEARED ON BEHALF OF THE ASSESSEE. HOWEVE R, WRITTEN SUBMISSIONS ON BEHALF OF THE ASSESSEE WAS RECEIVED BY FAX ON 31 ST JANUARY, 2016 WHICH IS PLACED ON RECORD AND CONSIDERED FOR ADJUDICATING TH E ISSUE. 6 ITA NOS.1521 & 1522/PN/2015 8.1 AS PER THE WRITTEN SUBMISSIONS, THE ASSESSEE CO NTENDED THAT FIRST ISSUE INVOLVED IN THE PRESENT APPEAL IS THAT THE ASSESSIN G OFFICER HAS NOT GRANTED DEDUCTION UNDER SECTION 80P OF THE ACT IN RESPECT O F FOLLOWING CLASS OF ACTIVITIES : (I) LOCKER RENT (II) AMBULANCE RENT (III) COMMISSION ON COLLECTION OF MSEB BILLS (IV) HEALTH CLUB THE CIT(A) HAS ALSO CONFIRMED THE ORDER OF THE ASS ESSING OFFICER THAT THE ASSESSEE IS NOT ELIGIBLE FOR DEDUCTION UNDER SE CTION 80P IN RESPECT OF ABOVE ACTIVITIES. 8.2 AS BORNE OUT FROM THE WRITTEN SUBMISSIONS OF TH E ASSESSEE, THE CIT(A) HAS ALLOWED ONLY 10% OF THE GROSS RECEIPTS OF ABOVE CLASSES OF INCOME AS EXPENSES AS AGAINST ACTUALS AS PER AUDITED BOOKS OF ACCOUNTS. THE CIT(A) HAS ALSO DIRECTED TO WITHDRAW THE DEDUCTION OF RS.50,00 0/- GRANTED BY THE ASSESSING OFFICER UNDER SECTION 80P(2)(C) OF THE AC T. 8.3 AS REGARDS THE ELIGIBILITY FOR DEDUCTION UNDER SECTION 80P(2) OF THE ACT IN RESPECT OF LOCKER RENT INCOME, THE ASSESSEE RELI ED UPON THE DECISION OF THE HONBLE SUPREME COURT IN THE CASE OF MEHSANA DISTRI CT CENTRAL CO-OP. BANK LTD. VS. ITO, 251 ITR 522 (SC) WHEREIN THE HONBLE APEX COURT HELD THAT INCOME DERIVED BY THE ASSESSEE FROM HIRING OUT OF S AFE DEPOSIT VAULTS IS INCOME FROM BUSINESS OF BANKING AND THEREFORE DEDUCTIBLE U NDER SECTION 80P(2)(A)(I) OF THE ACT. 8.4 IN RESPECT OF AMBULANCE RENT INCOME, IT IS THE CASE OF THE ASSESSEE THAT THE CIT(A) WAS NOT JUSTIFIED IN RESTRICTING THE DED UCTION OF EXPENSES ATTRIBUTABLE TO AMBULANCE RENT RECEIVED AT 10% OF T HE GROSS AMBULANCE RENT RECEIVED, PARTICULARLY WHEN THE SEPARATE DETAILS OF EXPENSES INCURRED FOR 7 ITA NOS.1521 & 1522/PN/2015 RUNNING AMBULANCE FURNISHED TO THE ASSESSING OFFICE R AS WELL AS THE CIT(A) WHICH WERE NOT DOUBTED BY THEM. IT IS FURTHER CASE OF THE ASSESSEE THAT THE CIT(A) IS NOT JUSTIFIED IN NOT APPRECIATING THE FAC T THAT THE RUNNING OF AMBULANCE BY SOCIETY IS NOT FOR PROFIT BUT THE SAME IS FOR SOCIAL CAUSE. THE ASSESSEE, ACCORDINGLY, PLEADED THAT EXPENSES WHICH ARE ATTRIBUTABLE TO RUNNING OF AMBULANCE AS PER AUDITED ACCOUNTS OF THE ASSESSE E I.E. FUEL EXPENSES FOR RUNNING THE AMBULANCE AS WELL AS DRIVERS SALARY AN D DAY TO DAY REPAIRS OF AMBULANCE SHOULD BE ALLOWED AS DEDUCTION WHILE COMP UTING THE AMBULANCE RENT INCOME. HE ALSO PLEADED THAT DEDUCTION CLAIME D UNDER SECTION 80P SHOULD BE ALLOWED SINCE THE ACTIVITY IS TOWARDS PROMOTING SOCIAL CAUSE. 8.5 WITH RESPECT TO THE COMMISSION ON MSEB BILL COL LECTION, THE ASSESSEE RELIED UPON THE VARIOUS DECISIONS OF PUNE BENCH OF THE TRIBUNAL IN THE CASE OF AHMEDNAGAR DISTRICT CO-OPERATIVE BANK LTD. VS. ITO, 33 ITD 683 AND JALGAON DISTRICT CENTRAL CO-OPERATIVE BANK LTD. VS. ITO, 65 TTJ 464 AS WELL AS ITO VS. VIJAYNAGAR CO-OP. CREDIT SOCIETY (ITA NO.1247/P N/2013 DATED 29.05.2014 WHEREIN IT HELD TO BE AKIN BANKING ACTIV ITY IS ELIGIBLE FOR DEDUCTION UNDER SECTION 80P(2)(A)(I) OF THE ACT. WITHOUT PRE JUDICE TO THE AFORESAID PLEA, THE ASSESSEE CONTENDED THAT THE CIT(A) WAS NOT JUST IFIED IN RESTRICTING THE EXPENSES TO EARN SAID INCOME ARTIFICIALLY 10% OF TH E GROSS RECEIPT AND THEREFORE THE ASSESSING OFFICER SHOULD BE DIRECTED TO ALLOW P ROPORTIONATE EXPENSES ON ACCOUNT OF SALARY, DEPRECIATION, STATIONARY, ETC.. 8.6 THE FINDINGS OF THE CIT(A) IN RESPECT OF SHOP R ENT INCOME, HOWEVER, WAS ACCEPTED BY THE ASSESSEE AND NOT PRESSED. 8.7 WITH REGARD TO THE HEALTH CLUB FEES INCOME, THE ASSESSEE BY WAY OF HIS WRITTEN SUBMISSIONS PLEADED THAT DEDUCTION OF EXPEN SES ATTRIBUTABLE TO RUNNING OF HEALTH CLUB AS PER AUDITED ACCOUNT OF THE ASSESS EE NAMELY; SALARY OF THE CARETAKER, MAINTENANCE, ETC. SHOULD BE ALLOWED AND ACTION OF THE CIT(A) IN THIS 8 ITA NOS.1521 & 1522/PN/2015 REGARD TO ESTIMATE THE EXPENSES AND ESTIMATED AT 10 % OF THE GROSS FEES IS NOT JUSTIFIED. 8.8 WITH REGARD TO THE DIRECTION OF THE CIT(A) FOR WITHDRAWAL OF DEDUCTION OF RS.50,000/- UNDER SECTION 80P(2)(C) OF THE ACT, THE ASSESSEE ALLEGED THAT THE CIT(A) HAS WITHDRAWN THE DEDUCTION ALLOWED BY THE A SSESSING OFFICER WITHOUT GIVING ANY NOTICE OF ENHANCEMENT. THE ASSESSEE FUR THER SUBMITTED THAT AS PER THE PROVISIONS OF LAW, THE DEDUCTION OF RS.50,000/- IS AVAILABLE TO THE CO- OPERATIVE SOCIETY IF IT IS ENGAGED IN ANY ACTIVITY WHICH IS OTHERWISE NOT ELIGIBLE FOR DEDUCTION UNDER SECTION 80P(2)(A) OR (B). IN T HE PRESENT APPEAL, WITHOUT PREJUDICE TO EARLIER SUBMISSIONS, IF THE ACTIVITY O F THE ASSESSEE WITH RESPECT TO LOCKER RENT, AMBULANCE RENT, MSEB COLLECTION, RENT FROM PROPERTY OR HEALTH CLUB IS NOT ELIGIBLE FOR DEDUCTION UNDER SECTION 80 P(2)(A) OR (B) THEN THE ASSESSEE IS ELIGIBLE FOR DEDUCTION TO THE EXTENT OF RS.50,000/-. THE ASSESSING OFFICER HAS CORRECTLY GRANTED THE SAID DEDUCTION, B UT THE SAME IS WITHDRAWN BY THE CIT(A) WITHOUT GIVING ANY NOTICE FOR PROPOSED A CTION. IN THIS REGARD, THE ASSESSEE RELIED UPON THE DECISION OF PUNE BENCH OF THE TRIBUNAL IN THE CASE OF ITO VS. SHRI GOGABABA NAGARI SAHAKARI PATSANSTHA LT D. IN ITA NO.2452/PN/2012, ORDER DATED 30.05.2014 WHEREIN THE TRIBUNAL FORTIFIED THE ABOVE VIEW BY HOLDING AS UNDER :- WE FIND THE AO MADE THE ENTIRE ADDITION OF RS.2,27 ,109/- WHICH IS THE GROSS AMOUNT OF MSEB COMMISSION AND HE HAS NOT ALLOWED TH E EXPENDITURE FOR EARNING THE SAID COMMISSION. WE FIND MERIT IN THE SUBMISSION O F THE LD. COUNSEL FOR THE ASSESSEE THAT PRO-RATA EXPENDITURE SHOULD BE ALLOWE D TO THE ASSESSEE FOR EARNING THE COMMISSION SINCE THE ASSESSEE HAS TO INCUR VARIOUS EXPENDITURE AND SUCH PRO-RATA EXPENDITURE COMES TO 91.40%. IF THE SAID RATE IS A PPLIED THEN THE NET INCOME FROM MSEB COMMISSION AFTER CONSIDERING THE EXPENDITURE W ORKS OUT TO RS.19,531/- WHICH IS BELOW RS.50,000/- AND IS ELIGIBLE FOR DEDUCTION U/S 80P(2)(C). IN THIS VIEW OF THE MATTER, WE ALLOW THE CLAIM OF THE ASSESSEE AND THE GROUND RAISED BY THE REVENUE IS DISMISSED. IN THE LIGHT OF AFORESAID SUBMISSIONS, THE ASSESSEE PLEADED FOR SUITABLE RELIEF. 9. THE LD. DEPARTMENTAL REPRESENTATIVE FOR THE REVE NUE, ON THE OTHER HAND, RELIED UPON THE ORDER OF THE CIT(A). 9 ITA NOS.1521 & 1522/PN/2015 10. WE HAVE CAREFULLY CONSIDERED THE RIVAL SUBMISSI ONS, ORDERS OF THE AUTHORITIES BELOW AND CASE LAW CITED. THE SHORT QU ESTION BEFORE US IS TO DETERMINE ELIGIBILITY OF DEDUCTION UNDER SECTION 80 P OF THE ACT IN RESPECT OF INCOME EARNED FROM CERTAIN ALLIED ACTIVITIES VIZ. ( I) LOCKER RENT; (II) AMBULANCE RENT; (III) COMMISSION ON COLLECTION OF M SEB BILLS; AND (IV) HEALTH CLUB BY COOPERATIVE CREDIT SOCIETY CARRYING ON BANKING BUSINESS. THE ALTERNATE GROUND AGITATED BY THE ASSESSEE IS TOWARD S AD-HOC ESTIMATION OF EXPENSES IN RELATION TO SUCH INCOME @ 10% OF THE GR OSS RECEIPT AS AGAINST ACTUAL AND PROPORTIONATE EXPENSES ATTRIBUTABLE FOR THE PURPOSE OF CARRYING ON SUCH ALLIED ACTIVITIES. THIS HAS RESULTED IN HIGHE R INCIDENCE OF TAXATION OWING TO DENIAL OF DEDUCTION UNDER SECTION 80P ON SUCH IN COME. WE FIND THAT ELIGIBILITY OF THE ASSESSEE FOR DEDUCTION UNDER SEC TION 80P OF THE ACT IN RESPECT OF LOCKER RENT INCOME IS COVERED BY THE DECISION OF THE HONBLE SUPREME COURT IN THE CASE OF MEHSANA DISTRICT CENTRAL CO-OP. BANK LTD. (SUPRA). THEREFORE, WE SET-ASIDE THE DIRECTION OF THE CIT(A) IN THIS RE GARD AND HOLD THAT THE ASSESSEE IS ELIGIBLE FOR DEDUCTION UNDER SECTION 80 P OF THE ACT IN RESPECT OF THIS INCOME. WITH RESPECT TO THE INCOME FROM RUNNING OF AMBULANCE, WHILE HOLDING THAT THE ASSESSEE IS NOT ELIGIBLE FOR DEDUC TION UNDER SECTION 80P(2)(A) OR (B), WE ARE IN TOTAL AGREEMENT WITH THE ALTERNAT E PLEA OF THE ASSESSEE THAT THE EXPENSES ATTRIBUTABLE FOR THE PURPOSE OPERATING SUC H ACTIVITY OUGHT TO HAVE TO BE ALLOWED ON ACTUAL/PROPORTIONATE BASIS. WE ARE O F THE VIEW THAT THE ACTION OF THE CIT(A) IN RESTRICTING THE EXPENSES ARTIFICIALLY @ 10% OF THE GROSS INCOME FROM SUCH ACTIVITIES IS NOT SUSTAINABLE IN LAW BEIN G DEVOID OF OBJECTIVITY. THE ASSESSING OFFICER IS ACCORDINGLY DIRECTED TO ALLOW THE EXPENSES WHICH ARE ATTRIBUTABLE TO THE RUNNING OF AMBULANCE AND DETERM INE THE INCOME FROM THE AFORESAID ACTIVITY. THE SURPLUS IF ANY, FROM THIS ACTIVITY WOULD BE ENTITLED TO RELIEF MADE RESIDUARY CLAUSE OF SECTION 80P(2)(C)(I I). WE ALSO NOTICE THAT THE INCOME FROM MSEB COMMISSION IS HELD TO BE BUSINESS ACTIVITY AS PER DECISION CITED BY THE ASSESSEE IN THE CASE OF AHMEDNAGAR DIS TRICT CO-OPERATIVE BANK LTD. (SUPRA) AND OTHER DECISIONS NOTED ABOVE. ACCO RDINGLY, WE HOLD THAT THE ASSESSEE IS ENTITLED TO RELIEF UNDER SECTION 80P AS PER LAW. WE ALSO 10 ITA NOS.1521 & 1522/PN/2015 SIMULTANEOUSLY FIND MERIT IN THE ALTERNATE PLEA OF THE ASSESSEE THAT PROPORTIONATE EXPENSES ATTRIBUTABLE TO EARNING OF S UCH INCOME OUGHT TO HAVE BEEN ALLOWED BY THE AUTHORITIES BELOW. IN VIEW OF THE FAIR ADMISSION ON THE PART OF THE ASSESSEE, THE FINDING OF THE CIT(A) IN RESPECT OF SHOP RENT INCOME IS SUSTAINED. WITH REGARD TO OTHER INCOME, NAMELY, HEALTH CLUB FEES, WE ONCE AGAIN HOLD THAT EXPENSES ATTRIBUTABLE TO THE RUNNIN G OF THE HEALTH CLUB SHOULD BE ALLOWED TO THE ASSESSEE WHILE DETERMINING THE IN COME FROM SUCH ACTIVITY ON REASONABLE/PROPORTIONATE BASIS. HOWEVER, WE DO NOT FIND ANY MERIT IN CLAIM OF THE ASSESSEE FOR DEDUCTION UNDER SECTION 80P(2)(A)/ 80P(2)(B) OF THE ACT IN RESPECT OF THIS ACTIVITY. 11. AS REGARDS WITHDRAWAL OF DEDUCTION OF RS.50,000 /- AS ALLOWED BY THE ASSESSING OFFICER UNDER SECTION 80P(2)(C), WE FIND MERIT IN THE PLEA OF THE ASSESSEE THAT A CO-OPERATIVE SOCIETY ENGAGED IN ANY BUSINESS ACTIVITY WHICH IS NOT OTHERWISE ELIGIBLE FOR DEDUCTION UNDER SECTION 80P(2)(A) OR (B), IN SUCH A SCENARIO, IT IS ELIGIBLE FOR DEDUCTION TO THE EXTEN T OF RS.50,000/- AS PER PLAIN PROVISIONS OF THE ACT. WE ALSO FIND THAT THE ACTIO N OF THE CIT(A) IN WITHDRAWING THE AFORESAID DEDUCTION WITHOUT AFFORDI NG THE OPPORTUNITY TO THE ASSESSEE IN THIS REGARD ALSO OFFENDS THE PROVISIONS OF THE ACT AS WELL AS PRINCIPLES OF NATURAL JUSTICE. IN THE LIGHT OF THE AFORESAID, WE HOLD THAT THE ASSESSEE IS ENTITLED TO DEDUCTION UNDER SECTION 80P (2)(C)(II) OF THE ACT IN RESPECT OF BUSINESS ACTIVITIES SUCH AS RUNNING OF A MBULANCE, HEALTH CLUB FEE ETC. WHICH ARE NOT ELIGIBLE FOR DEDUCTION UNDER SEC TION 80P(2)(A) OR 80P(2)(B) OF THE ACT. IN THE LIGHT OF THE AFORESAID OBSERVAT IONS, THE ASSESSEE GETS PART RELIEF IN TERMS OF ABOVE. 12. IN THE RESULT, THE APPEAL OF THE ASSESSEE IN IT A NO.1521/PN/2015 RELATING TO ASSESSMENT YEAR 2010-11 IS PARTLY ALLOW ED. 11 ITA NOS.1521 & 1522/PN/2015 ITA NO.1522/PN/2015 (A.Y. 2011-12) 13. THE ISSUES INVOLVED IN APPEAL OF THE ASSESSEE I N ITA NO.1522/PN/2015 RELATING TO ASSESSMENT YEAR 2011-12 ARE IDENTICAL T O ISSUES INVOLVED IN APPEAL OF THE ASSESSEE IN ASSESSMENT YEAR 2010-11. ACCORD INGLY, OUR DECISION IN ASSESSMENT YEAR 2010-11 SHALL APPLY MUTATIS-MUTANDIS TO THIS ASSESSMENT YEAR I.E. A.Y. 2011-12. 14. IN THE RESULT, THE APPEAL OF THE ASSESSEE IN IT A NO.1522/PN/2015 RELATING TO ASSESSMENT YEAR 2011-12 IS ALSO PARTLY ALLOWED. 15. RESULTANTLY, BOTH THE CAPTIONED APPEALS OF THE ASSESSEE ARE PARTLY ALLOWED. ORDER PRONOUNCED ON THIS 10 TH DAY OF MARCH, 2016. SD/- SD/- ( SUSHMA CHOWLA ) ( PRADIP KUMAR KEDIA ) / JUDICIAL MEMBER $ / ACCOUNTANT MEMBER PUNE ; DATED : 10 TH MARCH, 2016. & ' ()* +*( / COPY OF THE ORDER IS FORWARDED TO : 1) THE ASSESSEE; 2) THE DEPARTMENT; 3) THE CIT(A)-I, NASHIK; 4) THE CIT-I, NASHIK; 5) THE DR SMC BENCH, I.T.A.T., PUNE; 6) GUARD FILE. &, / BY ORDER , ' # //TRUE COPY// $ %& # '( / SR. PRIVATE SECRETARY ) '* , / ITAT, PUNE