Uma Bavan Co.Op. Credit Society Ltd., Visnagar V. The Income Tax Officer, Patan Ward -3, Mehsana

ITA 1936/AHD/2013

• Counselvise Citation: [2017] 128 COUNSELVISE.COM (IT) 6251 (ITAT-AHMEDABAD)
• Duration Of Justice: 3 year(s) 8 month(s) 28 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 12-04-2017
• Appeal Filed By: Assessee
• Order Result: Dismissed
• Bench Allotted: C
• Next Hearing Date: 11-04-2017
• Assessment Year: 2009-2010
• Appeal Filed On: 15-07-2013
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Department Lawyers: VIBHA BHALLA
• Assessee Lawyers: M K PATEL
• Section: 142(1)

Judgement Text

, IN THE INCOME TAX APPELLATE TRIBUNAL , C BENCH, AHMEDABAD BEFORE SHRI S.S. GODARA , JUDICIAL MEMBER AND SHRI MANISH BORAD , ACCOUNTANT MEMBER ./ ITA NO. 193 6 / AHD /201 3 / ASSTT. YEAR S : 20 0 9 - 20 10 UMA BAVAN CO - OP. CREDIT SOCIETY LIMITED, OPP. M.N. COLLEGE, VISNAGAR - 384315 P AN :AAAAU0275E VS . ITO, PATAN WARD - 3, MEHSANA (APPLICANT) (RESPONENT) ASSESSEE BY : SHRI M.K.PATEL , AR REVENUE BY : MS VIBHA BHALL A, DR / DATE OF HEARING : 1 1 / 04 / 201 7 / DATE OF PRONOUNCEMENT: 12 / 04 /201 7 / O R D E R PER MANISH BORAD, ACCOUNTANT MEMBER THIS APPEAL BY A SSESSEE FOR A.Y.2009 - 10 IS DIRECTED AGAINST THE ORDER OF LEARNED COMMI SSIONER OF INCOME TAX(APPEALS) GANDHINAGAR (IN SHORT, LD.CIT(A)) DATED 16/04/2013 ARISING OUT OF ORDER U/S.143(3) OF THE INCOME TAX ACT,1961 (HEREIN AFTER REFERRED TO AS ACT) FRAMED ON 21/10/2011 BY ITO, PATAN, WARD - 3, MEHSANA. ITA NO.1936/AHD/2013 ASSTT. YEAR 2009 - 10 2 2. THE ASSESSEE HAS RAIS ED THREE GROUNDS O F APPEAL BUT THE SOLITARY ISSUE IS CENTERED AGAINST THE ORDER OF LD.CIT(A) HOLDING THAT INTEREST INCOME OF RS.3,11,089/ - EARNED FROM LONG TERM INVESTMENT OF SPARE FUNDS IS TAXABLE U/S.56 OF THE ACT, AND ALSO ASSESSEE IS NOT ENTITLE D TO EXEMPTION U/S. 80P(2)(A)(I) OF THE ACT, ON THE ALLEGED INTEREST INCOME OF RS.3,11,089/ - 3. BRIEFLY STATED FACTS AS CULLED OUT FROM THE RECORDS ARE THAT THE ASSESSEE IS A CREDIT CO - OPERATIVE SOCIETY ENG AGED IN THE ACTIVITIES OF PROVIDING LOAN S TO ITS MEMBER S A ND EARNING INCOME THERE FROM. RE T URN OF INCOME DECLARING NIL INCOME WAS FILED ON 01/09/2009. CASE PICK ED UP FOR SCRUTINY ASSESSMENT AND NOTICE U/S.143(2) FOLLOWED BY 142(1) OF THE ACT, WERE ISSUED AND DULY SERVED UPON ASSESSEE SEEKING VARIOUS INFORMATION AS PER DETAILED QUESTI ONNAIRE ATTACHED THERETO. N ECESSARY DETAILS WERE FURNISHED BY THE ASSESSEE. LEARNED ASSESSING OFFICER (IN SHORT LD.AO ) COMPLETED A SSESSMENT BY ASSESSING INCOME AT RS.18,00,600/ - AFTER DISALLOWING CLAIM OF DEDUCTION U/S.80P(2)(A)(I) O F RS.10,80,000/ - AND ALSO ADDING PROVISION S OF RS.7,20,596/ - WHICH W AS C ONTENDED TO HAVE BEEN PROVIDED AS PER PROVISIONS BY - LAWS. 4. AGGRIEVED , ASSESSEE WENT IN APPEAL BEFORE LD. C IT(A) AND PARTLY SUCCEEDED AS LD .CIT(A) ALLOW ED ASSESSEES CLAIM OF DEDUCTION U/S.80P(2)(A)(I) OF RS.10,80,000/ - AND ALSO DELETED ADDITION OF RS.7 , 20 , 596/ - BY OBSERVING THAT ONCE IT HAS BEEN HELD THAT ASSESSEE IS ELIGIBLE FOR EXEMPTION U/S/80P(2)(A)(I) , IT SHOULD APPLY ON TH E IMPUGNED ADDITION OF RS.7 , 20 , 596/ - HOWEVER, LD.CIT(A) ALSO O BSERVE D THAT , ASSESSE HAS EARNED INTEREST INCOME OF RS.3 , 11 , 089 / - FROM SURPLUS FUND DEPOSITED A S LONG TERM INVESTMENT WITH SARD AR SAROVAR NARMADA NIGAM L I MITED . HE FURTHER HELD THAT ASSESSEE IS NOT ELIGIBLE TO CLAIM DEDUCTION U/S.80P(2)(A)(I) ON THIS INTEREST INCOME OF RS.3 , 11 , 089/ - AND IT IS TO BE TAXED U/S.56 OF THE INCOME TAX ACT, AS INCOME FROM OTHER SOURCES. ITA NO.1936/AHD/2013 ASSTT. YEAR 2009 - 10 3 5. AGGRIEVED, ASSESSEE IS NOW IN APPEAL BEFOR E THE TRIBUNAL. AT THE OUTSET , LD .COUNSEL SUBMITTED THAT ISSUE RAISED IN THIS APPEAL IS NOW SQUARELY COVERED AGAINST THE ASSESSEE BY THE JUDGMENT OF HON BLE JURISDICTIONAL HIGH COURT IN THE CASE OF STATE BANK OF INDIA (SBI) V/S COMMISSIONER OF INCOME TAX 389 , ITR 578 . HOWEVER, LD. COUNSEL REQUESTED TO SET ASIDE THE ISSUE TO THE FILE OF A SSESSING OFFICER TO DISALLOW ONLY NET INTEREST INCOM E . 6. ON THE OTHER HAND , LD. DEPARTMENTAL REPRESENTATIVE STRONGLY OBJECTED TO THE LD.COUNSE L S REQ UEST TO SET ASIDE ISSUE TO THE FILE O F ASSESSING OFFICER BY SUBMITTING THAT ALLEGED INTEREST INCOME OF RS.3 , 11 , 089/ - IS EARN ED FROM LONG TERM INVESTMENT OF RS.40 LACS MA DE WIT H SARD AR SAROVAR NARMADA NIGAM L I MITE D AND THE SAID INV ESTMENT WAS MADE IN EARLIER YEAR S AND THERE CAN BE NO QUESTION O F NETTING OF OTHER INT EREST EXPENSES OR ALLOWING INCIDENTAL EXPE NSES AGAINST THE ALLEGED INTEREST INCOME OF RS.3 , 11 , 089/ - 7. WE HAVE HEARD THE RIVAL CONTENT ION S AND PERUSED THE RECORD PLACED BEFORE US. THE S OLITARY GRIEVANCE OF THE ASSESSEE IS AGAINST LD. CIT(A) S ORDER HOLDING THAT INTEREST INCOME OF RS.3 , 11 , 08 9/ - OF LONG TERM INVESTMENT FUND IS TAXABLE U/S.56 OF THE ACT, AND FURTHER HELD THAT ASSESSEE IS NOT ENTITLED TO EXEMPTION U/S.80P(2)(A)(I) OF THE ACT. 7.1 WE FIND THAT THE ASSESSE I S A C REDIT CO - OPERATIVE SOCIETY. IT HAS EARNED RS.3 , 11 , 089/ - SURPLUS FUNDS OF RS.40 LACS FROM INVESTING WITH SARDAR SAROVAR NA RMADA NIGAM L IMITED. T HIS FACT IS NOT CONTROVERTED BY LD.COUNSEL FOR THE A SSE SSEE . WE FURTHER OBSERVE THAT THE I SSUE RELATING TO TREATMENT OF INTEREST INCOME EARNED BY CREDI T CO - OPERATIVE SOCIETY FROM SURPLUS FUND HAS BEEN WELL SETTLED BY HON BLE JURISDICTIONAL HIGH COURT IN THE CASE OF STATE BANK OF INDIA ITA NO.1936/AHD/2013 ASSTT. YEAR 2009 - 10 4 (SBI) VS. CIT(SUPRA) , WHEREIN IT HAS BEEN HELD THAT IN THE CASE OF A SOCIETY ENGAGED IN PROVIDING CREDIT FACILITIES TO ITS MEMBERS, IT IS ONLY INTEREST DERIVED FROM CREDIT PROVIDED TO ITS MEMBERS WHICH IS DEDUCTIBLE UNDER SEC TION 80P(2)(A)(I) OF THE ACT, AN D INTEREST DERIVED BY DEPOSITING SURPLUS FUNDS WITH BANK NOT BEING ATTRIBUTABLE IN BUSINESS CARR IED ON BY SOCIETY CANNOT BE DEDUCTED UNDER SEC TION 80P(2)(A)(I) OF THE ACT AND ARE TO BE TAXED U/S.56 OF THE ACT AS INCOME FROM OTHER SOURCES 8. DURING THE COURSE OF HEARING , LD.COUNSEL HAS CONCEDED THAT ABOVE REFERRED JUDGMENT OF HON BLE HIGHT C O URT OF GUJ ARAT IS HELD AGAINST ASSESSEE. 9. WE FURTHER NOTICE THAT ALLEGED INTEREST INCOME IS FROM LONG TERM INVESTMENT AND THERE IS N O DISCUSSION BEFORE ANY OF THE LOWER PROCEEDING ABO UT ANY INCIDENTAL EXPENSES OR NETTING OF THE INTEREST INCOME. WE DO NO T FIND ANY SUBSTANCE IN THE CONTENTION OF LD.COUNSEL FOR SETTIN G ASIDE THE ISSUE TO THE FILE OF ASSESSING OFFICER. WE THEREFORE, RESPECTFULLY FOLLOWING THE JUDGMENT OF HON BLE JURISDICTIONAL HIGH COURT AND EXAMINING THE FACTS IN THE LIGHT OF ABO VE JUDGMENT , ARE OF THE VIEW THAT IMPUGNED INTEREST INCOME OF RS.3 , 11 , 089 / - ON LONG TERM INVESTMENT OF SURPLU S FUND IS TAXABLE U/S.56 OF THE ACT, AS INCOME FROM OTHER SOURCES AND ASSESSEE IS NOT ENTITLED TO ANY DEDUCTION ON THIS AMOUNT U/S.80P(2)(A)(I) OF THE ACT. 10. IN THE RESULT, APPEAL OF THE ASSESSEE IS DISMISSED. ITA NO.1936/AHD/2013 ASSTT. YEAR 2009 - 10 5 ORDER PRONOUNCED IN THE COURT ON 12 TH APRIL , 2017 AT AHMEDABAD. SD/ - SD/ - ( S.S.GODARA ) JUDICIAL MEMBER (MANISH BORA D ) ACCOUNTANT MEMBER TRUE COPY A HMEDABAD; DATED 12 / 0 4 /2017 MANISH / COPY OF THE ORDER FORWARDED TO : / BY ORDER, / ( DY./ASSTT.REGISTRAR) , / ITAT, AHMEDABAD 1. / THE APPELLANT 2. / THE RESPONDENT. 3. / CONCERNED CIT 4. ( ) / THE CIT(A) 5. , / DR, ITAT, 6. / GUARD FILE .