The Old Nagrik Credit Co-Op. Society Ltd., Anand V. The Dy. Commissioner Of Income Tax, Anand Circle, Anand

ITA 2105/AHD/2017

• Counselvise Citation: [2018] 125 COUNSELVISE.COM (IT) 7814 (ITAT-AHMEDABAD)
• Duration Of Justice: 9 month(s) 19 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 10-07-2018
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: SMC
• Assessment Year: 2014-2015
• Appeal Filed On: 21-09-2017
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: V K SINGH
• Section: 143(3); 56

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL AHMEDABAD D BENCH BEFORE: SHR I RAJPAL YADAV , JUDICIAL MEMBER AND SHRI AMARJIT SINGH, ACCOUNTANT MEMBER THE ODE NAGRIK CREDIT CO - OP. SOCIETY LTD. OPP. BHADRAKALI MANDIR, AT. ODE, DIST. ANAND - 388001 PAN: AAATT4181D (APPELLANT) VS THE DCIT, ANAND CIRCLE, ANAND (RESPONDENT) REVENUE BY : S H RI V.K. SINGH , SR. D . R. ASSESSEE BY: NONE DATE OF HEARING : 27 - 06 - 2 018 DATE OF PRONOUNCEMENT : 10 - 07 - 2 018 / ORDER P ER : AMARJIT SINGH, ACCOUNTANT MEMBER : - T HIS ASSESSEE S APPEAL FOR A.Y. 2014 - 15 , ARIS ES FROM ORDER OF THE CIT(A) - 4 , VADODARA DATED 16 - 06 - 2017 , IN PROCEEDINGS UNDER SECTION 143(3) OF THE INCOME TAX ACT, 1961; IN SHORT THE ACT . 2. THE ASSESSEE HAS RAISED FOLLOWING GROUNDS OF APPEAL: - 1. THE LD. COMMISSIONER OF INCOME TAX (APPEALS) - 4, BARODA HAS ERRED IN LAW AND IN FACTS IN CONFIRMING THE ACTION OF THE LD. ASSESSING OFFICER IN ASSESSING THE INCOME OF AN AMOUNT OF RS. 1,12,794/ - RECEIVED FROM ISSUE OF DRAFTS, MISC. INCOME, COLLECTION OF ELECTR ICITY DUES ETC. AS 'INCOME FROM OTHER SOURCES' AND NOT AS INCOME FROM BUSINESS OF BANKING ELIGIBLE FOR DEDUCTION UNDER SECTION 80P(2)(A)(I). THE CLAIM OF THE APPELLANT MAY PLEASE BE ALLOWED AS CLAIMED. I T A NO . 2105 / A HD /20 17 A SSESSMENT YEAR 2014 - 15 I.T.A NO. 2105 /AHD/20 17 A.Y. 2014 - 15 PAGE NO THE ODE NAGRIK CREDIT CO - OP. SOCIETY LTD. VS. DCIT 2 2. THE LD. COMMISSIONER OF INCOME TAX (APPEALS) - 4, B ARODA HAS ERRED IN LAW AND IN FACTS IN CONFIRMING THE ACTION OF THE LD. ASSESSING OFFICER IN ASSESSING THE INCOME OF RS. 20,40,167/ - DERIVED FROM INTEREST ON FUNDS DEPOSITED WITH OTHER BANKS UNDER THE HEAD 'INCOME FROM OTHER SOURCES' AND NOT AS INCOME FROM BUSINESS OF BANKING ELIGIBLE FOR DEDUCTION UNDER SECTION 80P(2)(A)(I). THE CLAIM OF THE APPELLANT MAY PLEASE BE ALLOWED AS CLAIMED. 3. THE LD. COMMISSIONER OF INCOME TAX (APPEALS) - 4, BARODA HAS ERRED IN LAW AND IN FACTS IN CONFIRMING THE ACTION OF THE L D. ASSESSING OFFICER IN NOT ACCEPTING THE ALTERNATIVE PLEA OF THE APPELLANT TO ALLOW THE SET OFF OF INTEREST AND OTHER EXPENSES INCURRED AGAINST THE INTEREST INCOME FROM BANK DEPOSITS. THE CLAIM OF THE APPELLANT MAY PLEASE BE ALLOWED. 4. THE LD. COMMISS IONER OF INCOME TAX (APPEALS) - 4, BARODA HAS ERRED IN LAW AND IN FACTS IN NOT ALLOWING THE CLAIM OF THE DEDUCTION U/S 80(P)(2)(D) FOR RS.2,40,615/ - BEING INTEREST EARNED ON DEPOSITS WITH ANOTHER COOPERATIVE SOCIETY, KHEDA JILLA CENTRAL COOPERATIVE BANK LTD WHICH IS ELIGIBLE FOR DEDUCTION. THE CLAIM OF THE APPELLANT MAY PLEASE BE ALLOWED. 3. THE BRIEF FACT OF THE ACT IS THAT ASSESSE HAS FILED RETURN OF INCOME DECLARING INCOME AT RS. 16,660 / - . SUBSEQUENTLY, THE CASE WAS SELECTED UNDER SCRUTINY BY ISS UING O F NOTICE U/S. 143(2) ON 31 .08. 2015 . DURING THE COURSE OF ASSESSMENT PROCEEDINGS, THE ASSESSING OFFICER NOTICED THAT ASSESSEE HAS EARNED INTEREST INCOME TOTALING TO RS 20,40,167/ ON SURPLUS FUNDS DEPOSITED WITH NATIONALIZED BANK . HE HAS FURTHER NOTICED T HAT ASSESSEE HAS CLAIMED DEDUCTION UNDER CHAPTER VIA OF THE ACT U/S. 80P(2)(A)(I) IN RESPECT OF AFORESAID INTEREST INCOME DERIVED FROM INVESTMENT IN FIXED DEPOSIT WITH COMMERCIAL B ANKS. THE ASSESSING OFFICER OBSERVED THAT EXEMPTION U/S. 80P(2)(A)(I) IS AV AILABLE ON INCOME WHICH IS ATTRIBUTABLE TO BUSINESS OPERATION OF THE ASSESSEE CO - OPERATIVE SOCIETY AND THE INTEREST EARNED ON THE FUND INVESTED WITH THE COMMERCIAL BANK IS NOT OPERATIONAL INCOME FROM PROVIDING CREDIT FACILITIES TO ITS MEMBERS. CONSEQUENTL Y, HE HAS TREAT ED THE INTEREST INCOME OF RS 20,40,167/ AS INCOME FROM OTHER SOURCES U/S. 56 OF THE ACT AND DISALLOWED THE CLAIM OF DEDUCTION U/S. 80P ON THE AFORESAID INTEREST INCOME. 4. AGGRIEVED ASSESSEE FILED APPEAL BEFORE THE LD. CIT(A). THE LD. CIT(A) HAS SUSTAINED THE DISALLOWANCE AFTER PLACING RELIANCE ON THE DECISION OF JURISDICTIONAL HON BLE HIGH COURT OF GUJARAT IN THE CASE OF SBI VS. CIT (2016) 72 TAXMANN.COM 64 I.T.A NO. 2105 /AHD/20 17 A.Y. 2014 - 15 PAGE NO THE ODE NAGRIK CREDIT CO - OP. SOCIETY LTD. VS. DCIT 3 5. WE HAVE HEARD THE RIVAL CONTENTIONS AND PERUSED THE MATERIAL ON RECORD CAREFULLY . THE ASSESSEE IS ENGAGED IN THE BUSINESS OF PROVIDING CREDIT FACILITIES TO ITS MEMBERS. THE ASSESSING OFFICER HAS NOTICED THAT IN ADDITION TO THE INTEREST INCOME EARNED ON LOAN AND ADVANCES TO ITS MEMBERS, THE ASSESSE HAS CLAIMED DEDUCTION U/S. 80P(2)(A )(I) OF THE ACT ON INTEREST INCOME EARNED FROM FIXED DEPOSIT MAINTAINED WITH THE COMMERCIAL BANK. AS PER SECTION 80P(2)(A)(I) OF THE ACT THE INTEREST INCOME EARNED ON PROVIDING CREDIT FACILITY TO ITS MEMBERS IS DEDUCTIBLE U/S. 80P(2)(A)(I) OF THE ACT. AFT ER PERUSAL OF THE AFORESAID PROVISION OF THE ACT WE OBSERVE THAT DEDUCTION U/S 80P(2)(A)(I) IS NOT AVAILABLE ON THE INTEREST EARNED ON DEPOSIT MAINTAINED WITH THE COMMERCIAL BANK. WE FIND THAT THE HON BLE JURISDICTIONAL HIGH COURT HAS DECIDED THE IDENTICA L ISSUE IN FAVOUR OF THE REVENUE VIDE STATE BANK OF INDIA VS. CIT (2016) 72 TAXMANN.COM 64 (GUJARAT) WHEREIN IT IS HELD THAT INTEREST INCOME ON DEPOSIT PLACED WITH THE COMMERCIAL BANKS IS NOT EXEMPT U/S. 80P(2)(A)(I) OF THE ACT. IN VIEW OF THE ABOVE FACTS AND LEGAL FINDINGS WE ARE INCLINED WITH THE DECISION OF THE LD. CIT(A) THAT INVESTING SURPLUS FUNDS IN A COMMERCIAL BANK IS NO PART OF THE BUSINESS OF PROVIDING CREDIT FACILITIES TO ITS MEMBERS WHICH IS NOT DEDUCTIBLE UNDER SECTION 80P(2)(A)(I) OF THE ACT. HOWEVER AS DECIDED IN THE VARIOUS DECISION OF THE CO - ORDINATE BENCHES OF ITAT AHMEDABAD WE DIRECT THE ASSESSING OFFICER TO ALLOW PRO RATA EXPENSES IN RESPECT OF INTEREST EARNED FROM DEPOSIT HELD WITH NATIONALIZED BANK TO THE ASSESSEE FOR COMPUTING THE DED UCTION U/S. 80P AFTER EXAMINING/VERIFICATION AND AFFORDING ADEQUATE OPPORTUNITY TO THE ASSESSEE. THEREFORE, THE APPEAL OF THE ASSESSEE IS PARTLY ALLOWED FOR STATISTICAL PURPOSES. 6. IN THE RESULT, THE APPEAL OF THE ASSESSEE IS PARTLY ALLOWED FOR STATISTIC AL PURPOSES. ORDER PR ONOUNCED IN THE OPEN C OURT ON 10 - 07 - 201 8 SD/ - SD/ - ( RAJPAL YADAV ) ( AMARJIT SINGH ) JUDICIAL MEMBER ACCOUNTANT MEMBER I.T.A NO. 2105 /AHD/20 17 A.Y. 2014 - 15 PAGE NO THE ODE NAGRIK CREDIT CO - OP. SOCIETY LTD. VS. DCIT 4 AHMEDABAD : DATED 10 /07 /2018 / COPY OF ORDER FORWARDED TO: - 1. ASSESSEE 2. REVENUE 3. CONCERNED CIT 4. CIT (A) 5. DR, ITAT, AHMEDABAD 6. GUARD FILE. BY ORDER/ , / ,