Dy. Commissioner of Income Tax , Circle-1(1), Hyderabad V. Andhra Pradesh State Financial Corporation, Hyderabad

ITA 2069/Hyd/2017

• Counselvise Citation: [2021] 109 COUNSELVISE.COM (IT) 5272 (ITAT-HYDERABAD)
• Duration Of Justice: 3 year(s) 2 month(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 08-02-2021
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: DB-A
• Assessment Year: 2012-2013
• Appeal Filed On: 08-12-2017
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: SUNIL KUMAR PANDEY
• Keywords: Depreciation

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL HYDERABAD BENCHES A : HYDERABAD (THROUGH VIDEO CONFERENCE) BEFORE SHRI S.S.GODARA, JUDICIAL MEMBER AND SHRI LAXMI PRASAD SAHU, ACCOUNTANT MEMBER I.T.A. NO. 2069/HYD/2017 ASSESSMENT YEAR: 2012-13 DY. COMMISSIONER OF INCOME TAX, CIRCLE-1(1), HYDERABAD VS M/S.ANDHRA PRADESH STATE FINANCIAL CORPORATION, HYDERABAD [PAN: AABCA9106B] (APPELLANT) (RESPONDENT) FOR REVENUE : SHRI SUNIL KUMAR PANDEY, DR FOR ASSESSEE : NONE DATE OF HEARING : 21-01-2021 DATE OF PRONOUNCEMENT : 08-02-2021 O R D E R PER BENCH : THIS REVENUES APPEAL FOR AY.2012-13 ARISES FROM THE CIT(A)-8, HYDERABADS ORDER DATED 27-09-2017 PASSED IN CASE NO.0081/CIT(A)-8/HYD/2016-17 INVOLVING PROCEEDINGS U/S.143(3) OF THE INCOME TAX ACT, 1961 [IN SHORT, THE ACT]. 2. THE REVENUE HAS RAISED THE FOLLOWING SUBSTANTIVE GROUNDS IN THE INSTANT APPEAL: II. THE LD.CIT(A) ERRED IN ALLOWING OTHER INCOME OF RS.2715.19 LAKHS OUT OF RS.3768.80 LAKHS WITHOUT GIVING ANY FINDING THAT THE RECEIPTS ARE FROM ELIGIBLE BUSINESS FOR COMPUTING DEDUCTION U/S.36(1)(VIII). ITA NO. 2069/HYD/2017 :- 2 -: III. THE LD.CIT(A) ERRED IN ACCEPTING THE WORKING O F THE ASSESSEE WITHOUT GIVING ANY FINDING THAT RECEIPTS INCLUDED I N OTHER INCOME WERE FROM ELIGIBLE BUSINESS FOR THE PURPOSE OF DEDUCTION U/S.36(1)(VIII). 3. MR.PANDEY AT THE OUTSET TOOK US TO THE CIT(A)S DETAILE D DISCUSSION QUA THE INSTANT SOLE ISSUE OF SECTION 36(1)(VIII) DEDUCTION READING AS UNDER: 5. THE APPELLANT CLAIMED DEDUCTION U/S.36(1)(VIII) OF RS.18,24,11,223/- THE AO NOTED THAT THE DEDUCTION UNDER SUCH SECTION SHALL BE RESTRICTED TO 20% OF THE PROFITS D ERIVED FROM ELIGIBLE BUSINESS ONLY ON THE OPERATING BANKING/FINANCE BUSI NESS EXCLUDING ANY INCOME ON ACCOUNT OF INVESTMENT FROM OTHER INCO ME. HE THEREFORE, CONCLUDED THAT 'OTHER INCOME' OF RS.37,68,80,800/- HAS TO BE REDUCED WHILE CALCULATING THE DEDUCTION. HE ACCORDINGLY ARR IVED EXCESS CLAIM OF DEDUCTION WHICH IS SHOWN AS UNDER:- OPERATING PROFIT OF ASSESSEE 112,12,40,000 LESS: OTHER INCOME 37,68,80,000 ELIGIBLE INCOME 74,43,60,000 ACTUAL DEDUCTION SHOULD BE (20% OF ELIGIBLE INCOME) 14,88,72,000 EXCESS CLAIM OF DEDUCTION (18,24,11,223 14,88,72,000) 3,35,39,223 5.1 THE ABOVE ACTION OF THE AO WAS CONTESTED IN GRO UND NO.4 OF APPEAL. BEFORE ME, THE AR SUBMITTED A LETTER DATED 25.2.2015 GIVING THE WORKING OF DEDUCTION CLAIMED U/S.36(1)(VIII) WH ICH WAS FILED BEFORE THE AO. THE WORKING FILED BEFORE THE AO IS A S UNDER:- OPERATING PROFIT 11212.40 LESS: INCENTIVE CLAIMED ON PAYMENT BASIS 300.00 ADD: DEPRECIATION ADJUSTMENT 14.00 LESS: PROFIT ON SALE OF INVESTMENTS, ASSETS AND DIVIDEND RECEIVED 7.69 LESS: INTEREST ON STAFF ADVANCES 99.63 LESS: INTEREST ON BANK DEPOSITS 191.39 LESS: RENTS RECEIVED 178.99 OTHER INCOME 289.91 1053.61 BUSINESS FROM NORMAL ACTIVITIES 10158.79 RATIO OF LONG TERM AND OTHER THAN LONG TERM BUSINESS 89.78/10.22 PROFIT ATTRIBUTABLE TO LONG TERM LOANS 9120.56 ITA NO. 2069/HYD/2017 :- 3 -: 5.2 THE AR FURTHER SUBMITTED THAT THE ABOVE MENTION ED WORKING IS ON THE SAME LINES AS IN EARLIER YEARS AND THE AO DID N OT ALTER THE WORKING IN THE EARLIER YEARS AND ENCLOSED COPIES OF ASSESSMENT ORDERS FOR THE AYS 2010-11, 2011-12 AND 2013-14 IN SUPPORT OF THE CLAIM. IT WAS SUBMITTED THAT 'OTHER INCOME' WHICH H AS NO RELEVANCE TO THE BUSINESS HAS BEEN EXCLUDED AND THE DEDUCTION HA S BEEN CALCULATED ACCORDINGLY. 5.3 I HAVE CAREFULLY CONSIDERED THE ISSUE AND THE S UBMISSIONS MADE BY AR. SECTION 36(1)(VIII) IS A DEDUCTION ALLOWED I N RESPECT OF SPECIAL RESERVE CREATED AND MAINTAINED BY A SPECIFIED ENTIT Y AS PER THE EXPLANATION, WHICH INCLUDES A STATE FINANCE CORPORA TION, OF AN AMOUNT NOT EXCEEDING 20% OF PROFITS DERIVED FROM TH E ELIGIBLE BUSINESS, COMPUTED FROM THE PROFITS OF THE BUSINESS CARRIED TO SUCH RELEVANT ACCOUNT. ELIGIBLE BUSINESS HAS BEEN DEFINE D AS THE BUSINESS TO PROVIDE LONG TERM LOANS FOR INDUSTRIALISTS AND E NTREPRENEURS OR FOR AGRICULTURAL DEVELOPMENT ETC. SCHEDULE K TO THE P&L ALE GIVES DETAILS OF OTHER INCOME TOTALING TO RS.3768.80 LAKHS. THE A PPELLANT HAS REDUCED INTEREST ON BANK DEPOSITS, INTEREST ON STAF F ADVANCES, RENTS RECEIVED AND OTHER INCOME OF RS.289.91 LAKHS TOTALI NG TO RS.1053.61 LAKHS FROM THE SAID 'OTHER INCOME' FOR COMPUTING TH E DEDUCTION. THUS, WORKING GIVEN BY THE APPELLANT FOR ARRIVING AT THE PROFIT DERIVED FROM ELIGIBLE BUSINESS IS IN ACCORDANCE WITH PROVISIONS OF 5ECTION 36(1)(VIII). IT APPEARS THAT THE AO HAS SIMPLY REDU CED THE ENTIRE AMOUNT OF RS.3768.80 LAKHS SHOWN AS 'OTHER INCOME' IN SCHEDULE-K, WITHOUT GOING TO INDIVIDUAL ITEMS. IN VIEW OF THE A BOVE, THE DISALLOWANCE MADE BY THE AO IS DELETED AND THE GROU ND OF APPEAL IS ALLOWED. 4. IT IS VEHEMENTLY CONTENDED AT THE REVENUES BEHEST T HAT THE ASSESSING OFFICER HAD RIGHTLY FOUND DISCREPANCIE S IN ASSESSEES DETAILS IN THE ABOVE EXTRACTED CHART (SUPRA) THAT ITS OTHER INCOME HAD BEEN WRONGLY TAKEN AS ELIGIBLE FOR D EDUCTION. MR.PANDEY THEREFORE ARGUED IN FAVOUR OF THE ASSESSMEN T FINDINGS THAT THE SAME HAD RIGHTLY BEEN ADDED IN THE ASSESSEES HANDS BEING IN VIOLATION OF SECTION 36(1) (VIII) OF THE ACT. WE FIND NO SUBSTANCE IN REVENUES FOREGOING ARG UMENTS SINCE IT HAS BEEN MADE CLEAR IN THE CIT(A)S ORDER TH AT THE ASSESSEE HAD NOT ONLY FILED DETAILS IN SUPPORT OF ITS I NCOME FROM THE ELIGIBLE BUSINESS BUT ALSO THAT FORMING THE OTHE R ITA NO. 2069/HYD/2017 :- 4 -: INCOME INCLUDING INTEREST FROM BANK DEPOSITS AND STAFF ADVANCES ETC. THESE CLINCHING FACTUAL FINDINGS HAVE G ONE UN- REBUTTED FROM THE REVENUES SIDE DURING THE COURSE OF HEARING. WE RESPECTFULLY FOLLOW THE SAME TO AFFIRM THE CIT(A)S ORDER DELETING THE IMPUGNED DISALLOWANCE. WE ALSO DEEM IT P ROPER TO QUOTE HON'BLE APEX COURTS DECISION IN CIT VS. K.Y.PI LLIAH (1967) [63 ITR 411] (SC) THAT THE TRIBUNAL NEED NOT DIG DEEPER AND GIVE ITS OWN FINDINGS ONCE IT HAS EXPRESSED COMP LETE AGREEMENT WITH THE LOWER APPELLATE CONCLUSION. 5. THIS REVENUES APPEAL IS DISMISSED. ORDER PRONOUNCED IN THE OPEN COURT ON 8 TH FEBRUARY, 2021 SD/- SD/- (LAXMI PRASAD SAHU) (S.S.G ODARA) ACCOUNTANT MEMBER JUDICIAL MEM BER HYDERABAD, DATED: 08-02-2021 TNMM ITA NO. 2069/HYD/2017 :- 5 -: COPY TO : 1.THE DEPUTY COMMISSIONER OF INCOME TAX, CIRCLE-1(1 ), HYDERABAD. 2.M/S.ANDHRA PRADESH STATE FINANCIAL CORPORATION, 5-9-194, CHIRAG ALI LANE, HYDERABAD. 3.CIT(APPEALS)-8, HYDERABAD. 4.PR.CIT-1, HYDERABAD. 5.D.R. ITAT, HYDERABAD. 6.GUARD FILE.