Ahmedabad Maskati Market Cloth Dealers Co.Op. Shops & Warehouse Soc. Ltd., Ahmedabad V. The DCIT, Circle-2,., Ahmedabad

ITA 1826/AHD/2013

• Counselvise Citation: [2016] 133 COUNSELVISE.COM (IT) 1679 (ITAT-AHMEDABAD)
• Duration Of Justice: 2 year(s) 10 month(s) 18 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 12-05-2016
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: B
• Next Hearing Date: 03-05-2016
• Assessment Year: 2008-2009
• Appeal Filed On: 24-06-2013
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Keywords: Business income

Judgement Text

IT A NO. 1826 /AHD/2013 A.Y . 2008 - 09 PAGE 1 OF 4 IN THE INCOME TAX APPELLATE TRIBUNAL AHMEDABAD B BENCH, AHMEDABAD BEFORE SHRI ANIL CHATURVEDI , ACCOUNTANT MEMBER AND SHRI S.S. GODARA , JUDICIAL MEMBER I TA NO. 1 826 /AHD /201 3 ASSESSMENT YEAR: 200 8 - 09 AHMEDABAD MASKATI MARKET CLOTH VS. DY. COMMISSIO NER OF INCOME TAX, DEALERS CO - OP. SHOPS & WAREHOUSE CIRCLE - 2, AHMEDABAD. SOCIETY LIMITED, 15, NEW CLOTH MARKET, O/S. RAIPUR GATE, AHMEDABAD 380 002. [PAN AA AAA 0591 R ] (APPELLANT ) (RESPONDENT) APPELLANT BY : SHRI GAURAV NAHTA, A.R. RESPONDENT BY : S HRI MUDIT NAGPAL, SR. D.R. DATE OF HEARING : 03 .0 5 . 20 16 DATE OF PRONOUNCEMENT : 12 .0 5 .2016 O R D E R PER ANIL CHATURVEDI, A .M. THIS APPEAL FILED BY THE ASSESSEE IS AGAINST THE ORDER OF LEARNED CIT ( A ) - III , AHM EDABAD DATED 22.04.2013 FOR THE ASSESSMENT YEAR 2008 - 09. 2. THE RELEVANT FACTS AS CULLED OUT F R OM THE MA TERIALS ON RECORD ARE AS UNDER : - 3. THE ASSESSEE IS A CO - OPERATIVE SOCIETY REGISTERED UNDER THE PROVISIONS OF BOMBAY CO - OPERATIVE SOCIETIES ACT , 1925 . THE ASSESSEE FILED ITS RETURN OF INCOME FOR ASSESSMENT YEAR 2008 - 09 ON 03.12.2008 DECLARING TOT A L INCOME OF RS.2,32,033/ - . THE CASE WAS SELECTED FOR SCRUTINY AND THEREAFTER THE ASSE SS MEN T WAS F R AMED UNDER SECTION 143 ( 3 ) OF THE INCOME TAX ACT, 1961 ( IN SHORT THE ACT ) VIDE ORDER DATED 23.12.2010 AND THE TOTAL INCOME W A S DETERMINED AT RS.17,44,053/ - . AGGRIEVED BY THE ORDER OF IT A NO. 1826 /AHD/2013 A.Y . 2008 - 09 PAGE 2 OF 4 A SSESSING OFFICER T HE A SSESSEE CARRIED TH E MATTER BEFORE THE LD . CIT ( A ) WHO VIDE OR D ER DATED 22.04.2013 IN A PPEAL NO .CIT(A) - III/ 246/ITO - WD.2(1)/12 - 13 GRANTED PARTIAL RELIEF TO THE ASSESSEE. AG GRIEVED BY THE ORDER OF LD . CIT ( A ) THE ASSESSEE IS IN APPEAL BEFOR E US AND HAS RAISED THE FOLLOWING GROUNDS : - 1. THE LD. CIT APPEALS III AHMEDABAD HAS ERRED IN LAW AND ON FACTS IN PASSING APPELLATE ORDER DATED 22.04.2013 FOR A.Y. 2008 - 09 IN THE CASE OF APPELLANT BY CONFIRMING THE ADDITION ON ACCOUNT OF TREATING THE INTEREST INCOME EARNED ON FIXED DEPOSIT AS INCOME FROM OTHER SOURCES. 2. IT IS FURTHER SUBMITTED THAT THE SOCIETY IS GOVERNED BY THE PRINCIPLES OF MUTUALITY THEREFORE THE INTEREST INCOME EARNED ON FIXED DEPOSITS IS ALSO COVE RED UNDER MUTUALITY AND THEREFORE NOT TAXABLE. 4. DURING THE COURSE OF ASSESSMENT PROCEEDINGS THE A SSESSING OFFICER NOTICED THAT ASSESS E E HAD EARNED INTERES T INCOME OF RS.15 , 60 , 493/ - . IT WAS ASSESSEE S CONTENTION THAT THE INTEREST INCOME HAD ARISEN OUT OF SURPLUS FROM BUSINESS ACTIVIT Y OF THE SOCIETY A ND SHOULD BE ASSESSED A S BUSINESS INCOME . THE AFORESAID CONTENTION WAS NOT FOUND ACCEPTABLE TO THE ASSESSIN G OFFICER, AS HE WAS OF THE VIEW THAT THE INTEREST INCOME EARNED BY THE ASSESSEE WAS NOT EARNED IN THE COURSE OF CARRYING OUT ANY ACTIVITY IN THE NATURE OF TRADE AND BUSINESS AND IT WAS NOT THE BUSINESS OF THE SOCIETY TO EARN INTEREST ON FIXED DEPOSIT S . H E , THEREFORE , CONSIDERED THE INTER E ST INCOME EARNED BY THE ASSESSEE TO BE TAXABLE UNDER THE H E AD INCOME FROM OTHER SOURCES AND , THEREFORE , VARIOUS EXPENSES IN THE NATUR E OF MAINTENANCE EXPENSE S AND CHARITY ETC . DEBITED TO INCOME AND EXPENDITURE ACCOUNT W ERE NOT ALLOWABLE TO BE CLAIMED AS EXPENDITURE AGAINST INTEREST INCOME. HE ACCORDINGLY CONSIDERED THE INTEREST INCOME AS INCOME FROM OTHER SOURCES . AGGRIEVED BY TH E OR D ER OF THE A SSESSING OFFICE R THE MATTER WAS CARRIED TO TH E LD . CIT ( A ) WHO UPHELD THE OR D ER OF TH E ASSESSING OFFICER BY HOLDING THAT THE ASSESSEE W A S NOT CARRYING ON ANY BUSINESS AND ITS A CTIVIT IES W ERE GOVER NED BY THE IT A NO. 1826 /AHD/2013 A.Y . 2008 - 09 PAGE 3 OF 4 PRINCIPLE S OF MUTUALITY AND , THEREFORE , HELD THAT THE ASSESSING OFFICER HAD RIGHTLY TREATED THE INTEREST INCOME A S INCOME F ROM OTHER SOURCES. AGGRIEVED BY THE ORDER OF LD. CIT(A), THE ASSESSEE IS NOW IN APPEAL BEFORE US. 5. BEFORE US AT THE OUTSET THE LD . AUTHORISED REPRESENTATIVE SUBMITTED THAT IDENTICAL ISSUE AROSE IN THE CASE OF THE ASSESSEE IN ASSESSMENT YEAR 2006 - 07 AND WHEN THE MATTER WAS CARRIED BY THE REVENUE BEFORE THE TRIBUNAL , TH E APPEAL OF THE R EVENUE WAS DISMISS E D. HE PLACED ON RECORD COPY OF THE ORDER IN ITA NO. 2479 / AHD / 2010 DATE D 31.05.2013. H E , THEREFORE , SUBMITTED THAT SINCE THE ISSUE IN THE Y E AR UND E R A PPEAL IS DIRECTLY COVER E D BY THE DECISION OF C O - ORDINATE B E NCH IN ASSESSEE S OWN CAS E OF EARLIER YEAR AND , THEREFORE , THE GROUND NEEDS TO BE DECIDED IN FAVOUR OF THE ASSESSEE. THE L D . DEPARTMENT REPRESENTATIVE, ON THE OTHER HAND , SUPPORTED THE ORDER S OF T HE A SSESSING OFFICER AND THE LD. CIT(A) . 6 . WE HAVE HEARD THE RIVAL SUBMISSIONS AND PERUSED THE MATERIAL ON RECORD. WE FIND THAT IDENTICAL ISSUE AROSE IN ASSESSEE S OWN CASE FOR ASSESSMENT YEAR 2006 - 07. TH E CO - ORDINATE BENCH OF T HE TRIBUNAL VI D E ORDER D ATE D 31.05.2013 DECIDED THE ISSUE IN FAVOUR OF THE ASSESSEE BY HOLDING THAT TH E EXCESS FUNDS DEPOSITED IN TH E BANK AND INTEREST EARNED THEREON WAS UTILIS E D FOR T HE PURPOSE OF THE SOCIETY AND HAD FURTHER FOLLOWED THE DE CISION OF HON BLE SUPREME COURT RENDER ED IN THE CASE OF BANGALOR E CLUB VS . CIT & ANOTHER R E PORTED IN (2013) 255 CTR ( SC ) 465 . THE RELEVANT GROUND RAISED IN APPAL BEFORE THE CO - ORDINATE B ENCH AND ITS DECISION READS AS UNDER : - THE EFFECTIVE GROUND OF APPEAL ARE AS UNDER : - THE LEARNED CIT(A) FURTHER ERRED ON FACTS IN HOLDING THAT THE PRINCIPLE OF MUTUALITY APPLIES ALSO FOR THE INTEREST INCOME OF RS.9,19,667/ - EARNED BY THE ASSESSEE. IT A NO. 1826 /AHD/2013 A.Y . 2008 - 09 PAGE 4 OF 4 THE ISSUE WAS DECIDED BY T HE T RIBUNAL BY HOLDING A S UNDER : - 6. WE HAVE HEARD THE RIVAL SUBMISSION AND PERUS ED THE MATERIAL AVAILABLE ON RECORD. THE ASSESSEE IS A CO - OPERATIVE SOCIETY AND RUN ON NO PROFIT NO LOSS BASIS FOR THE BENEFIT OF THE MEMBERS ONLY, EXCESS FUND DEPOSITED IN THE BANK AND INTEREST EARNED ON IT WHICH WERE ALSO USED FOR THE PURPOSES OF THE SOC IETY. BY FOLLOWING THE RECENT DECISION OF THE HON'BLE SUPREME COURT RENDERED IN THE CASE OF BANGALORE CLUB (SUPRA), THE APPELLANT HAS FULFILLED THREE CONDITIONS AS PRESCRIBED UNDER IT. THUS, WE CONFIRM THE ORDER OF THE LEARNED CIT(A). 7 . BEFORE US , R EVE NUE HAS NOT PLACED A NY CONTRARY BINDING DECISION IN ITS SUPPORT. IN VIEW OF THE AFORESAID FACTS A ND RESPECTFULLY FOLLOWING THE T RIBUNAL S DECISION D ATED 31.05.2013 IN AS S ESSEE S OWN CASE FOR THE A SSESSMENT YEAR 2006 - 07, TH E GROUND RAISED BY THE ASSESSEE I N ITS APPEAL IS ALLOWED , AS WE SEE NO REASONS TO TAKE ANY OTHER VIEW OF THE MATTER THAN THE VIEW SO TAKEN BY THE C O - ORDINATE B ENCH. THUS THE GROUND OF ASSESSEE IS ALLOWED. 8 . IN THE RESULT, APPEAL OF THE ASSESSEE IS ALLOWED . ( THIS ORDER P RONOUNCED IN TH E OPEN COURT TODAY ON TH E 12 TH DAY OF MAY , 201 6 . ) SD/ - SD/ - S.S. GODARA ANIL CHATURVEDI ( JUDICIAL MEMBER) ( ACCOUNTANT MEMBER) AHMEDABAD, THE 12 TH DAY OF MAY , 2016 PBN/* COPIES TO: (1) THE APPELLANT ( 2) THE RESPONDENT (3) COMMISSIONER (4) CIT(A) (5) DEPARTMENTAL REPRESENTATIVE (6) GUARD FILE BY ORDER ASSISTANT REGISTRAR INCOME TAX APPELLATE TRIBUNAL AHMEDABAD BENCHES, AHMEDABAD