North Howrah Co-operative Credit Society Limited , Howrah V. ITO, Ward - 46(1), Kolkata , Kolkata

ITA 1658/KOL/2018

• Counselvise Citation: [2019] 112 COUNSELVISE.COM (IT) 6761 (ITAT-KOLKATA)
• Duration Of Justice: 6 month(s) 26 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 28-02-2019
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: SMC
• Assessment Year: 2012-2013
• Appeal Filed On: 02-08-2018
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: C J SINGH JCITSRDR
• Assessee Lawyers: DEBEYAN PATRA
• Keywords: Earning of tax free income; Co-operative Credit Society
• Section: 143(3); 80P

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL KOLKATA BENCH SMC KOLKATA BEFORE SHRI S.S, GODARA, JUDICIAL MEMBER ITA NO.1658/KOL/2018 ASSESSMENT YEAR:2012-13 NORTH HOWRAH CO-OPERATIVE CREDIT SOCIETY LTD.,12/1 UPENDRA NATH MITRA LANE, SALKIA, DIST. HOWRAH PIN- 711106 [ PAN NO.AAAAN 6736 D ] / V/S . INCOME TAX OFFICER, WARD-46(1), 3, GOVERNMENT PLACE (WEST) KOLKAT- 700001 /APPELLANT .. /RESPONDENT /BY APPELLANT SHRI DEBEYAN PATRA, FCA /BY RESPONDENT SHRI C.J. SINGH, JCIT-SR-DR /DATE OF HEARING 26-02-2019 /DATE OF PRONOUNCEMENT 20-02-2019 /O R D E R THIS ASSESSEES APPEAL FOR ASSESSMENT YEAR 2012-13 , ARISES AGAINST THE COMMISSIONER OF INCOME-TAX (APPEALS)-14, KOLKATAS ORDER DATED 21.05.2018 PASSED IN CASE NO.10/CIT(A)-14/WD-48(1)/2015-16 INVOLVING PROCEEDINGS U/S. 143(3) OF THE INCOME TAX ACT, 1961; IN SHORT THE ACT. HEARD BOTH THE PARTIES. CASE FILE PERUSED. 2. IT IS POINTED OUT AT THE OUTSET THAT ASSESSEES INSTANT APPEAL SUFFERS FROM 13 DAYS DELAY IN HAVING STATED TO BE ATTRIBUTABLE TO VARIOU S PROCEDURAL ASPECTS. THE REVENUE IS FAIR ENOUGH IN NOT DISPUTING THE CORRECTNESS THEREO F DURING THE COURSE OF HEARING. I THUS CONDONE THE IMPUGNED 13 DAYS DELAY TO BE NEITHER IN TENTIONAL NOR DELIBERATE. THE CASE IS NOW TAKEN UP FOR ADJUDICATION ON MERITS. 3. THE ASSESSEES SOLE SUBSTANTIVE GROUND CHALLENGE S THE CIT(A)S ACTION AFFIRMING THE ASSESSMENT FINDINGS AMOUNTING TO 7,02,495/- AS UNDER:- ITA NO.1658/KOL/2018 A.Y. 2012-1 3 NORTH HOWRAH CO-OP. CREDIT SOCIETY LTD. VS. ITO WD-46(1) KOL. PAGE 2 4. / DECISION: 4.1 GROUNDS 1-3 AS ALL THE GROUNDS RELATES TO THE L ONE EFFECTIVE ISSUE OF DISALLOWANCE OF DEDUCTION OF INTEREST FOR A SUM OF RS.7,02,495, THE SAME ARE CONSIDERED TOGETHER. DURING THE ASSESSMENT PROCEEDINGS THE AO NOTED THAT THE APPELLANT HAS CLAIMED RS.11,83,714 AS EXPENDITURE ON ACCOUNT OF INTEREST PAYABLE TO LENDERS. SHE FURTHER OBSERVED THAT THE APPELLANT HAS MADE A PROVISION OF RS.7,02,495 FOR INTEREST PAYMENT. THE LEARNED AO BY OFFICE LETTER DATED 10.02.2015 SO UGHT AN EXPLANATION FROM THE APPELLANT REQUIRING DETAILS OF THE BASIS ON WHICH T HE PROVISION WAS MADE. THE LEARNED AO FURTHER PROVIDED OPPORTUNITIES TO THE APPELLANT TO EXPLAIN AS TO WHY THE INTEREST INCOME OF THE SOCIETY FROM THE LOAN GIVEN TO THE ME MBERS BE NOT CONSIDERED AS INELIGIBLE FOR DEDUCTION BY VIRTUE OF SECTION 80P(4 ) OF THE IT ACT. ON RECEIVING NO EXPLANATION FROM, THE APPELLANT, THE AO DISALLOWED THE CLAIM MADE ON ACCOUNT OF INTEREST PROVISIONING OF RS.7,02,495 AND ADDED THE SAME TO THE TOTAL INCOME OF THE APPELLANT. AGGRIEVED, THE APPELLANT DURING THE APPE LLATE PROCEEDINGS SUBMITS THAT THE APPELLANT IS A PRIMARY CO-OPERATIVE CREDIT SOCIETY. IT IS FURTHER SUBMITTED THAT AS PER THE DEFINITION OF A PRIMARY CO-OPERATIVE BANK UNDER SECTION 5(CCV) OF THE BANKING REGULATION ACT, 1949, THE APPELLANT IS NOT A CO-OPE RATIVE BANK AND DOES NOT COME WITHIN THE MISCHIEF OF THE PROVISIONS OF SECTION 80 (P)(4) OF THE IT ACT. IT IS THEREFORE PLEADED, AS A CONSEQUENCE, IT WOULD BE ELIGIBLE TO GET DEDUCTION UNDER SECTION 80P(2)(A)(I) OF THE IT ACT. APPELLANTS CONTENTIONS WERE CAREFULLY CONSIDERED. 4.2 THE APPELLANT HAS NOT SUBMITTED ANY EVIDENCE AS TO ITS EXACT ACTIVITY. ITS STATUS IS A COOPERATIVE SOCIETY AS REVEALED FROM THE ASSESSMENT ORDER. BEYOND THIS, FROM THE SUBMISSIONS MADE DURING THE APPELLATE PROCEEDINGS, THE APPELLANT HAS NOT UNEQUIVOCALLY PROVED AS TO ITS EXACT NATURE OF ACTI VITIES BY PROVIDING MEMORANDUM OF OBJECTIVES, RULES AND BY-LAWS OF THE SOCIETY, DETAI LED ANNUAL REPORT, REGISTRATION DOCUMENTS, LIST OF MEMBERS AND BENEFICIARIES. IT HA S ALSO NOT SUBMITTED ANY DETAILS AS TO WHETHER IT IS A PRIMARY CO-OPERATIVE SOCIETY OR A FEDERATED CO-OPERATIVE SOCIETY AND WHETHER CREDIT FACILITIES HAVE BEEN PROVIDED TO OR ACCEPTED FROM ONLY MEMBERS OR ALSO INCLUDING NON-MEMBERS BY WAY OF ANY DOCUMENTARY EVI DENCES OTHER THAN MERE ASSERTIONS. GIVEN THE FACT THAT THE AO ASKED A POIN TED EXPLANATION FROM THE APPELLANT AS TO WHY AND HOW THE PROVISIONS FOR INTEREST HAS B EEN MADE, THE BASIS OF THE SAME AND UNDER WHAT ACT OR COMPUTATION AND YET THE APPEL LANT CHOSE TO REMAIN SILENT ALSO DOES NOT IN ANY WAY GUIDE ONE TO THE CONCLUSION THA T THE APPELLANT IS A PRIMARY CO- OPERATIVE CREDIT SOCIETY PROVIDING CREDIT FACILITIE S ONLY TO ITS MEMBERS. NEITHER DURING THE ASSESSMENT NOR DURING APPELLATE PROCEEDINGS, T HE APPELLANT HAS PROVIDED DETAILS WITH RESPECT TO THE MEMBERS AND THE AMOUNT OF LOAN OR CREDIT GIVEN TO SUCH MEMBER. SIMILARLY, THE APPELLANT HAS CHOSEN TO REMAIN SILEN T WITH RESPECT TO RECEIPT OF SUCH LOANS, THE PARTIES FROM WHOM SUCH LOANS HAVE BEEN R ECEIVED AND DETAILS OF EACH SUCH LOANS AND INTEREST EXPENDED OR PROVISIONED IN RESPE CT OF THE SAME. FOR CLAIMING ANY DEDUCTION UNDER THE SCHEME OF THE ACT, THE ONUS IS ON THE ASSESSEE TO PROVE THAT REQUISITE INCOME OF WHICH DEDUCTION IS CLAIMED HAS BEEN ACTUALLY OF THE NATURE MANDATED UNDER THE PROVISIONS OF THE ACT. IN THE IN STANT CASE, IN SPITE OF BEING ASKED BY THE AO AND DURING THE APPELLATE PROCEEDINGS, THE APPELLANT HAS BEEN UNABLE TO PROVIDE ANY EVIDENCE TO VERIFY THE NATURE OF INCOME OR CLAIM OF EXPENSE IN RESPECT OF WHICH IT CANVASES ITS ARGUMENT FOR SEEKING DEDUCTIO N UNDER SECTION 80P(2)(A)(I) OF THE IT ACT. IN VIEW OF THE ABOVE, ON THE FACTS AND CIRC UMSTANCES OF THE CASE, THE UNDERSIGNED IS NOT INCLINED TO INTERFERE WITH THE O RDER OF THE AO. IN THE ABSENCE OF ANY EVIDENCE THAT CREDIT FACILITIES HAVES BEEN RESTRICT ED TO ONLY MEMBERS AND THAT THERE IS NO DIVISION BETWEEN ORDINARY AND NOMINAL MEMBERS, T HAT THE APPELLANT STICKS TO THE ITA NO.1658/KOL/2018 A.Y. 2012-1 3 NORTH HOWRAH CO-OP. CREDIT SOCIETY LTD. VS. ITO WD-46(1) KOL. PAGE 3 PRINCIPLE OF MUTUALITY BY RESTRICTING ITS BUSINESS OF PROVIDING CREDIT FACILITIES TO MEMBERS ONLY AND THAT THE APPELLANT IS NOT A FEDERA TED SOCIETY, THE AO WAS JUSTIFIED IN DISALLOWING THE INTEREST CLAIM ON ACCOUNT OF PROVI SIONS. APPELLANTS GROUND FAILS. 4. I HAVE GIVEN MY THOUGHTFUL CONSIDERATION TO RIVA L CONTENTIONS. IT TRANSPIRES DURING THE COURSE OF HEARING THAT NO EXEMPT INCOME HAS BEEN DERIVED AT THE ASSESSEES BEHEST IN THE IMPUGNED ASSESSMENT YEAR. I PUT A SPE CIFIC QUERY AS TO WHETHER THE ASSESSEE HAD CLAIMED ANY 80P DEDUCTION OR NOT IN TH E IMPUGNED ASSESSMENT YEAR. LEARNED COUNSEL HAS FILED BEFORE ME ASSESSEES COMP UTATION OF INCOME, RETURN AS WELL AS ACKNOWLEDGEMENT OF THE IMPUGNED ASSESSMENT YEAR NOWHERE INDICATING SUCH A DEDUCTION CLAIM. I HOLD IN THESE FACTS AND CIRCUMST ANCES THAT BOTH THE LOWER AUTHORITIES HAVE ERRED IN DISALLOWING ASSESSEES INTEREST CLAIM VIDE ITS ABOVE EXTRACTED DETAILED REASONING REFERRING SEC. 80P(2) OF THE ACT. I DIREC T THE ASSESSING OFFICER TO DELETE THE IMPUGNED ADDITION THEREFORE. 5. THIS ASSESSEES APPEAL IS ALLOWED. ORDER PRONOUNCED IN OPEN COURT ON 28/02/2019 SD/- (S.S. GODARA) JUDICIA L MEMBER KOLKATA, *DKP/SR.PS - 28/02/2019 / COPY OF ORDER FORWARDED TO:- 1. /APPELLANT-NORTH HOWRAH CO-OP. CREDIT SOCIETY LTD., 12/1 UPENDRA NATH MITRA LANE , SALKIA DIST.HOWRAH PIN-711106 2. /RESPONDENT-ITO WARD46(1),, 3 GOVT. PLACE (WEST), K OLKATA-001 3. # & / CONCERNED CIT 4. & - / CIT (A) 5. ' # , # / DR, ITAT, KOLKATA 6. + / GUARD FILE. BY ORDER/ , /TRUE COPY/ / #,