Sree Udaya Ravi Souhardha Pattina Sahakari Niyamita, Tiptur V. ITO-Ward-1, Tiptur

ITA 2018/BANG/2016

• Counselvise Citation: [2017] 130 COUNSELVISE.COM (IT) 8562 (ITAT-BANGALORE)
• Duration Of Justice: 3 month(s) 6 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 28-02-2017
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: A
• Next Hearing Date: 13-02-2017
• Assessment Year: 2012-2013
• Appeal Filed On: 21-11-2016
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: A R V SREENIVA SAN J
• Assessee Lawyers: P DINESHA

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL SMC - A BENCH : BANGALORE BEFORE SHRI VIJAY PAL RAO, JUDICIAL MEMBER ITA NO. 2018/BANG/2016 ASSESSMENT YEAR : 2012-13 M/S. SRI UDAYA RAVI SOUHARDHA PATTINA SAHAKARI NIYAMITHA UDAYARAVI BHAVANA, 1 ST MAIN ROAD, 7 TH CROSS, K.R. EXTENSION, TIPTUR 572 201. PAN: AAWFS 0981J VS. THE INCOME-TAX OFFICER, WARD-1, TIPTUR. APPELLANT RESPONDENT APPELLANT BY : SHRI P. DINESHA, ADVOCATE RESPONDENT BY : SHRI AR.V. SREENIVASAN, JCIT(DR) DATE OF HEARING : 23.02.2017 DATE OF PRONOUNCEMENT : 28.02.2017 O R D E R PER VIJAY PAL RAO, JUDICIAL MEMBER THIS APPEAL BY THE ASSESSEE IS DIRECTED AGAINST TH E ORDER DATED 25.08.2016 OF CIT(A) FOR THE ASSESSMENT YEAR 2012-1 3. THE ASSESSEE HAS RAISED THE FOLLOWING GROUNDS. ITA NO. 2018/BANG/2016 PAGE 2 OF 4 1. THE ORDER OF THE LEARNED CIT(A) INSOFAR AS IT I S PREJUDICIAL TO THE INTEREST OF THE APPELLANT, IS BAD AND UNSUST AINABLE IN THE EYE OF THE LAW. 2. THE CIT(A) OUGHT TO HAVE APPRECIATED THAT THE IN COME EARNED FROM E-STAMPING WAS DIRECTLY ATTRIBUTABLE TO THE BA NKING BUSINESS OF THE APPELLANT CREDIT CO-OPERATIVE SOCIETY. 3. WITHOUT PREJUDICE, THE APPELLANT HAVING MAINTAI NED DETAILS OF EXPENDITURE RELATABLE TO EARNING THE INCOME FROM E- STAMPING IN ITS BOOKS OF ACCOUNT, THE CIT(A) OUGHT TO HAVE GIVEN TH E BENEFIT OF NETTING INSTEAD OF DISMISSING THE GROUND RAISED IN THIS BEHALF. 4. FOR THESE AND SUCH OTHER GROUNDS THAT MAY BE UR GED AT THE TIME OF HEARING, THE APPELLANT PRAYS THAT THE APPEA L MAY BE ALLOWED. 2. THE ONLY ISSUE ARISES IN THIS APPEAL OF THE ASSESSE E IS DISALLOWANCE OF THE BENEFIT U/S. 80P IN RESPECT OF THE INCOME FROM E-ST AMPING. THE ASSESSEE IS A CREDIT CO-OPERATIVE SOCIETY AND ENGAGED IN PRO VIDING CREDIT FACILITY TO ITS MEMBERS AS PER THE BYLAWS. DURING THE ASSESSME NT PROCEEDINGS THE AO OBSERVED THAT THE ASSESSEE HAS EARNED A SUM OF R S. 1,13,661/- BY WAY OF COMMISSION ON E-STAMPING FACILITIES PROVIDED AND TREATED THE SAME AS INCOME FROM OTHER SOURCES ON WHICH DEDUCTIO N U/S. 80P OF THE IT ACT WAS CLAIMED. THE AO ACCORDINGLY DISALLOWED THE DEDUCTION BY HOLDING THAT THE INCOME FROM E-STAMPING BEING NOT E LIGIBLE FOR DEDUCTION U/S. 80P(2) OF THE ACT. THE ASSESSEE CHALLENGED TH E ACTION OF THE AO BEFORE THE CIT(A) BUT COULD NOT SUCCEED. 3. BEFORE THE TRIBUNAL THE LD. AR OF THE ASSESSEE HAS SUBMITTED THAT THOUGH THE E-STAMPING ACTIVITY IS NOT A CORE BUSINESS ACTI VITY OF THE ASSESSEE HOWEVER, WHEN THE STATE GOVERNMENT HAS ENTRUSTED TH IS JOB TO THE CO- OPERATIVE SOCIETIES THEN IT WAS THRUST UPON THE ASS ESSEE TO UNDERTAKE THE E-STAMPING ACTIVITY AND THEREFORE THE INCOME BY WAY OF COMMISSION ON ITA NO. 2018/BANG/2016 PAGE 3 OF 4 E-STAMPING IS ELIGIBLE FOR DEDUCTION U/S. 80P. ALT ERNATIVELY THE LD. AR HAS SUBMITTED THAT THE AO HAS DISALLOWED THE GROSS COMMISSION INCOME INSTEAD OF NET AMOUNT AFTER ADJUSTING THE EXPENDITU RE INCURRED BY THE ASSESSEE FOR EARNING SUCH INCOME. ON THE OTHER HAN D, THE LD. DR HAS RELIED UPON THE ORDER OF THE AUTHORITIES BELOW AND SUBMITTED THAT THE COMMISSION INCOME ON E-STAMPING FACILITY HAS NO DIR ECT OR PROXIMATE CONNECTION WITH THE BANKING BUSINESS OF THE ASSESSE E SOCIETY AND THEREFORE THE DEDUCTION U/S. 80P(2) IS NOT AVAILABL E ON SUCH INCOME WHICH IS NOT TRIED FROM THE BUSINESS ACTIVITY. 4. HAVING CONSIDERED THE RIVAL SUBMISSIONS AS WELL AS RELEVANT MATERIAL ON RECORD, IT IS NOTED THAT THE INCOME FROM E-STAMPING COMMISSION HAS BEEN COMPUTED ON ESTIMATE BASIS. THEREFORE THE ISSUE OF NET INCOME HAS NOT BEEN CONSIDERED BY THE AUTHORITIES BELOW AS CLAIMED BY THE ASSESSEE. THERE IS NO QUARREL ON THE POINT THAT EVEN IN CASE THE BENEFIT OF 80P IS DENIED ON THE INCOME FROM E-STAMPING FACILITY THE CORRESPONDING EXPENDITURE FOR EARNING SUCH INCOME HAS TO BE TAKEN INTO CONSIDERATION. THUS, IN CASE THIS INCOME IS HELD AS NOT ELIGIBLE F OR DEDUCTION U/S. 80P ONLY THE NET AMOUNT HAS TO BE ADDED TO THE TOTAL IN COME OF THE ASSESSEE SOCIETY AND NOT THE GROSS AMOUNT OF THE COMMISSION. THEREFORE, I FIND MERIT AND SUBSTANCE IN THE ALTERNATE PLEA OF THE LD . AR OF THE ASSESSEE THAT ONLY THE NET AMOUNT OF THE INCOME FROM E-STAMP ING FACILITY HAS TO BE ITA NO. 2018/BANG/2016 PAGE 4 OF 4 ADDED TO THE INCOME OF THE ASSESSEE AND NOT THE GRO SS AMOUNT. ACCORDINGLY, THE AO IS DIRECTED TO CONSIDER ONLY TH E NET AMOUNT FOR THE PURPOSE OF ADDITION BY DISALLOWING THE DEDUCTION U/ S. 80P. AS REGARDS THE INCOME ELIGIBLE FOR DEDUCTION U/S. 80P IF IS NO T DISPUTED BY THE ASSESSEE THAT E-STAMPING FACILITY IS NOT THE CORE B USINESS ACTIVITY NOR IT IS A ANCILLARY OR OTHER SUPPORTING BUSINESS ACTIVITY TO THE CORE ACTIVITY OF THE ASSESSEE. THUS, WHEN E-STAMPING HAVE NO ANNEXE S WITH THE BUSINESS ACTIVITY OF THE ASSESSEE SOCIETY THEN I DO NOT FIND ANY ERROR OR ILLEGALITY IN THE ORDERS OF THE AUTHORITIES BELOW QUA THIS ISSUE. 5. IN THE RESULT THE APPEAL OF THE ASSESSEE IS PARTLY ALLOWED. PRONOUNCED IN THE OPEN COURT ON THIS 28 TH DAY OF FEBRUARY, 2017. SD/- (VIJAY PAL RAO) JUDICIAL MEMBER BANGALORE, DATED, THE 28 TH FEBRUARY, 2017. / MS/ COPY TO: 1. APPELLANT 2. RESPONDENT 3. CIT 4. CIT(A) 5. DR, ITAT, BANGALORE. 6. GUARD FILE BY ORDER ASSISTANT REGISTRAR, ITAT, BANGALORE.