Shree Nirat Nagrik Sahakari Mandali Ltd., Vadodara V. The Income Tax Officer, Ward-3(1)(1), Vadodara

ITA 1903/AHD/2017

• Counselvise Citation: [2018] 125 COUNSELVISE.COM (IT) 8445 (ITAT-AHMEDABAD)
• Duration Of Justice: 7 month(s) 26 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 13-04-2018
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: D
• Assessment Year: 2014-2015
• Appeal Filed On: 18-08-2017
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: SAURABH SINGH
• Assessee Lawyers: M J SHAH

Judgement Text

, - IN THE INCOME TAX APPELLATE TRIBUNAL AHMEDABAD BENCH A BEFORE SHRI RAJPAL YADAV, JUDICIAL MEMBER AND SHRI AMARJIT SINGH, ACCOUNTANT MEMBER ./ ITA NO. 1903/AHD/2017 / ASSESSMENT YEAR: 2014-15 SHRI NIRAT NAGRIK SAHAKARI MANDALI LTD YAMUNA KUNJ, WADI TAD FALIA WADI VADODARA 390 017. PAN : AAAAS 6648 H VS ITO, WARD-3(1)(1) VADODARA. / (APPELLANT) / (RESPONDENT) ASSESSEE BY : SHRI M.J. SHAH, AR REVENUE BY : SHRI SAURABH SINGH, SR.DR / DATE OF HEARING : 12/04/2018 /DATE OF PRONOUNCEMENT : 13/04/2018 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)-3, VADODARA DATED 22.5.2017 PASSED FOR THE ASSTT.YEAR 2014-15. 2. SOLE ISSUE INVOLVED IN THE GROUNDS OF APPEAL REL ATES TO WHETHER INTEREST INCOME EARNED ON FIXED DEPOSITS WITH NATIO NALIZED BANK WOULD QUALIFY FOR DEDUCTION UNDER SECTION 80P(2)(A)(I) OF THE INCOME TAX ACT OR NOT. 3. BRIEF FACTS OF THE CASE ARE THAT ASSESSEE IS A C OOPERATIVE SOCIETY ENGAGED IN PROVIDING CREDIT FACILITIES TO ITS MEMBE RS. IT HAS FILED ITS ITA NO.1903/AHD/2017 - 2 - RETURN OF INCOME ON 6.9.2014 DECLARING NIL INCOME. THEREAFTER THE CASE OF THE ASSESSEE WAS SELECTED FOR SCRUTINY ASSESSMEN T. IN THE SCRUTINY ASSESSMENT, IT WAS NOTICED BY THE AO THAT ASSESSEE HAD INTEREST INCOME FROM ITS MEMBERS AND NATIONALIZED BANKS AMOUNTING T O RS.1,20,91,455/-. AFTER CLAIMING EXPENSES ETC. NET PROFIT AVAILABLE T O THE ASSESSEE WAS RS.85,65,824/- WHICH THE ASSESSEE CLAIMED AS DEDUCT ION UNDER SECTION 80P OF THE ACT. TO THE SHOW CAUSE NOTICE, THE ASS ESSEE SUBMITTED THAT THE ASSESSEE IS ENGAGED IN BANKING ACTIVITIES AND P ROVIDING CREDIT FACILITIES TO ITS MEMBERS, ITS ENTIRE INCOME IS ATT RIBUTABLE TO ACTIVITIES, AND THEREFORE, ELIGIBLE FOR DEDUCTION UNDER SECTION 80P (2)(D) OF THE ACT. HOWEVER, THE LD.AO REJECTED CLAIM OF THE ASSESSEE A ND HELD THAT ONLY THE INCOME ATTRIBUTABLE TO ACTIVITY OF THE ASSESSEE OF PROVIDING CREDIT FACILITIES TO ITS MEMBERS WOULD BE QUALIFIED FOR DE DUCTION UNDER SECTION 80P(2)(D) OF THE ACT, AND NOT INTEREST EARNED ON SU RPLUS FUND INVESTMENT IN NATIONALIZED BANKS, WHICH WAS NOT ACTIVITY OF TH E ASSESSEE FOR WHICH INCOME WOULD BE DEDUCTIBLE. THIS FINDING OF THE L D.AO FOUND CONFIRMATION FROM THE LD.CIT(A). 4. BEFORE US, THE LD.COUNSEL FOR THE ASSESSEE REITE RATED SUBMISSIONS MADE BEFORE THE REVENUE AUTHORITIES, WHEREAS, THE L D.DR RELIED UPON BOTH THE IMPUGNED ORDERS. 5. WE HAVE HEARD RIVAL CONTENTIONS AND GONE THROUGH THE RECORD CAREFULLY. WE FIND THAT ISSUE OF ELIGIBILITY OF DE DUCTION UNDER SECTION 80P(2)(A)(I) OF THE ACT AVAILABLE TO CO-OPERATIVE S OCIETY IS NO MORE RES INTEGRA , IN VIEW OF DECISION OF HONBLE JURISDICTIONAL HIG H COURT IN THE CASE IN THE CASE OF STATE BANK OF INDIA VS. CIT, 38 9 ITR 578 WHEREIN HONBLE COURT HELD THAT IN CASE OF A SOCIETY ENGAGE D IN PROVIDING CREDIT ITA NO.1903/AHD/2017 - 3 - FACILITIES TO ITS MEMBERS, INCOME FROM INVESTMENTS MADE IN THE BANKS DOES NOT QUALIFY FOR DEDUCTION UNDER SECTION 80P(2) (A). THE LD.COUNSEL COUNSEL FOR THE ASSESSEE FAIRLY CONCEDED TO THIS PO SITION OF LAW LAID DOWN BY THE HONBLE HIGH COURT. IN THIS VIEW OF THE MATT ER, WE DISMISS THE APPEAL OF THE ASSESSEE. HOWEVER, ANY EXPENDITURE I NCURRED BY THE ASSESSEE FOR EARNING SUCH INCOME COULD BE ALLOWED T O IT. IN OTHER WORDS, THE LD.AO HAS TO DETERMINE THE NET INTEREST INCOME EARNED BY THE ASSESSEE ON SUCH INVESTMENT WITH BANK, AND ONLY THE REAFTER THAT INCOME HAS TO BE EXCLUDED FROM THE ADMISSIBILITY OF DEDUCT ION UNDER SECTION 80P(2) OF THE ACT. 6. IN THE RESULT, APPEAL OF THE ASSESSEE IS PARTLY ALLOWED FOR STATISTICAL PURPOSE. PRONOUNCED IN THE OPEN COURT ON 13 TH APRIL, 2018. SD/- SD/- (AMARJIT SINGH) ACCOUNTANT MEMBER (RAJPAL YADAV) JUDICIAL MEMBER AHMEDABAD; DATED, 13/04/2018 ! / COPY OF THE ORDER FORWARDED TO : 1. '# / THE APPELLANT 2. $%'# / THE RESPONDENT. 3. && ' / CONCERNED CIT 4. ' ( ) / THE CIT(A) 5. *+, $-- , , / DR, ITAT, AHMEDABAD 6. ,./ 0 / GUARD FILE. ' / BY ORDER, TRUE COPY #/$ % (DY./ASSTT.REGISTRAR) & ', / ITAT, AHMEDABAD