ACIT,Chandrapur Cir, Chandrapur V. Shree Kanyaka Nagri Sahakari Bank Ltd, Chandrapur

ITA 185/NAG/2012

• Counselvise Citation: [2019] 117 COUNSELVISE.COM (IT) 3198 (ITAT-NAGPUR)
• Duration Of Justice: 6 year(s) 10 month(s) 29 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 16-04-2019
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: DB
• Assessment Year: 2004-2005
• Appeal Filed On: 18-05-2012
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Assessee Lawyers: S C THAKAR; C J THAKAR
• Section: 143(3); 80P; 147

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL NAGPUR E-BENCH, NAGPUR (THROUGH VIDEO CONFERENCE AT MUMBAI) . . , . / , . . BEFORE SHRI R.K. GUPTA, JUDICIAL MEMBER /AND SHRI RAJENDRA, ACCOUNTANT MEMBER . / ITA NO. 185/NAG/2012 / ASSESSMENT YEAR 2004-05 ASST. COMMISSIONER OF INCOME TAX, CIRCLE - CHANDRAPUR, AAYAKAR BHAVAN, NEAR RAILWAY STATION, JALNAGAR CHANDRAPUR-442 401. VS. SHREE KANYAKA NAGRI SAHKARI BANK LTD., RAGHUWANSHI COMPLEX, BAZAR WARD, CHANDRAPUR 442 402 PAN: AAHCL 3296 E ( / APPELLANT ) ( / RESPONDENT ) REVENUE BY : SHRI PRAKASH MANE ASSESSEE BY : SHRI C.J. THAKAR & SHRI S.C. THAKAR ! '#$ / DATE OF HEARING : 31-01-2013 %& ! '#$ / DATE OF PRONOUNCEMENT : 06-02-2013 '( / O R D E R PER RAJENDRA, AM THE FOLLOWING ARE THE GROUNDS OF APPEAL FILED BY TH E ASSESSING OFFICER (AO) AGAINST ORDER DT. 08-02-2012 OF CIT(A)-II, NAGPUR. I. THE CIT(A) HAS ERRED IN HOLDING THAT SALE OF GOVT. SECURITIES ARE NOT ASSESSABLE UNDER THE HEAD CAPITAL GAINS. II. THE CIT(A) HAS ERRED IN HOLDING THAT TRANSACTION MA DE BY THE BANK IN THE GOVT. SECURITIES FROM THE PART OF ITS BUSINE SS. III. THESE AND ANY OTHER GROUNDS THAT MAY BE URGED AT TH E TIME OF HEARING. 2. ASSESSEE, DERIVING INCOME FROM BANKING ACTIVITIES, FILED ITS RETURN OF INCOME ON 31-10-2004 DECLARING NIL INCOME AFTER ADJUSTMENT OF CLAIM OF DEDUCTION OF RS. 78,35,550/- U/S. 80P OF THE INCOME TAX ACT, 1961 (A CT). THE ASSESSMENT UNDER SECTION 143(3) OF THE ACT WAS COMPLETED BY THE ASSE SSING OFFICER (AO) VIDE ORDER DT. ITA NO. 185/NAG/2012 SHREE KANYAKA NAGRI SAHKARI BANK LTD 2 19-12-2005 DETERMINING THE ASSESSEE INCOME OF THE A SSESSEE AT NIL. SUBSEQUENTLY, HE NOTICED THAT THE ASSESSEE HAD CREDITED AN AMOUNT OF RS. 18,92,000/-, BEING THE INCOME EARNED FROM SALE OF GOVT. SECURITIES, TO PROFIT AND LOSS A/C AND HAD CLAIMED DEDUCTION U/S. 80P OF THE ACT ON WHOLE INCOME INCLU DING THE AFORESAID INCOME OF RS. 18,92,000/-. AO WAS OF THE VIEW THAT THE INCOME AM OUNTING TO RS. 18,92,000/- RELATED TO CAPITAL GAIN, THAT THE ASSESSEE WAS NOT ENTITLED TO DEDUCTION U/S. 80P OF THE ACT. HE HELD THAT ONLY THE INCOME FAILING UNDER TH E HEAD PROFIT AND GAINS OF BUSINESS WAS ELIGIBLE FOR DEDUCTION UNDER SECTION 80P, THAT IN INCOME FROM CAPITAL GAIN WAS NOT ELIGIBLE FOR DEDUCTION OF CHAPTER VI-A OF THE ACT. IN VIEW OF THE ABOVE, THE ASSESSMENT WAS RE-OPENED U/S. 147 ON 08-04-2008 AFTER RECORDING THE REASONS. VIDE HIS ORDER DT. 17-11-2009 U/S. 143(3) R.W.S. 14 7 OF THE ACT, HE DETERMINED THE TOTAL INCOME OF THE ASSESSEE AT RS. 15.33 LAKHS. 3. FIRST APPELLATE AUTHORITY (FAA) HELD THAT DURING TH E YEAR UNDER CONSIDERATION, APPELLANT HAD SOLD INVESTMENT IN GOVERNMENT SECURIT IES HELD AS TRADING ASSET AND HAD EARNED INCOME OF RS. 18,92,000/-, THAT INVESTMENT I N GOVERNMENT SECURITIES HELD AS TRADING ASSET WAS PART AND PARCEL OF BANKING BUSINE SS OF THE APPELLANT, THAT THE INCOME DERIVED FROM THE SALE OF SUCH SECURITIES WAS INDEED INCOME OF THE APPELLANT FROM BANKING BUSINESS OF THE APPELLANT. RELYING UPON TH E CASES OF KAKENARA RADHA SWAMI BANK [57 ITR 306 (SC)] AND UNITED COMMERCIAL BANK [ 240 ITR 355 (SC)], HE FINALLY HELD THAT ASSESSEE WAS ELIGIBLE EXEMPTION U/S. 80P( 2)(A)(I) OF THE ACT. 4. BEFORE US, DEPARTMENTAL REPRESENTATIVE (DR) SUPPORT ED THE ORDER OF THE AO. WHEREAS AUTHORISED REPRESENTATIVE (AR) RELIED UPON THE ORDER OF THE FAA. FOLLOWING CASES WERE ALSO REFERRED ON BEHALF OF THE ASSESSEE-BANK. I. (1984) 148 I.T.R. P. 196 (MADRAS) CIT VS. MADURAI D ISTRICT CENTRAL CO-OP. BANK LTD., II. (2001) 251 I.T.R. P. 194 (SUPREME COURT) CIT VS. KA RNATAKA STATE CO-OP. APEX BANK. III. (1974) 93 I.T.R. P. 168 (ORISSA) BEHRAMPUR CO-OP. S OCIETY VS. ADD. CIT ORISSA. IV. (1975) 101 I.T.R. P. 87 (KERALA) MALBAR CO-OP. CENT RAL BANK LTD. VS. CIT KERALA 5. WE HAVE HEARD THE RIVAL SUBMISSIONS AND PERUSED THE MATERIAL AVAILABLE ON FILE. AS POINTED OUT BY THE AR OF THE ASSESSEE, TH ERE WAS A CONFLICT BETWEEN THE DECISION OF THE HONBLE SUPREME COURT IN THE CASES OF MADHYA PRADESH CO-OPERATIVE BANK LTD. VS ADDITIONAL COMMISSIONER OF I.T. (218 I TR 438) AND COMMISSIONER OF INCOME-TAX VS BANGALORE DISTT. CO-OPERATIVE CENTRAL BANK LTD. (233 ITR 282). BUT THE CONTROVERSY HAD BEEN SET TO REST BY THE DECISIO N OF THE HONBLE SUPREME COURT DELIVERED IN THE MATTER OF THE CIT VS. KARNATAKA HC (251 ITR 194). WHILE DECIDING THE ISSUE OF ELIGIBILITY OF SALE PROCEEDS OF GOVERN MENT SECURITY U/S. 80P(2) OF THE ACT, HONBLE SUPREME COURT HAS HELD AS UNDER: INTEREST ARISING FROM INVESTMENT MADE, IN COMPLIAN CE WITH STATUTORY PROVISIONS TO ENABLE IT TO CARRY ON BANKING BUSINESS, OUT OF RESE RVE FUND BY A CO-OPERATIVE SOCIETY ENGAGED IN BANKING BUSINESS, IS EXEMPT UNDER SECTIO N 80P(2)(A)(I) OF THE INCOME-TAX ACT, 1961. THE PLACEMENT OF SUCH FUNDS BEING IMPERA TIVE FOR THE PURPOSE OF CARRYING ON BANKING BUSINESS THE INCOME THERE FROM WOULD BE INCOME FROM THE ASSESSEES BUSINESS. ITA NO. 185/NAG/2012 SHREE KANYAKA NAGRI SAHKARI BANK LTD 3 THERE IS NOTHING IN THE PHRASEOLOGY OF SECTION 80P( 2)(A)(I) WHICH MAKES IT APPLICABLE ONLY TO INCOME DERIVED FROM WORKING OR CIRCULATING CAPITAL. 6. RESPECTFULLY FOLLOWING THE DECISION OF THE APEX COU RT, WE UPHOLD THE ORDER OF THE FAA. GROUND NOS. 1 & 2 ARE DECIDED AGAINST TH E AO. AS A RESULT, APPEAL FILED BY THE AO STANDS DISMISSE D. ) *+ , -# / '01 ! * 23 ! ' 45. ORDER PRONOUNCED BY E-BENCH AT MUMBAI ON THIS 6 TH DAY OF FEBRUARY, 2013 *7 0+' - 789 / 6 TH FEBRUARY, 2013 & '( %&:' ; . SD/- SD/- ( . . / R.K. GUPTA ) ( / RAJENDRA ) '+ / JUDICIAL MEMBER $ '+ / ACCOUNTANT MEMBER *7 MUMBAI, ;' DATE: 6 TH FEBRUARY, 2013 TNMM COPY TO: 1. APPELLANT 2. RESPONDENT 3. THE CONCERNED CIT (A) 4. THE CONCERNED CIT 5. DR, ITAT, NAGPUR 6. GUARD FILE :' ' //TRUE COPY// BY ORDER, ASST. REGISTRAR, ITAT