ITO 17(3)(4), MUMBAI V. STATE BANK OF INDIA EMPLOYEES, MUMBAI

ITA 1970/MUM/2016

• Counselvise Citation: [2017] 127 COUNSELVISE.COM (IT) 9723 (ITAT-MUMBAI)
• Duration Of Justice: 1 year(s) 4 month(s) 2 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 31-07-2017
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: Not Allotted
• Assessment Year: 2012-2013
• Appeal Filed On: 29-03-2016
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: V JUSTIN
• Section: 143(3)

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL MUMBAI BENCH A , MUMBAI BEFORE SHRI G.S. PANNU, ACCOUNTANT MEMBER AND SHRI RAVISH SOOD , JUDICIAL MEMBER ITA NO. 1970 /MUM/ 2016 : A.Y : 2012 - 13 ITO - 17(3)(4), MUMBAI (APPELLANT) VS. STATE BANK OF INDIA EMPLOYEES M.S PATEL CO - OP. CREDIT SOCIETY LTD., 3 RD FLOOR, STATE BANK OF INDIA MAIN BRANCH, HORNIMAN CIRCLE, FORT, MUMBAI 400 023 (RESPONDENT) PAN : AAAAS9621A APPELLANT BY : SHRI V. JUSTIN RESPONDENT BY : SHRI HEMANT SHAH DATE OF HEARING : 03 / 07 /201 7 DATE OF PRONOUNCEMENT : 31 /0 7 /201 7 O R D E R PER G.S. PANNU , AM : THE CAPTIONED APPEAL BY THE REVENUE IS DIRECTED AGAINST THE ORDER OF THE CIT(A) - 28 , MUMBAI DATED 12.01.2016 , PERTAINING TO THE ASSESSMENT YEAR 2012 - 13 , WHICH IN TURN HAS ARISEN FROM THE ORDER PASSED BY THE ASSESSING OFFICER DATED 28.1.2015 UNDER SECTION 143(3) OF THE INCOME TAX ACT, 1961 (IN SHORT THE ACT). 2. IN THIS APPEAL BY THE REVENUE, THE SOLITARY DISPUTE IS WITH REGARD TO THE EXEMPTION CLAIMED BY THE ASSESSEE UNDER SEC. 80 - P OF THE ACT 2 STATE BANK OF INDIA EMPLOYEES M.S PATEL COOP. CREDITY SOCY LTD. ITA NO. 1970/MUM/2016 WITH REGARD TO THE INTEREST INCOME EARNED ON FIXED DEPOSIT WITH STATE BANK OF INDIA AMOUNTING TO RS.83,86,322/ - . 3. IN BRIEF, THE RELEVANT FACTS ARE THAT THE ASSESSEE IS A CO - OPERATIVE CREDIT SOCIETY, WHICH IS E NGAGED IN THE ACTIVITY OF PROVIDING CREDIT FACILIT IES TO ITS M EMBERS AFTER ACCEPTING DEPOSITS FROM ITS M EMBERS. IN THE COURSE OF ASSESSMENT PROCEEDINGS, THE ASSESSING OFFICER NOTED THAT ASSESSEE HAD , INTER - ALIA , EARNED INTEREST ON FIXED DEPOSIT WITH STATE BANK OF INDIA OF RS.83,86,322/ - , WHICH WAS NOT ELIGIBLE FOR EXEMPTION U/S 80 - P(2)(A)(I) OF THE ACT SINCE THE SAID INCOME DID NOT RELATE TO THE ACTIVITY OF PROVIDING CREDIT FACILIT IES TO THE M EMBERS. THEREFORE, THE EXEMPTION IN RELATION TO THE AFORESAID I NTEREST INCOME WAS DENIED. BEFORE THE CIT(A), ASSESSEE POINTED OUT THAT IT WAS NOT A CO - OPERATIVE BANK SO AS TO BE COVERED BY THE EXCLUSION PROVIDED U/S 80 - P(4) OF THE ACT, AND IN THIS CONTEXT PLACED RELIANCE ON THE JUDGMENT OF THE HON'BLE BOMBAY HIGH COU RT AT GOA IN THE CASE OF M/S. THE QUEPEM URBAN CO - OPERATIVE CREDIT SOCIETY LTD. , TAX APPEALS NO. 22, 23 & 24 OF 2015 DATED 17.4.2015 . THE ASSESSEE ALSO PLACED RELIANCE ON THE DECISION OF MUMBAI BENCH OF THE TRIBUNAL IN THE CASE OF M/S. JAOLI TALUKA SAHAKARI PATPEDHI MARYADIT, ITA NO. 6627/MUM/2014 DATED 10.8.2015 , WHEREIN UNDER SIMILAR CIRCUMSTANCES, THE EXEMPTION U/S 80 - P OF THE ACT WAS ALLOWED. APART THEREFROM, RELIANCE WAS ALSO PLACED ON THE DECISION OF THE KOLKATA BENCH OF THE TRIBUNAL IN THE CA SE OF S.E.S.E.C & E CO. RAILWAY EMPLOYEES, (2014) 41 CCH 0218 , WHEREIN A SIMILAR CLAIM HAS BEEN UPHELD. THE CIT(A) NOTICED THAT THE DECISION OF THE MUMBAI BENCH OF TRIBUNAL IN THE CASE OF M/S. JAOLI TALUKA SAHAKARI PATPEDHI MARYADIT (SUPRA) FULLY COVERED THE CONTROVERSY IN FAVOUR OF THE 3 STATE BANK OF INDIA EMPLOYEES M.S PATEL COOP. CREDITY SOCY LTD. ITA NO. 1970/MUM/2016 ASSESSEE. IN THIS CONTEXT, THE FOLLOWING DISCUSSION IN THE ORDER OF THE CIT(A) IS RELEVANT : - 5.1 I FIND THAT THE CASE OF THE APPELLANT IS THAT INTEREST INCOME EARNED FROM SBI IS DIRECTLY ATTRIBUTABLE TO ITS ACTIVITIES. ON THE OTHER HAND, THE CASE OF THE AO IS THAT ONLY THAT INTEREST EARNED FROM INVESTMENTS IN OTHER CO - OPERATIVE SOCIETIES IS ELIGIBLE F OR DEDUCTION U/S 80(2)(D). THE AO HELD THAT THE INTENT OF THE LEGISLATURE WAS TO DENY DEDUCTION ON ANY OTHER INTEREST. AT THIS STAGE IT IS RELEVANT TO EXAMINE THE WORDINGS OF SEC 80P. SEC 80P(1) PROVIDES FOR DEDUCTION OF THOSE SUMS FROM THE TOTAL INCOME A S MENTIONED IN 80P(2). SEC 80P(2) STATES THAT THE SUMS REFERRED IN SUB SECTION (1) ARE (A) (I) TO (VII) AND FURTHER STATES THAT 'THE WHOLE OF THE AMOUNT OF PROFITS AND GAINS OF BUSINESS ATTRIBUTABLE TO ANYONE OR MORE OF SUCH ACTIVITIES'. THE CONTROVERSY IS THEREFORE WHETHER THE INTEREST INCOME EARNED FROM SBI (WHICH ADMITTEDLY IS NOT A COOPERATIVE SOCIETY), COULD BE SAID TO BE 'ATTRIBUTABLE' TO THE BUSINESS ACTIVITY OF THE APPELLANT. IN THIS CONNECTION THE DECISION OF THE HON'BLE ITAT MUMBAI BENCH IN THE CA SE OF JAOLI TALUKA SAHAKARI PATPEDHI MARYADIT FOR A. Y. 2010 - 11 IN ITA NO 6627/MUM/2014 DATED 10/08/2015 IS REVEALING AND COVERS THE MATTER SQUARELY IN FAVOR OF THE APPELLANT. IN THAT CASE, THE ISSUE WAS IDENTICAL ON FACTS. IN THAT CASE, THE CIT(A) HELD T HAT THE INTEREST INCOME EARNED BY THE SOCIETY FROM ITS INVESTMENTS IN VARIOUS COOPERATIVE BANKS AS WELL AS SCHEDULED BANKS IS TO BE HELD AS INCOME FROM OTHER SOURCES AS THAT INTEREST COULD NOT BE SAID TO BE GENERATED FROM BUSINESS ACTIVITIES. IN THE SAID O RDER, THE ITAT HAS FOLLOWED THE DECISION OF THE HON'BLE KARNATAKA HIGH COURT IN THE CASE OF TUMKUR MERCHANTS SOUHARDA CREDIT COOPERATIVE LTD (2015) 230 TAXMAN 309. THE HON'BLE KARNATAKA HIGH COURT HAS CONSIDERED THE DECISION OF THE HON'BLE SUPREME COURT IN TOTGARS CASE (CITED BY THE AO IN THE PRESENT APPEAL), AND HELD THAT THE INTEREST INCOME, ARISING FROM INVESTMENTS OF THE SOCIETY IN BOTH COOPERATIVE AS WELL AS SCHEDULED BANKS, IS 'ATTRIBUTABLE' TO THE BUSINESS ACTIVITIES OF THE ASSESSEE AND IS THEREFORE ELIGIBLE FOR A DEDUCTION U/S 80P(2)(A)(I). THE ITAT MUMBAI IN ITS ORDER HAS FOLLOWED THE DECISION OF THE KARNATAKA HIGH COURT AND HELD THAT INTEREST INCOME EARNED FROM INVESTMENTS IN BOTH 4 STATE BANK OF INDIA EMPLOYEES M.S PATEL COOP. CREDITY SOCY LTD. ITA NO. 1970/MUM/2016 COOPERATIVE AS WELL AS SCHEDULED BANKS IS ELIGIBLE FOR DEDUCTION U/S 80P(2)(A)(I). 5.2 THE FACTS AND ISSUE IN THE PRESENT APPEAL IS IDENTICAL TO THE CASE BEFORE THE HON'BLE ITAT MUMBAI. RESPECTFULLY FOLLOWING THE DECISION OF THE ITAT, I HOLD THAT THE INTEREST EARNED BY THE APPELLANT FROM ITS INVESTMENTS IN SBI ARE ALSO E LIGIBLE FOR DEDUCTION U/S 80P(2)(A)(I). THE AO IS DIRECTED ACCORDINGLY. THE DISALLOWANCE MADE BY THE AO IS THEREFORE DELETED. AGAINST THE AFORESAID DECISION, REVENUE IS IN FURTHER APPEAL BEFORE US. 4. AT THE TIME OF HEARING, THE LD. DR REITERATED THE STAND OF THE ASSESSING OFFICER, BUT QUITE FAIRLY POINTED OUT THAT THE CIT(A) HAS FOLLOWED THE DECISION OF THE MUMBAI BENCH OF THE TRIBUNAL IN THE CASE OF M/S. JAOLI TALUKA SAHAKARI PATPEDHI MARYADIT (SUPRA), WHICH CONTINUES TO HOLD THE FIELD. IN VIEW OF T HE AFORESAID FACT - SITUATION, WE FIND NO REASONS TO INTERFERE WITH THE DECISION OF THE CIT(A), WHICH WE HEREBY AFFIRM. THUS, APPEAL OF THE REVENUE IS DISMISSED. 5. IN THE RESULT, APPEAL OF THE REVENUE IS DISMISSED. ORDER PRONOUNCED IN THE OPEN COURT ON 3 1 S T JULY, 2017. SD/ - SD/ - ( RAVISH SOOD ) JUDICIAL MEMBER ( G.S. PANNU ) ACCOUNTANT MEMBER MUMBAI, DATE : 3 1 S T JULY , 201 7 * SSL * 5 STATE BANK OF INDIA EMPLOYEES M.S PATEL COOP. CREDITY SOCY LTD. ITA NO. 1970/MUM/2016 COPY TO : 1) THE APPELLANT 2) THE RESPONDENT 3) THE CIT(A) CONCERNED 4) THE CIT CONCERNED 5) THE D.R, A BENCH, MUMBAI 6) GUARD FILE BY ORDER DY./ASSTT. REGISTRAR I.T.A.T, MUMBAI