Citizens Co. Op. Credit Society Ltd., Vadodara V. The Income Tax Officer, Ward-3(1)(3), Vadodara

ITA 1871/AHD/2017

• Counselvise Citation: [2018] 125 COUNSELVISE.COM (IT) 7862 (ITAT-AHMEDABAD)
• Duration Of Justice: 11 month(s) 1 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 13-07-2018
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: SMC
• Assessment Year: 2014-2015
• Appeal Filed On: 11-08-2017
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Keywords: Business income
• Section: 2

Judgement Text

, LH LHLH LH IN THE INCOME TAX APPELLATE TRIBUNAL C BENCH, AHMEDABAD LOZJH LOZJH LOZJH LOZJH OLHE VGEN OLHE VGEN OLHE VGEN OLHE VGEN] YS[KK LNL; ,OA ] YS[KK LNL; ,OA ] YS[KK LNL; ,OA ] YS[KK LNL; ,OA EK/KQFERK JKW; EK/KQFERK JKW; EK/KQFERK JKW; EK/KQFERK JKW;] U;KF;D LNL; ] U;KF;D LNL; ] U;KF;D LNL; ] U;KF;D LNL; DS LE{KA DS LE{KA DS LE{KA DS LE{KA BEFORE SHRI WASEEM AHMED, ACCOUNTANT MEMBER AND SMT MADHUMITA ROY, JUDICIAL MEMBER ./ I.T.A. NO.1871/AHD/2017 ( / ASSESSMENT YEAR : 2014-15) CITIZENS CO-OP CREDIT SOCIETY LTD., WADI, TAIWADA NAKA, VADODARA 390 001 / VS. ITO WARD -3(1)(3), VADODARA. ./ ./ PAN/GIR NO. : AAAAC 0414 F ( / APPELLANT ) .. ( / RESPONDENT ) / APPELLANT BY : --NONE-- / RESPONDENT BY : SHRI PRASOON KABRA, SR. D.R. / DATE OF HEARING 05/07/2018 !'# / DATE OF PRONOUNCEMENT 13/07/2018 $% / O R D E R PER WASEEM AHMED, ACCOUNTANT MEMBER: THE CAPTIONED APPEAL HAS BEEN FILED AT THE INSTANCE OF THE ASSESSEE AGAINST THE APPELLATE ORDER OF THE COMMISSIONER OF INCOME TAX(APPEALS)-3, VADODARA [CIT(A) IN SHORT] VIDE APPEAL NO.CAB- 3/10178/2016-17 DATED 30.05.2017 ARISING IN THE ASSESSMENT ORDER PASSED UNDER S.143(3) OF THE INCOME TAX ACT, 1961 (HERE-IN -AFTER REFERRED TO AS 'THE ACT') DATED 22.07.2016 RELEVANT TO ASSESSMENT YEAR (AY) 2014-15. 2. THE GROUNDS OF APPEAL RAISED BY THE ASSESSEE ARE AS UNDER:- 1. ON THE FACTS AND CIRCUMSTANCES OF THE CASE OF YOUR APPELLANT, THE LD. CIT(A) HAS ERRED IN TREATING THE BANK FD INTERE ST EARNED BY A CO-OPERATIVE SOCIETY ENGAGED IN THE BUSINESS OF P ROVIDING CREDIT FACILITIES TO ITS MEMBERS AS INCOME FROM OTH ER SOURCES ITA NO.1871/AHD/2017 CITIZENS CO-OP CREDIT SOCIETY LTD. VS. ITO ASST.YEAR 2014-15 - 2 - U/S.56 OF THE ACT AND THEREBY DISALLOWING DEDUCTION U/S 80P OF THE ACT ON THE SAID FD INTEREST. THEREFORE YOUR APP ELLANT PRAYS YOUR GOODSELF TO CONSIDER THE INTEREST INCOME EARNE D ON THE BANK FD AS THE BUSINESS INCOME AND ALLOW THE DEDUCTION U /S 80P OF THE ACT. 2. YOUR APPELLANT CRAVES LEAVE TO ADD, ALTER, AMEND , AND/OR DELETE ANY GROUNDS OF APPEAL EITHER BEFORE OR AT THE TIME OF HEARING OF APPEAL. 3. AT THE OUTSET IT WAS OBSERVED THAT THE ASSESSEE/ HIS AUTHORIZED REPRESENTATIVE NEITHER APPEARED NOR FILED ANY ADJOU RNMENT PETITION AT THE TIME OF HEARING. HOWEVER WE OBSERVED THAT THE ISSUE INVOLVED IN THIS APPEAL IS ALREADY COVERED BY VARIOUS JUDICIAL PRONO UNCEMENTS. THEREFORE WE DECIDED TO PROCEED TO ADJUDICATE THE ISSUE RAISE D BY THE ASSESSEE AFTER HEARING THE LD. DEPARTMENTAL REPRESENTATIVE ON BEHA LF OF REVENUE. 4. THE SOLITARY ISSUE INVOLVED IN THE GROUNDS OF AP PEAL RELATES TO WHETHER INTEREST INCOME EARNED ON FIXED DEPOSITS WI TH THE NATIONALIZED BANK WOULD QUALIFY FOR DEDUCTION UNDER SECTION 80P( 2)(A)(I) OF THE INCOME TAX ACT. 5. AT THE OUTSET, IT WAS OBSERVED THAT ISSUE IN DI SPUTE IS SQUARELY COVERED AGAINST THE ASSESSEE BY THE JUDGMENT OF THE HON'BLE JURISDICTIONAL HIGH COURT IN THE CASE OF STATE BANK OF INDIA VS. C IT, 389 ITR 578 WHEREIN HON'BLE COURT HELD THAT INTEREST INCOME EAR NED FROM THE INVESTMENT MADE IN ANY BANK IS NOT DEDUCTIBLE UNDER SECTION 80P(2)(A)(I) OF THE ACT. HOWEVER, IN THE INTEREST OF JUSTICE AN D FAIR PLAY WE NOTE THAT NET AMOUNT OF INTEREST INCOME FROM NATIONALIZED BAN K SHOULD BE CONSIDERED FOR DISALLOWING THE DEDUCTION U/S 80P(2) (A)(I) OF THE ACT. ON ITA NO.1871/AHD/2017 CITIZENS CO-OP CREDIT SOCIETY LTD. VS. ITO ASST.YEAR 2014-15 - 3 - THE NET AMOUNT OF INTEREST INCOME DEDUCTION U/S 80P (2)(A)(I), THE LD. DEPARTMENTAL REPRESENTATIVE OBJECTED ON THE GROUND THAT THE SUCH ISSUE WAS NOT RAISED BY THE ASSESSEE IN THE GROUND OF APP EAL. HOWEVER WE ARE INCLINED TO REJECT THE ARGUMENT OF THE LD. DEPARTME NTAL REPRESENTATIVE ON THE GROUND THAT THE CLAIM FOR THE EXPENSES INCURRED IN CONNECTION WITH INTEREST INCOME HAS ALREADY BEEN ADJUDICATED IN FAV OR OF ASSESSEE IN VARIOUS JUDICIAL PRONOUNCEMENTS. IN THIS CONNECTION WE FIND SUPPORT & GUIDANCE FROM THE ORDER OF THIS TRIBUNAL IN THE CAS E OF SHREEJI CO- OPERATIVE CREDIT SOCIETY LTD VS. ITO PERTAINING TO THE ASSESSMENT YEAR 2013-14 IN ITA NO.2751/AHD/2016 VIDE ORDER DATED 15 -02-2018 WHEREIN IT WAS HELD AS UNDER: 3. AT THE OUTSET, THE LD. COUNSEL FOR THE ASSESSEE FAIRY CONCEDED THAT ISSUE IN DISPUTE IS SQUARELY COVERED AGAINST THE AS SESSEE BY DECISION OF THE HONBLE JURISDICTIONAL HIGH COURT IN THE CASE O F STATE BANK OF INDIA VS. CIT, 389 ITR 578 WHEREIN HONBLE COURT HELD THA T INTEREST EARNED FROM INVESTMENT MADE IN ANY BANK IS NOT DEDUCTIBLE UNDER SECTION 80P(2)(D). IN THIS VIEW OF THE MATTER, WE DISMISS T HE APPEAL OF THE ASSESSEE. HOWEVER, ANY EXPENDITURE INCURRED BY THE ASSESSEE FOR EARNING SUCH INCOME COULD BE ALLOWED TO IT. IN OTHE R WORDS, THE LD. AO HAS TO DETERMINE THE NET INTEREST EARNED BY THE ASS ESSEE ON SUCH INVESTMENT WITH BANK, AND ONLY THEREAFTER THAT INCO ME HAS TO BE EXCLUDED FROM THE ADMISSIBILITY OF DEDUCTION UNDER SECTION 80P(2) OF THE ACT. 4. IN THE RESULT, APPEAL OF THE ASSESSEE IS PARTLY ALLOWED FOR STATISTICAL PURPOSE. THE FACTS OF THE CASE ON HAND ARE IDENTICAL AS DISC USSED IN THE ABOVE CASE. THEREFORE, RESPECTFULLY FOLLOWING THE SAME, WE DIRE CT THE AO TO EXCLUDE THE AMOUNT OF NET INTEREST INCOME FROM THE DEDUCTIO N CLAIMED U/S 80P(2)(A)(I) OF THE ACT. THUS THE AO WILL ALLOW THE EXPENSES INCURRED BY THE ASSESSEE IN THE EARNING OF SUCH INTEREST INCOME NOT ELIGIBLE FOR ITA NO.1871/AHD/2017 CITIZENS CO-OP CREDIT SOCIETY LTD. VS. ITO ASST.YEAR 2014-15 - 4 - DEDUCTION UNDER SECTION 80P(2)(A)(I) OF THE ACT. HE NCE, GROUNDS OF APPEAL FILED BY THE ASSESSEE ARE ALLOWED FOR STATIS TICAL PURPOSES. 6. IN THE RESULT, THE APPEAL OF THE ASSESSEE IS AL LOWED FOR STATISTICAL PURPOSES. THIS ORDER PRONOUNCED IN OPEN COURT ON 13/07/2018 SD/- SD/- E/KQFERK JKW; E/KQFERK JKW; E/KQFERK JKW; E/KQFERK JKW; OLHE VGEN OLHE VGEN OLHE VGEN OLHE VGEN U;KF;D LNL; U;KF;D LNL; U;KF;D LNL; U;KF;D LNL; YKS[KK LN YKS[KK LN YKS[KK LN YKS[KK LN L; L; L; L; (MADHUMITA ROY) (WASEEM AHMED) JUDICIAL MEMBER ACCOUNTANT MEMBER AHMEDABAD; DATED 13/07/2018 PRITI YADAV, SR.PS !'# $#! / COPY OF THE ORDER FORWARDED TO : 1. / THE APPELLANT 2. / THE RESPONDENT. 3. & '( ) / CONCERNED CIT 4. ) () / THE CIT(A)-2, VADODARA. 5. ,-. //'( , '(# , 12$&$ / DR, ITAT, AHMEDABAD 6. .34 5 / GUARD FILE. % & / BY ORDER, , / //TRUE COPY// '/& () ( DY./ASSTT.REGISTRAR) , / ITAT, AHMEDABAD