The Bhildi Mercantile Credit Co.Operative Society Ltd., Banaskantha V. The ACIT.,B.K Circle, Palanpur

ITA 2086/AHD/2015

• Counselvise Citation: [2018] 126 COUNSELVISE.COM (IT) 5916 (ITAT-AHMEDABAD)
• Duration Of Justice: 2 year(s) 8 month(s) 5 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 19-03-2018
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: SMC
• Assessment Year: 2011-2012
• Appeal Filed On: 14-07-2015
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Keywords: Rectification of order
• Section: 143(3)

Judgement Text

SMC-ITA NO. 208/ AHD/2015 BHILADI MERCANTILE CRE. COOP SOC LTD VS. ACIT AY : 2011-12 PAGE 1 OF 3 IN THE INCOME TAX APPELLATE TRIBUNAL SMC BENCH, AHMEDABAD [ BEFORE SHRI PRAMOD KUMAR, ACCOUNTANT MEMBER ] ITA NO. 2086/AHD/2015 ASSESSMENT YEAR : 2011-12 THE BHILADI MERCANTILE CREDIT CO-OP SOCIETY LTD .. ..........APPELLANT GANJ BAZAR ROAD, AT : BHILADI, DIST. BANASKANTHA-385 310 [PAN : AABAT 9726 A] VS. THE ACIT .......................RESPONDENT BANASKANTHA CIRCLE, PALANPUR APPEARANCES BY: NONE FOR THE APPELLANT (WRITTEN SUBMISSION ON RECORD) KEYUR PATEL FOR THE RESPONDENT DATE OF CONCLUDING THE HEARING : 22.12.2017 DATE OF PRONOUNCING THE ORDER : 19.03.2018 O R D E R 1. BY WAY OF THIS APPEAL, THE ASSESSEE APPELLANT CH ALLENGES CORRECTNESS OF ORDER DATED 14.05.2015 PASSED BY THE CIT(A)-4, AHME DABAD IN THE MATTER OF ASSESSMENT UNDER SECTION 143(3) OF THE INCOME-TAX A CT, 1961, FOR THE ASSESSMENT YEAR 2011-12. 2. GRIEVANCES RAISED BY THE APPELLANT ARE AS FOLLOW S:- 1. BOTH THE LD. CIT (A) AND LD, A.O. HAVE ERRED IN LAW AND ON FACTS IN DENYING THE DEDUCTION ADMISSIBLE TO THE APPELLANT C O-OPERATIVE SOCIETY UNDER SECTION 80P OF THE INCOME TAX ACT, 1961 ON TH E GROUND THAT DEPOSIT OF EXCESS MONEY WAS PART AND PARCEL OF THE BANKING BUS INESS, THE INTEREST THERE FROM IS ELIGIBLE FOR THE DEDUCTION U/S 80P OF I.T. ACT, 1961. 2. BOTH THE LD. CIT(A) AND LD. A.O. HAVE ERRED IN L AW AND ON FACTS IN HOLDING THAT OUR COOPERATIVE SOCIETY HAVE DEPOSITED OWN FUNDS IN THE SCHEDULE CO-OPERATIVE BANKS IN THE NORMAL COURSE OF BUSINESS AND AS PER OUR CO-OPERATIVE SOCIETIES RULES AND REGULATION ALS O CARING ON THE BUSINESS OF BANKING OR PROVIDING CREDIT FACILITIES TO OUR ME MBERS ONLY AND NOT DOING ANY SELLING ACTIVITIES DURING THE YEAR. THEREFORE OUR OWN FUNDS INVESTMENT AND EARNING INTEREST ON THAT ARE ELIGIBLE TO DEDUCT ION U/S. 80P(2)(A)(I) OF INCOME TAX ACT, 1961. SMC-ITA NO. 208/ AHD/2015 BHILADI MERCANTILE CRE. COOP SOC LTD VS. ACIT AY : 2011-12 PAGE 2 OF 3 3. THE ORDER OF THE LD. A.O. AND LD. CIT(A) MAY, T HEREFORE, BE REVERSED AND THE A.O. MAY BE DIRECTED TO GRANT INS DEDUCTION U/S. 80P(2) OF THE ACT, 1961. 3. NONE APPEARED FOR THE ASSESSEE. HOWEVER, I HAVE PERUSED THE WRITTEN SUBMISSION FILED BY THE ASSESSEE AS ALSO MATERIAL O N RECORD. I HAVE HEARD THE LEARNED DEPARTMENTAL REPRESENTATIVE AND HAVE DULY C ONSIDERED FACTS OF THE CASE IN THE LIGHT OF THE APPLICABLE LEGAL POSITION. 4. LEARNED REPRESENTATIVES AGREE THAT THE ISSUE IS COVERED BY A DIVISION BENCH ORDER DATED 28.01.2016 IN ASSESSEES OWN CASE FOR THE ASSESSMENT YEARS 2011-12 AND 2012-13 WHEREBY THE DIVISION BENCH HAS REMITTED THE MATTER TO THE FILE OF THE ASSESSING OFFICER BY OBSERVING AS FOLLO WS :- 7. THE ONLY ISSUE NEEDS TO BE DECIDED IS WHETHER T HE APPELLANT- ASSESSEE WHICH IS A CO-OPERATIVE SOCIETY AND REGISTERED UNDE R THE CO-OPERATIVE CREDIT SOCIETIES ACT IS ENTITLED TO DEDUCTION UNDER SECTION 80P(2)(A)(I) OF THE ACT FOR THE INTEREST INCOME AT RS.1,15,213/- RECEIV ED FROM SHORT-TERM DEPOSIT AND GOVERNMENT SECURITIES. FROM THE PERUSAL OF THE RECORD, WE FIND THAT THE ASSESSING OFFICER WHILE FRAMING THE ASSESS MENT ORDER UNDER SECTION 143(3) OF THE ACT, COMPLETED THE ASSE SSMENT BY ASSESSING THE ASSESSEE CO-OPERATIVE SOCIETY BY TREATING AS CO -OPERATIVE BANK OTHER THAN A PRIMARY AGRICULTURAL CREDIT SOCIETY OR A PRI MARY CO-OPERATIVE AGRICULTURAL AND RURAL DEVELOPMENT BANK AND ACCORDI NGLY DENIED THE DEDUCTION TO THE ASSESSEE UNDER SECTION 80P(2)(A)(I ) OF THE ACT WHEREIN DEDUCTION IS AVAILABLE FOR THE PROFITS EARNED BY A CO-OPERATIVE SOCIETY ENGAGED IN CARRYING ON THE BUSINESS OF PAYING OR PR OVIDING CREDIT FACILITIES TO ITS MEMBERS. HOWEVER, THE ASSESSING OFFICER ALLOWED DEDUCTION U/S 80P(2)(D) AT RS.1,77,980/- WHICH REFERS TO INCOME E ARNED BY CO- OPERATIVE SOCIETY FROM ITS INVESTMENTS WITH ANOTHER CO-OPERAT IVE SOCIETY. APART FROM THIS ISSUE, NOTHING ELSE HAS BEEN OBSERVED AND DEAL T WITH BY THE ASSESSING OFFICER. THEREAFTER RECTIFICATION ORDER WAS PASSED BY THE ASSESSING OFFICER ON 16.6.2014 GIVING EFFECT TO THE ORDER OF LD. CIT( A)-XX, AHMEDABAD, WHO PARTLY ALLOWED THE APPEAL OF THE ASSESSEE AND DELET ED THE ADDITION MADE BY THE ASSESSING OFFICER MADE ON ACCOUNT OF DISALLOWAN CE CLAIMED OF DEDUCTION U/S 80P(2)(A)(I) OF THE ACT. HOWEVER, THR OUGH THIS RECTIFICATION ORDER ON ONE HAND, ASSESSING OFFICER ALLOWED THE CL AIM UNDER SECTION 80P(20(A)(I) OF THE ACT AT RS.12,44,440/- OUT OF TH E TOTAL INCOME ASSESSED BY HIM AS PER HIS ORDER U/S 143(3) OF THE ACT ON 7. 12.2012 AND ON THE OTHER HAND MADE ADDITION OF RS.1,15,213/- ON ACCOUNT OF I NTEREST RECEIVED FROM SHORT-TERM DEPOSIT AND GOVT. SECURITIES. THIS ADDI TION OF RS.1,15,213/- HAS NEITHER BEEN DISCUSSED BY THE ASSESSING OFFICER IN HIS ASSESSMENT ORDER U/S 143(3) NOR HAS IT BEEN DEALT IN BY THE LD. CIT( A). LD. CIT(A) HAS ONLY DECIDED THAT ASSESSEE SOCIETY IS NOT A CO-OPERATIVE BANK AS CONTEMPLATED U/S 80P(4) OF THE ACT AS WELL AS IN GUIDANCE NOTES TO THE AMENDMENT IN SECTION 2(24)(7A) AND ACCORDINGLY DECIDED THAT A SSESSEE WAS ELIGIBLE FOR DEDUCTION U/S 80P(2)(A)(I) OF THE ACT. 8. AS THE ADDITION OF RS.1,15,213/- HAS NOT BEEN DE ALT ON MERIT EITHER AT THE LEVEL OF ASSESSING OFFICER OR AT THE LEVEL OF LD. C IT(A), WE ARE UNABLE TO SMC-ITA NO. 208/ AHD/2015 BHILADI MERCANTILE CRE. COOP SOC LTD VS. ACIT AY : 2011-12 PAGE 3 OF 3 ADJUDICATE THE ISSUE BECAUSE THE DETAILS OF INCOME ON ACCOUNT OF INTEREST RECEIVED FROM SHORT-TERM DEPOSITS AND GOVT. SECURIT IES ARE NOT AVAILABLE AS TO WHETHER THEY HAVE BEEN RECEIVED FROM NATIONALIZE D BANK OR CO-OPERATIVE BANKS AS WELL AS WHETHER THERE WERE EXTRA IDLE FUND S AVAILABLE WITH THE ASSESSEE WHICH MAY NOT HAVE BEEN UTILIZED FOR EARNI NG INTEREST INCOME. ALSO NONE APPEARED ON BEHALF OF THE ASSESSEE TO PRO VIDE THESE DETAILS AND IN THESE CIRCUMSTANCES WE HAVE NO OTHER OPTION BUT EXCEPT TO REMIT BACK THE ISSUE TO THE FILE OF ASSESSING OFFICER WITH THE DIRECTION TO RE- ASSESS THE ASSESSEE-CO-OPERATIVE-SOCIETY BY TREATING IT AS CRE DIT CO- OPERATIVE SOCIETY AND NOT A BANK AND ELIGIBLE FOR DEDUCTION UNDER SEC TION 80P(2)(A)(I) OF THE ACT AFTER GIVING REASONABLE OPPORTUNITY TO THE ASSE SSEE OF BEING HEARD AND TO FURNISH ALL FINANCIAL RECORDS TO EXAMINE ANY DET AIL, THE INCOME FROM INTEREST RECEIVED FROM SHORT-TERM DEPOSITS AND GOVT . SECURITIES. ACCORDINGLY, THE APPEAL OF THE ASSESSEE IS ALLOWED FOR STATISTIC AL PURPOSES. 5. RESPECTFULLY FOLLOWING THE VIEWS SO EXPRESSED BY THE DIVISION BENCH, WHICH BIND THIS BENCH, I REMIT THE MATTER TO THE FILE OF THE ASSESSING OFFICER FOR FRESH ADJUDICATION IN THE LIGHT OF THE ABOVE OBSERVATIONS , WHICH APPLY MUTATIS MUTANDIS IN THIS ASSESSMENT YEAR AS WELL, BY WAY OF A SPEAKING ORDER, IN ACCORDANCE WITH THE LAW AND AFTER GIVING A FAIR REASONABLE OPPORTUNITY TO THE ASSESSEE. 6. AS THE MATTER IS BEING REMITTED TO THE FILE OF T HE ASSESSING OFFICER FOR FRESH ADJUDICATION, I SEE NO NEED TO SPECIFICALLY DEAL WI TH THE PERIPHERAL ISSUES RAISED BY THE APPELLANT. 7. IN THE RESULT, THE APPEAL IS ALLOWED FOR STATIST ICAL PURPOSES. ORDER PRONOUNCED IN THE OPEN COURT ON THIS 19 TH DAY OF MARCH, 2018. SD/- PRAMOD KUMAR (ACCOUNTANT MEMBER) AHMEDABAD, THE 19 TH DAY OF MARCH, 2018 **BT COPIES TO: (1) THE APPELLANT (2) THE RESPONDENT (3) COMMISSIONER (4) CIT(A) (5) DEPARTMENTAL REPRESENTATIVE (6) GUARD FILE BY ORDER TRUE COPY ASSISTANT REGISTRAR INCOME TAX APPELLATE TRIBUNAL AHMEDABAD BENCHES, AHMEDABAD