Buwasaheb Nawale Gramin Bigar Sheti Sah. Patsanstha Ltd., Ahmednagar V. Income-tax Officer,

ITA 1656/PUN/2015

• Counselvise Citation: [2016] 132 COUNSELVISE.COM (IT) 1819 (ITAT-PUNE)
• Duration Of Justice: 5 month(s) 13 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 27-05-2016
• Appeal Filed By: Assessee
• Order Result: Dismissed
• Bench Allotted: SMC
• Next Hearing Date: 24-05-2016
• Assessment Year: 2010-2011
• Appeal Filed On: 14-12-2015
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Keywords: Business income
• Section: 43B; 143(3)

Judgement Text

- IN THE INCOME TAX APPELLATE TRIBUNAL PUNE BENCH SMC , PUNE , BEFORE MS. SUSHMA CHOWLA, JM . / ITA NO. 1 656 /PN/201 5 / ASSESS MENT YEAR : 20 1 0 - 1 1 BUWASAHEB NAWALE GRAMIN BIGAR SHETI SAH. PATSANSTHA LTD., M/S. S.Z. DESHMUKH & CO. , SHRIRAM B - ED COLLEGE ROAD, SANGAMNER TAL, DIST. AHMEDNAGAR 422605 . / APPELLANT PAN: A AABB0238K VS. THE INCOME TAX OFFICER , WARD 1 , A HMEDNAGAR . / WARD 1 , A HMEDNAGAR . / RESPONDENT / APPELLANT BY : NONE / RESPONDENT BY : SHRI SUDHENDU DAS / DATE OF HEARING : 2 4 . 0 5 .201 6 / DATE OF PRONOUNCEMENT: 27 . 0 5 .201 6 / ORDER PER SUSHMA CHOWLA, J M : TH IS APPEAL FILED BY THE ASSESSEE IS AGAINST THE ORDER OF CIT (A) - 2 , PUNE , DATED 31 . 08 .20 1 5 RELATING TO ASSESSMENT YEAR 20 1 0 - 1 1 AGAINST ORDER PASSED UNDER SECTION 143(3) OF THE INCOME - TAX ACT , 1961 (IN SHORT THE ACT ) . ITA NO. 1 656 /PN/20 1 5 BUWASAHEB NAWALE GRAMIN BIGAR SHETI SAH. PATSANSTHA LTD. 2 2 . THE PRESENT APPEAL WAS FIXED FOR HEARING ON 03.02.2016 AND ON 12.04.2016, FOR WHICH NOTICE WAS SENT TO THE PARTIES FOR EACH OF THE DATES. HOWEVER, NONE APPEARED ON BEHALF OF THE ASSESSEE ON ANY OF THE DATES. EVEN ON APPOINTED DATE OF HEARING, FOR WHICH NOTICE WAS ISSUED BY RPAD, NONE APPEARED ON BEHALF OF THE ASSESSEE NOR ANY APPLICATION WAS FILED FOR ADJOURNMENT. THE ACKNOWLEDGEMENT CARD OF RPAD IS ALSO AVAILABLE ON RECORD. IT SEEMS THAT THE ASSESSEE IS NOT INTERESTED IN PURSUING THE APPEAL AND HENCE, WE PROCEED TO DECIDE THE MATTER EX - PARTE AFTER HEARING THE LEARNED DEPARTMENTAL REPRESENTATIVE FOR THE REVENUE. 3. THE ASSESSEE HAS RAISED THE FOLLOWING GROUNDS OF APPEAL: - 1. IN THE CIRCUMSTANCES AND FACTS OF THE CASE THE COMMISSIONER OF INCOME T AX (APPEALS) - 2,PUNE WAS NOT JUSTIFIED IN CONFIRMING THE ORDER U/S. 143(3) DATED 04.09.2012 PASSED BY THE INCOME TAX OFFICER WARD - L, AHMEDNAGAR DENYING THE DEDUCTION ON DISALLOWANCES MADE AT RS.6 , 34 , 133/ - BY HOLDING THAT THE D I SALLOWANCES WERE THE ACTUAL IN COME RS.6 , 34 , 133/ - BY HOLDING THAT THE D I SALLOWANCES WERE THE ACTUAL IN COME OF THE ASSESSEE HAVING ACCRUED BY WAY OF VIOLATION OF THE PROVISIONS OF THE ACT AND NOT EARNED IN THE NORMAL BUSINESS OF BANKING BUSINESS. 2. IN THE CIRCUMSTANCES AND FACTS OF THE CASE THE HON' COMMISSIONER OF INCOME TAX (APPEALS) - 2 PUNE WAS NOT JUST IFIED IN CONFIRMING THE ACTION OF THE A.O. DENYING DEDUCTION U/S. 80 P(2)(A)(I) ON TOTAL INCOME AS INCREASED BY DISALLOWANCES IGNORING THE FACT THAT INCOME DETERMINED AFTER MAKING DISALLOWANCES IS THE TOTAL INCOME FROM PROFITS AND GAINS OF THE BUSINESS AND AS PER SEC. 80 P, THE DEDUCTION IS ADMISSIBLE ON THE WHOLE OF THE AMOUNT OF PROFITS AND GAINS OF BUSINESS AND PROFESSION IS ELIGIBLE FOR DEDUCTION U/S. 80 P(2)(A)(I) OF THE INCOME TAX ACT IN VIEW OF THE D E CISION OF THE HON' ITAT AMRITSAR IN THE CASE OF JAMMU RURAL BANK V /S ITO REPORTED IN (2005) 92 TTJ (ASR,TRIB)791. 3. THE HON' COMMISSIONER OF INCOME TAX (APPEALS) - 2,PUNE HAS ERRED IN HOLD I NG THAT THE APPELLANT SOCIETY MADE CLAIMS WHICH WERE AGAIN S T THE CLEAR CUT PROVISIONS OF SEC.40(A) OF THE IT ACT AND THA T THE ADDITION MADE BY THE A.O. OF SUCH AMOUNT CANNOT BE ATTRIBUTABLE TO EARNING OF INCOME BY WAY OF PROVIDING CREDIT FACILITIES TO ITS MEMBERS. THE CIT(A) HAS ALSO ERRED IN HOLDING THAT THE DECISION IN THE CASE OF JAMMU RURAL BANK REFERRED ABOVE IS DISTI N G UISHABLE ON THE FACTS THAT DEDU C TION V /S . 43B FOR CERTAIN EXPENDITURE IS ALLOWABLE ON ACTUAL PAYMENT BASIS IGNORING THE FACT THAT EVEN IF SUCH PAYMENTS ARE NOT MADE WITHIN THE FINANCIAL YEAR AND ARE MADE BEFORE DUE DATE OF FILING OF RETURN, THE DEDU C TIO N IS ALLOWABLE IN VIEW OF PROVISIONS OF SEC.43B.SIMILARLY, DEDUCTION OF EXPENDITURE COVERED V /S .40A(I)(A) CANNOT BE DENIED EVEN IF ITA NO. 1 656 /PN/20 1 5 BUWASAHEB NAWALE GRAMIN BIGAR SHETI SAH. PATSANSTHA LTD. 3 THE PAYMENTS ARE MADE BEFORE DUE DATE OF FILING OF RETURN. THE DECISION CITED ABOVE THUS IS SQUARELY APPLICABLE IN THIS CASE ALSO. THE HON' I TAT PUNE BENCH, PUNE IS REQUESTED TO ALLOW THE DEDUCTION U/S. 80 P(2)(A)(I) ON TOTAL INCOME AS INCREASED BY DISALLOWANCES MADE V / S.40(A) AND OTHER TOTALLING TO RS.6 , 34 , 134/ - . 4 . THE ISSUE RAISED IN THE PRESENT APPEAL IS AGAINST THE DENIAL O F DEDUCTION O N DISALLOWANCES MADE BY THE ASSESSING OFFICER AT RS.6,34,133/ - . THE ASSESSEE CLAIMS THAT IT WAS ENTITLED TO THE DEDUCTION ALLOWABLE UNDER SECTION 80P(2)(A)(I) OF THE ACT ON TOTAL INCOME AS INCREASED BY DISALLOWANCES SINCE THE INCOME WAS FROM PROFITS AND GAINS OF THE BUSINESS. 5. BRIEFLY, IN THE FACTS OF THE CASE, THE ASSESSEE WAS A COOPERATIVE CREDIT SOCIETY REGISTERED UNDER THE CO - OPERATIVE SOCIETIES ACT AND WAS ENGAGED IN PROVIDING CREDIT FACILITIES TO ITS MEMBERS. THE ASSESSEE CLAIMED THA T IT ACCEPTS DEPOSITS AND GIVES LOANS OUT OF DEPOSITS SO RECEIVED. THE ASSESSEE HAD DECLARED THE INCOME FOR THE YEAR UNDER CONSIDERATION AT NIL HOLDING ITSELF TO BE ELIGIBLE FOR DEDUCTION UNDER SECTION 80P(2)(A)(I) OF THE ACT . THE ASSESSING OFFICER DURIN G THE COURSE OF ASSESSMENT PROCEEDINGS NOTED THAT THE PRIMARY OBJECT OF THE ASSESSEE WAS TO PROVIDE LOANS OR OTHER CREDIT FACILITIES TO ITS MEMBERS. FURTHER, THE ASSESSEE HAD CLAIMED CERTAIN DEDUCTIONS WHICH WERE DISALLOWED BY THE ASSESSING OFFICER. THE FIRST DEDUCTION CLAIMED BY THE ASSESSEE WAS THE INCOME TAX PENALTY OF RS.4,08,458/ - . FURTHER, INCOME TAX OF RS.1,67,740/ - UNDER SECTION 40(A)(II) OF THE ACT , FRINGE BENEFIT TAX OF RS. 9,516/ - UNDER SECTION 40(A)(IIC) OF THE ACT AND NON TDS ON AUDIT OF RS.4 8,419/ - UNDER SECTION 40(A)(IA) OF THE ACT WERE DISALLOWED , THE TOTAL DISALLOWANCE MADE IN THE HANDS OF ASSESSEE WAS RS.6,34,133/ - , AGAINST WHICH NO DEDUCTION UNDER SECTION 80P(2)(A)(I) OF THE ACT WAS GIVEN TO THE ASSESSEE. ITA NO. 1 656 /PN/20 1 5 BUWASAHEB NAWALE GRAMIN BIGAR SHETI SAH. PATSANSTHA LTD. 4 6. BEFORE THE CIT(A), THE EXPL ANATION OF ASSESSEE WAS THAT THE VIEW TAKEN BY THE ASSESSING OFFICER THAT THE DISALLOWANCES MADE WERE THE ACTUAL INCOME OF THE ASSESSEE HAVING ACCRUED BY WAY OF VIOLATION OF THE PROVISIONS OF THE ACT AND NOT EARNED IN THE NORMAL PRACTICE OF BANKING, WAS NO T CORRECT. WHERE THE INCOME DETERMINED AFTER MAKING DISALLOWANCE WAS THE INCOME FROM PROFITS AND GAINS OF BUSINESS OR PROFESSION, THE ASSESSEE WAS ENTITLED TO THE CLAIM OF DEDUCTION UNDER SECTION 80P OF THE ACT AND WHOLE OF THE AMOUNT ON PROFITS AND GAINS OF BUSINESS ATTRIBUTABLE TO THE BUSINESS INCOME. THE ASSESSEE PLACED RELIANCE ON THE DECISION OF AMRITSAR BENCH OF TRIBUNAL IN THE CASE OF JAMMU RURAL BANK REPORTED IN (2005) 93 ITD 717 (AMRITSAR TRIB) . THE ASSESSEE ALSO CLAIMED THAT THE ADDITIONS MAD E BY THE ASSESSING OFFICER BEING NEITHER WARRANTED ON FACTS NOR IN LAW BE DELETED. THE CIT(A) NOTED THAT THE FOUR ITEMS OF DEDUCTIONS CLAIMED BY THE ASSESSEE IN ITS PROFIT & LOSS ACCOUNT, WERE NOT AS PER LAW, THE ASSESSING OFFICER THUS, DISALLOWED THE AMO UNTS . THE CIT(A) HELD THAT THE DISALLOWANCES MADE BY THE ASSESSING OFFICER WERE ACTUAL INCOME OF ASSESSEE HAVING ACCRUED BY WAY OF VIOLATION OF PROVISIONS OF THE ACT AND NOT IN NORMAL PRACTICE OF BUSINESS OF ASSESSEE. WHERE SECTION 80P OF THE ACT TALKS A BOUT DEDUCTION ON SUCH INCOME IN RESPECT OF CO - OPERATIVE SOCIETY, WHICH IS EARNED AS PER DIFFERENT CLAUSES OF SUB - SECTION (2), THEN ONLY THE INCOME WHICH IS EARNED FROM CARRYING THE SAID BUSINESS I.E. PROVIDING CREDIT FACILITIES TO ITS MEMBERS, WAS DEDUCTI BLE UNDER SECTION 80P OF THE ACT. THE ADDITIONS MADE BY THE ASSESSING OFFICER ON SUCH AMOUNTS WHICH WERE AGAINST THE CLEAR CUT PROVISIONS OF SECTION 40(A) OF THE ACT COULD NOT BE ATTRIBUTED TO EARNING OF INCOME BY WAY OF PROVIDING CREDIT FACILITIES TO ITS MEMBERS. RELIANCE PLACED UPON BY THE ASSESSEE ON THE DECISION OF AMRITSAR BENCH OF TRIBUNAL IN THE CASE ITA NO. 1 656 /PN/20 1 5 BUWASAHEB NAWALE GRAMIN BIGAR SHETI SAH. PATSANSTHA LTD. 5 OF JAMMU RURAL BANK (SUPRA) WAS HELD TO BE DISTINGUISHABLE ON FACTS. THE CIT(A) THUS, UPHELD THE ORDER OF ASSESSING OFFICER IN ADDING SUM OF RS.6,34, 133/ - UNDER SECTION 40(A) OF THE ACT AND DENYING THE DEDUCTION UNDER SECTION 80 P(2)(A)(I) OF THE ACT OF THE ACT ON SUCH INCOME. 7. THE ASSESSEE IS IN APPEAL AGAINST THE ORDER OF CIT(A). 8. ON PERUSAL OF RECORD, IT IS APPARENT THAT THE ASSESSEE WAS A CO - OPERATIVE SOCIETY AND WAS ENGAGED IN PROVIDING LOANS OR OTHER CREDIT FACILITIES TO ITS MEMBERS. THE ASSESSEE WAS RECEIVING DEPOSITS FROM ITS MEMBERS , WHICH IN TURN, WERE BEING ADVANCED TO THE MEMBERS. THE ASSESSEE CLAIMED THAT ITS INCOME ARISING FROM TH E ACTIVITIES CARRIED ON BY IT ON PROVIDING CREDIT FACILITIES TO ITS MEMBERS WAS ELIGIBLE FOR DEDUCTION UNDER SECTION 80P(2)(A)(I) OF THE ACT . THE ASSESSEE FOR THE YEAR UNDER CONSIDERATION FURNISHED RETURN OF INCOME DECLARING NIL INCOME, WHICH WAS ADOPTED BY THE ASSESSING OFFICER WHILE COMPUTING THE INCOME IN THE HANDS OF ASSESSEE. HOWEVER, CERTAIN DISALLOWANCES WERE MADE BY THE ASSESSING OFFICER ON ACCOUNT OF EXPENSES DEBITED TO THE PROFIT & LOSS ACCOUNT. THE DISALLOWANCES MADE BY THE ASSESSING OFFICER W ERE ON ACCOUNT OF VIOLATION OF PROVISIONS OF THE ACT IN RESPECT OF PAYMENT OF INCOME TAX, FRINGE BENEFIT TAX AND PENALTY LEVIED BY THE INCOME TAX DEPARTMENT. THE ASSESSEE ON THE ONE HAND CLAIMS THAT ITS INCOME WAS ELIGIBLE FOR DEDUCTION UNDER SECTION 80P( 2)(A)(I) OF THE ACT AND ON THE OTHER HAND, HAS ALSO CLAIMED DEDUCTION ON ACCOUNT OF EXPENSES BEING INCOME TAX, INCOME TAX PENALTIES AND FRINGE BENEFIT TAX. THE DISALLOWANCES HAVE BEEN CONSIDERED AS TOTAL INCOME OF THE ASSESSEE BEING NOT ELIGIBLE FOR THE C LAIM OF DEDUCTION UNDER SECTION 80P(2)(A)(I) OF THE ACT . SINCE THE ASSESSEE HAS FAILED ITA NO. 1 656 /PN/20 1 5 BUWASAHEB NAWALE GRAMIN BIGAR SHETI SAH. PATSANSTHA LTD. 6 TO EXPLAIN THE NATURE OF SAID DISALLOWANCES MADE IN THE HANDS OF ASSESSEE WHICH HAVE BEEN CONSIDERED AS ITS TOTAL INCOME, THERE IS NO MERIT IN THE CLAIM OF ASSESSEE IN THIS REGARD AND THE GROUNDS OF APPEAL RAISED BY THE ASSESSEE ARE DISMISSED . 9 . IN THE RESULT, THE APPEAL OF THE ASSESSEE IS DISMISSED. ORDER PRONOUNCED ON THIS 27 TH D AY OF MA Y , 201 6 . SD/ - (SUSHMA CHOWLA) / JUDICIAL MEMBER / PUNE ; DATED : 27 TH MA Y , 201 6 . GCVSR / COPY OF THE ORDER IS FORWARDED TO : 1. / THE APPELLANT ; 2. / THE RESPOND ENT; 3. ( ) / THE CIT(A) - 2 , PUNE ; 4. / THE PR. CIT - 1 , PUNE ; 5. , , , - / DR SMC , ITAT, PUNE; / BY ORDER , // TRUE COPY // / SR. PR IVATE SECRETARY , / ITAT, PUNE