GODREJ INDUSTRIES EMPLOYEES CO-OPERATIVE CREDIT SOCIETY LIIMITED, MUMBAI V. PR.CIT-29, MUMBAI

ITA 1803/MUM/2019

• Counselvise Citation: [2020] 110 COUNSELVISE.COM (IT) 5963 (ITAT-MUMBAI)
• Duration Of Justice: 1 year(s) 2 month(s) 21 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 18-06-2020
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: G
• Assessment Year: 2014-2015
• Appeal Filed On: 28-03-2019
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: MANJUNATHA SWAMY
• Keywords: Opportunity of being heard; Principle of natural justice; Question of law; Set aside
• Section: 143(3); 80P; 263

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL MUMBAI BENCHES G , MUMBAI BEFORE S HRI RAJESH KUMAR (AM ) AND SHRI RAM LAL NEGI (JM) ITA NO. 1803 /MUM/20 1 9 ASSESSMENT YEAR: 2014 - 15 GODREJ INDUSTRIES EMPLOYEES CO - OPERATIVE CREDIT SOCIETY LTD., PLOT NO. 11, GODREJ & BOYCE MANUFACTURING CO. LTD., L.B.S. MARG, VIKHROLI (E), MUMBAI 400079 PAN: AAAAG1042M VS. ( THE PR. C.I.T. - 29 ) I.T.O. - 29(1)(4) C - 10, 3 RD FLOOR, PRATYAKSHAKAR BHAVAN, BANDRA KURLA COMPLEX, BANDRA (E), MUMBAI - 400051 (APPELLANT) (RESPONDENT) A SSESSEE BY : MS. DINKLE HARIYA (A R) REVENUE BY : SHRI MANJUNATHA SWAMY (D R) DATE OF HEARING: 16/06/2020 DATE OF PRONOUNCEMENT: 18 / 06/2020 O R D E R PER RAM LAL NEGI, JM THIS A PPEAL HAS BEEN FILED BY THE ASSESSEE AGAINST THE ORDER DATED 24.01.2019 PASSED BY THE LD. PR. COMMISSIONER OF INCOME TAX (FOR SHORT THE. (PR. CIT) 29 , MUMBAI , FOR THE A S S ESSMENT YEAR 2014 - 15 , WHEREBY THE LD. PR. CIT HAS REVISED THE ASSESSMENT ORDER PASSED U/S 143(3) OF THE INCOME TAX ACT, 1961 (FOR SHORT THE ACT) BY EXERCISING THE JURISDICTION UNDER SECTION 263 OF THE ACT . 2. BRIEF FACTS OF THE CASE ARE THAT THE ASSESSEE AN EMPLOYEE CO - OPERATIVE CREDIT SOCIETY, FILED ITS RETURN OF INCOME FOR THE ASSESS MENT YEAR UNDER CONSIDERATION DECLARING NIL INCOME AFTER CLAIMING DEDUCTION U/S 80P OF THE ACT. THE AO PASSED THE ASSESSMENT ORDER U/S 143(3) OF THE ACT ACCEPTING THE RETURN. SUBSEQUENTLY, IT WAS NOTICED THAT THE ASSESSEE HAD EARNED INTEREST OF RS. 15, 67 , 3 92 / - ON INVESTMENTS WITH CO - OPERATIVE BANKS AND CLAIMED 2 ITA NO. 1803 / MUM/2019 ASSESSMENT YEAR: 2014 - 1 5 DEDUCTION U/S 80P(2) OF THE ACT. ACCORDINGLY, THE LD. PR. CIT EXERCISING THE POWERS U/S 263 OF THE ACT SET ASIDE THE ASSESSMENT ORDER AND HOLDING THAT SAME IS ERRONEOUS AS WELL AS PREJUDICIAL TO THE I NTEREST OF THE REVENUE AND FURTHER DIRECTED THE AO TO FRAME THE ASSESSMENT DE NOVO . AGGRIEVED BY THE SAID ORDER , THE ASSESSEE IS IN APPEAL BEFORE THIS TRIBUNAL. 3 . THE ASSESSEE HAS CHALLENGED THE ORDER OF THE LD. PR. CIT ON THE FOLLOWING GROUND S : 1. BREACH OF THE PRINCIPLES OF NATURAL JUSTICE 1.1 THE LEARNED PRINCIPAL COMMISSIONER OF INCOME TAX - 29, MUMBAI [LD. CIT), ERRED IN FRAMING THE REVISION ORDER U/S 263 OF THE INCOME TAX ACT, 1961 [ THE ACT] BY NOT GIVING PROPER, SUFFICIENT AND EFFECTIVE OPPORTUNITY OF BEING HEARD TO THE APPELLANT. 1.2 IT IS SUBMITTED THAT IN THE FACTS AND THE CIRCUMSTANCES OF THE CASE, AND IN LAW, THE REVISION ORDER IS REQUIRED TO BE HELD AS BAD AND ILLEGAL AS THE SAME IS PASSED IN BREACH OF THE PRINCIPLES OF NATURAL JUSTICE, AS WELL AS WITH NON - APPLICATION OF MIND TO THE FATS AND THE CONTENTIONS BROUGHT ON RECORD BY THE APPELLANT. WITHOUT PREJUDICE TO THE ABOVE 2. REVISION ILLEGAL 2.1 THE LD. CIT ERRED IN PASSING THE ORDER U/S 263 OF THE ACT, REVISING THE ASSESSMENT ORDER PASSED BY THE A.O. U /S 143 (3) OF THE ACT. 2.2 IT IS SUBMITTED THAT IN THE FACTS AND THE CIRCUMSTANCES OF THE CASE, AND IN LAW, THE ORDER IS BAD, ILLEGAL AND VOID AS NECESSARY PRE - CONDITIONS FOR INITIATING THE REVISION PROCEEDING AS WELL AS THE COMPLETION THEREOF WERE NOT FULFILL ED. 2.3 WITHOUT PREJUDICE TO THE GENERALITY OF THE ABOVE, THE CIT FAILED TO APPRECIATE THAT: (I) THE ASSESSMENT ORDER FRAMED WAS NOT ERRONEOUS WITHIN THE MEANING OF SECTION 263 OF THE ACT, AND (II) I N ANY CASE, THE ASSESSMENT ORDER WAS NOT PREJUDICIAL TO THE INTER EST OF THE REVENUE WITHIN THE MEANING OF SECTION 263 OF THE ACT. 3 ITA NO. 1803 / MUM/2019 ASSESSMENT YEAR: 2014 - 1 5 2.4 IT IS SUBMITTED THAT IN THE FACTS AND THE CIRCUMSTANCES OF THE CASE, AND IN LAW, NO REVISION U/S 263 OF THE ACT WAS CALLED FOR. WITHOUT FURTHER PREJUDICE TO THE ABOVE. 3. ON MERITS 3.1 THE CIT ER RED IN OBSERVING THAT THE INTEREST INCOME AMOUNTING TO RS. 15,67,392/ - EARNED BY WAY OF INVESTMENT IN CO - OPERATIVE BANKS WAS NO T ELIGIBLE FOR DEDUCTION U/S 80P(2)(A)(I) OF THE ACT. 4. AT THE OUTSET, THE LD. COUNSEL FOR THE ASSESSEE SUBMITTED BEFORE US THAT THE ISSUE INVOLVED IN THE PRESENT CASE IS COVERED BY THE ORDER OF THE MUMBAI TRIBUNAL IN THE CASE OF GODREJ & BOYCE EMPLOYEES CREDIT SOCIETY LTD. VS. THE ITO , ITA NO. 2520/MUM/2007 FOR THE ASSESSMENT YEAR 2004 - 05. SINCE THE ASSESSMENT ORDER IS IN CONS ONANCE WITH THE DECISION OF THE TRIBUNAL, THE IMPUGNED ORDER IS LIABLE TO BE SET ASIDE. THE LD. COUNSEL FURTHER RELIED ON THE JUDGMENT OF THE HONBLE KARNATAKA HIGH COURT IN THE CASE OF TUMKUR MERCHANTS SOUHARDA CREDIT COOPERATIVE LTD. VS. INCOME TAX OFFIC ER [2015] 55 TAXMANN.COM 447 (KARNATAKA), THE DECISIONS OF THE MUMBAI TRIBUNAL IN THE CASE OF ITO VS. M/S MUMBAI SALES TAX STAFF CO - OP CREDIT SOCIETY LTD., ITA NO. 1820/MUM/2017, AY 2013 - 14, AND S.E., S.E.C. & E. CO. RAILWAYS EMPLOYEES CO - OPERATIVE CREDIT SOCIETY LTD. VS. ACIT, ITA NO. 1693/KOL/2012, AY 2008 - 09 TO SUBS TANTIATE THE CLAIM OF THE ASSESSEE. 5. ON THE OTHER HAND, THE LD . DEPARTMENTAL REPRESENTATIVE (DR) ADMITTED THAT THE TRIBUNAL HAS DECIDED THE ISSUE IN QUESTION IN FAVOUR OF THE ASSESSEE IN T HE CASE OF GODREJ & BOYCE EMPLOYEES CREDIT SOCIETY LTD. VS. THE ITO FOR THE ASSESSMENT YEAR 2004 - 05, HOWEVER, SUPPORTED THE ORDER PASSED BY THE LD. PR. CIT. 6. WE HAVE PERUSED THE MATERIAL ON RECORD IN THE LIGHT OF THE CONTENTIONS OF THE PARTIES. AS POINTE D OUT BY THE LD. COUNSEL IN THE CASE OF GODREJ & BOYCE EMPLOYEES CREDIT SOCIETY LTD (SUPRA) , THE ASSESSEE EARNED DIVIDEND AND INTEREST INCOME FROM INVESTMENTS MADE WITH UTI AND OTHER COOPERATIVE BANKS. THE 4 ITA NO. 1803 / MUM/2019 ASSESSMENT YEAR: 2014 - 1 5 ASSESSEE CLAIMED EXEMPTION U/S 80P OF THE ACT. HOW EVER, THE AO REJECTING THE CLAIM OF THE ASSESSEE MADE ADDITION OF THE SAID AMOUNT TO THE INCOME OF THE ASSESSEE. IN THE FIRST APPEAL, THE LD CIT(A) PARTLY ALLOWED THE CLAIM OF THE ASSESSEE, HOWEVER, REJECTED THE CLAIM OF EXEMPTION WITH REGARD TO THE INTERE ST AND DIVIDEND RECEIVED FROM UTI AND CENTRAL BANK OF INDIA. STILL AGGRIEVED, THE ASSESSEE CHALLENGED THE ORDER OF THE LD. CIT(A) BEFORE THE TRIBUNAL. THE COORDINATE BENCH SET ASIDE THE FINDINGS OF THE LD. CIT(A) AND ALLOWED THE APPEAL OF THE ASSESSEE HOLD ING AS UNDER: 6 HAVING GIVEN A THOUGHTFUL CONSIDERATION AND RIVAL SUBMISSIONS, WE ARE OF THE VIEW THAT THE IDENTICAL ISSUE WAS EXAMINED BY THE TRIBUNAL IN THE AFORESAID CASES IN WHICH IT HAS BEEN SPECIFICALLY HELD THAT THE INCOME EARNED BY THE ASSESSEE CO - OPERATIVE SOCIETY ON INVESTMENT IN UTI WAS ENTITLED TO DEDUCTION U/S 80P(2)(A)(I) AS INVESTMENT WAS MADE BY THE ASSESSEE SOCIETY IN UTI OUT OF CIRCULATING BANKING BUSINESS. SIMILAR IS THE POSITION WITH REGARD TO INTEREST INCOME EARNED FROM THE BANK. IT W AS AGAIN HELD BY THE TRIBUNAL IN THE CASE OF ELECTRO URBAN CREDIT SOCIETY THAT THE INTEREST ON FIXED DEPOSITED EARNED BY CO - OPERATIVE SOCIETY ENGAGED IN LENDING MONEY TO ITS MEMBERS OUT OF MEMBERSHIP FUNDS AND DEPOSITS COLLECTED FROM SUCH MEMBERS WAS AN IN COME ATTRIBUTABLE TO BUSINESS OF BANKING CARRIED ON BY IT AND ARE ELIGIBLE FOR DEDUCTION U/S 80P(2)(A)(I) OF THE I.T. ACT. SINCE THE PARTICULAR VIEW HAS BEEN TAKEN IN SIMILAR SET OF FACT, WE FIND NO REASON TO TAKE CONTRARY VIEW IN THIS APPEAL. ACCORDINGLY, FOLLOWING THE AFORESAID ORDER OF THE TRIBUNAL, WE HOLD THAT THE ASSESSEE IS ENTITLED FOR DEDUCTION WITH REGARD TO INCOME EARNED ON INVESTMENT IN UTI AND THE INTEREST EARNED ON SAVINGS BALANCE WITH THE CENTRAL BANK OF INDIA. ACCORDINGLY, THE ORDER OF THE C IT (A) IS SET ASIDE IN THIS REGARD AND THE AO IS DIRECTED TO ALLOW DEDUCTION U/S 80P(2)(A)(I) OF THE ACT. 7. WE FURTHER NOTICE THAT THE HONBLE KARNATAKA HIGH COURT IN THE CASE OF TUMKUR MERCHANTS SOUHARDA CREDIT COOPERATIVE LTD. VS. INCOME TAX OFFICER (SUPRA) HAS HELD THAT WHERE A CO - OPERATIVE SOCIETY IS ENGAGED IN THE ACTIVITY OF CARRYING ON BUSINESS OF PROVIDING CREDIT FACILITIES TO ITS MEMBERS, THE SOCIETY IS 5 ITA NO. 1803 / MUM/2019 ASSESSMENT YEAR: 2014 - 1 5 ENTITLED TO DEDUCT THE INTEREST EARNED FROM DEPOSITS OF EXCESS AMOUNT FOR SHORT TERM IN BAN KS. THE OBSERVATIONS OF THE HONBLE COURT ARE AS UNDER: - 10. IN THE INSTANT CASE, THE AMOUNT WHICH WAS INVESTED IN BANKS TO EARN INTEREST WAS NOT AN AMOUNT DUE TO ANY MEMBERS. IT WAS NOT THE LIABILITY. IT WAS NOT SHOWN AS LIABILITY IN THEIR ACCOUNT. IN FACT THIS AMOUNT WHICH IS IN THE NATURE OF PROFITS AND GAINS, WAS NOT IMMEDIATELY REQUIRED BY THE ASSESSEE FOR LENDING MONEY TO THE MEMBERS, AS THERE WERE NO TAKERS. THEREFORE THEY HAD DEPOSITED THE MONEY IN A BANK SO AS TO EARN INTEREST. THE SAID INTERES T INCOME IS ATTRIBUTABLE TO CARRYING ON THE BUSINESS OF BANKING AND THEREFORE IT IS LIABLE TO BE DEDUCTED IN TERMS OF SECTION 80P(I) OF THE ACT. IN FACT SIMILAR VIEW IS TAKEN BY THE ANDHRA PRADESH HIGH COURT IN THE CASE OF CIT V. ANDHRA PRADESH STATE CO - OP ERATIVE BANK LTD. [ 2011] 200 TAXMAN 220/12 TAXMANN.COM 66. IN THAT VIEW OF THE MATTER, THE ORDER PASSED BY THE APPELLATE AUTHORITIES DENYING THE BENEFIT OF DEDUCTION OF THE AFORESAID AMOUNT IS UNSUSTAINABLE IN LAW. ACCORDINGLY, IT IS HEREBY SET ASIDE. THE SUBSTANTIAL QUESTION OF LAW IS ANSWERED IN FAVOUR OF THE ASSESSEE AND AGAINST THE REVENUE. HENCE, WE PASS THE FOLLOWING ORDER: 8. SIMILARLY, THE COORDINATE BENCHES OF THE MUMBAI TRIBUNAL HAVE DECIDED THE IDENTICAL ISSUES IN FAVOUR OF THE ASSESSEE IN THE CASE OF ITO VS. M/S MUMBAI SALES TAX STAFF CO - OP CREDIT SOCIETY LTD AND S.E., S.E.C. & E. CO. RAILWAYS EMPLOYEES CO - OPERATIVE CREDIT SOCIETY LTD. VS. ACIT, ITA NO. 1693/KOL/2012, AY 2008 - 09 (SUPRA) . 9 . SINCE, THE ISSUE RAISED BY THE LD. PR. CIT IS COVERE D IN FAVOUR OF THE ASSESSEE BY THE JUDGMENT OF THE HONBLE HIGH COURT AND THE CO - ORDINATE BENCHES OF THE TRIBUNAL, THE ASSESSMENT ORDER FRAMED BY THE AO IS IN ACCORDANCE WITH THE LAW. UNDER SECTION 263 OF THE ACT, ONLY THOSE ORDERS CAN BE REVISED WHICH ARE ERRONEOUS AND PREJUDICIAL TO THE INTEREST OF THE REVENUE. IN THE PRESENT CASE, SINCE THE ASSESSMENT ORDER IS NOT ERRONEOUS AND IN ACCORDANCE WITH THE LAW, THE LD. PR. CIT HAS WRONGLY EXERCISED THE JURISDICTION 6 ITA NO. 1803 / MUM/2019 ASSESSMENT YEAR: 2014 - 1 5 U/S 263 OF THE ACT. HENCE, WE ALLOW THE ASSES SEES APPEAL AND QUASH THE ORDER PASSED BY THE LD. PR. CIT. 10 . SINCE, WE HAVE DECIDED THE APPEAL ON MERITS , WE DO NOT DEEM IT NECESSARY TO DECIDE THE LEGAL GROUNDS RAISED BY THE ASSESSEE. IN THE RESULT, APPEAL FILED BY THE ASSESSEE FOR ASSESSMENT YE AR 2014 - 2015 IS ALLOWED. ORDER PRON OUNCED UNDER RULE 34(4) OF THE INCOME TAX APPELLATE TRIBUNAL RULES, 1963. SD/ - SD/ - ( RAJES H KUMAR ) ( RAM LAL NEGI ) ACCOUNTANT ME MBER JUDICIAL MEMBER MUMBAI ; DATED: 18 / 06/2020 ALINDRA, PS / COPY OF THE ORDER FORWARDED TO : 1. / THE APPELLANT 2. / TH E RESPONDENT. 3. ( ) / THE CIT(A) - 4. / CIT 5. , , / DR, ITAT, MUMBAI 6. / GUARD FILE . / BY ORDER, //TRUE COPY// / (DY./ASSTT. REGISTRAR) , / ITAT, MUMBAI