Income-tax Officer, V. HAL (ND) Employees Co.op. Credit Society Ltd., Nashik

ITA 1878/PUN/2014

• Counselvise Citation: [2016] 132 COUNSELVISE.COM (IT) 1716 (ITAT-PUNE)
• Duration Of Justice: 1 year(s) 7 month(s) 27 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 10-06-2016
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: B
• Assessment Year: 2010-2011
• Appeal Filed On: 13-10-2014
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: HITENDRA NINAWE
• Section: 147

Judgement Text

, IN THE INCOME TAX APPELLATE TRIBUNAL PUNE BENCH B, PUNE . . , ! , # $ BEFORE SHRI R.K. PANDA, AM AND SHRI VIKAS AWASTHY, JM . / ITA NO.1878/PN/2014 #& & / ASSESSMENT YEAR : 2010-11 ITO, WARD-1(1), NASHIK . / APPELLANT V/S HAL (ND) EMPLOYEES CO-OPERATIVE CREDIT SOCIETY, TYPE-III, B-121/122, OZAR TOWNSHIP, OZAR, DIST. NASHIK PAN NO.AADFH5852N . / RESPONDENT / ASSESSEE BY : SHRI ABHAY AVCHAT / REVENUE BY : SHRI HITENDRA NINAWE / ORDER PER R.K.PANDA, AM : THIS APPEAL FILED BY THE REVENUE IS DIRECTED AGAINST THE O RDER DATED 07-08-2014 OF THE CIT(A)-I, NASHIK RELATING TO ASSE SSMENT YEAR 2010-11. 2. FACTS OF THE CASE, IN BRIEF, ARE THAT THE ASSESSEE IS A N EMPLOYEES CO-OPERATIVE CREDIT SOCIETY REGISTERED IN THE YEAR 1968 UNDER THE MAHARASHTRA CO-OPERATIVE SOCIETIES ACT, 1960 AND FORMED WITH THE SOLE PURPOSE OF CARRYING ON BANKING BUSINESS AND PROVIDING CREDIT FACILITIES TO ITS MEMBERS. IT FILED ITS RETURN OF INCOME ON 25- / DATE OF HEARING :09.06.2016 / DATE OF PRONOUNCEMENT:10.06.2016 2 ITA NO.1878/PN/2014 09-2010 DECLARING NIL INCOME. DURING THE COURSE OF ASSES SMENT PROCEEDINGS THE AO NOTICED THAT THE SOCIETY HAS RECEIVE D INTEREST OF RS.93,45,306/- FROM ITS INVESTMENT WITH STATE BANK OF INDIA, PUN JAB NATIONAL BANK AND BANK OF MAHARASHTRA. HE, THEREFORE, ASK ED THE ASSESSEE TO EXPLAIN AS TO WHY THE INTEREST INCOME RECEIV ED FROM THE FIXED DEPOSITS KEPT WITH NATIONALISED BANKS SHOULD NOT BE DISALLOWED IN VIEW OF THE PROVISIONS OF SECTION 80P(2)(D) OF THE I.T. ACT. ACCORDING TO THE AO, SINCE THE ASSESSEE SOCIETY IS EXISTING TO PROVIDE CREDIT FACILITY TO ITS MEMBERS, THEREFORE, INTEREST E ARNED FROM THE AMOUNTS LENT TO ITS MEMBERS ONLY CONSTITUTES ITS OP ERATIONAL INCOME. RELYING ON THE DECISION OF HONBLE SUPREME COURT IN THE CASE OF TOTGARS CO-OPERATIVE SALES SOCIETY LTD. VS. ITO REPORTED IN 229 CTR 209 THE AO HELD THAT THE INTEREST RECEIVED ON DEPOSITS WITH NATIONALIZED BANKS AT RS.93,45,306/- DOES NOT CONSTITUTE T HE OPERATIONAL INCOME OF THE ASSESSEE SOCIETY. THEREFORE, HE HELD THAT DEDUCTION U/S. 80P(2)(A)(I) IN RESPECT OF THE ABOVE INCOME W AS NOT ALLOWABLE. THE AO FURTHER NOTED THAT ASSESSEE SOCIETY H AS CLAIMED EXPENSES UNDER VARIOUS HEADS IN THE PROFIT AND LOSS ACCO UNT AT RS.39,10,123/-. SINCE THE ASSESSEE COULD NOT ESTABLISH THA T THE ABOVE EXPENDITURE HAS BEEN EXPENDED WHOLLY AND EXCLUSIV ELY FOR THE PURPOSE OF MAKING OR EARNING SUCH INCOME AS PER THE PRO VISIONS OF SECTION 57 OF THE I.T. ACT, 1961, THE AO HELD THAT THE EX PENSES, WHICH ARE IN THE NATURE OF ADMINISTRATIVE EXPENSES, HAS T O BE ALLOWED ON PROPORTIONATE BASIS IN RESPECT OF INTEREST EAR NED ON DEPOSITS WITH NATIONALIZED BANKS. THE ADMINISTRATION EXPENS ES DEBITED TO THE PROFIT AND LOSS ACCOUNT IN RESPECT OF WHICH PROPORTIONATE EXPENSES ARE ALLOWABLE WAS CALCULATED AT 3 ITA NO.1878/PN/2014 RS.4,13,182/-. THE AO, THEREFORE, MADE ADDITION OF RS.89,32,12 4, I.E. (RS.93,45,306 RS.4,13,182) TO THE TOTAL INCOME OF THE ASSESSEE. 3. IN APPEAL THE LD.CIT(A) FOLLOWING THE DECISION OF THE TRIBU NAL IN ASSESSEES OWN CASE FOR A.Y. 2009-10 AND VARIOUS OTHE R DECISIONS DELETED THE ADDITION MADE BY THE AO BY OBSERVING AS UNDER : 6. I HAVE CAREFULLY CONSIDERED THE FACTS OF THE CASE, THE ASSESSMENT ORDER, THE ORDER OF THE ITAT IN APPELLANTS OWN CASE AND THE SUBMISSIONS FILED BY THE APPELLANT. AS REGARDS GROUND N O.1, THE AO HAS MADE ADDITION OF RS.89,32,124/- ON ACCOUNT OF DISALLO WANCE OF INTEREST WHICH THE APPELLANT HAD RECEIVED ON INVESTMENTS MADE IN STATE BANK OF INDIA (RS.26,968/-), BANK OF MAHARASHTRA (RS.93,05,436 /-) AND PUNJAB NATIONAL BANK (RS.12,902/-) AFTER DEDUCTING PROPORTI ONATE ADMINISTRATIVE EXPENSES OF RS.4,13,812/- FOR EARNING T HE ABOVE INTEREST (PARA 7 OF THE ASSESSMENT ORDER). THE AO HAS DENIED EX EMPTION U/S.80P(2)(D). THIS ISSUE IS IDENTICAL TO A.Y. 2009-10 WHEREIN THE HONBEL ITAT, PUNE IN ITA NO.306/PN/2013 FOR A.Y. 2 009-10 VIDE ORDER DATED 24-02-2014 HAS ALLOWED THE APPELLANTS APPEAL AND DELETED THE ADDITION OF RS.39,42,138/- MADE BY THE AO ON ACCOUNT OF INTEREST INCOME RECEIVED FROM STATE BANK OF INDIA AND BANK O F MAHARASHTRA ON WHICH THE APPELLANT HAD CLAIMED DEDUCTION U/S.80P(2) (A)(I) HOLDING AS UNDER : THE ISSUE INVOLVED IN THESE APPEALS WAS COVERED IN FAVO UR OF THE ASSESSEE BY THE DECISIONS OF ITAT PUNE, IN THE FOLLOWING CASES: I. THE MSRTC (M) EMPLOYEES CO-OPERATIVE CREDIT SOCIE TY LTD., AURANGABAD AND OTHERS IN ITAT NO.795 /PN/2004 FOR AY 1997-98, ETC. DATED 21.10.2005. II. SHRI SAHASTRARJUN NAGARI SAH. PAT SANSTHA LTD., SOLAPUR IN ITAT NO.1161/PN/01 FOR A.Y 1995-96 DATED 23 02.2005. III. SHRI MAHAVIR NAGARI SAHAKARI PAT SANSTHA LTD. V S DCIT (2002) 74 TTJ (PUNE) 793. IV. NEMINATH NAGARI SAHAK ARI PAT SANSTHA MARYADIT IN ITAT NO.421/PN/2002 FOR A.Y 1998-99 DATED 23.02.2005 5. WE HAVE CONSIDERED THE RIVAL SUBMISSION IN THE LIGHT OF MATERIAL ON RECORD. WE FIND THAT THE ISSUE INVOLVED I N THESE APPEALS IS COVERED IN FAVOUR OF THE ASSESSEE-SOCIETY BY THE DECISION OF THE I.T.A.T. PUNE IN THE CASES MEN TIONED ABOVE. 6. IN THE CASE OF SHRI MAHAVIR NAGARI SAHAKARI PAT SANSTHA LTD. (SUPRA), IT WAS NOTED BY THE TRIBUNAL THAT THE ASSESSEE WAS A CO-OPERATIVE CREDIT SOCIETY REGISTERED UNDER THE MAHARASHTRA STATE CO-OPERATIVE SOCIETIES ACT,1960 AND WAS ENGAGED IN CARRYING ON THE BUSINESS OF 4 ITA NO.1878/PN/2014 PROVIDING CREDIT FACILITIES TO ITS MEMBERS AND ALSO OF BANKING, THAT THE ASSESSEE-SOCIETY GAVE LOANS TO ITS MEMBERS, THAT THE MEMBERS INCLUDED NOMINAL MEMBERS ALSO WHO WERE ADMITTED AS PER THE BYE-LAWS OF THE SOCIETY, THAT THE ASSESSEE-SOCIETY SATISFIED THE CONDITION S LAID DOWN U/S 80P(2)(A)(I) OF THE ACT AND WAS ENTITLE D TO DEDUCTION U/S 80P. 7. IN THE CASE OF NEMINATH NAGARI SAHAKARI PAT SANST HA MARYADIT (SUPRA), THE INCOME FROM INVESTMENTS IN GOVERNMENT SECURITIES, FIXED DEPOSITS, KVPS, IVPS ETC., WAS HELD TO BE EXEMPT U/S 80P(2) OF THE ACT. 8. THEREFORE, WE FOLLOW PRECEDENTS AND UPHOLD THE OR DERS OF THE CIT(A). 9. IN THE RESULT, THE APPEALS FILED BY THE DEPARTMENT FOR A.Y. 1997- 98 AND 1998-999 ARE DISMISSED. 5. FOLLOWING THE AFORESAID PRECEDENT, WE AFFIRM THE ORDER OF THE CIT(A), AS IT HAS NOT BEEN SHOWN THAT THE PRECEDENT RE NDERED IN ASSESSEES OWN CASE HAS BEEN ALTERED BY ANY HIGHER AUTHORI TY. THUS, REVENUE FAILS ON THIS ASPECT. SINCE THE FACTS ARE IDENTICAL, RESPECTFULLY FOLLOWING THE DECISION OF THE HONBLE ITAT IN APPELLANTS OWN CASE FOR A.Y. 2009-10 , THE ADDITION OF RS.89,32,124/- IS DELETED. GROUND NO.1 IS ALLOWED. 4. AGGRIEVED WITH SUCH ORDER OF THE CIT(A) THE REVENUE IS IN APPEAL BEFORE US WITH THE FOLLOWING GROUNDS : 1. WHETHER ON THE FACTS AND IN THE CIRCUMSTANCES OF T HE CASE, THE LD.CIT(A)-I, NASHIK WAS JUSTIFIED IN ALLOWING THE DEDU CTION U/S.80P(2)(A)(I) AMOUNTING TO RS.89,32,124/- IN RESPEC T OF INTEREST EARNED ON FIXED DEPOSITS WITH NATIONALISED BANKS. 2. WHETHER ON THE FACTS AND IN THE CIRCUMSTANCES OF TH E CASE, THE LD.CIT(A)-I, NASHIK WAS JUSTIFIED IN RELYING ON THE H ONBLE ITAT, PUNE B BENCH, PUNES ORDER IN ASSESSEES OWN CASE FOR A.Y. 2009-1 0 VIDE ITA NO.306/PN/2013 DATED 24-02-2014 EVEN THOUGH THE SAID DECISION IS BEING CONTESTED FURTHER IN THE HONBLE HIGH COURT. 3. THE APPELLANT PRAYS THAT THE ORDER OF THE LD.CIT( A)-I, NASHIK MAY BE PLEASED BE CANCELLED AND THE ORDER OF THE ASSESSING O FFICER MAY PLEASE BE RESTORED. 4. THE APPELLANT PRAYS LEAVE TO ADD, ALTER, CLARIFY, AMEND AND OR WITHDRAW ANY GROUNDS OF APPEAL AS AND WHEN THE OCCASIO N DEMANDS. 5 ITA NO.1878/PN/2014 5. AFTER HEARING BOTH THE SIDES, WE FIND IDENTICAL ISSUE HAD COME UP BEFORE THE TRIBUNAL IN ASSESSEES OWN CASE FOR A.Y. 200 9-10. THE TRIBUNAL VIDE ITA NO.306/PN/2013 DATED 24-04-2014 HAS D ECIDED THE ISSUE IN FAVOUR OF THE ASSESSEE AND DISMISSED THE APP EAL FILED BY THE REVENUE BY OBSERVING AS UNDER : 4. AT THE TIME OF HEARING, IT WAS A COMMON POINT BE TWEEN THE PARTIES THAT THE PRECEDENT RELIED UPON BY THE CIT(A), WHICH HAS BEEN RENDERED IN THE ASSESSEES OWN CASE FOR ASSESSMENT YEARS 1996-97 TO 199 8-99 AND 2000-01, HAS NOT BEEN ALTERED BY ANY HIGHER AUTH ORITY. AS A RESULT, WE FIND NO REASON TO INTERFERE WITH THE ULTIMATE CON CLUSION OF THE CIT(A) WHICH IS BASED ON THE DECISION OF THE TRIBUNAL DATED 29.09.2006 (SUPRA) IN THE ASSESSEES OWN CASE. NEVERTHELESS, IN ORDER T O IMPART COMPLETENESS TO THE ORDER, WE REPRODUCE HEREUNDER THE RELEVANT PORTION OF THE ORDER OF THE TRIBUNAL DATED 29.09.20 06 (SUPRA) :- 2. THE ASSESSEE IS A CO-OPERATIVE SOCIETY OF HAL EMPLOYE ES REGISTERED UNDER THE MAHARASHTRA CO-OPERATIVE SOCIETI ES ACT, 1960 AND FORMED WITH THE SOLE PURPOSE OF PROVIDING CR EDIT FACILITIES TO ITS MORE THAN 5000 MEMBERS. THE RETURN FOR A.Y 1996-97 WAS FILED ON 31.10.1996 SHOWING TOTAL INCOME OF RS. 18,400. IN THE ASSESSMENT ORDER PASSED U/S 147 OF THE ACT ON 16.03.2004, THE TOTAL INCOME WAS ASSESSED AT RS, 46,05,73 1/- AS UNDER: 3. THE CIT(A) ALLOWED THE ASSESSEE'S CLAIM FOR DEDUCTION U/S 80P(2) IN RESPECT OF INCOME FROM INTEREST AND FROM CO MMISSION AND HIS ORDER HAS BEEN CHALLENGED BY THE DEPARTMENT I N THE PRESENT APPEAL. 4. THE FACTS ARE IDENTICAL IN RESPECT OF BOTH THE AP PEALS FOR AY 1997-98 AND 1998-99. IT WAS POINTED OUT BY MRS. DEEPA KHARE, THE ID A.R THAT ITA NO.306/PN/2013 A.Y. 2009-10 3 T HE ISSUE INVOLVED IN THESE APPEALS WAS COVERED IN FAVOUR OF THE ASSESSEE BY THE DECISIONS OF ITAT PUNE, IN THE FOLLOWING CASES: I. THE MSRTC (M) EMPLOYEES CO-OPERATIVE CREDIT SOCIE TY LTD., AURANGABAD AND OTHERS IN ITAT NO.795 /PN/2004 FOR A Y 1997- 98, ETC. DATED 21.10.2005. II. SHRI SAHASTRARJUN NAGARI SAH. PAT SANSTHA LTD., S OLAPUR IN ITAT NO.1161/PN/01 FOR A.Y 1995-96 DATED 23 02.2005. III. SHRI MAHAVIR NAGARI SAHAKARI PAT SANSTHA LTD. V S DCIT (2002) 74 TTJ (PUNE) 793. IV. NEMINATH NAGARI SAHAKARI PAT SANSTHA MARYADIT IN ITAT NO.421/PN/2002 FOR A.Y 1998-99 DAT ED 23.02.2005. 6 ITA NO.1878/PN/2014 5. WE HAVE CONSIDERED THE RIVAL SUBMISSION IN THE LIGHT OF MATERIAL ON RECORD. WE FIND THAT THE ISSUE INVOLVED I N THESE APPEALS IS COVERED IN FAVOUR OF THE ASSESSEE-SOCIETY BY T HE DECISION OF THE I.T.A.T. PUNE IN THE CASES MENTIONED A BOVE. 6. IN THE CASE OF SHRI MAHAVIR NAGARI SAHAKARI PAT S ANSTHA LTD. (SUPRA), IT WAS NOTED BY THE TRIBUNAL THAT THE ASSESSEE WAS A CO- OPERATIVE CREDIT SOCIETY REGISTERED UNDER THE MAHARASH TRA STATE CO-OPERATIVE SOCIETIES ACT,1960 AND WAS ENGAGED IN CA RRYING ON THE BUSINESS OF PROVIDING CREDIT FACILITIES TO ITS MEMBE RS AND ALSO OF BANKING, THAT THE ASSESSEE-SOCIETY GAVE LOANS TO ITS MEMBERS, THAT THE MEMBERS INCLUDED NOMINAL MEMBERS ALSO WHO WER E ADMITTED AS PER THE BYE-LAWS OF THE SOCIETY, THAT THE ASSESSEE- SOCIETY SATISFIED THE CONDITIONS LAID DOWN U/S 80P(2)(A) (I) OF THE ACT AND WAS ENTITLED TO DEDUCTION U/S 80P. 7. IN THE CASE OF NEMINATH NAGARI SAHAKARI PAT SANSTH A MARYADIT (SUPRA), THE INCOME FROM INVESTMENTS IN GOVERNMENT SECU RITIES, FIXED DEPOSITS, KVPS, IVPS ETC., WAS HELD TO BE EXEMPT U /S 80P(2) OF THE ACT. 8. THEREFORE, WE FOLLOW PRECEDENTS AND UPHOLD THE OR DERS OF THE CIT(A). 9. IN THE RESULT, THE APPEALS FILED BY THE DEPARTMENT FOR A.Y. 1997- 98 AND 1998-999 ARE DISMISSED. 5. FOLLOWING THE AFORESAID PRECEDENT, WE AFFIRM THE ORDER OF THE CIT(A), AS IT HAS NOT BEEN SHOWN THAT THE PRECEDENT RE NDERED IN ASSESSEES OWN CASE HAS BEEN ALTERED BY ANY HIGHER AUTHORI TY. THUS, REVENUE FAILS ON THIS ASPECT. 6. SINCE THE LD.CIT(A) WHILE DECIDING THE ISSUE IN FAVOUR OF T HE ASSESSEE HAS FOLLOWED THE ORDER OF THE TRIBUNAL IN ASSESSE ES OWN CASE, THEREFORE, IN ABSENCE OF ANY CONTRARY MATERIAL BROUG HT TO OUR NOTICE AGAINST THE ORDER OF THE TRIBUNAL, WE FIND NO INFIRMITY IN THE ORDER OF THE CIT(A) ON THIS ISSUE. MERELY BECAUSE THE RE VENUE HAS FILED AN APPEAL BEFORE THE HONBLE HIGH COURT THE SAME CAN NOT BE A GROUND TO TAKE A CONTRARY VIEW THAN THE VIEW ALREADY T AKEN BY THE TRIBUNAL UNTIL AND UNLESS THE SAME IS REVERSED BY THE HO NBLE HIGH COURT. ACCORDINGLY, THE GROUNDS RAISED BY THE REVENUE ARE DISMISSED. 7 ITA NO.1878/PN/2014 7. IN THE RESULT, THE APPEAL FILED BY THE REVENUE IS DISMISSED. ORDER PRONOUNCED IN THE OPEN COURT ON 10-06-2016. SD/- SD/- (VIKAS AWASTHY) (R.K. PANDA) JUDICIAL MEMBER ACCOUNTANT MEMBER PUNE; ' DATED : 10 TH JUNE, 2016. ) *#,! -!/ COPY OF THE ORDER FORWARDED TO : 1. / THE APPELLANT 2. / THE RESPONDENT 3 . THE CIT(A ) - I, NASHIK 4. 5. 6. THE CIT - I, NASHIK $ ''( , ( , / DR, ITAT, B PUNE; + / GUARD FILE. / BY ORDER, // TRUE COPY // // $ ' //TRUE -. ' ( / SR. PRIVATE SECRETARY ( , / ITAT, PUNE