Panvel Peoples Nagari Sahakari Patsanstha Maryadit, Panvel V. Income-tax Officer, Ward - 5, Panvel

ITA 1862/PUN/2018

• Counselvise Citation: [2019] 118 COUNSELVISE.COM (IT) 0595 (ITAT-PUNE)
• Duration Of Justice: 3 month(s) 19 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 25-03-2019
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: SMC
• Assessment Year: 2014-2015
• Appeal Filed On: 06-12-2018
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: M K VERMA
• Assessee Lawyers: PRIYANKA V JADHAV
• Keywords: Business income; Earning of tax free income; Source of fund
• Section: 80P

Judgement Text

, - IN THE INCOME TAX APPELLATE TRIBUNAL PUNE BENCH SMC, PUNE . , BEFORE SHRI D. KARUNAKARA RAO, AM . / ITA NO.1862/PUN/2018 / ASSESSMENT YEAR : 2014-15 PANVEL PEOPLES NAGARI SAHAKARI PATSANSTHA MARYADIT, E-1/13 C/01, GROUND FLOOR, SECTOR-14, NEW PANVEL-410206. PAN : AAJFP6696C . /APPELLANT VS. ITO, WARD- 5, PANVEL. . / RESPONDENT / APPELLANT BY : MS. PRIYANKA V. JADHAV / RESPONDENT BY : SHRI M. K. VERMA / DATE OF HEARING : 14.02.2019 / DATE OF PRONOUNCEMENT: 01.03.2019 / ORDER PER D. KARUNAKARA RAO, AM : THIS APPEAL IS FILED BY THE ASSESSEE AGAINST THE ORDER OF CIT(A)-2, PUNE DATED 11.07.2018 FOR THE ASSESSMENT YEAR 2014-15. 2. THE GROUNDS RAISED BY THE ASSESSEE ARE AS UNDER :- 1. REJECTING THE GENUINE AND ADMISSIBLE CLAIM OF APPELLANT CREDIT SOCIETY WITH RESPECT TO MSEB COMMISSION INCOME OF RS.1,61,459/- BEING THE INCOME ATTRIBUTABLE TO THE BUSINESS INCOME AND DENYING THE DEDUCTION U/S 80P(2)(A)(I) OF THE INCOME TAX ACT, 1961. 2. ALTERNATIVELY NOT ALLOWING THE LEGITIMATE EXPENDITURE OF RS.1,76,564/- INCURRED AGAINST THE EARNING OF MSEB GROSS COMMISSION RS.1,61,459/-. HOWEVER, THE LD. ITO HAS ALLOWED ONLY RS.30,485/- ON HETEROGENEOUS BASIS INSTEAD OF HOMOGENOUS BASIS. BEFORE ARRIVING AT TAXABLE MSEB COMMISSION INCOME. THESE EXPENDITURE OF RS.1,76,564/- MUST BE ALLOWED BEFORE CALCULATING NET TAXABLE INCOME UNDER THESE SOURCES OF INCOME AND ENHANCING 80P(2)(A)(I) DEDUCTION BY EQUAL AMOUNT. ITA NO.1862/PUN/2018 - 2 - 3. BRIEFLY STATED THE RELEVANT FACTS INCLUDE THAT THE ASSESSEE IS A CO- OPERATIVE SOCIETY REGISTERED UNDER THE MAHARASHTRA CO-OPERATIVE SOCIETIES ACT, 1960. IT IS ENGAGED IN THE BUSINESS OF BANKING BY PROVIDING CREDIT FACILITIES TO ITS MEMBERS. THE ASSESSEE EARNED THE MSEB COMMISSION INCOME. THE ASSESSEE FILED THE RETURN OF INCOME DECLARING TOTAL INCOME AT NIL. AT THE END OF THE ASSESSMENT, THE ASSESSING OFFICER MADE AN ADDITION OF RS.1,61,469/- ON ACCOUNT COMMISSION RECEIVED FROM MSEB TREATING THE SAME WAS NOT ELIGIBLE FOR DEDUCTION U/S 80P(2)(A)(I) OF THE ACT. 4. AT THE OUTSET, LD. COUNSEL FOR THE ASSESSEE SUBMITTED THAT THIS IS A CASE WHERE A COMMISSION RECEIVED BY THE ASSESSEE WAS TREATED AS TAXABLE INCOME. BEFORE ME, LD. COUNSEL SUBMITTED THAT THE IDENTICAL ISSUE WAS DECIDED BY THE PUNE BENCH OF THE TRIBUNAL IN THE CASE OF DRONAGIRI NAGRI SAHAKARI PATSANSTHA MARYADIT VS. ITO VIDE ITA NO.1183/PUN/2017 ORDER DATED 20.06.2018 WHERE THE SOCIETY WAS EARNED INCOME ON ACCOUNT OF COMMISSION FROM MSEB AS EXEMPT INCOME FOR THE PURPOSE OF DEDUCTION U/S SECTION 80P OF THE ACT. IN THIS REGARD, LD. COUNSEL RELIED ON THE PUNE BENCH DECISION IN THE CASE OF DRONAGIRI NAGRI SAHAKARI PATSANSTHA MARYADIT (SUPRA). 5. ON HEARING BOTH THE SIDES, I FIND THE SIMILAR ISSUE WAS DECIDED BY THE PUNE BENCH OF THE TRIBUNAL IN THE CASE OF DRONAGIRI NAGRI SAHAKARI PATSANSTHA MARYADIT (SUPRA) IN FAVOUR OF THE ASSESSEE AND THE CONTENTS OF PARAS 10 TO 13 ARE RELEVANT IN THIS REGARD. FOR THE SAKE OF COMPLETENESS, THE SAID PARAS 10 TO 13 ARE EXTRACTED HEREUNDER :- 10. AFTER HEARING BOTH THE LEARNED COUNSEL FOR ASSESSEE AND THE LEARNED DEPARTMENTAL REPRESENTATIVE FOR THE REVENUE, IT TRANSPIRES THAT SIMILAR ISSUE OF ELECTRICITY COMMISSION AROSE BEFORE THE TRIBUNAL IN THE CASE OF BANGANGA ITA NO.1862/PUN/2018 - 3 - NAGRI SAHAKARI PATSANSTHA LTD. VS. ITO (SUPRA), WHEREIN IT WAS HELD AS UNDER:- 10. WE HAVE CAREFULLY CONSIDERED THE RIVAL SUBMISSIONS, ORDERS OF THE AUTHORITIES BELOW AND CASE LAW CITED. THE SHORT QUESTION BEFORE US IS TO DETERMINE ELIGIBILITY OF DEDUCTION UNDER SECTION 80P OF THE ACT IN RESPECT OF INCOME EARNED FROM CERTAIN ALLIED ACTIVITIES VIZ. (I) LOCKER RENT; (II) AMBULANCE RENT; (III) COMMISSION ON COLLECTION OF MSEB BILLS ; AND (IV) HEALTH CLUB BY COOPERATIVE CREDIT SOCIETY CARRYING ON BANKING BUSINESS. THE ALTERNATE GROUND AGITATED BY THE ASSESSEE IS TOWARDS AD-HOC ESTIMATION OF EXPENSES IN RELATION TO SUCH INCOME @ 10% OF THE GROSS RECEIPT AS AGAINST ACTUAL AND PROPORTIONATE EXPENSES ATTRIBUTABLE FOR THE PURPOSE OF CARRYING ON SUCH ALLIED ACTIVITIES. THIS HAS RESULTED IN HIGHER INCIDENCE OF TAXATION OWING TO DENIAL OF DEDUCTION UNDER SECTION 80P ON SUCH INCOME. WE FIND THAT ELIGIBILITY OF THE ASSESSEE FOR DEDUCTION UNDER SECTION 80P OF THE ACT IN RESPECT OF LOCKER RENT INCOME IS COVERED BY THE DECISION OF THE HONBLE SUPREME COURT IN THE CASE OF MEHSANA DISTRICT CENTRAL CO-OP. BANK LTD. (SUPRA). THEREFORE, WE SET-ASIDE THE DIRECTION OF THE CIT(A) IN THIS REGARD AND HOLD THAT THE ASSESSEE IS ELIGIBLE FOR DEDUCTION UNDER SECTION 80P OF THE ACT IN RESPECT OF THIS INCOME. WITH RESPECT TO THE INCOME FROM RUNNING OF AMBULANCE, WHILE HOLDING THAT THE ASSESSEE IS NOT ELIGIBLE FOR DEDUCTION UNDER SECTION 80P(2)(A) OR (B), WE ARE IN TOTAL AGREEMENT WITH THE ALTERNATE PLEA OF THE ASSESSEE THAT THE EXPENSES ATTRIBUTABLE FOR THE PURPOSE OPERATING SUCH ACTIVITY OUGHT TO HAVE TO BE ALLOWED ON ACTUAL/PROPORTIONATE BASIS. WE ARE OF THE VIEW THAT THE ACTION OF THE CIT(A) IN RESTRICTING THE EXPENSES ARTIFICIALLY @ 10% OF THE GROSS INCOME FROM SUCH ACTIVITIES IS NOT SUSTAINABLE IN LAW BEING DEVOID OF OBJECTIVITY. THE ASSESSING OFFICER IS ACCORDINGLY DIRECTED TO ALLOW THE EXPENSES WHICH ARE ATTRIBUTABLE TO THE RUNNING OF AMBULANCE AND DETERMINE THE INCOME FROM THE AFORESAID ACTIVITY. THE SURPLUS IF ANY, FROM THIS ACTIVITY WOULD BE ENTITLED TO RELIEF MADE RESIDUARY CLAUSE OF SECTION 80P(2)(C)(II). WE ALSO NOTICE THAT THE INCOME FROM MSEB COMMISSION IS HELD TO BE BUSINESS ACTIVITY AS PER DECISION CITED BY THE ASSESSEE IN THE CASE OF AHMEDNAGAR DISTRICT CO-OPERATIVE BANK LTD. (SUPRA) AND OTHER DECISIONS NOTED ABOVE. ACCORDINGLY, WE HOLD THAT THE ASSESSEE IS ENTITLED TO RELIEF UNDER SECTION 80P AS PER LAW.. 11. THE ISSUE OF ELECTRICITY COMMISSION ARISING IN THE PRESENT APPEAL IS SIMILAR TO THE ISSUE BEFORE THE TRIBUNAL AND FOLLOWING THE SAME PARITY OF REASONING, THIS ISSUE IS DECIDED IN FAVOUR OF ASSESSEE. ACCORDINGLY, RELEVANT GROUND IS ALLOWED. 12. THE ISSUE OF BANK INTEREST HAS ALREADY BEEN SETTLED BY THE APEX COURT IN THE CASE OF CIT VS. NAWANSHAHAR CENTRAL COOPERATIVE BANK LTD. (2007) 160 TAXMAN 48 (SC). IN THIS REGARD, THE CBDT HAS ALSO ISSUED CIRCULAR NO.18/2015. THE RELEVANT PARA OF CBDTS CIRCULAR READS AS UNDER:- 4. IN THE LIGHT OF THE SUPREME COURTS DECISION IN THE MATTER, THE ISSUE IS WELL SETTLED. ACCORDINGLY, THE BOARD HAS DECIDED THAT NO APPEALS MAY HENCEFORTH BE FILED ON THIS GROUND BY THE OFFICERS OF THE DEPARTMENT AND APPEALS ALREADY FILED, IF ANY, ON THIS GROUND BEFORE COURTS/TRIBUNALS MAY BE WITHDRAWN / NOT PRESSED UPON. THIS MAY BE BROUGHT TO THE NOTICE OF ALL CONCERNED. 13. IN VIEW OF ABOVE SETTLED POSITION, THE CLAIM OF ASSESSEE IS ALLOWED AND HENCE, RELEVANT GROUND IS ALLOWED. ITA NO.1862/PUN/2018 - 4 - 6. FOLLOWING THE SAME PARITY OF REASONING, THE PRECEDENTS ON THE SAME ISSUE, IN LIGHT OF THE ABOVE SETTLED LEGAL PROPOSITION ON THIS ISSUE, THE CLAIM OF THE ASSESSEE IS ALLOWED. 7. IN THE RESULT, THE APPEAL OF THE ASSESSEE IS ALLOWED. ORDER PRONOUNCED ON THIS 01 ST DAY OF MARCH, 2019. SD/- (D. KARUNAKARA RAO) / ACCOUNTANT MEMBER / PUNE; DATED : 01 ST MARCH, 2019. SUJEET / COPY OF THE ORDER IS FORWARDED TO : 1. / THE APPELLANT; 2. / THE RESPONDENT; 3. THE CIT(A)-2, PUNE; 4. THE CCIT, THANE; 5. , , - / DR SMC, ITAT, PUNE; 6. / GUARD FILE. / BY ORDER, //TRUE COPY// SENIOR PRIVATE SECRETARY , / ITAT, PUNE