Apollo Tyres Employees Multipurpose Consumer Co-Operative Credit Society Ltd., Vadodara V. The ITO, Ward-3(1)(2), Vadodara

ITA 1897/AHD/2017

• Counselvise Citation: [2019] 118 COUNSELVISE.COM (IT) 7044 (ITAT-AHMEDABAD)
• Duration Of Justice: 1 year(s) 4 month(s) 28 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 16-01-2019
• Appeal Filed By: Assessee
• Order Result: Dismissed
• Bench Allotted: SMC
• Assessment Year: 2014-2015
• Appeal Filed On: 18-08-2017
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Department Lawyers: B P SRIVASTAVA
• Section: 244A; 234B

Judgement Text

, - IN THE INCOME TAX APPELLATE TRIBUNAL AHMEDABAD BENCH D BEFORE SHRI RAJPAL YADAV, JUDICIAL MEMBER AND SHRI WASEEM AHMED, ACCOUNTANT MEMBER ./ ITA NO. 1897/AHD/2017 / ASSESSMENT YEAR: 2014-15 APOLLO TYRES EMPLOYEES MULTIPURPOSE CONSUMER CO-OPERATIVE CREDIT SOCIETY LTD. APOLLO TYRES LTD. LIMDA, WAGHODIA, VADODARA. PAN : AAAAA 2305 H VS ITO, WARD-3(1)(2) BARODA. / (APPELLANT) / (RESPONDENT) ASSESSEE BY : SHRI BANDISH SOPARKAR, AR REVENUE BY : SHRI B.P. SRIVASTAVA, SR.DR / DATE OF HEARING : 11/01/2019 /DATE OF PRONOUNCEMENT : 16/ 01/2019 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)-3, BARODA DATED 31.5.2017 PASSED FOR THE ASSTT.YEAR 20 14-15. 2. IN THE APPEAL, ASSESSEE IS AGGRIEVED BY THE ACTI ON OF THE LD.CIT(A) IN CONFIRMING DISALLOWANCE OF INTEREST INCOME OF RS .15,56,555/- EARNED ON FIXED DEPOSITS WITH NATIONALISED BANKS AND RS.12 ,995/- RECEIVED FROM INCOME TAX DEPARTMENT UNDER SECTION 244A OF THE INC OME TAX ACT. 3. BRIEF FACTS OF THE CASE ARE THAT THE ASSESSEE IS A COOPERATIVE SOCIETY ENGAGED IN PROVIDING CREDIT FACILITIES TO ITS MEMBE RS. IT FILED ITS RETURN OF ITA NO.1897/AHD/2017 - 2 - INCOME DECLARING NIL INCOME ON 26.8.2014. THE CASE OF THE ASSESSEE WAS SELECTED FOR SCRUTINY ASSESSMENT AND NOTICE UNDER S ECTION 143(2) OF THE ACT WAS ISSUED AND SERVED UPON THE ASSESSEE. DURIN G THE ASSESSMENT PROCEEDINGS, IT WAS NOTICED BY THE AO THAT THE ASSE SSEE HAS EARNED INTEREST INCOME TO THE TUNE OF RS.15,56,555/- ON FI XED DEPOSITS WITH NATIONALIZED BANK. THE ASSESSEE CLAIMED THE SAME A S A DEDUCTION ALLOWABLE UNDER SECTION 80P(2) OF THE ACT. SINCE T HIS INCOME OF THE ASSESSEE WAS NOT DERIVED FROM THE ACTIVITIES OF THE ASSESSEE-SOCIETY, THE LD.AO SHOW CAUSED THE ASSESSEE AS TO WHY THE INTERE ST INCOME SHOULD NOT BE ADDED BACK TO THE TOTAL INCOME OF THE ASSESS EE. ASSESSEE, INTER ALIA , SUBMITTED THAT PARKING SURPLUS MONEY NOT IMMEDIAT ELY REQUIRED FOR THE DAY-TO-DAY ACTIVITIES OF THE ASSESSEE IS AN INT EGRAL PART OF ITS BUSINESS ACTIVITY, AND THEREFORE, ELIGIBLE FOR EXEMPTION UND ER SECTION 80P(2) OF THE ACT, AND THEREFORE, INTEREST EARNED ON SUCH DEPOSIT S WAS ATTRIBUTABLE TO THE BUSINESS OF THE SOCIETY. THIS SUBMISSION OF TH E ASSESSEE WAS NOT FOUND ACCEPTABLE TO THE AO BY HOLDING THAT THE INTE REST INCOME EARNED BY THE ASSESSEE WAS NOT FROM ITS MAIN ACTIVITY OF P ROVIDING CREDIT FACILITIES TO ITS MEMBERS, RATHER SUCH INCOME WAS G ENERATED OUT FUNDS INVESTED WITH NATIONALIZED BANK. HE ACCORDINGLY MA DE ADDITION TO THIS EFFECT. APPEAL TO THE CIT(A) DID NOT BRING ANY RELI EF TO THE ASSESSEE. 4. HAVING HEARD BOTH THE PARTIES AND GONE THROUGH T HE RECORD, WE FIND THAT ASSESSEE IS A COOPERATIVE SOCIETY ENGAGED IN PROVIDING CREDIT FACILITIES TO ITS MEMBERS. THE ASSESSEE HAS FILED I TS RETURN OF INCOME ON 26.8.2014 DECLARING TOTAL INCOME AT RS.NIL BY CLAIM ING ENTIRE NET INCOME DEDUCTIBLE UNDER SECTION 80P(2)(A)(I) OF THE INCOME TAX ACT. THIS CLAIM WAS DENIED BY THE AO ON THE GROUND THAT ASSESSEE BE ING A COOPERATIVE ITA NO.1897/AHD/2017 - 3 - CREDIT SOCIETY ENGAGED IN PROVIDING CREDIT FACILITI ES TO ITS MEMBERS DEPOSITS ITS SURPLUS FUND IN FDRS ACCOUNTS WITH NAT IONALIZED BANK AND EARN INTEREST OUT OF SUCH DEPOSITS, THEN SUCH INTER EST INCOME WOULD NOT QUALIFY FOR DEDUCTION UNDER THE RELEVANT PROVISIONS APPENDED TO SECTION 80P(2) OF THE ACT. THE AO ACCORDINGLY REJECTED THE CLAIM OF THE ASSESSEE. THE LD.CIT(A) UPHELD THE ORDER OF THE AO BY TAKING SUPPORT FROM THE DECISION OF THE HONBLE JURISDICTIONAL HIGH COURT I N THE CASE OF CIT VS. STATE BANK OF INDIA, 389 ITR 578. WE FIND THAT HON BLE JURISDICTIONAL HIGH COURT HAS HELD THAT INTEREST EARNED FROM INVES TMENT MADE IN NATIONALIZED BANK BY A COOPERATIVE SOCIETY ENGAGED IN PROVIDING CREDIT FACILITIES TO ITS MEMBERS, IS NOT DEDUCTIBLE UNDER SECTION 80P(2)(A)(I). IN RECENT PAST THE TRIBUNAL IN NUMBER OF DECISIONS HAS TAKEN A CONSISTENT VIEW ON THIS ISSUE BY FOLLOWING ABOVE JUDGMENT OF T HE HONBLE JURISDICTIONAL HIGH COURT. IN THIS VIEW OF THE MATT ER, WE DO NOT INCLINE TO DISTURB THE ORDERS OF THE REVENUE ON THIS ISSUE, WH ICH WE UPHOLD. HOWEVER, ANY EXPENDITURE INCURRED BY THE ASSESSEE F OR EARNING SUCH INCOME COULD BE ALLOWED TO IT. IN OTHER WORDS, THE LD.AO HAS TO DETERMINE THE NET INTEREST INCOME 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. 5. SO FAR AS EARNING OF INTEREST INCOME OF RS.12,99 5/- UNDER SECTION 244A OF THE ACT IS CONCERNED, SINCE THIS INCOME IS NOT ATTRIBUTABLE TO THE ACTIVITIES OF THE ASSESSEE-SOCIETY, THE SAME IS NOT AN ELIGIBLE INCOME FOR EXEMPTION. THE LD.AO HAS RIGHTLY MADE THIS ADDITIO N. AS REGARDS ITA NO.1897/AHD/2017 - 4 - CHARGING OF INTEREST UNDER SECTION 234A AND 234B AR E CONCERNED, THEY BEING MANDATORY PROVISIONS, LEVY OF INTEREST IS CON SEQUENTIAL. 6. IN THE RESULT, APPEAL OF THE ASSESSEE IS DISMISS ED. PRONOUNCED IN THE OPEN COURT ON 16 TH JANUARY, 2019. SD/- SD/- (WASEEM AHMED) ACCOUNTANT MEMBER (RAJPAL YADAV) JUDICIAL MEMBER