Rayat Seva Krushi Udyog Sahakari Sangh Ltd, , Kolhapur V. Income-tax Officer, Ward - 1(3), , Kolhapur

ITA 2146/PUN/2017

• Counselvise Citation: [2018] 119 COUNSELVISE.COM (IT) 2297 (ITAT-PUNE)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 14-11-2018
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: SMC
• Assessment Year: 2013-2014
• Appeal Filed On: 13-09-2017
• Court: TRIBUNAL

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL PUNE BENCH SMC, PUNE BEFORE SHRI R.S. SYAL, VICE PRESIDENT . / ITA NOS.2145 TO 2147/PUN/2017 / ASSESSMENT YEARS : 2012-13 TO 2014-15 RAYAT SEVA KRUSHI UDYOG SAHAKARI SANGH LTD., 1877/KH/1, A-WARD, RAYAT SEVA SADAN, RANKALA TOWER, KOLHAPUR PAN : AAAAR0951N VS. ITO, WARD-1(2), TARABAI PARK, KOLHAPUR (APPELLANT) (RESPONDENT) / ORDER PER R.S.SYAL, VP : THESE THREE APPEALS BY THE ASSESSEE ARISE OUT OF A COMMON ORDER PASSED BY THE LD. CIT(A)-1, KOLHAPUR, ON 10-07-2017 IN RELATION TO THE A.YRS. 2012-13 TO 2014-15. SINCE ALL THE APPEALS ARE BASED ON COMMON FACTS AND IDENTIC AL GROUNDS, I AM, THEREFORE, PROCEEDINGS TO DISPOSE THEM OF F BY THIS CONSOLIDATED ORDER, FOR THE SAKE OF CONVENIENCE. APPELLANT BY NONE RESPONDENT BY SHRI RAJESH GAWLI DATE OF HEARING 13-11-2018 DATE OF PRONOUNCEMENT 14 -11-2018 ITA NOS.2145 TO 2147/PUN/2017 RAYAT SEVA KRUSHI UDYOG SAHAKARI SANGH LTD., 2 2. FACTS RELATING TO THE A.Y. 2012-13 ARE THAT THE ASSESSEE IS A CO-OPERATIVE SOCIETY ENGAGED IN THE BUSINESS OF TRADING OF FERTILIZERS AND AGRO RELATED GOODS TO ITS MEMBERS. THE ASSESSEE CLAIMED DEDUCTION U/S. 80P(2)(A)(I) OF THE INCOME -TAX ACT, 1961 (HEREINAFTER ALSO CALLED AS THE ACT) ON INTEREST INCOME FROM BANKS AMOUNTING TO RS.5,62,430/-, OTHER THAN CO- OPERATIVE BANKS. ON BEING CALLED UPON TO JUSTIFY THE CLAIM OF DEDUCTION ON SUCH INTEREST INCOME, IT WAS SUBMITTED ON BEHALF OF THE ASSESSEE THAT IT AVAILED OVERDRAFT FACILITIES ON THE BASIS OF FIXED DEPOSITS MAINTAINED WITH STATE BANK OF INDIA. IT WAS FURTHER SUBMITTED THAT MAINTENANCE OF ACCOUNT WITH STATE BANK OF INDIA WAS NECESSARY FOR PURCHASES CHIEFLY FROM (1) ZUARI INDUSTRIES LTD.; (2) RASHTRIAY CHEMICALS AND FERTILIZERS; (3) INDIAN FARMERS FERTILIZERS CO-OP. LTD.; (4) KRUSHAK BHARTI CO - OP. LTD. (5) INDIAN POTASH LTD. ETC. THE ASSESSEE SUBMITTE D THAT THE PAYMENTS WERE REQUIRED TO BE MADE TO SUCH SUPPLIERS AS AND WHEN DEMANDED. SINCE FDRS WERE KEPT WITH STATE BANK OF INDIA FOR OBTAINING OVERDRAFT FACILITY, THE ASSESSEE SUBMITTED THAT SUCH INTEREST SHOULD BE TREATED AS INCOME ARISING UNDER THE HEAD PROFITS AND GAINS FROM BUSINESS OR PROFESSION. NEGATING SUCH OPINION, THE AO TREATED INTERES T ITA NOS.2145 TO 2147/PUN/2017 RAYAT SEVA KRUSHI UDYOG SAHAKARI SANGH LTD., 3 INCOME AS ARISING UNDER THE HEAD INCOME FROM OTHER SOURCES. RELYING ON THE JUDGMENT OF HONBLE SUPREME COU RT IN THE CASE OF TOTGARS COOPERATIVE SALE SOCIETY LTD. VS. ITO (2010) 322 ITR 283 (SC) , THE AO DENIED THE BENEFIT OF DEDUCTION ON SUCH INTEREST INCOME. FACTS AND CIRCUMSTANCES O F THE OTHER TWO YEARS IN APPEAL ARE SIMILAR EXCEPT WITH THE DIFFERENCE IN THE AMOUNTS OF INTEREST EARNED BY THE ASSESSE E FROM THE RESPECTIVE FDRS MAINTAINED WITH STATE BANK OF INDIA. THE LD. CIT(A) ECHOED THE ASSESSMENT ORDERS ON TH IS ISSUE, AGAINST WHICH THE ASSESSEE HAS COME UP IN APPEAL BE FORE THE TRIBUNAL. 3. I HAVE HEARD THE LD. DR AND PERUSED THE RELEVANT MATERIAL ON RECORD. NOTICE SENT TO THE ASSESSEE HAS BEEN SERVED AND ACKNOWLEDGMENT IS PLACED ON RECORD. AS THE ASSESSEE HA S NOT PUT IN ANY APPEARANCE, I AM PROCEEDING TO DISPOSE OF THES E APPEALS EX PARTE QUA THE ASSESSEE. 4. IT IS FOUND FROM THE ASSESSMENT ORDER THAT THE AS SESSEE CATEGORICALLY STATED BEFORE THE AO THAT THE INTEREST WAS EARNED FROM BANK ON FDRS WHICH WERE REQUIRED TO BE MAINTAINED FO R OBTAINING CREDIT FACILITIES. IT WAS NECESSARY FOR THE REASON TH AT ITA NOS.2145 TO 2147/PUN/2017 RAYAT SEVA KRUSHI UDYOG SAHAKARI SANGH LTD., 4 ALL ITS SUPPLIERS, LISTED ABOVE, INSISTED ON HAVING ACCOUNT WITH THE STATE BANK OF INDIA SO AS TO FACILITATE THE BUSINESS DEALINGS . THE RELIANCE OF THE AUTHORITIES BELOW ON THE JUDGMENT IN THE CASE OF TOTGARS COOPERATIVE SALE SOCIETY LTD. (SUPRA) IS MISCONCEIVED IN AS MUCH AS THE HONBLE SUPREME COURT HAS HELD THAT INTEREST INCOME FROM SURPLUS FUNDS/SHORT TERM DEPOSITS WITH BANKS IS INCOME FROM OTHER SOURCES TAXABLE U/S.56 OF THE ACT AND HENCE INELIGIBLE FOR DEDUCTION U/S. 80P . AS THE ASSESSEE IN THE INSTANT CASE WAS COMMERCIALLY BOUND TO MAINTAIN OVERDRAFT WITH STATE BANK OF INDIA AND FOR THAT PURPOSE IT HAD TO PLACE FDRS, ON WHICH THE INTEREST INCOME WAS EARNED, SUCH AN INTEREST ARISING ON THESE FDRS, IN THE GIVEN CIRCUMSTANCES, IS IN THE NATURE OF INCOME UNDER THE HE AD PROFITS AND GRAINS FROM BUSINESS OR PROFESSION AND CANN OT BE CHARACTERIZED INCOME FROM OTHER SOURCES AS HELD BY TH E AUTHORITIES BELOW. ONCE THE INTEREST INCOME IS CONSTRUED AS BUSINESS INCOME, THE SAME BECOMES ELIGIBLE FOR DEDUCTION U/S. 80P OF THE ACT. I, THEREFORE, OVERTURN THE IMPUGNE D ORDER AND DIRECT TO GRANT DEDUCTION U/S.80P ON SUCH INTEREST INCOM E IN ALL THE THREE YEARS UNDER CONSIDERATION. ITA NOS.2145 TO 2147/PUN/2017 RAYAT SEVA KRUSHI UDYOG SAHAKARI SANGH LTD., 5 5. THE OTHER GROUND RAISED IN THESE APPEALS ABOUT THE LEVY OF INTEREST U/S.234A, 234B AND 234C IS CONSEQUENTIAL AND DISPOSED OFF ACCORDINGLY. 6. IN THE RESULT, ALL THE THREE APPEALS ARE ALLOWED. ORDER PRONOUNCED IN THE OPEN COURT ON 14 TH NOVEMBER, 2018. SD/- (R.S.SYAL) / VICE PRESIDENT PUNE; DATED : 14 TH NOVEMBER, 2018 / COPY OF THE ORDER IS FORWARDED TO : 1. / THE APPELLANT; 2. / THE RESPONDENT; 3. ( ) / THE CIT (APPEALS)-1, KOLHAPUR 4. / THE PR. CIT-1, KOLHAPUR 5. , , SMC / DR SMC, ITAT, PUNE; 6. / GUARD FILE. / BY ORDER, / TRUE COPY // SENIOR PRIVATE SECRETARY , / ITAT, PUNE ITA NOS.2145 TO 2147/PUN/2017 RAYAT SEVA KRUSHI UDYOG SAHAKARI SANGH LTD., 6 DATE 1. DRAFT DICTATED ON 13.11.18 2. DRAFT PLACED BEFORE AUTHOR 13.11.18 3. DRAFT PROPOSED & PLACED BEFORE THE SECOND MEMBER -- 4. DRAFT DISCUSSED/APPROVED BY SECOND MEMBER. -- 5. APPROVED DRAFT COMES TO THE SR.PS/PS 13.11.18 6. KEPT FOR PRONOUNCEMENT ON 14.11.18 7. FILE SENT TO THE BENCH CLERK 14.11.18 8. DATE ON WHICH FILE GOES TO THE AR 9. DATE ON WHICH FILE GOES TO THE HEAD CLERK. 10. DATE OF DISPATCH OF ORDER. *