M/s. Vir Transport Operators Co. Op. Credit and Servieces Society, Dahod V. The Income Tax Officer, Ward-2, Vadodara

ITA 2/AHD/2017

• Counselvise Citation: [2018] 125 COUNSELVISE.COM (IT) 1147 (ITAT-AHMEDABAD)
• Duration Of Justice: 1 year(s) 8 month(s) 15 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 17-09-2018
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: Not Allotted
• Assessment Year: 2013-2014
• Appeal Filed On: 02-01-2017
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: B P SRIVASTAVA
• Assessee Lawyers: UVASHI SHODHAN

Judgement Text

, - IN THE INCOME TAX APPELLATE TRIBUNAL AHMEDABAD - BENCH C BEFORE SHRI RAJPAL YADAV, JUDICIAL MEMBER AND SHRI AMARJIT SINGH, ACCOUNTANT MEMBER ./ ITA NO.02/AHD/2017 / ASSTT. YEAR: 2013-2014 M/S.VIR TRANSPORT OPERATORS CO-OP. CREDIT AND SERVICES SOCIETY GODHARA ROAD, LIMDI TA: JHALOD DIST. DAHOD 389 180. PAN : AAAAS 2228 K VS. ITO, WARD-2 DAHOD. / (APPELLANT) / (RESPONDENT) ASSESSEE BY : MS.UVASHI SHODHAN, AR REVENUE BY : SHRI B.P. SRIVASTAVA, SR.DR ! / DATE OF HEARING : 11/09/2018 '#$ ! / DATE OF PRONOUNCEMENT: 17 /09/2018 %& / O R D E R PER RAJPAL YADAV, JUDICIAL MEMBER: ASSESSEE IS IN APPEAL BEFORE THE TRIBUNAL AGAINST O RDER OF LD.CIT(A)-4, VADODARA DATED 30.9.2016 PASSED FOR TH E ASSESSMENT YEAR 2013-14. 2. THE GROUNDS RAISED IN THE APPEAL OF THE ASSESSEE ARE DESCRIPTIVE IN NATURE, WHICH IN FACT RAISES ONLY ONE ISSUE I.E. DENIAL EXEMPTION UNDER SECTION 80P(2)(A)(I)/(II) AND 80P(2)(D) OF TH E INCOME TAX ACT, 1961. ITA NO.02/AHD/2017 2 3. BRIEF FACTS LEADING TO THE PRESENT CASE ARE THAT THE ASSESSEE IS A COOPERATIVE SOCIETY ENGAGED IN THE BUSINESS OF PROV IDING CREDIT FACILITIES TO ITS MEMBERS. ASSESSEE HAS FILED ITS RETURN OF I NCOME DECLARING NIL INCOME. THIS IS AFTER CLAIMING DEDUCTION OF RS.73, 17,436/- (INTEREST FROM COOPERATIVE BANK AMOUNTING TO RS.3,96,818/- AN D INTEREST EARNED FROM NATIONALISED BANK AMOUNTING TO RS.69,20,618/-. THE AO NOTICED THIS CLAIM AND FOUND THAT THIS INTEREST INCOME WAS NOT DERIVED BY ASSESSEE FROM ITS ACTIVITY OF PROVIDING CREDIT FACI LITIES TO ITS MEMBERS AND RELATED ACTIVITIES. THEREFORE, HE PROPOSED TO TAX THIS INCOME UNDER INCOME FROM OTHER SOURCES AND ISSUED SHOW CAUSE N OTICE TO THE ASSESSEE TO JUSTIFY ITS CASE. THE ASSESSEE BY ITS REPLY DATED 25.2.2016 DEFENDED ITS CLAIM AND RELIED UPON CERTAIN CASE LAW S. THE LD.AO DID NOT ACCEPT THE SUBMISSIONS OF THE ASSESSEE, AS HE FOUND THAT THE CASES RELIED UPON BY THE ASSESSEE COVERS ONLY COOPERATIVE BANK WHICH ARE DOING BANKING BUSINESS AND NOT COOPERATIVE SOCIETY ENGAGED IN PROVIDING CREDIT FACILITIES TO ITS MEMBERS. HE AC CORDINGLY DENIED THE CLAIM OF THE ASSESSEE AND ADDED TO THE INCOME OF TH E ASSESSEE. IN APPEAL BEFORE THE LD.FIRST APPELLATE ATUHROITY, THE LD.CIT(A) CONCURRED WITH THE FINDING OF THE LD.AO AND CONFIRMED THE ADD ITION BY RELYING UPON VARIOUS CASES LAWS INCLUDING THE DECISION OF HONBL E JURISDICTIONAL HIGH COURT IN THE CASE OF STATE BANK OF INDIA VS.CIT,72 TAXMANN.COM 64 (GUJ). AGGRIEVED BY THIS ORDER OF THE LD.CIT(A), T HE ASSESSEE IS BEFORE THE TRIBUNAL. 4. BEFORE US, THE LD.COUNSEL FOR THE ASSESSEE REITE RATING THE SUBMISSIONS MADE BEFORE THE LOWER AUTHORITIES AND P RAYED FOR SETTING ASIDE IMPUGNED ORDERS OF THE REVENUE AUTHORITIES AN D ALLOWANCE OF DEDUCTION UNDER SECTION 80P(2)(A)(I) OF THE ACT. ITA NO.02/AHD/2017 3 5. ON THE OTHER HAND, THE LD.DR SUBMITTED THAT ISSU E IS COVERED IN FAVOUR OF THE REVENUE BY JUDGMENT OF THE HONBLE JU RISDICTIONAL HIGH COURT IN THE CASE OF STATE BANK OF INDIA CO-OPERATI VE SOCIETY VS. CIT, 72 TAXMANN.COM 64 (GUJ) WHEREIN IT HAS BEEN HELD TH AT COOPERATIVE SOCIETY ENGAGED IN THE BUSINESS OF PROVIDING CREDIT FACILITIES TO ITS MEMBERS WHICH EARNS INTEREST INCOME ON THE SURPLUS FUNDS PARKED WITH THE NATIONALISED BANKS, IS NOT ELIGIBLE FOR DE DUCTION UNDER SECTION 80P(2)(A)(I) OF THE ACT. SINCE IMPUGNED ORDERS OF REVENUE AUTHORITIES ARE IN CONSONANCE WITH JUDGMENT OF THE HONBLE HIGH COURT CITED SUPRA, NO INTERFERENCE THEREOF IS REQUIRED AND THE APPEAL OF THE ASSESSEE MAY BE DISMISSED. 6. HAVING HEARD BOTH THE PARTIES AND ON PERUSAL OF THE RECORD, WE FIND THAT ASSESSEE IS A COOPERATIVE SOCIETY REGISTE RED UNDER GUJARAT CO-OPERATIVE SOCIETIES ACT, 1961 AND ENGAGED IN PRO VIDING CREDIT FACILITIES TO ITS MEMBERS. WE FIND THAT HONBLE JU RISDICTIONAL HIGH COURT IN THE CASE OF STATE OF INDIA (SUPRA) HAS HEL D THAT INTEREST EARNED FROM INVESTMENT MADE IN BANK BY A COOPERATIVE SOCIE TY ENGAGED IN PROVIDING CREDIT FACILITIES TO ITS MEMBERS, IS NOT ELIGIBLE FOR DEDUCTION UNDER SECTION 80P(2). THE TRIBUNAL IN EARLIER OCCA SIONS ON SIMILAR ISSUE HAS TAKEN A CONSISTENT VIEW BY FOLLOWING ABOVE JUDG MENT OF THE HONBLE JURISDICTIONAL HIGH COURT. SINCE ORDERS OF THE REVENUE AUTHORITIES ARE IN ACCORDANCE WITH JUDGMENT OF THE HONBLE JURISDICTIONAL HIGH COURT CITED SUPRA, NO INTERFERE IS CALLED FOR IN THE IMPUGNED ORDERS, WHICH WE CONFIRM. HOWEVER, ANY EXP ENDITURE INCURRED BY THE ASSESSEE FOR EARNING SUCH INCOME CO ULD BE ALLOWED TO ITA NO.02/AHD/2017 4 IT, IF NOT ALREADY ALLOWED. IN OTHER WORDS, THE LD .AO HAS TO DETERMINE THE NET INTEREST INCOME AS WELL AS MISC. INCOME EAR NED BY THE ASSESSEE, AND ONLY THEREAFTER THAT INCOME HAS TO BE EXCLUDED FROM THE ADMISSIBILITY OF DEDUCTION UNDER SECTION 80P(2) OF THE ACT. THE LD.AO IS ALSO DIRECTED TO CONSIDER ALLOWANCE OF DEDUCTION UNDER SECTION 80P(2)(C)(II) OF THE ACT IN ACCORDANCE WITH LAW. 7. IN THE RESULT, APPEAL OF THE ASSESSEE IS PARTLY ALLOWED. ORDER PRONOUNCED IN THE COURT ON 17 TH SEPTEMBER, 2018 AT AHMEDABAD. SD/- SD/- (AMARJIT SINGH) ACCOUNTANT MEMBER (RAJPAL YADAV) JUDICIAL MEMBER