M/s. GODREJ & BOYCE EMPLOYEES CO-OP. CREDIT SOC. LTD., MUMBAI V. PR.CIT-29, MUMBAI

ITA 1846/MUM/2019

• Counselvise Citation: [2020] 110 COUNSELVISE.COM (IT) 5964 (ITAT-MUMBAI)
• Duration Of Justice: 1 year(s) 2 month(s) 19 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: 29-03-2019
• 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. 1846 /MUM/20 1 9 ASSESSMENT YEAR: 2014 - 15 GODREJ & BOYCE EMPLOYEES CO - OPERATIVE CREDIT SOCIETY LTD., PLOT NO. 11, GODREJ & BOY CE MANUFACTURING CO. LTD., L.B.S. MARG, VIKHROLI (E), MUMBAI 400079 PAN: AAAAG2855N 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) ASSE SSEE 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 APPE AL 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 ASSESSMEN T 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. 15,50,854/ - ON INVESTMENTS WITH CO - OPERATIVE BANKS AND CLAIMED 2 ITA NO. 1846 / 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 INTE REST 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 PREFERRED THE PRESENT APPEAL AGAINST THE ORDER OF THE LD. PR. CIT BY RAISING THE FOLLOWING GROUND S OF APPEAL 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 PR OPER, 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, REVISIN G 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 FULFILLED. 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 3 ITA NO. 1846 / MUM/2019 ASSESSMENT YEAR: 2014 - 1 5 (II) I N ANY CASE, THE ASSESSM ENT ORDER WAS NOT PREJUDICIAL TO THE INTEREST OF THE REVENUE WITHIN THE MEANING OF SECTION 263 OF THE ACT. 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 P REJUDICE TO THE ABOVE. 3. ON MERITS 3.1 THE CIT ERRED IN OBSERVING THAT THE INTEREST INCOME AMOUNTING TO RS. 15,50,854/ - EARNED BY WAY OF INVESTMENT IN CO - OPERATIVE BANKS WAS NO ELIGIBLE FOR DEDUCTION U/S 80P(2)(A)(I) OF THE ACT. 4. AT THE OUTSET, THE LD. CO UNSEL FOR THE ASSESSEE SUBMITTED BEFORE US THAT THE ISSUE INVOLVED IN THE PRESENT CASE IS COVERED BY THE ORDER OF THE MUMBAI TRIBUNAL IN ASSESSEES OWN CASE FOR THE ASSESSMENT YEAR 2004 - 05. SINCE THE ASSESSMENT ORDER IS IN CONSONANCE WITH THE DECISION OF T HE 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 OFFICER [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 SUBSTANTIATE 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 ASSESSEES OWN CASE FOR THE AS SESSMENT 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 POINTED OUT BY THE LD. COUNSEL DURING THE ASSESSMENT YEAR 2004 - 05, THE ASSESSEE EARN ED DIVIDEND AND INTEREST INCOME FROM INVESTMENTS 4 ITA NO. 1846 / MUM/2019 ASSESSMENT YEAR: 2014 - 1 5 MADE WITH UTI AND OTHER COOPERATIVE BANKS. THE ASSESSEE CLAIMED EXEMPTION U/S 80P OF THE ACT. HOWEVER, THE AO REJECTING THE CLAIM OF THE ASSESSEE MADE ADDITION OF THE SAID AMOUNT TO THE INCOME OF THE ASSESSE E. 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 INTEREST AND DIVIDEND RECEIVED FROM UTI AND CENTRAL BANK OF INDIA. STILL AGGRIEVED, THE ASSESSEE CHALLENGED THE ORDE R 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 HOLDING AS UNDER: 6 HAVING GIVEN A THOUGHTFUL CONSIDERATION AND RIVAL SUBMISSIONS, WE ARE OF THE VIEW THAT THE I DENTICAL 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 WAS AGAIN HELD BY THE TRIBUNAL IN THE CASE OF ELECTRO URBAN CREDIT SOCIETY THAT THE INTEREST ON FIXED DEPOSITE D EARNED BY CO - OPERATIVE SOCIETY ENGAGED IN LENDING MONEY TO ITS MEMBERS OUT OF MEMBERSHIP FUNDS AND DEPOSITS COLLECTED FROM SUCH MEMBERS WAS AN INCOME 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 REGA RD 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 CIT (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 5 ITA NO. 1846 / MUM/2019 ASSESSMENT YEAR: 2014 - 1 5 CARRYING ON BUSINESS OF PRO VIDING CREDIT FACILITIES TO ITS MEMBERS, THE SOCIETY IS ENTITLED TO DEDUCT THE INTEREST EARNED FROM DEPOSITS OF EXCESS AMOUNT FOR SHORT TERM IN BANKS. THE OBSERVATIONS OF THE HONBLE COURT ARE 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 ACCOUNT. IN FACT THIS AMOUNT WHICH IS IN THE NATURE OF PROFITS AND GAINS, WAS NOT IMMEDIATELY REQUIRED BY THE ASSESSEE F OR 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 INTEREST 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 - OPERATIVE BANK LTD. [ 2011] 200 TAXMAN 220/12 TAXMANN.COM 66. IN THAT VIEW OF THE MATTER, THE ORDER PASSED BY T HE 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 TH E 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 EMPLO YEES 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 COVERED IN FAVOUR OF THE ASSESSEE BY THE JUDGMENT OF THE HONBLE HIGH COURT AND THE CO - ORDINATE BENCHES OF THE TRIB UNAL, IN OUR CONSIDERED VIEW, 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 6 ITA NO. 1846 / MUM/2019 ASSESSMENT YEAR: 2014 - 1 5 EXERCISED THE JURISDICTION U/S 263 OF THE ACT. HENCE, WE ALLOW THE ASSESSEES APPEAL AND QUASH THE ORDER PASSED BY THE LD. PR. CIT. 10 . SINCE, WE HAVE DECIDE D 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 YEAR 2014 - 2015 IS ALLOWED. ORDER PRON OUNCED UNDER RULE 34(4) O F THE INCOME TAX APPELLATE TRIBUNAL RULES, 1963. SD/ - SD/ - ( RAJES H KUMAR ) ( RAM LAL NEGI ) ACCOUNTANT MEMBER JUDICIAL MEMBER MUMBAI ; DATED: 18 / 06/2020 ALINDRA, PS / COPY OF THE ORDER FORWARDED TO : 1. / THE APPELLANT 2. / THE RESPONDENT. 3. ( ) / THE C IT(A) - 4. / CIT 5. , , / DR, ITAT, MUMBAI 6. / GUARD FILE . / BY ORDER, //TRUE COPY// / (DY./ASSTT. REGISTRAR) , / ITAT, MUMBAI