Patan Taluka Ni Prathmik Shalona Shikshakono Nana Dhirnar Sahkari Mandli Ltd., Patan V. The Income Tax Officer, Ward-2, Patan

ITA 1858/AHD/2017

• Counselvise Citation: [2018] 125 COUNSELVISE.COM (IT) 8058 (ITAT-AHMEDABAD)
• Duration Of Justice: 10 month(s) 17 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 28-06-2018
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: SMC
• Assessment Year: 2014-2015
• Appeal Filed On: 10-08-2017
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Section: 143(3); 56

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL AHMEDABAD D BENCH BEFORE: SHRI RAJPAL YADAV, JUDICIAL MEMBER AND SHRI AMARJIT SINGH, ACCOUNTANT MEMBER SL. NO. ITA NO. A.Y. ASSESSEE REVENUE D.R. A.R. 1 1858/AHD/2 017 2014 - 15 PATAN TALUKANI PRATHMI SHALONA SHIKSHAKONO NANA DHIRNARI SAHKARI MANDLI LTD. ITO, WD - 2, PATAN SHRI V.K. SINGH MS. ARTI N. SHAH 2 1790/AHD/2 017 2014 - 15 SINDH CO - OP. CREDIT SOCIETY LTD. ITO, WD - 3(1)(5), VADODARA SHRI V.K. SINGH NONE 3 1789/AHD/2 017 2014 - 15 RAILWAYMENS CO - OP CREDIT SOCIETY ITO, WD - 3(1)(3), VADODARA SHRI V.K. SINGH NONE 4 1635/AHD/2 017 2014 - 15 JAFARI MOMIN VIKAS CO - OP. CREDIT SOCIETY LTD. ITO, WD - 4, PATAN SHRI V.K. SINGH NONE 5 2182/AHD/2 017 2013 - 14 SIDHRAJ CO - OP. CREDIT SOCIETY LTD. ITO, WD - 2 PATAN SHRI V.K. SINGH NONE 6 2482/AHD/2 017 2012 - 13 THE KAVITHA CO - OP. CREDIT SOCIETY LTD. ITO, WD - 1(3)(2), PETLAD SHRI V.K. SINGH NONE D ATE OF HEARING : 27 - 06 - 2018 DATE OF PRONOUNCEMENT : 28 - 06 - 2018 / ORDER PER : AMARJIT SINGH, ACCOUNTANT MEMBER: - THESE SIX APPEAL S FILED BY DIFFERENT ASSESSEES FROM ORDER OF THE CIT(A) , IN PROCEEDINGS UNDER SECTION 143(3) OF THE INCOME TAX ACT, 1961; IN SHORT THE ACT . ITA NOS. 1 8 58, 1790, 1789, 1635, 2182 AND 2482/AHD/2017 SIX DIFFERENT ASSESSEES VS. ITO 2 2. AS THE FACTS IN THESE SIX APPEALS FILED BY DIFFERENT ASSESSEES ARE COMMON, SO, WE TAKE ITA NO. 1858/AHD/2017 AS A LEAD CASE AND ITS FINDINGS WILL BE APPLICABLE FOR THE REMAINING APPEALS FOR THE SA KE OF CONVENIENCE. 3 . THE ASSESSEE HAS RAISED FOLLOWING GROUNDS OF APPEALS: - ITA NO . 18 58/AHD/2017 1. THE LEARNED COMMISSIONER OF INCOME TAX (APPEALS), GANDHINAGAR, AHMEDABAD HAS ERRED IN LAW AND ON FACTS OF THE CASE IN CONFIRMING THE ACTION OF THE ASSESSING OFFICER IN MAKING ADDITION U/S.56 OF THE I.T. ACT, 1961 OF RS.23,62,726/ - BEING INTEREST RECEIVED FROM NATIONALIZED BANKS. 2. WITHOUT PREJUDICE TO THE ABOVE GROUND, THE LEARNED COMMISSIONER OF INCOME TAX (APPEALS), GANDHINAGAR HAS ERRED IN NOT ALLOWING DEDUCTION OF INTEREST PAID AGAINST THE INCOME OF RS.23,62,726/ - COMPUTED AS 'INCOME FROM OTHER SOURCES'. 4 . THE BRIEF FACT OF THE ACT IS THAT ASSESSE HAS FILED RETURN OF INCOME DECLARING INCOME AT RS. NIL ON 29 TH SEP, 2014. SUBSEQUENTLY, THE CASE WAS SELECTED UNDER SCRUTINY BY ISSUING OF NOTICE U/S. 143(2) ON 24TH SEP, 2014. DURING THE COURSE OF ASSESSMENT PROCEEDINGS, THE ASSESSING OFFICER NOTICED THAT ASSESSEE HAS EARNED INTEREST INCOME TOTALING TO RS . 23,62, 726/ - ON SURPLUS FUNDS DEPOSITED WITH NATIONALIZED BANK . HE HAS FURTHER NOTICED THAT ASSESSEE HAS CLAIMED DEDUCTION UNDER CHAPTER VIA OF THE ACT U/S. 80P(2)(A)(I) IN RESPECT OF AFORESAID INTEREST INCOME DERIVED FROM INVESTMENT IN FIXED DEPOSIT WITH COMMER CIAL ANKS. THE ASSESSING OFFICER OBSERVED THAT EXEMPTION U/S. 80P(2)(A)(I) IS AVAILABLE ON INCOME WHICH IS ATTRIBUTABLE TO BUSINESS OPERATION OF THE ASSESSEE CO - OPERATIVE SOCIETY AND THE INTEREST EA RNED ON THE FUND INVESTED WITH T HE COMMERCIAL BANK IS NOT OPERATIONAL INCOME FROM PROVIDING CREDIT FACILITIES TO ITS MEMBERS. CONSEQUENTLY, HE HAS TREATED THE INTEREST INCOME OF RS. 23,62,726/ - AS INCOME FROM OTHER SOURCES U/S. 56 OF THE ACT AND DISALLOWED THE CLAIM OF DEDUCTION U/S. 80P ON THE AFORESAID INTERE ST INCOME. ITA NOS. 1 8 58, 1790, 1789, 1635, 2182 AND 2482/AHD/2017 SIX DIFFERENT ASSESSEES VS. ITO 3 5 . AGGRIEVED ASSESSEE FILED APPEAL BEFORE THE LD. CIT(A). THE LD. CIT(A) HAS SUSTAINED THE DISALLOWANCE AFTER PLACING RELIANCE ON THE DECISION OF JURISDICTIONAL HON BLE HIGH COURT OF GUJARAT IN THE CASE OF SBI VS. CIT (2016) 72 TAXMANN.COM 64 6 . WE HAVE HEARD THE RIVAL CONTENTIONS AND PERUSED THE MATERIAL ON RECORD CAREFULLY. THE ASSESSEE IS ENGAGED IN THE BUSINESS OF PROVIDING CREDIT FACILITIES TO ITS MEMBERS. THE ASSESSING OFFICER HAS NOTICED THAT IN ADDITION TO THE INTEREST INCOME EARNE D ON LOAN AND ADVANCES TO ITS MEMBERS, THE ASSESSE HAS CLAIMED DEDUCTION U/S. 80P(2)(A)(I) OF THE ACT ON INTEREST INCOME EARNED FROM FIXED DEPOSIT MAINTAINED WITH THE COMMERCIAL BANK. AS PER SECTION 80P(2)(A)(I) OF THE ACT THE INTEREST INCOME EARNED ON PR OVIDING CREDIT FACILITY TO ITS MEMBERS IS DEDUCTIBLE U/S. 80P(2)(A)(I) OF THE ACT . AFTER PERUSAL OF THE AFORESAID PROVISION OF THE ACT WE OBSERVE THAT DEDUCTION U/S 80P(2)(A)(I) IS NOT AVAILABLE ON THE INTEREST EARNED ON DEPOSIT MAINTAINED WITH THE COMMERC IAL BANK. WE FIND THAT THE HON BLE JURISDICTIONAL HIGH COURT HAS DECIDED THE IDENTICAL ISSUE IN FAVOUR OF THE REVENUE VIDE STATE BANK OF INDIA VS. CIT (2016) 72 TAXMANN.COM 64 (GUJARAT) WHEREIN IT IS HELD THAT INTEREST INCOME ON DEPOSIT PLACED WITH THE CO MMERCIAL BANKS IS NOT EXEMPT U/S. 80P(2)(A)(I) OF THE ACT. IN VIEW OF THE ABOVE FACTS AND LEGAL FINDINGS WE ARE INCLINED WITH THE DECISION OF THE LD. CIT(A) THAT INVESTING SURPLUS FUNDS IN A COMMERCIAL BANK IS NO PART OF THE BUSINESS OF PROVIDING CREDIT FACILITIES TO ITS MEMBERS WHICH IS NOT DEDUCTIBLE UNDER SECTION 80P(2)(A)(I) OF THE ACT . HOWEVER AS DECIDED IN THE VARIOUS DECISION OF THE CO - ORDINATE BENCHES OF ITAT AHMEDABAD WE DIRECT THE ASSESSING OFF ICER TO ALLOW PRO RATA EXPENSES IN RESPECT OF INTEREST EARNED FROM DEPOSIT HELD WITH NATIONALIZED BANK TO THE ASSESSEE FOR COMPUTING THE DEDUCTION U/S. 80P AFTER EXAMINING/ VERIFICATION AND AFFORDING ADEQUATE OPPORTUNITY TO THE ASSESSEE. THEREFORE, THE APPE AL OF THE ASSESSEE IS PARTLY ALLOWED FOR STATISTICAL PURPOSES. ITA NOS. 1789 & 1790 /AHD/2017 7. ASSESSEE S GROUND OF APPEAL REGARDING LEVY OF INTEREST U/S. 234A/B/C IS OF GENERAL NATURE WHICH IS TO BE CHARGED MANDATORY AS PER PROVISION OF THE ACT. THERE FORE, THE SAME IS DISMISSED. THE OTHER GROUND OF APPEAL AGAINST INITIATION OF PENALTY ITA NOS. 1 8 58, 1790, 1789, 1635, 2182 AND 2482/AHD/2017 SIX DIFFERENT ASSESSEES VS. ITO 4 PROCEEDINGS U/S. 271C IS PREMATURE WHICH DO NOT REQUIRE ANY ADJUDICATION AT THIS STAGE , THEREFORE , THE SAME IS ALSO DISMI SSED. 8 . I N THE COMBINED RESULT, ITAS 1 8 58, 1790, 1789, 1635, 2182 AND ITA 2482 /AHD/201 7 ARE PARTLY ALLOWED FOR STATISTICAL PURPOSES. ORDER PRONOUNC ED IN THE OPEN COURT ON 2 8 - 06 - 2018 S D / - S D / - (RAJPAL YADAV) (AMARJIT SINGH) JUDICIAL MEMBER ACCOUNTANT MEMBER AHMEDABAD : DATED 2 8 /06 /2018 / COPY OF ORDER FORWARDED TO: - 1. ASSESSEE 2. REVENUE 3. CONCERNED CIT 4. CIT (A) 5. DR, ITAT, AHMEDABAD 6. GUARD FILE. BY ORDER/ , / ,