The Agriculture Development Co.Op.Credit Society Ltd., Sidhpur V. The Income tax Officer,Patan Ward-4, Patan

ITA 1636/AHD/2017

• Counselvise Citation: [2019] 118 COUNSELVISE.COM (IT) 7042 (ITAT-AHMEDABAD)
• Duration Of Justice: 1 year(s) 6 month(s) 12 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 16-01-2019
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: SMC
• Assessment Year: 2014-2015
• Appeal Filed On: 04-07-2017
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: RANJAN KUMAR SINGH
• Assessee Lawyers: H V DOSHI
• Section: 56

Judgement Text

, - IN THE INCOME TAX APPELLATE TRIBUNAL AHMEDABAD - BENCH C BEFORE SHRI RAJPAL YADAV, JUDICIAL MEMBER AND SHRI AMARJIT SINGH, ACCOUNTANT MEMBER ./ ITA NO.1636/AHD/2017 / ASSTT. YEAR: 2014-15 THE AGRICULTURE DEVELOPMENT CO-OP. CREDIT SOCIETY LTD. ZAPALI POLE SIDHPUR 384 141. PAN : AAAAA 1055 C VS. ITO, PATAN WARD-4 UNJHA. / (APPELLANT) / (RESPONDENT) ASSESSEE BY : SHRI H.V. DOSHI, AR REVENUE BY : SHRI RANJANKUMAR SINGH, SR.DR ! / DATE OF HEARING : 06/12/2018 '#$ ! / DATE OF PRONOUNCEMENT: 16/01/2019 %& / O R D E R PER AMARJIT SINGH, ACCOUNTANT MEMBER: THIS IS ASSESSEES APPEAL ORDER OF LD.CIT(A), GANDH INAGAR, AHMEDABAD DATED 8.5.2017 PASSED FOR THE ASSESSMENT YEAR 2014-15. 2. ASSESSEE HAS RAISED SOLITARY GROUND IN ITS APPEA L ON THE ISSUE THAT THE LD.CIT(A) HAS ERRED IN CONFIRMING THE ADDITION MADE BY THE AO OF RS.10,04,064/- WHICH WAS CLAIMED BY THE ASSESSEE AS DEDUCTION UNDER SECTION 80P(2)(A)(I) OF THE INCOME TAX ACT, 1961. 3. BRIEF FACTS OF THE CASE ARE THAT THE ASSESSEE IS A COOPERATIVE SOCIETY ENGAGED IN PROVIDING CREDIT FACILITIES TO I TS MEMBERS BY ITA NO.1636/AHD/2017 2 ACCEPTING DEPOSITS, SAVING ETC. AND PROVIDING LOANS AND ADVANCES FOR AGRICULTURAL PURPOSES TO ITS MEMBERS. IT HAS FILED ITS RETURN OF INCOME ON 18.1.2014 DECLARING TOTAL INCOME AT RS.14,820/-. IN SCRUTINY ASSESSMENT THE LD.AO NOTICED THAT THE ASSESSEE HAS EARNED INTEREST INCOME OF RS.1,32,34,056/- OUT OF WHICH AN AMOUNT O F RS.39,34,892/- WAS EARNED BY THE ASSESSEE FROM NON-COOPERATIVE/NAT IONALIZED BANKS. IN OTHER WORDS, OUT OF TOTAL INTEREST INCOME OF RS. 1,32,34,056/-, AN AMOUNT OF RS.32,46,699/- WAS EARNED FROM DCB BANK T OWARDS FDR DEPOSITS AND AN AMOUNT OF RS.6,88,193/- FROM SARDAR SAROVAR NIGAM LTD., AS INTEREST INCOME. THE AO WAS OF VIEW THAT THIS AMOUNT OF RS.39,34,892/- SINCE EARNED FROM NON-COOPERATIVE BA NK/NATIONALIZED BANKS, THE SAME HAS TO BE TREATED AS INCOME CHARGEA BLE UNDER THE TAX INCOME FROM OTHER SOURCES, ACCORDINGLY, THE LD.AO BY ISSUING SHOW CAUSE NOTICE, PROPOSED ADDITION OF THIS AMOUNT UNDE R THE PROVISIONS OF SECTION 56 OF THE ACT. THE ASSESSEE IN ITS REPLY S UBMITTED THAT THE ASSESSEE A PRIMARY AGRICULTURE CREDIT SOCIETY PROVI DING CREDIT FACILITIES TO ITS MEMBERS FOR AGRICULTURE PURPOSE. THE ASSESSEE F URTHER PLEADED THAT IT HAS REQUIRED TO MAINTAIN LIQUID FUNDS, THEREFORE , A PORTION OF FUND HAS TO BE INVESTED EVEN IF IT IS REQUIRED FOR GIVING LO AN TO ITS MEMBERS. THE FUNDS INVESTED WITH BANKS WAS NOT SURPLUS FUNDS, RA THER IT WAS WORKING CAPITAL TO MEET IMMEDIATE REQUIREMENT. THE ASSESSEE ALSO RELIED UPON, AMONGST OTHER, DECISION OF THE ITAT IN THE CASE OF JAFARI MOMIN VIKAS CO-OP. CREDIT SOCIETY, IN ITA NO.1491AHD/2012 TO SU PPORT ITS CASE. HOWEVER, THE LD.AO DID NOT ACCEPT THESE SUBMISSIONS OF THE ASSESSEE AND RELYING ON EARLIER DECISIONS OF THE LD.CIT(A) I N THE ASSESSEES OWN CASE, MADE ADDITION OF RS.10,04,064/- AFTER CONSIDE RING PROPORTIONATE EXPENSES ALLOWABLE TO THE ASSESSEE FOR EARNING SUCH INCOME. AGGRIEVED ASSESSEE PREFERRED FIRST APPEAL BEFORE THE LD.CIT(A ), WHO AFTER CONSIDERING THE SUBMISSIONS OF THE ASSESSEE CONFIRM ED BY THE ORDER OF ITA NO.1636/AHD/2017 3 THE LD.AO. THE ASSESSEE IS NOW BEFORE THE TRIBUNA L AGAINST CONFIRMATION OF ADDITION. 4. BEFORE US, THE LD.COUNSEL FOR THE ASSESSEE HAS F ILED WRITTEN SUBMISSIONS, WHICH IS MORE OR LESS ON SIMILAR LINE AS PLEADED BEFORE THE LD.REVENUE AUTHORITIES. THE LD.COUNSEL PRAYED FOR S ETTING ASIDE IMPUGNED ORDERS OF THE REVENUE AUTHORITIES AND ALLO WANCE OF DEDUCTION UNDER SECTION 80P(2)(A)(I) OF THE ACT. 5. ON THE OTHER HAND, THE LD.DR SUBMITTED THAT ISSU E IS COVERED IN FAVOUR OF THE REVENUE BY JUDGMENT OF THE HONBLE JU RISDICTIONAL HIGH COURT IN THE CASE OF STATE BANK OF INDIA CO-OPERATI VE SOCIETY VS. CIT, 72 TAXMANN.COM 64 (GUJ) WHEREIN IT HAS BEEN HELD TH AT COOPERATIVE SOCIETY ENGAGED IN THE BUSINESS OF PROVIDING CREDIT FACILITIES TO ITS MEMBERS WHICH EARNS INTEREST INCOME ON THE SURPLUS FUNDS PARKED WITH THE NATIONALISED BANKS, IS NOT ELIGIBLE FOR DEDUCTI ON UNDER SECTION 80P(2)(A)(I) OF THE ACT. SINCE IMPUGNED ORDERS OF REVENUE AUTHORITIES ARE IN CONSONANCE WITH JUDGMENT OF THE HONBLE HIGH COURT CITED SUPRA, NO INTERFERENCE THEREOF IS REQUIRED AND THE APPEAL OF THE ASSESSEE MAY BE DISMISSED. 6. HAVING HEARD BOTH THE PARTIES AND ON PERUSAL OF THE RECORD, WE FIND THAT ASSESSEE IS A COOPERATIVE SOCIETY REGISTE RED UNDER GUJARAT CO- OPERATIVE SOCIETIES ACT, 1961 AND ENGAGED IN PROVID ING CREDIT FACILITIES TO ITS MEMBERS. WE FIND THAT HONBLE JURISDICTIONA L HIGH COURT IN THE CASE OF STATE OF INDIA (SUPRA) HAS HELD THAT INTERE ST EARNED FROM INVESTMENT MADE IN SCHEDULED BANK BY A COOPERATIVE SOCIETY ENGAGED IN PROVIDING CREDIT FACILITIES TO ITS MEMBERS, IS N OT ELIGIBLE FOR DEDUCTION UNDER SECTION 80P(2). THE TRIBUNAL IN EARLIER OCCA SIONS ON SIMILAR ISSUE HAS TAKEN A CONSISTENT VIEW BY FOLLOWING ABOVE JUDG MENT OF THE HONBLE JURISDICTIONAL HIGH COURT. SINCE ORDERS OF THE REVE NUE AUTHORITIES ARE IN ITA NO.1636/AHD/2017 4 ACCORDANCE WITH JUDGMENT OF THE HONBLE JURISDICTIO NAL HIGH COURT CITED SUPRA, NO INTERFERE IS CALLED FOR IN THE IMPUGNED O RDERS, WHICH WE CONFIRM. HOWEVER, ANY EXPENDITURE INCURRED BY THE A SSESSEE FOR EARNING SUCH INCOME COULD BE ALLOWED TO IT, IF NOT ALREADY ALLOWED. IN OTHER WORDS, THE AO HAS TO ALLOW PRORATA EXPENSES IN RESP ECT OF INTEREST INCOME EARNED FROM DEPOSITS HELD WITH NATIONALIZED BANK FOR COMPUTING DEDUCTION UNDER SECTION 80P(2) OF THE ACT. 7. IN THE RESULT, APPEAL OF THE ASSESSEE IS PARTLY ALLOWED FOR STATISTICAL PURPOSE. ORDER PRONOUNCED IN THE COURT ON 16 TH JANUARY, 2019 AT AHMEDABAD. SD/- SD/- (RAJPAL YADAV) JUDICIAL MEMBER (AMARJIT SINGH) ACCOUNTANT MEMBER