Maruti Co Operative Credit Society Ltd., Kheda V. ITO Ward-1, Nadiad

ITA 2228/AHD/2017

• Counselvise Citation: [2018] 125 COUNSELVISE.COM (IT) 8071 (ITAT-AHMEDABAD)
• Duration Of Justice: 8 month(s) 22 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 28-06-2018
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: SMC
• Assessment Year: 2014-2015
• Appeal Filed On: 06-10-2017
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Assessee Lawyers: NISHIT SHAH

Judgement Text

, LH LHLH LH IN THE INCOME TAX APPELLATE TRIBUNAL C BENCH, AHMEDABAD LOZJH LOZJH LOZJH LOZJH OLHE VGEN OLHE VGEN OLHE VGEN OLHE VGEN] YS[KK LNL; ,OA ] YS[KK LNL; ,OA ] YS[KK LNL; ,OA ] YS[KK LNL; ,OA EK/KQFERK JKW; EK/KQFERK JKW; EK/KQFERK JKW; EK/KQFERK JKW;] U;KF;D LNL; ] U;KF;D LNL; ] U;KF;D LNL; ] U;KF;D LNL; DS LE{KA DS LE{KA DS LE{KA DS LE{KA BEFORE SHRI WASEEM AHMED, ACCOUNTANT MEMBER AND SMT MADHUMITA ROY, JUDICIAL MEMBER ./ I.T.A. NO.2228/AHD/2017 ( / ASSESSMENT YEAR : 2014-15) MARUTI CO-OP CREDIT SOCIETY LTD., NEELKANTH SOCIETY, OPP: DUMRAL ROAD, NADIAD, DIST.KHEDA 387 001 / VS. ITO, WARD - 1 NADIAD. ./ ./ PAN/GIR NO. : AAAAM 6007 C ( / APPELLANT ) .. ( / RESPONDENT ) / APPELLANT BY : SHRI NISHIT SHAH, A.R. / RESPONDENT BY : SHRI PRASOON KABRA, SR. D.R. / DATE OF HEARING 26/06/2018 !'# / DATE OF PRONOUNCEMENT 28/06/2018 $% / O R D E R PER WASEEM AHMED, ACCOUNTANT MEMBER: THE CAPTIONED APPEAL HAS BEEN FILED AT THE INSTANCE OF THE ASSESSEE AGAINST THE APPELLATE ORDER OF THE COMMISSIONER OF INCOME TAX(APPEALS)-2, VADODARA [CIT(A) IN SHORT] VIDE APPEAL NO.CIT(A)/VADODARA-2/10592/16-17 DATED 12.06.2017 A RISING IN THE ASSESSMENT ORDER PASSED UNDER S.143(3) OF THE INCOM E TAX ACT, 1961 (HERE-IN-AFTER REFERRED TO AS 'THE ACT') DATED 28. 11.2016 RELEVANT TO ASSESSMENT YEAR (AY) 2014-15. ITA NO.2228/AHD/2017 MARUTI CO.OP CREDIT SOCIE TY LTD. VS. ITO ASST.YEAR 2014-15 - 2 - 2. THE GROUNDS OF APPEAL RAISED BY THE ASSESSEE ARE AS UNDER:- 1. LD. CIT (A) ERRED IN LAW AND ON FACTS IN CONFIR MING DISALLOWANCE MADE BY AO OF RS.4,06,569/- DEDUCTION CLAIMED U/S 8 0P(2)(A)(I) OF THE ACT. LD. CIT (A) OUGHT TO HAVE ALLOWED DEDUC TION CLAIMED OF INTEREST RECEIVED ON THE OPERATIONAL FUNDS DEPOS ITED WITH NATIONALIZED/SCHEDULED BANK. 2. LD.CIT (A) ERRED IN LAW AND ON THE FACTS CONFIRM ING DISALLOWANCE MADE BY AO TREATING INTEREST EARNED AS 'INCOME FROM OTHER SOURCES. LD. CIT (A) OUGHT TO HAVE HELD INTEREST EARNED AS PROFITS & GAINS OF BUSINESS. 3. LD. CIT (A) ERRED IN LAW AND ON FACTS HOLD ING THAT INTEREST DERIVED BY DEPOSITING SURPLUS FUNDS WITH NATIONALIZ ED/SCHEDULED BANKS AS NOT ATTRIBUTABLE TO THE BUSINESS CARRIED O N BY THE APPELLANT CREDIT SOCIETY AND HENCE NOT DEDUCTIBLE U /S 80P(2)(A)(I) OF THE ACT. 4. ALTERNATIVELY & WITHOUT PREJUDICE TO THE ABOVE, PROPORTIONATE EXPENSES BE ALLOWED AGAINST INTEREST INCOME EARNED FROM NATIONALIZED/ SCHEDULED BANKS IF HELD AS 'INCOME FR OM OTHER SOURCES'. 5. LD. CIT (A) ERRED IN LAW AND ON FACTS CONF IRMING DISALLOWANCE OF THE CLAIM OF DEDUCTION RELYING ON JUDGMENT RENDERED IN REVISIONARY PROCEEDINGS NOT APPLICABLE TO THE FACTS OF THE CASE. LD. CIT (A) OUGHT TO HAVE APPRECIATED RATIO OF THE JUDICIAL CITATIONS DIRECTLY ON THE ISSUE & ALLOWED DEDUCTION . 6. LEVY OF INTEREST U/S 234A/234B/234C & 234D OF T HE ACT IS NOT JUSTIFIED. 7. INITIATION OF PENALTY U/S 271(1)(C) OF THE ACT IS NOT JUSTIFIED. THE APPELLANT CRAVES LEAVE TO ADD, AMEND, ALTER, ED IT, DELETE, MODIFY OR CHANGE ALL OR ANY OF THE GROUNDS OF APPEAL AT THE T IME OF OR BEFORE THE HEARING OF THE APPEAL. 3. THE SOLITARY ISSUE INVOLVED IN THE GROUNDS OF AP PEAL RELATES TO WHETHER INTEREST INCOME EARNED ON FIXED DEPOSITS WI TH THE NATIONALIZED ITA NO.2228/AHD/2017 MARUTI CO.OP CREDIT SOCIE TY LTD. VS. ITO ASST.YEAR 2014-15 - 3 - BANK WOULD QUALIFY FOR DEDUCTION UNDER SECTION 80P( 2)(A)(I) OF THE INCOME TAX ACT. 4. AT THE OUTSET, THE LEARNED COUNSEL FOR THE ASSE SSEE FAIRLY CONCEDED THAT ISSUE IN DISPUTE IS SQUARELY COVERED AGAINST T HE ASSESSEE BY THE DECISION OF THE HON'BLE JURISDICTIONAL HIGH COURT I N THE CASE OF STATE BANK OF INDIA VS. CIT, 389 ITR 578 WHEREIN HON'BLE COURT HELD THAT INTEREST EARNED FROM THE INVESTMENT MADE IN ANY BAN K IS NOT DEDUCTIBLE UNDER SECTION 80P(2)(A)(I) OF THE ACT. IN THIS VIEW OF THE MATTER, WE DISMISS THE APPEAL OF THE ASSESSEE. HOWEVER, WE DIR ECT THE AO TO EXCLUDE THE AMOUNT OF NET INTEREST INCOME FROM THE DEDUCTIO N CLAIMED U/S 80P(2)(A)(I) OF THE ACT. THUS THE AO WILL ALLOW THE EXPENSES INCURRED BY THE ASSESSEE IN THE EARNING OF SUCH INTEREST INCOME NOT ELIGIBLE FOR DEDUCTION UNDER SECTION 80P(2)(A)(I) OF THE ACT. IN OTHER WORDS, THE LD.AO HAS TO DETERMINE THE NET INTEREST INCOME EARNED BY THE ASSESSEE ON SUCH INVESTMENT WITH THE BANK, A ND ONLY AFTER THAT NET INTEREST INCOME HAS TO BE EXCLUDED FROM THE ADMISSI BILITY OF DEDUCTION UNDER SECTION 80P(2) OF THE ACT. HENCE, GROUNDS OF APPEAL FILED BY THE ASSESSEE ARE ALLOWED FOR STATISTICAL PURPOSES. ITA NO.2228/AHD/2017 MARUTI CO.OP CREDIT SOCIE TY LTD. VS. ITO ASST.YEAR 2014-15 - 4 - 5. IN THE RESULT, THE APPEAL OF THE ASSESSEE IS PA RTLY ALLOWED FOR STATISTICAL PURPOSE. THIS ORDER PRONOUNCED IN OPEN COURT ON 28/06/2018 SD/- SD/- E/KQFERK JKW; E/KQFERK JKW; E/KQFERK JKW; E/KQFERK JKW; OLHE VGEN OLHE VGEN OLHE VGEN OLHE VGEN U;KF;D LNL; U;KF;D LNL; U;KF;D LNL; U;KF;D LNL; YKS[KK LN YKS[KK LN YKS[KK LN YKS[KK LN L; L; L; L; (MADHUMITA ROY) (WASEEM AHMED) JUDICIAL MEMBER ACCOUNTANT MEMBER AHMEDABAD; DATED 28/06/2018 PRITI YADAV, SR.PS !'# $#! / COPY OF THE ORDER FORWARDED TO : 1. / THE APPELLANT 2. / THE RESPONDENT. 3. & '( ) / CONCERNED CIT 4. ) () / THE CIT(A)-2, VADODARA. 5. ,-. //'( , '(# , 12$&$ / DR, ITAT, AHMEDABAD 6. .34 5 / GUARD FILE. % & / BY ORDER, , / //TRUE COPY// '/& () ( DY./ASSTT.REGISTRAR) , / ITAT, AHMEDABAD 1. DATE OF DICTATION 27/06/2018 . 2. DATE ON WHICH THE TYPED DRAFT IS PLACED BEFORE THE DICTATING MEMBER 27/06/2018. 3. OTHER MEMBER 4. DATE ON WHICH THE APPROVED DRAFT COMES TO THE SR.P. S./P.S 27/06/2018 5. DATE ON WHICH THE FAIR ORDER IS PLACED BEFORE THE D ICTATING MEMBER FOR PRONOUNCEMENT 6. DATE ON WHICH THE FAIR ORDER COMES BACK TO THE SR.P .S./P.S. 7. DATE ON WHICH THE FILE GOES TO THE BENCH CLERK 8. DATE ON WHICH THE FILE GOES TO THE HEAD CLERK ... 9. THE DATE ON WHICH THE FILE GOES TO THE ASSISTANT RE GISTRAR FOR SIGNATURE ON THE ORDER.. 10. DATE OF DESPATCH OF THE ORDER