Appeal Details
Counselvise Citation
[2018] 125 COUNSELVISE.COM (IT) 7864 (ITAT-AHMEDABAD)
Assessee PAN
Bench
Appeal Number
Duration Of Justice
10 month(s) 25 day(s)
Appellant
Respondent
Appeal Type
Income Tax Appeal
Pronouncement Date
13-07-2018
Appeal Filed By
Assessee
Order Result
Partly Allowed
Bench Allotted
SMC
Assessment Year
2014-2015
Appeal Filed On
18-08-2017
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.1899/AHD/2017 ( / ASSESSMENT YEAR : 2014-15) VADODARA MAHANAGAR SEVA SADAN EMPLOYEES CO- OPERATIVE CREDIT SOCIETY LTD., 1 ST FLOOR, OLD PO BUILDING, OPPOSITE KHANDERAO MARKET, VAODARA. / VS. THE INCOME TAX OFFICER, WARD 3(1)(3), BARODA. ./ ./ PAN/GIR NO. : AAAAV 6708 P ( / 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- 3/10163/2016-17 DATED 25.05.2017 ARISING IN THE ASSESSMENT ORDER PASSED ITA NO.1899/AHD/2017 VADODARA MAHANAGAR SEVA SADAN EMPLOYEES CO-OP CRE DIT SOCIETY LTD. VS. ITO ASST.YEAR 2014-15 - 2 - UNDER S.143(3) OF THE INCOME TAX ACT, 1961 (HERE-IN -AFTER REFERRED TO AS 'THE ACT') DATED 11.07.2016 RELEVANT TO ASSESSMENT YEAR (AY) 2014-15. 2. THE GROUNDS OF APPEAL RAISED BY THE ASSESSEE ARE AS UNDER:- 1. THE LEARNED CIT(A)-3, HAS ERRED IN LAW AND ON T HE FACTS IN CONFIRMING THE ORDER OF THE ASSESSING OFFICER HOLDI NG THAT THE AMOUNT OF INTEREST INCOME EARNED ON FIXED DEPOSITS MADE WITH NATIONALIZED BANKS AND CO-OPERATIVE BANK IS NOT PRO FITS AND GAINS ATTRIBUTABLE TO THE ACTIVITY OF PROVIDING CREDIT FA CILITIES TO MEMBERS AND HENCE NOT ELIGIBLE FOR DEDUCTION UNDER SECTION 80P OF THE ACT AND THEREBY CONSIDERING THE AMOUNT OF IN TEREST OF RS.11,54,648/- AS INCOME FROM OTHER SOURCES LIABLE TO BE TAXED UNDER SECTION 56 OF THE ACT. 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 AND COOPERATIVE BANK WOULD QUALIFY FOR DEDUCTI ON UNDER SECTION 80P(2)(A)(I) OF THE INCOME TAX ACT. ITA NO.1899/AHD/2017 VADODARA MAHANAGAR SEVA SADAN EMPLOYEES CO-OP CRE DIT SOCIETY LTD. VS. ITO ASST.YEAR 2014-15 - 3 - 5. THE ASSESSEE DURING THE YEAR INTER-ALIA HAS EAR NED INTEREST INCOME FROM THE NATIONALIZED BANK AND CO-OPERATIVE AGGREGA TING TO RS. 11,56.648.00 ONLY. THE ASSESSEE CLAIMED DEDUCTION U NDER SECTION 80P(2)(A)(I) OF THE INCOME TAX ACT IN RESPECT OF IN TEREST INCOME STATED ABOVE. HOWEVER AT THE ONSET, WE NOTE THAT ISSUE RELATING T O INTEREST INCOME FROM NATIONALIZED BANK IS SQUARELY COVERED AGAINST THE A SSESSEE BY THE DECISION OF THE HON'BLE JURISDICTIONAL HIGH COURT IN THE CAS E OF STATE BANK OF INDIA VS. CIT, 389 ITR 578 WHEREIN HON'BLE COURT HE LD THAT INTEREST EARNED FROM THE INVESTMENT MADE IN ANY BANK IS NOT DEDUCTIBLE UNDER SECTION 80P(2)(A)(I) OF THE ACT. HOWEVER WE NOTE THAT THE ASSESSEE IS ELIGIBLE FOR D EDUCTION IN RESPECT OF THE INTEREST INCOME EARNED FROM THE COOPERATIVE BANK UNDER SECTION 80P(2)(D) OF THE ACT. IN THIS CONNECTION WE FIND SU PPORT & GUIDANCE FROM THE ORDER OF THIS TRIBUNAL IN THE CASE OF THE SARVODAY CREDIT CUM CONSUMERS CO-OPERATIVE SOCIETY LTD. VS. ACIT IN ITA NO.1875AHD/2015 PERTAINING TO THE ASSESSMENT YEAR 2 011-12 WHEREIN IT WAS HELD AS UNDER: 7. WE HAVE HEARD THE LD. REPRESENTATIVES OF THE RE SPECTIVE PARTIES AND PERUSED THE RELEVANT MATERIALS AVAILABLE ON REC ORD. WE FIND THAT THE ISSUE RAISED BY THE ASSESSEE AS TO WHETHER THE ASSE SSEE IS ENTITLED TO THE CLAIM U/S.80P(2)(A)(I) & 80P(2)(D) OF THE ACT ON TH E INTEREST AND DIVIDEND INCOME RECEIVED FROM THE BANASKANTHA DIST.CENTRAL C O-OPERATIVE BANK LTD. IS IDENTICAL TO THE ISSUE INVOLVED IN THOSE AB OVE APPEALS DECIDED BY ITA NO.1899/AHD/2017 VADODARA MAHANAGAR SEVA SADAN EMPLOYEES CO-OP CRE DIT SOCIETY LTD. VS. ITO ASST.YEAR 2014-15 - 4 - THE COORDINATE BENCH OF THIS TRIBUNAL. THE COORDIN ATE BENCH WHILE DECIDING THE ISSUE HAS OBSERVED AS FOLLOWS: 4. WE NOW ADVERT TO THE LEAD ISSUE OF SECTION 80(P )(2) DISALLOWANCE OF RS.27,97,019/- IN RESPECT OF ASSESSEES INTEREST INCOME DERIVED FROM ITS DEPOSITS WITH THE BANAS CO-OPERATIVE BANK. BOT H THE LOWER AUTHORITIES QUOTE THE LEGISLATIVE AMENDMENT VIDE FI NANCE ACT, 2006 W.E.F. 01.04.2007 INSERTING SUBSECTION 4 IN SECTION 80P AS WELL AS CBDTS EXPLANATORY NOTES TO THE ABOVE FINANCE ACT D ATED 28.122006 IN HOLDING THAT THE IMPUGNED INTEREST INCOME DERIVED F ROM CO-OPERATIVE BANK IS NOT ELIGIBLE FOR DEDUCTION. LEARNED DEPART MENTAL REPRESENTATIVE VEHEMENTLY CONTENDS THAT HONBLE KAR NATAKA HIGH COURTS RECENT DECISION IN (2017) 83 TAXMANN.COM 14 0 (KARNATAKA) PCIT VS. TOTAGARS CO-OPERATIVE SALE SOCIETY HAS SET TLED THE LAW THAT SUCH AN INCOME IS NOT ALLOWABLE AS SECTION 80P DEDU CTION IN VIEW OF THE LEGISLATIVE AMENDMENT HEREINABOVE. MR. KABRA THERE AFTER FILES HONBLE APEX COURTS JUDGMENT IN (2017) 397 ITR 1 (SC). TH E CITIZEN CO- OPERATIVE SOCIETY LTD. VS. ACIT SETTLING SECTION 80 P DEDUCTION ISSUE IN RESPECT OF ORDINARY AND NOMINAL MEMBERS. WE HOWEVE R FIND THAT THE ABOVE FORMER DECISION GOES CONTRARY TO HONBLE JURI SDICTIONAL HIGH COURTS JUDGMENT IN TAX APPEAL NO. 473 OF 2014 CIT VS. SABARKANTHA DISTRICT COOPERATIVE MILK PRODUCERS UNION LTD. DECL INING REVENUES IDENTICAL QUESTION OF LAW CHALLENGING TRIBUNALS DE CISION ALLOWING SECTION 80P DEDUCTION IN RESPECT OF INTEREST EARNED ON FIXED DEPOSITS WITH A COOPERATIVE BANK IN ASSESSMENT YEAR 2009-10 I.E. POST SECTION 80P(4) AMENDMENT W.E.F. 01.04.2007. THEIR LORDSHIPS REASONING TO THIS EFFECT READS AS UNDER: 4.0. NOW, SO FAR AS PROPOSED QUESTION NO. B I.E. W HETHER THE APPELLATE TRIBUNAL HAS SUBSTANTIALLY ERRED IN UPHOL DING THE ORDER OF THE CIT(A) IN DELETING THE DISALLOWANCES OF RS.1,42 ,19,5157- UNDER SECTION 80(P)(2)(D) OF THE ACT IS CONCERNED, IT IS REQUIRED TO BE NOTED THAT THE ASSESSEE CLAIMED DEDUCTION UNDER SECTION 8 0(P)(2)(D) OF THE ACT ON THE INTEREST EARNED ON THE FIXED DEPOSIT WIT H COOPERATIVE BANK AND THE SOCIETIES AND IT HAS BEEN FOUND THAT AS SUC H THE INCOME WAS RECEIVED FROM THE INVESTMENT IN COOPERATIVE SOCIETI ES AND COOPERATIVE BANK. CONSIDERING SECTION 80(P)(2)(D) O F THE ACT WHEN ITA NO.1899/AHD/2017 VADODARA MAHANAGAR SEVA SADAN EMPLOYEES CO-OP CRE DIT SOCIETY LTD. VS. ITO ASST.YEAR 2014-15 - 5 - THE ONLY REQUIREMENT WAS THAT THE INCOME SHOULD BE RECEIVED FROM INVESTMENT IN COOPERATIVE SOCIETIES AND THE COOPERA TIVE BANK WHICH IN THE PRESENT CASE HAS BEEN FULFILLED, IT CANNOT B E SAID THAT THE LEARNED TRIBUNAL HAS COMMITTED ANY ERROR IN DELETING DISALL OWANCE OF RS.1,42,19,515/- UNDER SECTION 80(P)(2)(D) OF THE A CT. WE ARE IN COMPLETE AGREEMENT WITH THE VIEW TAKEN BY THE LEARN ED TRIBUNAL. UNDER THE CIRCUMSTANCES, PROPOSED QUESTION B IS ALS O ANSWERED AGAINST THE REVENUE. WE THEREFORE FOLLOW HONBLE JURISDICTIONAL HIGH COU RTS JUDGMENT THAN HONBLE KARNATAKA HIGH COURTS DECISION. COMI NG TO HONBLE APEX COURTS DECISION IN THE CITIZEN CO-OP ERATIVE SOCIETY LTD. (SUPRA), WE FIND THAT THERE IS NO DISP UTE ABOUT THE CATEGORY OF MEMBERS AS IT WAS BEFORE THEIR LORDSHIP S. WE THUS CONCLUDE IN VIEW OF ALL THESE FACTS AND CIRCUMSTANC ES THAT HONBLE JURISDICTIONAL HIGH COURTS JUDGMENT IS BIN DING ON US. WE ACCORDINGLY DELETE THE IMPUGNED DISALLOWANCE OF RS.27,97,019/- IN QUESTION. THIS LEAD APPEAL ITA N O. 1891/AHD/2014 IS PARTLY ACCEPTED 8. THUS IT IS A FACT IN THE AFORESAID MATTER THAT T HE CO-ORDINATE BENCH HAS BEEN PLEASED TO ALLOW THE CLAIM OF THE AS SESSEE FOR DEDUCTION OF INTEREST INCOME DERIVED FROM THE DEPOS ITS WITH THE BANASKANTHA DIST. CENTRAL CO-OPERATIVE BANK LTD. 9. TAKING INTO CONSIDERATION THE ENTIRE FACT S OF THE MATTER AND THE DECISION CITED BY THE LD. AR, WE ARE OF THE CON SIDERED VIEW THAT THE ASSESSEE IS ENTITLED TO DEDUCTION U/S.80(2 )(A)(I) & 80P(2)(D) OF RS.22,52,868/- & RS.4,44,200/- BEING INTEREST AND DIVIDEND INCOME RESPECTIVELY DERIVED FROM THE DEPOS ITS WITH THE BANASKANTHA DIST.CENTRAL CO-OPERATIVE BANK LTD. AND THUS ACCORDINGLY DELETE THE IMPUGNED DISALLOWANCE OF RS. 22,51,000/-. 10. THE GROUND OF APPEAL PREFERRED BY THE ASSE SSEE IS ALLOWED. ITA NO.1899/AHD/2017 VADODARA MAHANAGAR SEVA SADAN EMPLOYEES CO-OP CRE DIT SOCIETY LTD. VS. ITO ASST.YEAR 2014-15 - 6 - SIMILARLY, IN THE INTEREST OF JUSTICE AND FAIR PLAY WE ALSO NOTE THAT NET AMOUNT OF INTEREST INCOME FROM NATIONALIZED BANK SH OULD BE CONSIDERED FOR DISALLOWING THE DEDUCTION U/S 80P(2)(A)(I) OF T HE ACT. ON 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. ITA NO.1899/AHD/2017 VADODARA MAHANAGAR SEVA SADAN EMPLOYEES CO-OP CRE DIT SOCIETY LTD. VS. ITO ASST.YEAR 2014-15 - 7 - 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 DEDUCTION UNDER SECTION 80P(2)(A)(I) OF THE ACT. SI MILARLY, WE ALSO DIRECT THE ASSESSING OFFICER TO ALLOW THE DEDUCTION TO THE ASSESSEE FOR THE AMOUNT OF INTEREST EARNED FROM THE CO-OPERATIVE BAN K UNDER SECTION 80P(2)(D) OF THE ACT. HENCE, GROUNDS OF APPEAL FILE D BY THE ASSESSEE ARE ALLOWED FOR STATISTICAL PURPOSES. 6. IN THE RESULT, THE APPEAL OF THE ASSESSEE IS PA RTLY ALLOWED 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 ITA NO.1899/AHD/2017 VADODARA MAHANAGAR SEVA SADAN EMPLOYEES CO-OP CRE DIT SOCIETY LTD. VS. ITO ASST.YEAR 2014-15 - 8 - !'# $#! / COPY OF THE ORDER FORWARDED TO : 1. / THE APPELLANT 2. / THE RESPONDENT. 3. & '( ) / CONCERNED CIT 4. ) () / THE CIT(A)-3, VADODARA. 5. ,-. //'( , '(# , 12$&$ / DR, ITAT, AHMEDABAD 6. .34 5 / GUARD FILE. % & / BY ORDER, , / //TRUE COPY// '/& () ( DY./ASSTT.REGISTRAR) , / ITAT, AHMEDABAD
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