The Harsiddhi Co.op. Credit Society Ltd., Mahisagar V. The ITO, Lunawad

ITA 1863/AHD/2017

• Counselvise Citation: [2018] 125 COUNSELVISE.COM (IT) 7843 (ITAT-AHMEDABAD)
• Duration Of Justice: 10 month(s) 29 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 09-07-2018
• 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
• Department Lawyers: V K SINGH
• Assessee Lawyers: SARKAR SHARMA

Judgement Text

, - IN THE INCOME TAX APPELLATE TRIBUNAL AHMEDABAD BENCH D BEFORE SHRI RAJPAL YADAV, JUDICIAL MEMBER AND SHRI AMARJIT SINGH, ACCOUNTANT MEMBER ./ ITA NO. 1863/AHD/2017 / ASSESSMENT YEAR: 2014-15 THE HARSIDDHI CO-OP. CREDIT SOCIETY LTD. AT & PO: SANTRAMPUR 389 260. DIST. MAHISAGAR, GUJARAT. PAN : AABAT 3395 D VS ACIT, PANCHAMAHAL CIRCLE GODHRA. / (APPELLANT) / (RESPONDENT) ASSESSEE BY : SHRI SARKAR SHARMA, AR REVENUE BY : SHRI V.K. SINGH, SR.DR / DATE OF HEARING : 27/06/2018 /DATE OF PRONOUNCEMENT : 9 /07/2018 O R D E R PER RAJPAL YADAV, JUDICIAL MEMBER : PRESENT APPEAL IS DIRECTED AT THE INSTANCE OF THE ASSESSEE AGAINST OR DER OF LD.CIT(A)-4, VADODARA DATED 5.5.2017 PASSED FOR THE ASSTT.YEAR 2 014-15. 2. THE ONLY ISSUE AGITATED BY THE ASSESSEE IN THIS APPEAL IS AGAINST NON-ALLOWANCE OF DEDUCTION UNDER SECTION 80P(2)(A)( I) OF THE INCOME TAX ACT, 1961. 3. AT THE OUTSET, THE LD.DR SUBMITTED THAT ISSUE IS COVERED IN FAVOUR OF THE REVENUE BY THE JUDGMENT OF THE HONBLE JURIS DICTIONAL HIGH COURT IN THE CASE OF STATE BANK OF INDIA CO-OPERATIVE SOC IETY VS. CIT, 72 ITA NO.1863/AHD/2017 - 2 - TAXMANN.COM 64 (GUJ) WHEREIN IT HAS BEEN HELD THAT COOPERATIVE SOCIETY ENGAGED IN THE BUSINESS OF PROVIDING CREDIT FACILIT IES TO ITS MEMBERS WHICH EARNS INTEREST INCOME ON THE SURPLUS FUNDS IN VESTED WITH THE NATIONALISED BANKS, IS NOT ELIGIBLE FOR DEDUCTION U NDER SECTION 80P OF THE ACT. SINCE BOTH THE IMPUGNED ORDERS ARE IN CONSONA NCE WITH THE JUDGMENT OF THE HONBLE HIGH COURT CITED SUPRA, NO INTERFERENCE THEREOF IS REQUIRED AND THE APPEAL OF THE ASSESSEE MAY BE D ISMISSED. HOWEVER, THE LD.COUNSEL FOR THE ASSESSEE DOES NOT CONTEST JU DGMENT OF HONBLE GUJARAT HIGH COURT, BUT SUBMITTED THAT IN CASE CLAI M OF THE ASSESSEE IS NOT FOUND ADMISSIBLE, THEN PROPORTIONATE ADMINISTRA TIVE AND FINANCIAL EXPENSES INCURRED FOR EARNING SUCH INTEREST/INVESTM ENT INCOME BE ALLOWED TO THE ASSESSEE. 4. HAVING HEARD BOTH THE PARTIES AND ON PERUSAL OF THE RECORD, WE FIND THAT ASSESSEE BEING A COOPERATIVE SOCIETY AND ENGAGED IN PROVIDING CREDIT FACILITIES TO ITS MEMBERS HAS CLAIMED DEDUCT ION UNDER SECTION 80P FOR THE INTEREST INCOME EARNED ON FDRS. WITH THE FI NANCIAL INSTITUTIONS. THIS CLAIM WAS DENIED BY THE AO ON THE GROUND THAT PROVISIONS OF SECTION 80P(2)(A)(I) DOES NOT COVER ASSESSEE-SOCIET Y. THE LD.CIT(A) UPHELD THE ORDER OF THE AO BY RELYING UPON THE JUDG MENT OF HONBLE JURISDICTIONAL HIGH COURT IN THE CASE OF STATE BANK OF INDIA CO-OPERATIVE SOCIETY (SUPRA). WE FIND THAT HONBLE JURISDICTION AL HIGH COURT HAS HELD THAT INTEREST EARNED FROM INVESTMENT MADE IN NATION ALIZED BANK BY A COOPERATIVE SOCIETY ENGAGED IN PROVIDING CREDIT FAC ILITIES TO ITS MEMBERS, IS NOT ELIGIBLE FOR DEDUCTION UNDER SECTION 80P. T HE TRIBUNAL IN EARLIER OCCASIONS ON SIMILAR ISSUE HAS TAKEN A CONSISTENT V IEW BY FOLLOWING ABOVE JUDGMENT OF THE HONBLE JURISDICTIONAL HIGH C OURT. SINCE ORDERS OF THE REVENUE AUTHORITIES ARE IN ACCORDANCE WITH T HE JUDGMENT OF THE ITA NO.1863/AHD/2017 - 3 - HONBLE JURISDICTIONAL HIGH COURT CITED SUPRA, NO I NTERFERE IS CALLED FOR IN THE IMPUGNED ORDERS, WHICH WE CONFIRM. HOWEVER, ANY EXPENDITURE INCURRED BY THE ASSESSEE FOR EARNING SUCH INCOME CO ULD BE ALLOWED TO IT, IF NOT ALREADY ALLOWED. IN OTHER WORDS, THE LD.AO HAS TO DETERMINE THE NET INTEREST INCOME EARNED BY THE ASSESSEE ON SUCH INVESTMENT WITH BANK, AND ONLY THEREAFTER THAT INCOME HAS TO BE EXC LUDED FROM THE ADMISSIBILITY OF DEDUCTION UNDER SECTION 80P(2) OF THE ACT. THE LD.AO SHALL ALSO ADJUDICATE THE ISSUE OF ADMISSIBILITY OF STATUTORY DEDUCTION OF RS.50,000/- 5. IN THE RESULT, APPEAL OF THE ASSESSEE IS PARTLY ALLOWED FOR STATISTICAL PURPOSE. PRONOUNCED IN THE OPEN COURT ON 9 TH JULY, 2018. SD/- SD/- (AMARJIT SINGH) ACCOUNTANT MEMBER (RAJPAL YADAV) JUDICIAL MEMBER AHMEDABAD; DATED, 09/07/2018