Canra Bank Staff Co. Op. Society. Ltd, Ahmedabad V. ITO, Ward-5(2)(2), Ahmedabad

ITA 1771/AHD/2018

• Counselvise Citation: [2019] 112 COUNSELVISE.COM (IT) 0768 (ITAT-AHMEDABAD)
• Duration Of Justice: 1 year(s) 3 month(s) 25 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 04-12-2019
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: B
• Assessment Year: 2012-2013
• Appeal Filed On: 09-08-2018
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Assessee Lawyers: S A SUKHADIA
• Keywords: Set aside

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL AHMEDABAD B BENCH (BEFORE SHRI MAHAVIR PRASAD, JUDICIAL MEMBER & SHRI AMARJIT SINGH, ACCOUNTANT MEMBER) ITA. NO: 1771/AHD/2018 (ASSESSMENT YEAR: 2012-13) CANARA BANK STAFF CO-OP SOCIETY LTD., 906, HEMKOOT BUILDING, OPP. CAPITAL COMMERCIAL CENTRE, ASHRAM ROAD, ELLIS BRIDGE, AHMEDABAD V/S INCOME TAX OFFICER, WARD- 5 (2)(2), AHMEDABAD (APPELLANT) (RESPONDENT) PAN: AAAAC 7849N APPELLANT BY : SHRI S. A. SUKHADIA, AR RESPONDENT BY : SHRI MUDIT NAGPAL, SR. D.R. ( )/ ORDER DATE OF HEARING : 10 -09-201 9 DATE OF PRONOUNCEMENT : 04 -12-2019 PER MAHAVIR PRASAD, JUDICIAL MEMBER 1. THIS APPEAL FILED BY THE ASSESSEE IS DIRECTED AGAIN ST THE ORDER OF THE LD. CIT(A)-5, AHMEDABAD DATED 08.06.2018 PERTAINING TO A.Y. 2012-13 AND FOLLOWING GROUNDS HAVE BEEN TAKEN: ITA NO. 1771 /AHD/2018 . A.Y. 2012-1 3 2 1. THE LD COMMISSIONER OF INCOME TAX ( APPEALS) ER RED IN CONFIRMING THE DISALLOWANCE U/S 80P(2)(D) OF THE INCOME TAX ACT TH AT OF RS. 114720/-BEING INTEREST EARNED FROM NATIONALISED BANK. 2. THE LD COMMISSIONER OF INCOME TAX (APPEALS) ERRE D IN NOT APPRECIATING THE FACT THAT THE AN OVERDRAFT FACILITIES CREATED ON SAID FD R AND THE OVERDRAFT ACCOUNT USED FOR ROUTINE DAY TO DAY TRANSACTION OF THE ASSE SSEE AND AN INTEREST OF RS. 86478 PAID FOR SUCH OVERDRAFT FACILITIES. 3. THE LD. COMMISSIONER OF INCOME TAX (APPEALS) ERR ED IN NOT CONSIDER NET INCOME FOR DISALLOWANCE U/S 80P(2)(D) AND DISALLOWED GROSS INTEREST RECEIVED FROM NATIONALISED BANK. 2. FACTS OF THE CASE ARE THAT THE APPELLANT IS A STAFF CO-OP. CREDIT SOCIETY CARRYING IN AN ACTIVITY THAT OF PROVIDING CREDIT FACILITIES TO ITS MEMBERS. THE SOCIETY APART FROM THE OPERATION FUND HAS MAINTAINED LIQUID FUNDS , AS A SHORT TERM DEPOSIT WITH THE CANARA BANK TO MEET ANY EVENTUALITY TOWARD S THE REPAYMENT OF THE DEPOSIT. FOR THAT PURPOSE, THE SOCIETY MAINTAIN OVE RDRAFT ACCOUNT AGAINST THE FDR, WHICH CAN BE VERIFIED FROM THE BALANCE SHEET O F THE SOCIETY, AS WELL AS OVER DRAFT BANK ACCOUNT STATEMENT WHICH WAS FILED O N BEHALF OF THE ASSESSEE FOR DAY TO DAY BANKING TRANSACTIONS ARE HAPPENED FROM T HE SAID ACCOUNT AND OD INTEREST CHARGE IS THAT OF RS. 86,478/-. AND ASSESS EE HAS ALSO MADE FIXED DEPOSIT WITH THE CANARA BANK TO MAINTAIN THE LIQUIDITY TO M EET OUT THE IMMEDIATE LIABILITIES ARISE. SO FAR FDR WITH THE CANARA BANK IS CONCERNED FDR OF RS. 11,00,000/- IS MADE AND ASSESSEE HAS EARNED INTERES T INCOME OF RS. 1,14,721/- FROM CANARA BANK. LD. A.O. HAS DISALLOWED THE CLAIM OF THE ASSESSEE OF RS. 1,14,721/- FOR THE REASON THAT SAID INTEREST INCOME HAS NOT BEEN EARNED FROM MEMBERS OF THE SOCIETY. ON THE CONTRARY, THIS INTER EST HAS BEEN EARNED BY THE ASSESSEE FROM IN ITS SURPLUS FUND IN CANARA BANK WH ICH IS A NATIONALIZED BANK. 3. THEREAFTER, ASSESSEE PREFERRED FIRST STATUTORY APPE AL BEFORE THE LD. CIT(A) WHO CONFIRMED THE ACTION OF THE LD. A.O. HOLDING THAT S IMILAR DISALLOWANCE WERE ITA NO. 1771 /AHD/2018 . A.Y. 2012-1 3 3 CONFIRMED IN ASSESSEES OWN CASE IN ASSESSMENT YEAR 2014-15 AND ON THAT BASIS, LD. CIT(A) CONFIRMED THE ADDITION. 4. NOW ASSESSEE HAS COME BEFORE US AND STATED THAT ADD ITION SHOULD NOT BE MADE IN THE HANDS OF THE ASSESSEE. 5. WE HAVE GONE THROUGH THE RELEVANT RECORD AND IMPUGN ED ORDER. ASSESSEE IS A STAFF CREDIT CO-OP. SOCIETY AND IF SOCIETY EARNS AN Y INTEREST INCOME FROM PROVIDING LOAN/ADVANCES TO ITS MEMBERS THAT INCOME IS EXEMPTED U/S. 80P(2)(A)(I) FOR CARRYING ON THE BUSINESS OF BANKIN G OR PROVIDING CREDIT FACILITIES TO ITS MEMBER. IN CASE BEFORE IS THAT ASSESSEE HAS DEPOSITED SURPLUS FUND WITH THE CANARA BANK AND EARNED INTEREST INCOME OF RS. 1 ,14,721/- AND SAME CANNOT BE EXEMPTED AND SAME DEDUCTION CANNOT BE ALLOWED TO THE ASSESSEE. HOWEVER, IF ANY EXPENSES HAVE BEEN INCURRED TO EARN THE INTE REST INCOME THAT WILL BE ALLOWED TO THE APPELLANT. 6. A SIMILAR VIEW HAS BEEN TAKEN BY THE CO-ORDINATE BE NCH IN THE MATTER OF ITO, WARD-3(4), PETLAD (BARODA) VS. THE ALARSA NAGRIK CO OPERATIVE BANK SOCIETY LTD. IN ITA NO. 2072/AHD/2014 ORDER DATED 10.04.20 17 WHEREIN CO-ORDINATE BENCH HAS HELD AS UNDER: 10. A PERUSAL OF THIS JUDGMENT WOULD SUGGEST THAT D EDUCTION UNDER SECTION 80P(2)1) IS NOT AVAILABLE ON THE INTEREST INCOME EA RNED ON SURPLUS MONEY DEPOSITED WITH NATIONALISED BANKS. BUT IF ASSESSEE HAS INCURRED ANY EXPENDITURE, WHICH IS ATTRIBUTABLE TO THE EARNING OF INTEREST IN COME, THEN, THE AO SHALL EXAMINE THAT ASPECT AND EXCLUDE THE INTEREST EXPEND ITURE IF ANY INCURRED BY THE ASSESSEE FOR EARNING THIS INTEREST FROM BANK. IN OT HER WORDS, THE ONLY NET INTEREST INCOME IS TO BE EXCLUDED FROM THE CLAIM OF DEDUCTIO N UNDER SECTION 80P(2) OF THE ACT. RESPECTFULLY FOLLOWING THE JUDGMENT OF HON'BLE GUJARAT COURT WE SET ASIDE BY THE ORDERS OF THE REVENUE AUTHORITIES AND RESTORE T HIS ISSUE TO THE FILE OF THE AO FOR RE-ADJUDICATION. THE ID.AO SHALL WORK OUT NET I NTEREST INCOME EARNED BY THE ITA NO. 1771 /AHD/2018 . A.Y. 2012-1 3 4 ASSESSEE FROM THE FDRS. WITH NATIONALIZED BANKS. HE THEREAFTER DISALLOW THAT AMOUNT ONLY FROM THE EXEMPTION ADMISSIBLE TO THE AS SESSEE UNDER SECTION 80P(2). 11. WE MAKE IT FURTHER CLEAR THAT THE ASSESSEE IS A CREDIT COOPERATIVE SOCIETY. IT IS ENTITLED FOR DEDUCTION UNDER SECTION 80P(2)(1) ON T HE INTEREST INCOME EARNED BY IT FROM ITS MEMBERS. THE INTEREST INCOME EARNED ON THE INVESTMENT OF SURPLUS FUND WITH NATIONALIZED BANK IS ONLY TO BE EXCLUDED FROM THE CLAIM OF 80P(2)(A)(I) OF THE ACT. THE ID.AO SHALL CARRY OUT THIS EXERCISE AFTER PROVIDING DUE OPPORTUNITY OF HEARING TO THE ASSESSEE. 12. IN THE RESULT APPEAL OF THE ASSESSEE IS ALL OWED FOR STATISTICAL PURPOSE. 7. THUS, IN PARITY WITH THE ORDER OF THE CO-ORDINATE B ENCH, WE SET ASIDE THIS MATTER TO THE FILE OF THE LD. A.O. WITH THE DIRECTI ON THAT A.O. WILL EXAMINE IF ANY EXPENDITURE HAS BEEN INCURRED IN ORDER TO EARN INTE REST INCOME FROM THE NATIONALIZED BANK THAT SHOULD BE EXCLUDED FROM THE ADDITION AND THEREAFTER WILL PASS AN ORDER AS PER PROVISIONS OF LAW. 8. IN THE RESULT, APPEAL FILED BY THE ASSESSEE IS ALLO WED FOR STATISTICAL PURPOSES. ORDER PRONOUNCED IN OPEN COURT ON 04- 12- 2019 SD/- SD/- (AMARJIT SINGH) (MAHAVIR PRASAD) ACCOUNTANT MEMBER TRUE COPY JUDICIAL MEMBER AHMEDABAD: DATED 04/12/2019 RAJESH COPY OF THE ORDER FORWARDED TO: - 1. THE APPELLANT. 2. THE RESPONDENT. 3. THE CIT (APPEALS) 4. THE CIT CONCERNED. 5. THE DR., ITAT, AHMEDABAD. 6. GUARD FILE. BY ORDER DEPUTY/ASSTT.REGISTRAR ITAT,AHME DABAD