Kevdabaug Navapura Sahakari Mandli Limited, Baroda V. The Income Tax Officer, Ward-3(1)(3), Baroda

ITA 2159/AHD/2017

• Counselvise Citation: [2019] 112 COUNSELVISE.COM (IT) 0947 (ITAT-AHMEDABAD)
• Duration Of Justice: 2 year(s) 2 month(s) 7 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 05-12-2019
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: SMC
• Assessment Year: 2014-2015
• Appeal Filed On: 28-09-2017
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: N K GOYAL
• Keywords: Bad and doubtful debts
• Section: 80P; 201; 64; 72; 56

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL AHMEDABAD SMC BENCH BEFORE: SHR I MAHAVIR PRASAD , JUDICIAL MEMBER AND SHRI AMARJIT SINGH, ACCOUNTANT MEMBER KEVDABAUG NAVAPURA SAHAKARI MANDLI LTD. SAHARA, NAVAPURA, MUSLIM MOHALLA, BARODA - 390001 PAN: AADFK7671G (APPELLANT) VS THE IT O , WARD - 3 ( 1 )(3 ) , BARODA (RESPONDENT) REVENUE BY : S H RI N.K. GOYAL , SR. D . R. ASSESSEE BY: SHRI SAKAR SHARMA , A.R. DATE OF HEARING : 29 - 11 - 2 019 DATE OF PRONOUNCEMENT : 05 - 12 - 2 019 / ORDER P ER : AMARJIT SINGH, ACCOUNTANT MEMBER : - THIS ASSESSEE S APPEAL FOR A.Y. 2014 - 15 , ARI SES FROM ORDER OF THE CIT(A) - 3, VADODARA DATED 31 - 07 - 2 017 , IN PROCEEDINGS UNDER SECTION 1 4 3(3) OF THE INCOME TAX ACT, 1961; IN SHORT THE ACT . 2. THE ASSESSEE HAS RAISED FOLLOWING GROUNDS OF APPEAL: - I T A NO . 2159 / A HD/20 17 A SS ESSMENT YEAR 2014 - 15 I.T.A NO. 2159 /AHD/20 17 A.Y. 2014 - 15 PAGE NO KEVDABAUG NAVAPURA SAHAKARI MANDLI LTD. VS. IT O 2 1. THE LD. CIT (A) ERRED ON FACTS AND IN LAW IN CONFIRMING DISALLOW ANCE OF DEDUCTION CLAIMED U/S 80 P AMOUNTING TO RS. 26,75,320/ - . 2. THE LD. CIT (A) ERRED ON FACTS AND IN LAW IN CONFIRMING DISALLOWANCE OF PROVISION FOR BAD AND DOUBTFUL DEBTS AMOUNT ING TO RS. 11,68,112/ - . 3 . T HE ASSESSEE IS A CO - OPERATIVE SOCIETY ENGAGED IN PROVIDING CREDIT FACILITIES TO ITS MEMBER. THE RETURN OF INCOME FOR THE ASSESSMENT YEAR UNDER CONSIDERATION WAS FINALIZED ON 30 TH NOV, 2014. THE RETURN WAS SELECTED FOR SC RUTINY AND NOTICE U/S. 143(2 ) OF THE ACT WAS ISSUED ON 28 TH AUGUST, 2015. 4 . THE FACTS PERTAINING TO THE ADDITIONS/DISALLOWANCES MADE BY THE ASSESSING OFFICER ARE DISCUSSED WHILE ADJUDICATED THE TWO GROUNDS OF APPEAL FILED BY THE ASSESSEE AS FOLLOWS : - GROUND NO. 1 ( DISALLOWANCE OF DEDUCTION CLAIMED U/S. 80POF RS. 26 , 75 , 320/ - ) 5. DURING THE COURSE OF ASSESSMENT PROCEE DINGS, THE ASSESSING OFFICER NOTICED THAT ASSESSEE HAS EARNED INTEREST INCOME OF RS. 26 , 75 , 320/ - ON SURPLUS FUNDS DEPOSITED WITH NATIONALIZED BANK AND C LAIMED DEDUCTION UNDER CHAPTER VI A OF THE ACT U/S. 80P(2) ( A)(I) . I N RESPECT OF AFORESAID INTEREST INCOME DERIVED FROM INVESTMENT IN FIXED DEPOSIT WITH COMMERCIAL BANK, T HE ASSESSING OFFICER OBSERVED THAT EXEMPTION U/S. 80P(2)(A)( I ) IS AVAILABLE ON INCOME WHICH IS ATTRIBUTABLE TO BUSINESS OPERATION OF THE ASSESSEE CO - OPERATIVE SOCIETY AND THE INTEREST EARNED ON T H E FUND INVESTED WITH THE COMMERCIAL BANK IS NOT OPERATION AL INCOME FROM PROVIDING CREDIT FACILITIES TO ITS MEMBER . CONS EQUENTLY , THE ASSESSING OFFICER HAS TREATED THE AFORESAID INTEREST INCOME OF RS. 26 , 75 ,3 20/ - AS INCOME FROM OTHER SOURCES U/S. 56 OF I.T.A NO. 2159 /AHD/20 17 A.Y. 2014 - 15 PAGE NO KEVDABAUG NAVAPURA SAHAKARI MANDLI LTD. VS. IT O 3 THE ACT AND DISALLOWED THE CLAIM OF DEDUCTION U/S. 80P ON T H E AFORESAID INTEREST INCOME. 6. AGGRIEVED ASSESSEE HAS FI LED APPEAL BEFORE THE LD. CIT(A). T HE LD. CIT(A) HAS SUSTAINED THE DISALLOWANCE AFTER PLACING RELIANCE ON THE DECISION OF JURISDICTIONAL HIGH COURT OF GUJARAT IN THE CASE OF SBI VS. CIT (2016) 72 TAXMAN.COM 64. 7. WE HAVE HEARD BOTH THE SIDES AND P ERUSED THE MATERIAL ON RECORD. THE ASSESSEE IS ENGAGED IN THE BUSINESS OF PROVIDING CREDIT FACILITIES TO ITS MEMBER AND CLAIMED DEDUCTION U/S. 80P(2)(A)(I ) ON INTEREST IN COME OF R S. 26 , 75 ,3 20/ - EARNED FORM FIXED DEPOSIT MAINTAINED WITH THE COMMERCIAL BANK . AS PER SECTION 80P(2)(A)(I ) OF T HE ACT , T HE INTEREST INCOME EARNED FROM PROVIDING CREDIT FACILITIES TO ITS MEMBER IS DEDUCTIBLE U/S. 80P(2)(A)(I ) OF THE ACT . A FTER PERUSAL OF THE AFORESAID PROVISION OF THE ACT , IT IS OBSERVED THAT DEDUCTION U/S . 80P( 2)(A ) (I) IS NOT AVAILABLE ON THE INTEREST EARNED ON DEPOSIT MAINTAINED WITH THE COMMERCIAL BANK. THE HON BLE JURISDICTIONAL HIGH COURT HAS DECIDED THE IDENTICAL ISSUE IN FAVOUR OF THE REVENUE VIDE SBI VS. CIT (2016) 72 TAXMAN.COM 64 (GUJ) WHEREIN IT IS H ELD THAT INTEREST INCOME ON DEPOSIT PLACED WITH THE COMMERCIAL BANK IS NOT EXEMPT U/S. 80P(2)(A)(I ). THE HON BLE HIGH COURT OF KARNATKA IN THE CASE OF PR. CIT VS. TATA GARS CO - OPERATIVE SALES SOCIETY (2017) 83 TAXMAN.COM 140 (KAR) HAS HELD THAT DEDUCTION U /S. 80P(2)(A)(I ) EARNED FROM SURPLUS DEPOSIT WITH CO - OPERATIVE BANK IS ALSO NOT ENTI TLED FOR DEDUCTION U/S. 80P(2)(D ) OF T HE ACT. I.T.A NO. 2159 /AHD/20 17 A.Y. 2014 - 15 PAGE NO KEVDABAUG NAVAPURA SAHAKARI MANDLI LTD. VS. IT O 4 IN THE LIGHT OF THE ABOVE FACTS AND LEGAL FINDING, WE CONSIDER THAT INTEREST EARNED ON DEPOSIT WITH THE NATIONALIZED BANK IN THE CASE OF THE ASSESSEE IS NOT ATTRIBUTABLE TO BUSINESS OPERATION OF THE ASSESSEE. THEREFORE, WE DO NOT FIND ANY MERIT IN THE APPEAL OF THE ASSESSEE AN D THE SAME IS DISMISSED. HOWEV ER, AS PLEADED BY THE LD. COUNSEL AS DECIDED IN THE VARIOUS DEC ISIONS OF THE CO - ORDINATE BENCH OF ITAT AHMEDABAD , WE DIRECT THE ASSESSING OFFICER TO ALLOW PRO RATA EXPENSE S IN RESPECT OF INTEREST EARNED FROM DEPOSIT HELD WITH NATIONALIZED BANK TO THE ASSESSEE FOR COMPUTING THE DEDUCTION U/S. 80P(2)(A)(I ) AFTER EXAMINA TION /VERIFICATION AND AFTER AFFORDING ADEQUATE OPPORTUNITY TO T H E ASSESSEE, THE RE FORE THE APPEAL OF THE ASSESSEE IS PARTLY ALLOWED FOR STATISTICAL PUR P OSES . GROUND NO. 2 ( DISALLOWANCE OF PROVISION OF BAD AND DOUBTFUL DEBT AMOUNT ING T O RS. 11 , 68 , 112) 8. DURING THE CO URS E OF ASSESSMENT, THE ASSESSING OFFICER HAS NOTICED THAT ASSESSEE HAS CLAIMED PROVISION FOR BAD AND DOUBTFUL DEBT AMOUNTING TO R S. 11 , 68 , 112 IN THE P & L A/C. T HE ASSESSING OFFICER HAS DISALLOWED THE CLAIM STATING THAT DEDUCTION U/S. 3 6(VII A) ALLOWABLE ONLY TO SCHEDULE BANK AND CO - OPERATIVE BANK HAVING RURAL BRANCHES. 9. AGGRIEVED ASSESSEE HAS FILED APPEAL BEFORE THE LD. CIT(A). THE LD. CIT(A) HAS DISMISSED THE APPEAL OF THE ASSESSEE. 10. WE HAVE HEARD THE RIVAL CONTENTIONS A ND CONSIDER THAT AS PER PROVISION OF SECTION 36(V II A) OF THE ACT , T HE ASSESSEE CO - OPERATIVE CREDIT SOCIETY IS NOT I.T.A NO. 2159 /AHD/20 17 A.Y. 2014 - 15 PAGE NO KEVDABAUG NAVAPURA SAHAKARI MANDLI LTD. VS. IT O 5 ENTITLED FOR DEDUCTION, THEREFORE, WE DO NOT FIND ANY SUBSTANCE IN THIS GROUND OF THE APPEAL OF THE ASSESSEE AND THE SAME IS DISMISSED. 11. IN THE RESULT, THE APPEAL OF THE ASSESSEE IS PARTLY ALLOWED FOR STATISTICAL PURPOSES. ORDER PR ONOUNCED IN THE OPEN C OURT ON 05 - 12 - 201 9 SD/ - SD/ - ( MAHAVIR PRASAD ) ( AMARJIT SINGH ) JUDICIAL MEMBER ACCOUNTANT MEMBER AHMEDABAD : DATED 05 /12 /2019 / COPY OF ORDER FORWARDED TO: - 1. ASSESSEE 2. REVENUE 3. CONCERNED CIT 4. CIT (A) 5. DR, ITAT, AHMEDABAD 6. GUARD FILE. BY ORDER/ , / ,