M/s Medi Assist India TPA Private Limited, Bangalore V. CIT - IIII, Bangalore

ITA 1582/BANG/2013

• Counselvise Citation: [2015] 140 COUNSELVISE.COM (IT) 86044 (ITAT-BANGALORE)
• Duration Of Justice: 1 year(s) 3 month(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 20-02-2015
• Appeal Filed By: Assessee
• Order Result: Dismissed
• Bench Allotted: B
• Assessment Year: 2010-2011
• Appeal Filed On: 20-11-2013
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Department Lawyers: P K SRIHARI
• Assessee Lawyers: SUKESH PATIL

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL BANGALORE B BENCH, BANGALORE BEFORE SHRI N.V.VASUDEVAN, JUDICIAL MEMBER AND SHRI ABRAHAM P GEORGE, ACCOUNTANT MEMBER ITA NO.437(BNG.)/2014 (ASSESSMENT YEAR : 2008-0 9) M/S SHRI SIDDASIRI PATTIN SUHARDA SAHAKARI NIYAMI, S.S.ROAD, BIJAPUR PAN NO.AAAJS3372F APPELLANT VS THE ASST. COMMISSIONER OF INCOME-TAX, CIRCLE-1, BIJAPUR RESPONDENT ASSESSEE BY : SHRI SUKESH PATIL, CA REVENUE BY : SHRI P.K.SRIHARI , ADDL.CIT DATE OF HEARING : 02-0 2-2015 DATE OF PRONOUNCEMENT : 20-02-2015 O R D E R PER SHRI ABRAHAM P GEORGE, AM; IN THIS APPEAL FILED BY THE ASSESSEE ITS GRIEVANCE IS THAT AO DENIED DEDUCTION OF RS.9,24,543/- U/S 80P(A)(I) OF THE IT ACT, ON THE REASONING THAT SUCH AMOUNT WAS INTEREST FROM INVESTMENTS, WHI CH INCOME FELL UNDER THE HEAD INCOME FROM OTHER SOURCES. 2. WHEN THE CASE CAME UP BEFORE US, LEARNED COUNSE L FOR THE ASSESSEE SUBMITTED THAT THE LOWER AUTHORITIES ERRED IN APPLYING THE 2 ITA NO.437(B)/14 JUDGMENTS OF THE HONBLE APEX COURT IN THE CASE OF TOTAGARS CO- OPERATIVE SALES SOCIETY LTD. VS CIT 322 ITR 283. A CCORDING TO THE LEARNED AR, ASSESSEE WAS IN THE BUSINESS OF PROVIDING CREDI TS TO ITS MEMBERS AND THEREFORE, INTEREST ARISING TO IT ON DEPOSITS WITH BANK WAS ATTRIBUTABLE TO SUCH CREDIT BUSINESS. LEARNED AR FURTHER SUBMITTED THAT THE AMOUNTS WHICH WERE HELD IN DEPOSITS WITH BANK WERE NOT OUT OF PROFITS OR SURPLUS BUT OUT OF DEPOSITS RECEIVED FROM THE MEMBERS. 3. PER CONTRA, LEARNED DR SUBMITTED THAT THE HONB LE APEX COURT IN THE CASE OF M/S TOTAGARS CO-OPERATIVE SALES SOCIET Y LTD. (SUPRA) HAD HELD THAT INCOME ATTRIBUTABLE TO THE BUSINESS OF A CO-OP ERATIVE SOCIETY WOULD BE ELIGIBLE UNDER SECTION 80P(2)(A) ONLY IF IT FELL UNDER ANY OF THE CLAUSE MENTIONED THEREIN. INTEREST FROM DEPOSIT HELD WITH BANK WAS NOTHING BUT INCOME FROM OTHER SOURCES. ACCORDING TO HIM, LOWE R AUTHORITIES WERE JUSTIFIED IN DENYING DEDUCTION U/S 80P(2)(A)(I) OF THE ACT ON SUCH INTEREST INCOME. 4. ADLIBITUM REPLY OF THE LEARNED AR WAS THAT THE ISSUE STOOD DECIDED BY THE HONBLE JURISDICTIONAL HIGH COURT IN THE CASE OF SRI 3 ITA NO.437(B)/14 RENUKADEVI URBAN CREDIT CO-OPERATIVE SOCIETY LTD, B ELGAUM IN ITA NO.5002/2009 01-04-2011. 5. WE HAVE PERUSED THE ORDERS AND HEARD THE RIVAL CONTENTIONS. THERE IS NO DISPUTE THAT THE ASSESSEE WAS IN THE LI NE OF CREDIT BUSINESS AND ITS CLAIM WAS UNDER SECTION 80P(2)(A)(I) OF THE ACT. IN THE CASE OF M/S RENUKADEVI URBAN CREDIT CO-OPERATIVE SOCIETY LTD. HONBLE JURISDICTIONAL HIGH COURT IN THEIR JUDGMENT DATED 01-04-2011 HELD AS UNDER, AT PARAS 4 TO 7 OF ITS ORDER. 4. IT IS NECESSARY AT THIS JUNCTURE TO NOTICE S ECTION 80P(2)(A)(I) OF THE INCOME-TAX ACT AND THE SAME REA DS AS UNDER; SECTION 80P DEDUCTION IN RESPECT OF INCOME OF CO- OPERATIVE SOCIETIES 1) 2) THE SUM REFERRED TO IN SUB-SECTION (1) SHALL BE THE FOLLOWING NAMELY. A) IN THE CASE OF A CO-OPERATIVE SOCIETY ENGAGED IN (I) CARRYING ON THE BUSINESS OF BANKING OR PROVIDI NG CREDIT FACILITIES TO ITS MEMBERS OR 5. A READING OF THE ABOVE PROVISION SPECIFIES THA T THE ASSESSEE IS ENTITLED FOR DEDUCTION ON THE INTEREST EARNED FROM THE BUSINESS OF BANKING. THE WORD BANKING IS NOT DEFINED IN THE INCOME-TAX ACT. THEREFORE, IT IS N ECESSARY FOR US TO TAKE INTO CONSIDERATION THE DEFINITION CL AUSE IN 4 ITA NO.437(B)/14 THE BANKING REGULATION ACT, 1949 WHEREIN SECTION 5(B) DEFINES BANKING AS UNDER; B) BANKING MEANS THE ACCEPTING FOR THE PURPOSE O F LENDING OR INVESTMENT OF DEPOSITS OF MONEY FROM THE PUBLIC REPAYABLE ON DEMAND OR OTHERWISE AND WITHDRAWABLE BY CHEQUE DRAT ORDER OR OTHERWISE. 6. FROM THIS DEFINITION, IT IS MANIFEST THAT DEPOS IT OF MONEY WHICH EARNS INTEREST FALLS UNDER THE DEFINITI ON OF BANKING. IN THE INSTANT CASE, THE ASSESSEE HAD THE EXCESS MONEY WITH THEM WHICH WAS NOT TAKEN BY ITS SHAREHOLDERS. INSTEAD OF KEEPING MONEY IDLE WITH ASSESSEE, THEY HAVE DEPOSITED THE SAME IN A PRIVATE LIMITED COMPANY SO THAT IT CAN EARN INTEREST. IN T HE INSTANT CASE, THE APPELLANT ASSESSEE DEPOSITED THE SAME IN A PRIVATE LIMITED COMPANY NAMELY M/S RENUKA SUGARS LTD. 7. THIS COURT IN IDENTICAL CIRCUMSTANCES, IN COMMISSIONER OF INCOME TAX AND ANOTHER VS GRAIN MERCHANTS CO-OPERATIVE BANK LTD. REPORTED IN 2004 ITR(KAR) 267 PAGE 742 HELD THAT THE INTEREST EARNED ON THE DEPOSITS MADE BY THE ASSESSEE IN ANY BANKING AC TIVITY IS EXEMPTED UNDER SECTION 80P OF THE INCOME TAX ACT . THEREFORE, FOR THE REASONS STATED ABOVE, WE ANSWER THE QUANTUM OF LAW FRAMED ABOVE IN FAVOUR OF THE ASSESSEE/APPELLANT AND AGAINST THE REVENUE. ORDERE D ACCORDINGLY. 5 ITA NO.437(B)/14 6. WE ARE OF THE OPINION THAT IN VIEW OF THE ABOVE MENTIONED JUDGMENT AND THE HONBLE JURISDICTIONAL HIGH COURT THE ASSESSEE HAS TO SUCCEED IN THIS APPEAL. 7. IN THE RESULT, APPEAL OF THE ASSESSEE IS ALLOWE D. ORDER PRONOUNCED IN THE OPEN COURT ON THE 20 TH FEBRUARY, 2015. SD/- SD /- (N.V.VASUDEVAN ) ( ABRAHAM P GEORGE ) JUD I CIAL MEMER ACCOUNTANT MEMBER BANGALORE: D A T E D : 20-02-2015 AM COPY TO : APPELLANT RESPONDENT CIT(A)-IV, BANGALORE. CIT DR, ITAT, BANGALORE. GUARD FILE (1+1) ASST. REGISTRAR ITAT, BANGALORE