Amalsad Vibhag Vividh Karyakari Sahkari Khedut Mandli Ltd., Navsari V. The Income tax Officer,Ward-1, Navsari

ITA 1833/AHD/2013

• Counselvise Citation: [2016] 133 COUNSELVISE.COM (IT) 1334 (ITAT-AHMEDABAD)
• Duration Of Justice: 3 year(s) 2 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 29-06-2016
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: SMC
• Next Hearing Date: 28-06-2016
• Assessment Year: 2009-2010
• Appeal Filed On: 26-06-2013
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Assessee Lawyers: PARIMAL SINGH PARMAR
• Keywords: Principle of natural justice; Question of law
• Section: 143(3)

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL AHMEDABAD D BENCH AHMEDABAD BEFORE SHRI S. S. GODARA, JM, & SHRI MANISH BORA D, AM. ITA NO.1833 /AHD/2013 ASST. YEAR: 2009-10 AMALSAD VIBHAG VIVIDH KARYAKARI SAHKARI KHEDUT MANDLI LTD., AT & PO : AMALSAD (W. RLYS.), TAL. GANDEVI, DIST. NAVSARI. VS. ITO, WARD-1, NAVSARI. APPELLANT RESPONDENT PAN AAAAA 1043N APPELLANT BY SHRI PARIMAL SINGH PARMAR, AR RESPONDENT BY SHRI KEYUR PATEL, SR.DR DATE OF HEARING: 28/6/2016 DATE OF PRONOUNCEMENT: 29/6/2016 O R D E R PER MANISH BORAD, ACCOUNTANT MEMBER . THIS APPEAL OF ASSESSEE IS DIRECTED AGAINST ORDER OF LD. CIT(A), VALSAD, DATED 31.03.3010 IN APPEAL NO.CIT(A)/VLS/16 7/11-12 PASSED AGAINST ORDER U/S 143(3) OF THE IT ACT, 1961 (IN SHORT THE ACT) FRAMED ON 30.09.2011 BY ITO, WD-1, NAVSARI. FOLLOWI NG GROUNDS HAVE BEEN RAISED IN THIS APPEAL :- 1. THE LEARNED CIT(A) HAS ERRED BOTH IN LAW AND ON THE FACTS OF THE CASE IN CONFIRMING THE ACTION OF AO IN NOT ALLOWING CLAI M OF DEDUCTION U/S 80P OF THE ACT IN THE SUM OF RS.24,24,071/- AND FUR THER ERRED IN ITA NO. 1833/AHD/2013 ASST. YEAR 2009-10 2 HOLDING THAT THE SAID INCOME IS TAXABLE IN HANDS OF THE APPELLANT SEPARATELY AS INCOME FROM OTHER SOURCES. 2. BOTH THE LOWER AUTHORITIES HAVE ERRED IN NOT AP PRECIATING THAT INVESTMENTS IS AN INTEGRAL PART OF PROVIDING CREDIT FACILITIES AND THEREFORE, ANY INCOME EARNED BY CARRYING OUT THE SA ID ACTIVITIES QUALIFIES FOR CLAIM OF DEDUCTION U/S 80P OF THE ACT . 3. ALTERNATIVELY AND WITHOUT PREJUDICE, BOTH THE LO WER AUTHORITIES OUGHT TO HAVE ALLOWED EXPENDITURE INCURRED FOR EARNING SU CH INCOME AND OUGHT TO HAVE TAXED ONLY THE NET INCOME INSTEAD OF GROSS RECEIPT AS HAS BEEN DONE. 4. BOTH THE LOWER AUTHORITIES HAVE PASSED THE ORDER S WITHOUT PROPERLY APPRECIATING THE FACT AND THAT THEY FURTHER ERRED I N GROSSLY IGNORING VARIOUS SUBMISSIONS, EXPLANATIONS AND INFORMATION S UBMITTED BY THE APPELLANT FROM TIME TO TIME WHICH OUGHT TO HAVE BEE N CONSIDERED BEFORE PASSING THE IMPUGNED ORDER. THIS ACTION OF T HE LOWER AUTHORITIES IS IN CLEAR BREACH OF LAW AND PRINCIPLE S OF NATURAL JUSTICE AND THEREFORE DESERVES TO BE QUASHED. 5. THE LEARNED CIT(A) HAS ERRED IN LAW AND ON FACTS OF THE CASE IN CONFIRMING ACTION OF THE ID. AO IN LEVYING INTEREST U/S 234A/B/C OF THE ACT. 6. THE LEARNED CIT(A) HAS ERRED IN LAW AND ON FACTS OF THE CASE IN CONFIRMING ACTION OF THE ID. AO IN INITIATING PENAL TY U/S 271(L)(C) OF THE ACT. THE APPELLANT CRAVES LEAVE TO ADD, AMEND, ALTER, ED IT, DELETE, MODIFY OR CHANGE ALL OR ANY OF THE GROUNDS OF APPEAL AT THE T IME OF OR BEFORE THE HEARING OF THE APPEAL. 2. BRIEFLY STATED FACTS OF THE CASE AS CULLED OUT F ROM THE RECORD ARE THAT THE ASSESSEE IS A CO-OPERATIVE SOCIETY ENGAGED IN THE PURCHASE OF AGRICULTURAL IMPLEMENTS, SEEDS, FERTILIZERS, PES TICIDES, LIVESTOCK AND OTHER ARTICLES INTENDED FOR AGRICULTURE FOR THE PUR POSE OF SUPPLYING ITA NO. 1833/AHD/2013 ASST. YEAR 2009-10 3 THEM TO ITS MEMBERS, MARKETING OF AGRICULTURAL PROD UCTS OF THE MEMBERS, PROVIDING CREDIT FACILITY TO ITS MEMBERS A ND WHATEVER INCOME EARN FROM THESE ACTIVITIES HAS BEEN CLAIMED AS DEDUCTION U/S 80P OF THE ACT TO THE EXTENT OF AVAILABLE PROFIT. T HE ASSESSEE ALSO DERIVES INTEREST AND DIVIDEND INCOME. ASSESSEE FILE D ITS E-RETURN OF INCOME ON 18/09/2009 DECLARING TOTAL INCOME AT RS.N IL AFTER CLAIMING DEDUCTION U/S 80P OF THE ACT AT RS.55,17,792/-. THE CASE WAS SELECTED FOR SCRUTINY ASSESSMENT AND NOTICE U/S 143 (2) OF THE ACT WAS ISSUED ON 20.03.3010. DURING THE COURSE OF ASSESSME NT PROCEEDINGS THE ASSESSING OFFICER OBSERVED THAT ASSESSEE HAS EA RNED INTEREST INCOME OF RS.24,24,071/-. THE ASSESSEE WAS ASKED TO SHOW CAUSE AS TO WHY INTEREST INCOME OF RS.24,24,071/- SHOULD NOT BE BROUGHT TO TAX AS INCOME FROM OTHER SOURCES AND THEREBY CLAIM OF DEDUCTION U/S 80P OF THE ACT SHOULD NOT BE RESTRICTED TO THAT EXT ENT. VIDE ITS WRITTEN SUBMISSION DATED 24.8.2011 ASSESSEE CONTENDED THAT IT IS ENGAGED IN THE ACTIVITY OF PROVIDING CREDIT FACILITY TO ITS MEMBER AND TEMPORARY SURPLUS FUND AVAILABLE WAS PLUGGED IN SHORT TERM DE POSIT WITH BANK AND EARNED INTEREST THEREON IS ELIGIBLE FOR DEDUCTI ON U/S 80P(2)(A)(I) OF THE ACT. THE ASSESSING OFFICER DID NOT AGREE WITH T HE SUBMISSION MADE BY ASSESSEE AND COMPLETED THE ASSESSMENT DETER MINING TOTAL INCOME AT RS.24,24,071/-. 3. ASSESSEE WENT IN APPEAL BEFORE LD. CIT(A) WHO CO NSIDERING THE CONTENTIONS OF ASSESSING OFFICER, THE SUBMISSIONS O F ASSESSEE AND VARIOUS CASE LAWS, DISMISSED THE APPEAL OF ASSESSEE BY OBSERVING AS UNDER :- ITA NO. 1833/AHD/2013 ASST. YEAR 2009-10 4 4.3 DECISION :- I HAVE CAREFULLY CONSIDERED THE OBSERVATIONS OF THE AO IN THE ASSESSMENT ORDER AS WELL AS THE CONTENTION RAISED B Y THE AR OF THE APPELLANT IN THE WRITTEN SUBMISSION. THE SHORT POINT HERE TO BE DECI DED IS WHETHER THE INTEREST INCOME EARNED BY THE APPELLANT FROM OTHER THAN CO-OPERATIV E BANKS IS ALLOWABLE DEDUCTION U/S. 80P(A)(D) OF THE ACT. I HAVE PERUSED THE FINDI NGS OF THE AO IN THE ASSESSMENT ORDER. THE AO HAS DISCUSSED THE ISSUE IN PARA 4.2 T O 4.4 OF THE ASSESSMENT ORDER. WHAT HE HAS OBSERVED IS THAT THE APPELLANT HAD EARNED FR OM VARIOUS SOURCES INCLUDING INTEREST INCOME FROM OTHER THAN CO-OPERATIVE BANK. ACCORDING TO THE AO SUCH INTEREST INCOME IS NOT EXEMPTED U/S. 80P(2)(D) OF T HE ACT. ON THE OTHER HAND THE ID. AR MADE EXHAUSTIVE SUBMISSION AS NARRATED IN PARA 4 .2 OF THIS ORDER. I HAVE CAREFULLY CONSIDERED THE SUBMISSION OF THE ID. AR ALONG WITH THE CASE LAWS RELIED UPON BY HIM. SEC. 80P(2)(D) OF THE ACT STIPULATES THAT THE WHOLE OF THE INTEREST OR DIVIDENDS DERIEVED BY A CO-OP. SOCIETY FROM ITS INVESTMENTS W ITH ANY OTHER CO-OP, SOCIETY. IT IS ALSO WELL SETTLED THAT THE WORD 'INVESTMENTS' IS A WORD OF VERY WIDE IMPORT. IN THE INSTANT CASE THE AO HAS DISALLOWED AND CHARGED TO T AX ON THE INTEREST INCOME DERIVED FROM OTHER THAN CO-OP SOCIETIES/BANK. THEREFORE, I DON'T FIND ANY ANOMALY IN HIS OBSERVATION. HENCE, THE ACTION OF THE AO IS UPHELD. THIS GROUND OF APPEAL IS DISMISSED. 4. AGGRIEVED, THE ASSESSEE IS NOW IN APPEAL BEFORE US. 5. AT THE OUTSET THE LD. AR OF THE ASSESSEE SUBMITT ED THAT THE ISSUE RAISED IN THIS APPEAL IS COVERED BY THE DECIS IONS OF THE CO- ORDINATE BENCH, AHMEDABAD IN ASSESSEES OWN CASE IN ITA NOS. 1710 & 1711/AHD/2011 FOR ASST. YEARS 2006-07 & 2007 -08, DT.13.8.2015 AND IN THE CASE OF STATE BANK OF INDIA SUPERVISING OFFICIALS CO-OP. CREDIT SOCIETY LTD. VS. ITO IN IT A NO.905 TO 908/AHD/2015 FOR ASST. YEAR 2007-08 TO 2009-10 & 20 11-12 VIDE ORDER DATED 10.6.2016 WHEREIN SIMILAR ISSUE HAS BEE N DECIDED IN FAVOUR OF ASSESSEE BY THE TRIBUNAL. 6. THE LD. DR RELIED ON THE ORDERS OF LOWER AUTHORI TIES AND COULD NOT CONTROVERT THE SUBMISSIONS OF LD. AR. ITA NO. 1833/AHD/2013 ASST. YEAR 2009-10 5 7. WE HAVE HEARD THE RIVAL CONTENTIONS AND PERUSED THE MATERIAL ON RECORD. ASSESSEE HAS RAISED VARIOUS GROUND NOS. 1 TO 4 BUT THE MAIN ISSUE IN ALL THESE GROUNDS IS REGARDING CLAIM OF DEDUCTION U/S 80P FOR INTEREST INCOME OF RS.24,24,071/- AND TAXIN G IT AS INCOME FROM OTHER SOURCES. WE FIND THAT SIMILAR ISSUE CAM E UP BEFORE THE CO- ORDINATE BENCH IN THE CASE OF ASSESSEE IN ITA NOS. 1710 & 1711/AHD/2011 FOR ASST. YEARS 2006-07 & 2007-08, DT .13.8.2015 HAS DECIDED THE ISSUE BY OBSERVING AS UNDER :- 7, WE HAVE HEARD THE RIVAL SUBMISSIONS AND PERUSED THE MATERIAL ON RECORD. THE ISSUE IN THE PRESENT CASE IS WITH RESPECT TO GRANTI NG OF DEDUCTION UNDER 8OP ON THE INTEREST EARNED ON THE DEPOSITS KEPT WITH BANK. IT IS AN UNDISPUTED FACT THAT THE ASSESSEE IS A CO-OPERATIVE SOCIETY. IT IS ASSES SEE'S SUBMISSION THAT THE AMOUNTS THAT WERE NOT IMMEDIATELY REQUIRED BY THE A SSESSEE WERE DEPOSITED IN THE BANK SO AS TO EARN INTEREST. THE AFORESAID SUBM ISSION OF THE ASSESSEE HAS NOT BEEN CONTROVERTED BY REVENUE. WE FIND THAT THE HON'BLE KARNATAKA HIGH COURT IN THE CASE OF TUMKUR MERCHANTS SOUHARDA CR EDIT CO-OPERATIVE LTD. (SUPRA) HAD DECIDED THE ISSUE IN FAVOUR OF THE ASSESSEE BY OBSE RVING AS UNDER: 10. IN THE INSTANT CASE, THE AMOUNT WHICH WAS IN VESTED 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 A CCOUNT. IN FACT THIS AMOUNT WHICH IS IN THE NATURE OF PROFITS AND GAINS, WAS NO T IMMEDIATELY REQUIRED BY THE ASSESSEE FOR LENDING MONEY TO THE MEMBERS, A S THERE WERE NO TAKERS. THEREFORE, THEY HAD DEPOSITED THE MONEY IN A BANK SO AS TO EARN INTEREST. THE SAID INTEREST INCOME IS ATTRIBUTABLE TO CARRYING ON THE BUSINESS OF BANKING AND THEREFORE IT IS LIABLE TO B E DEDUCTED IN TERMS OF SECTION SOP (1) OF THE ACT. I FACT SIMILAR VIEW IS TAKEN BY THE ANDHRA PRADESH HIGH COURT IN THE CASE OF CIT V/S. ANDHRA P RADESH STATE CO- OPERATIVE BANK LTD., [2011] 200 TAXMAN 220/12 TAXMA NN.COM 66. IN THAT VIEW OF THE MATTER, THE ORDER PASSED BY THE APPELLA TE 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.' 8. WE ARE OF THE VIEW THAT THE FACTS OF THE CASE AR E IDENTICAL TO THAT IN THE CASE OF TUMKAR MERCHANTS SOUHARDA CREDIT CO-OPERATIVE LTD. (SUPRA) WHICH HAS BEEN DECIDED BY HON'BLE KARNATAKA HIGH COURT AND THEREFO RE CONSIDERING THE FACTS OF THE PRESENT CASE IN THE LIGHT OF THE AFORESAID DECI SION OF HON'BLE KARNATAKA HIGH COURT AND IN THE ABSENCE OF ANY CONTRARY BINDING DE CISION POINTED OUT BY ITA NO. 1833/AHD/2013 ASST. YEAR 2009-10 6 REVENUE, WE ARE OF THE VIEW THAT THE INTEREST EARNE D BY THE ASSESSEE IS ELIGIBLE FOR DEDUCTION UNDER SECTION 80 P. WE THEREFORE SET ASIDE THE ORDER OF A.O. IN THE RESULT THE GROUND OF THE ASSESSEE IS ALLOWED, 9. SINCE THE FACTS OF THE CASE FOR A.Y.2007-08 ARE IDENTICAL TO THE FACTS FOR A.Y, 2006-07 AS ADMITTED BY BOTH THE PARTIES, WE THEREFO RE FOR THE REASONS STATED HEREINABOVE WHILE DECIDING THE APPEAL OF ASSESSEE F OR A.Y. 2006-07 AND FOR SIMILAR REASONS ALLOW THE GROUNDS OF ASSESSEE RAISE D BY ASSESSEE FOR ASSESSMENT YEAR 2007-08. 8. WE FIND THAT SIMILAR ISSUE ALSO CAME UP BEFORE T HE CO-ORDINATE BENCH IN THE CASE OF STATE BANK OF INDIA SUPERVISIN G OFFICIALS CO-OP. CREDIT SOCIETY LTD. VS. ITO (SUPRA) AS ALSO IN THE CASE OF ASSESSEE ITSELF, WHEREIN THE ISSUE HAS BEEN DECIDED IN FAVOU R OF ASSESSEE BY OBSERVING AS UNDER :- 6. WE HAVE HEARD THE RIVAL CONTENTIONS AND PERUSE D THE MATERIAL AVAILABLE ON RECORD. IN OUR CONSIDERED VIEW, THE DECISION OF ITA T IN ASSESSEE'S OWN CASE FOR AY 2010-11 (SUPRA) AND IN THE CASE OF STATE BANK OF IN DIA EMPLOYEES CO-OP. CREDIT & SUPPLY SOCIETY LTD. (SUPRA) IS ON THE VALIDITY OF 2 63 PROCEEDINGS AND IS NOT A DECISION ON MERITS. THE DECISION ON MERITS IN THIS REGARD HA VE BEEN DECIDED BY HON'BLE KARNATAKA HIGH COURT IN THE CASE OF TUMKUR MERCHANT S SOUHARDA CREDIT COOPERATIVE LTD, BY ANDHRA PRADESH HIGH COURT IN THE CASE OF AN DHRA PRADESH STATE COOPERATIVE BANK LTD. AND BY ITAT IN THE CASES OF AMALSAD VIBHA G YIVIDH KARYAKARI SAHKARI KHEDUT MANDALI LTD. AND MAROLI BAZAR VIBHAG VIVIDH KARYAKARI SAHKARI MANDI LIMITED. SINCE THESE AUTHORITIES UNEQUIVOCALLY SUPP ORT THE CASE OF THE ASSESSEE, RESPECTFULLY FOLLOWING THEM, WE HOLD THAT THE ASSES SEE IS ELIGIBLE FOR DEDUCTION U/S 80P(2)(A)(I), WHICH IS ALLOWED. CONSEQUENTLY, SUCH INCOME CANNOT BE HELD AS INCOME FROM OTHER SOURCES. IN VIEW OF THE FOREGOING, WE DE CIDE THIS GROUND IN FAVOUR OF THE ASSESSEE FOR ALL ASSESSMENT YEARS UNDER CONSIDERATI ON. 9. IN VIEW OF OUR ABOVE DISCUSSION, AND RESPECTFULL Y FOLLOWING THE ABOVE DECISION OF THE TRIBUNAL, WE HOLD THAT THE AS SESSEE IS ELIGIBLE FOR DEDUCTION U/S 80P(2)(A)(I) OF THE ACT FOR THE I NTEREST INCOME OF RS.24,24,071/- AND ALLOW THE CLAIM OF ASSESSEE. WE ALSO OBSERVE THAT SUCH INCOME CANNOT BE HELD AS INCOME FROM OTHE R SOURCES. ACCORDINGLY, THE APPEAL OF THE ASSESSEE IS ALLOWED. ITA NO. 1833/AHD/2013 ASST. YEAR 2009-10 7 10. GROUND NO.5 IS CONSEQUENTIAL. 11. GROUND NO.6 IS PREMATURE, HENCE NEED NOT BE ADJ UDICATED. 12. IN THE RESULT, APPEAL OF THE ASSESSEE IS ALLOWE D. ORDER PRONOUNCED IN THE OPEN COURT ON 29 TH JUNE, 2016 SD/- SD/- (S. S. GODARA) JUDICIAL MEMBER (MANISH BORAD) ACCOUNTANT MEMBER DATED 29/6/2016 MAHATA/- COPY OF THE ORDER FORWARDED TO: 1. THE APPELLANT 2. THE RESPONDENT 3. THE CIT CONCERNED 4. THE CIT(A) CONCERNED 5. THE DR, ITAT, AHMEDABAD 6. GUARD FILE BY ORDER ASST. REGISTRAR, ITAT, AHMEDABAD ITA NO. 1833/AHD/2013 ASST. YEAR 2009-10 8 1. DATE OF DICTATION: 28/06/2016 2. DATE ON WHICH THE TYPED DRAFT IS PLACED BEFORE T HE DICTATING MEMBER: 28/06/2016 OTHER MEMBER: 3. DATE ON WHICH APPROVED DRAFT COMES TO THE SR. P. S./P.S.: 4. DATE ON WHICH THE FAIR ORDER IS PLACED BEFORE TH E DICTATING MEMBER FOR PRONOUNCEMENT: __________ 5. DATE ON WHICH THE FAIR ORDER COMES BACK TO THE S R. P.S./P.S.: 6. DATE ON WHICH THE FILE GOES TO THE BENCH CLERK: 29/6/2016 7. DATE ON WHICH THE FILE GOES TO THE HEAD CLERK: 8. THE DATE ON WHICH THE FILE GOES TO THE ASSISTANT REGISTRAR FOR SIGNATURE ON THE ORDER: 9. DATE OF DESPATCH OF THE ORDER: