Janta Co. Op. Credit Society Ltd., Baroda V. The Income Tax Officer, Ward-3(1)(3), Baroda

ITA 1724/AHD/2017

• Counselvise Citation: [2018] 125 COUNSELVISE.COM (IT) 7873 (ITAT-AHMEDABAD)
• Duration Of Justice: 1 year(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 13-07-2018
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: SMC
• Assessment Year: 2014-2015
• Appeal Filed On: 13-07-2017
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Keywords: Opportunity of being heard

Judgement Text

, LH LHLH LH IN THE INCOME TAX APPELLATE TRIBUNAL C BENCH, AHMEDABAD LOZJH LOZJH LOZJH LOZJH OLHE VGEN OLHE VGEN OLHE VGEN OLHE VGEN] YS[KK LNL; ,OA ] YS[KK LNL; ,OA ] YS[KK LNL; ,OA ] YS[KK LNL; ,OA EK/KQFERK JKW; EK/KQFERK JKW; EK/KQFERK JKW; EK/KQFERK JKW;] U;KF;D LNL; ] U;KF;D LNL; ] U;KF;D LNL; ] U;KF;D LNL; DS LE{KA DS LE{KA DS LE{KA DS LE{KA BEFORE SHRI WASEEM AHMED, ACCOUNTANT MEMBER AND SMT MADHUMITA ROY, JUDICIAL MEMBER ./ I.T.A. NO.1724/AHD/2017 ( / ASSESSMENT YEAR : 2014-15) JANTA CO-OP CREDIT SOCIETY LTD., RAJMAHAL ROAD, BARODA 390 001 / VS. THE INCOME TAX OFFICER, WARD 3(1)(3), AAYAKAR BHAVAN, RACE COURSE CIRCLE, BARODA. ./ ./ PAN/GIR NO. : AAAAJ 0316 R ( / APPELLANT ) .. ( / RESPONDENT ) / APPELLANT BY : --NONE-- / RESPONDENT BY : SHRI PRASOON KABRA, SR. D.R. / DATE OF HEARING 05/07/2018 !'# / DATE OF PRONOUNCEMENT 13/07/2018 $% / O R D E R PER WASEEM AHMED, ACCOUNTANT MEMBER: THE CAPTIONED APPEAL HAS BEEN FILED AT THE INSTANCE OF THE ASSESSEE AGAINST THE APPELLATE ORDER OF THE COMMISSIONER OF INCOME TAX(APPEALS)-3, VADODARA [CIT(A) IN SHORT] VIDE APPEAL NO.CAB- 3/10162/2016-17 DATED 29.05.2017 ARISING IN THE ASSESSMENT ORDER PASSED UNDER S.143(3) OF THE INCOME TAX ACT, 1961 (HERE-IN -AFTER REFERRED TO AS 'THE ACT') DATED 07.07.2016 RELEVANT TO ASSESSMENT YEAR (AY) 2014-15. ITA NO.1724/AHD/2017 JANTA CO-OP CREDIT SOC IETY LTD. VS. ITO ASST.YEAR 2014-15 - 2 - 2. THE GROUNDS OF APPEAL RAISED BY THE ASSESSEE ARE AS UNDER:- 1. THE LEARNED C1T(A) HAS ERRED IN DISALLOW ING DEDUCTION U/S.80P AND MADE ADDITION AMOUNTING TO RS.12,08,210 /-. 2. ASSESSEE IS IN THE BUSINESS OF PROVIDING CREDIT FACILITIES TO ITS MEMBERS AND IS COVERED UNDER SECTION 80P AND HAS RI GHTLY CLAIMED DEDUCTION UNDER SECTION 80P(2)(A)(I) OF THE I.T. ACT, 1961. 3. THE ASSESSEE PRAY THAT DEDUCTION UNDER SECTION 80P(2)(A)(I) OF THE ACT IS ELIGIBLE, HENCE ADDITION OF RS.12,08,210 /- MADE BY LD. AO IS UNWARRANTED AND BAD IN LAW AND THEREFORE BE D ELETED. YOUR APPELLANT CRAVES LEAVE TO ADD, ALTER OR AMEND ANY OF THE GROUNDS OF APPEAL MENTIONED ABOVE, EITHER AT OR BEFORE THE TIME OF HEARING. 3. THE ASSESSEE ALSO FILED ADDITIONAL GROUNDS OF AP PEAL AS DETAILED UNDER:- (A) APPELLANT PRAYS THAT PRO RATA EXPENSES FOR EA RNING INTEREST INCOME BE ALLOWED. APPELLANT PRAYS THAT TOTAL EXPEN DITURE INCURRED FOR THE YEAR STOOD AT RS.46,48,577/-, TOTAL INCOME FOR THE YEAR STOOD AT RS.57,89,578/- AND INTEREST INCOME ON INVESTMENTS S TOOD AT RS.23,16,463/- HENCE PRO RATE EXPENSES FOR EARNING INTEREST INCOME OF RS,23,16,463/- AS AGAINST TOTAL INCOME OF RS.57,89, 578/- CALCULATED AT RS.18,59,938/-, BE ALLOWED. (B) APPELLANT FURTHER PRAYS THAT STATUTORY DEDUCTIO N OF RS.50,000/- BE ALLOWED UNDER SECTION 80P(2)(C)(II) OF THE INCOM E TAX ACT, 1961. 4. AT THE OUTSET IT WAS OBSERVED THAT THE ASSESSEE/ HIS AUTHORIZED REPRESENTATIVE NEITHER APPEARED NOR FILED ANY ADJOU RNMENT PETITION AT THE TIME OF HEARING. HOWEVER WE OBSERVED THAT THE ISSUE INVOLVED IN THIS APPEAL IS ALREADY COVERED BY VARIOUS JUDICIAL PRONO UNCEMENTS. THEREFORE WE DECIDED TO PROCEED TO ADJUDICATE THE ISSUE RAISE D BY THE ASSESSEE AFTER HEARING THE LD. DEPARTMENTAL REPRESENTATIVE ON BEHA LF OF REVENUE. ITA NO.1724/AHD/2017 JANTA CO-OP CREDIT SOC IETY LTD. VS. ITO ASST.YEAR 2014-15 - 3 - 5. THE INTERCONNECTED ISSUE INVOLVED IN THE GROUNDS OF APPEAL RELATES TO WHETHER INTEREST INCOME EARNED ON FIXED DEPOSITS WITH THE NATIONALIZED BANK WOULD QUALIFY FOR DEDUCTION UNDER SECTION 80P( 2)(A)(I) AND 80P(2)(C) OF THE INCOME TAX ACT. 6. AT THE OUTSET, IT WAS OBSERVED THAT ISSUE IN DI SPUTE IS SQUARELY COVERED AGAINST THE ASSESSEE BY THE DECISION OF THE HON'BLE JURISDICTIONAL HIGH COURT IN THE CASE OF STATE BANK OF INDIA VS. C IT, 389 ITR 578, WHEREIN HON'BLE COURT HELD THAT INTEREST EARNED FRO M THE INVESTMENT MADE IN ANY BANK IS NOT DEDUCTIBLE UNDER SECTION 80 P(2)(A)(I) OF THE ACT. IN THIS VIEW OF THE MATTER, WE DISMISS THE APPEAL O F THE ASSESSEE. HOWEVER, WE DIRECT THE AO TO EXCLUDE THE AMOUNT OF NET INTEREST INCOME FROM THE DEDUCTION CLAIMED U/S 80P(2)(A)(I) OF THE ACT. THUS THE AO WILL ALLOW THE EXPENSES INCURRED BY THE ASSESSEE IN THE EARNING OF SUCH INTEREST INCOME NOT ELIGIBLE FOR DEDUCTION UNDER SE CTION 80P(2)(A)(I) OF THE ACT. IN THIS CONNECTION WE FIND SUPPORT & GUIDA NCE FROM THE ORDER OF THIS TRIBUNAL IN THE CASE OF SHREEJI CO-OPERATIVE CREDIT SOCIETY LTD VS. ITO PERTAINING TO THE ASSESSMENT YEAR 2013-14 IN IT A NO.2751/AHD/2016 VIDE ORDER DATED 15-02-2018 WHEREI N IT WAS HELD AS UNDER: 3. AT THE OUTSET, THE LD. COUNSEL FOR THE ASSESSEE FAIRY CONCEDED THAT ISSUE IN DISPUTE IS SQUARELY COVERED AGAINST THE AS SESSEE BY DECISION OF THE HONBLE JURISDICTIONAL HIGH COURT IN THE CASE O F STATE BANK OF INDIA VS. CIT, 389 ITR 578 WHEREIN HONBLE COURT HELD THA T INTEREST EARNED FROM INVESTMENT MADE IN ANY BANK IS NOT DEDUCTIBLE UNDER SECTION 80P(2)(D). IN THIS VIEW OF THE MATTER, WE DISMISS T HE APPEAL OF THE ASSESSEE. HOWEVER, ANY EXPENDITURE INCURRED BY THE ASSESSEE FOR EARNING SUCH INCOME COULD BE ALLOWED TO IT. IN OTHE R WORDS, THE LD. AO HAS TO DETERMINE THE NET INTEREST EARNED BY THE ASS ESSEE ON SUCH ITA NO.1724/AHD/2017 JANTA CO-OP CREDIT SOC IETY LTD. VS. ITO ASST.YEAR 2014-15 - 4 - INVESTMENT WITH BANK, AND ONLY THEREAFTER THAT INCO ME HAS TO BE EXCLUDED FROM THE ADMISSIBILITY OF DEDUCTION UNDER SECTION 80P(2) OF THE ACT. 4. IN THE RESULT, APPEAL OF THE ASSESSEE IS PARTLY ALLOWED FOR STATISTICAL PURPOSE. SIMILARLY WE ALSO NOTE THAT THE ASSESSEE IS ELIGIBL E FOR DEDUCTION UNDER SECTION 80P(2)(C) OF THE ACT IN AS PER THE DECISION OF THE CO-ORDINATE BENCH OF THIS TRIBUNAL IN THE CASE OF 2426/AHD/2013 IN THE CASE OF DHAN LAXMI CO-OPERATIVE CREDIT SOCIETY LIMITED WHEREIN I T WAS HELD AS UNDER: 5. WE HAVE DULY CONSIDERED RIVAL CONTENTIONS AND G ONE THROUGH THE RECORD CAREFULLY. WE FIND THAT IN AN IDENTICAL SITUATION T HE TRIBUNAL HAS ISSUED FOLLOWING DIRECTIONS IN THE ASSTT.YEAR 2009-10 FOR VERIFICATION OF THE ASSESSEE'S CLAIM. '11) RESPECTFULLY FOLLOWING THE JUDGMENT OF HON. JU RISDICTIONAL HIGH COURT AND EXAMINING THE FACTS OF THE CASE AS ALSO IN THE LIGHT OF DECISION OF THE CO- ORDINATE BENCH DISCUSSED IN THE ABOVE PARAGRAPHS, W E ARE OF FOLLOWING VIEW :- (1) ASSESSEE IS NOT ELIGIBLE FOR DEDUCTION U/S 80P( 2)(A)(I) OF THE ACT ON THE INTEREST INCOME EARNED FROM SURPLUS DEPOSITS HELD W ITH NATIONALIZED/SCHEDULED BANKS. (2) ASSESSEE WILL BE ELIGIBLE TO STATUTORY DEDUCTIO N OF RS.50,000/-U/S 80P(2)(C) (II) OF THE ACT. (3) ASSESSEE WILL ALSO BE ELIGIBLE TO CLAIM PRO RAT A EXPENSES FOR EARNING INTEREST INCOME OF RS.8,55,854/- ASSESSEE'S CLAIM O F PRO RATA EXPENSES OF RS.5,77,423/- AGAINST THE INTEREST INCOME OF RS.8,5 5,854/- AFTER DUE VERIFICATION BY THE LEARNED ASSESSING OFFICER. WE, THEREFORE, DIRECT THE ASSESSING OFFICER TO VERI FY ASSESSEE'S CLAIM OF PRO RATA EXPENSES BY EXAMINING THE RECORD TO BE SHOWN F OR VERIFICATION BY THE ASSESSEE. NEEDLESS TO MENTION PROPER OPPORTUNITY OF BEING HEARD ITA NO.3268 AND 3269 /AHD/2014 IS TO BE GIVEN TO THE ASSESSEE. WE ORDER ACCORDINGLY. THE APPEAL OF THE ASSESSEE IS PARTLY ALLOWED FOR STATIS TICAL PURPOSES.' THE FACTS OF THE CASE ON HAND ARE IDENTICAL AS DISC USSED IN THE ABOVE CASE. THEREFORE, RESPECTFULLY FOLLOWING THE SAME, WE DIRE CT THE AO TO EXCLUDE ITA NO.1724/AHD/2017 JANTA CO-OP CREDIT SOC IETY LTD. VS. ITO ASST.YEAR 2014-15 - 5 - THE AMOUNT OF NET INTEREST INCOME FROM THE DEDUCTIO N CLAIMED U/S 80P(2)(A)(I) OF THE ACT. THUS THE AO WILL ALLOW THE EXPENSES INCURRED BY THE ASSESSEE IN THE EARNING OF SUCH INTEREST INCOME NOT ELIGIBLE FOR DEDUCTION UNDER SECTION 80P(2)(A)(I) OF THE ACT. SIMILARLY, WE ALSO FURTHER DIRECT THE ASSESSING OFF ICER TO ALLOW THE DEDUCTION TO THE ASSESSEE UNDER SECTION 80P(2)(C) O F THE ACT. HENCE, GROUNDS OF APPEAL FILED BY THE ASSESSEE ARE ALLOWED FOR STATISTICAL PURPOSES. 7. IN THE RESULT, THE APPEAL OF THE ASSESSEE IS PA RTLY ALLOWED FOR STATISTICAL PURPOSES. THIS ORDER PRONOUNCED IN OPEN COURT ON 13/07/2018 SD/- SD/- E/KQFERK JKW; E/KQFERK JKW; E/KQFERK JKW; E/KQFERK JKW; OLHE VGEN OLHE VGEN OLHE VGEN OLHE VGEN U;KF;D LNL; U;KF;D LNL; U;KF;D LNL; U;KF;D LNL; YKS[KK LN YKS[KK LN YKS[KK LN YKS[KK LN L; L; L; L; (MADHUMITA ROY) (WASEEM AHMED) JUDICIAL MEMBER ACCOUNTANT MEMBER AHMEDABAD; DATED 13/07/2018 PRITI YADAV, SR.PS ITA NO.1724/AHD/2017 JANTA CO-OP CREDIT SOC IETY LTD. VS. ITO ASST.YEAR 2014-15 - 6 - !'# $#! / COPY OF THE ORDER FORWARDED TO : 1. / THE APPELLANT 2. / THE RESPONDENT. 3. & '( ) / CONCERNED CIT 4. ) () / THE CIT(A)-3, VADODARA. 5. ,-. //'( , '(# , 12$&$ / DR, ITAT, AHMEDABAD 6. .34 5 / GUARD FILE. % & / BY ORDER, , / //TRUE COPY// '/& () ( DY./ASSTT.REGISTRAR) , / ITAT, AHMEDABAD 1. DATE OF DICTATION 09/07/2018 2. DATE ON WHICH THE TYPED DRAFT IS PLACED BEFORE THE DICTATING MEMBER 10/07/2018. 3. OTHER MEMBER 4. DATE ON WHICH THE APPROVED DRAFT COMES TO THE SR.P. S./P.S 13.07.2018 5. DATE ON WHICH THE FAIR ORDER IS PLACED BEFORE THE D ICTATING MEMBER FOR PRONOUNCEMENT 6. DATE ON WHICH THE FAIR ORDER COMES BACK TO THE SR.P .S./P.S. 7. DATE ON WHICH THE FILE GOES TO THE BENCH CLERK 8. DATE ON WHICH THE FILE GOES TO THE HEAD CLERK ... 9. THE DATE ON WHICH THE FILE GOES TO THE ASSISTANT RE GISTRAR FOR SIGNATURE ON THE ORDER.. 10. DATE OF DESPATCH OF THE ORDER