M/s. Jafari Momin Vikas Co-op. Credit Society Ltd., Patan V. The Income Tax Officer, Ward-2, Patan

ITA 2321/AHD/2014

• Counselvise Citation: [2018] 125 COUNSELVISE.COM (IT) 3090 (ITAT-AHMEDABAD)
• Duration Of Justice: 4 year(s) 15 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 28-08-2018
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: A
• Assessment Year: 2010-2011
• Appeal Filed On: 12-08-2014
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Assessee Lawyers: H V DOSHI

Judgement Text

, - IN THE INCOME TAX APPELLATE TRIBUNAL AHMEDABAD BENCH A BEFORE SHRI RAJPAL YADAV, JUDICIAL MEMBER AND SHRI WASEEM AHMED, ACCOUNTANT MEMBER ./ ITA NO. 2320, 2321 AND 2322/AHD/2014 / ASSESSMENT YEAR: 2007-08, 2010-11 AND 2011-12 M/S.JAFARI MOMIN VIKAS CO-OP. CREDIT SOCIETY AT-KAKOSHI, TA-SIDDHPUR DIST PATAN VS ITO, WARD-2 PATAN. / (APPELLANT) / (RESPONDENT) ASSESSEE BY : SHRI H.V. DOSHI, AR REVENUE BY : SHRI S.K. DEV, SR.DR / DATE OF HEARING : 14/08/2018 /DATE OF PRONOUNCEMENT : 28/08/2018 O R D E R PER RAJPAL YADAV, JUDICIAL MEMBER : PRESENT THREE APPEALS DIRECTED AT THE INSTANCE OF THE ASSESSEE AGAINST OR DERS OF LD.CIT(A), GANDHINAGAR, AHMEDABAD OF EVEN DATED 19.5.2014 PASS ED FOR ABOVE THREE ASSESSMENT YEARS. 2. COMMON ISSUE RAISED IN THESE THREE APPEALS ARE A GAINST THE ORDER OF THE LD.CIT(A), WHEREBY THE LD.CIT(A) CONFIRMED O RDER OF THE ASSESSING OFFICER AO IN DENYING DEDUCTION UNDER SECTION 80P(2 )(A)(I) OF THE INCOME TAX ACT, 1961. FACTS IN ALL THESE APPEALS ARE COMM ON EXCEPT VARIATION IN QUANTUM, THEREFORE, WE PROCEED TO DISPOSE OF ALL TH ESE APPEALS BY THIS COMMON ORDER. ITA NO.2320/AHD/2014 2 OTHERS - 2 - 3. AT THE OUTSET, THE LD.DR SUBMITTED THAT ISSUE IS COVERED IN FAVOUR OF THE REVENUE BY JUDGMENT OF THE HONBLE JURISDICT IONAL HIGH COURT IN THE CASE OF STATE BANK OF INDIA CO-OPERATIVE SOCIET Y VS. CIT, 72 TAXMANN.COM 64 (GUJ) WHEREIN IT HAS BEEN HELD THAT COOPERATIVE SOCIETY ENGAGED IN THE BUSINESS OF PROVIDING CREDIT FACILIT IES TO ITS MEMBERS WHICH EARNS INTEREST INCOME ON THE SURPLUS FUNDS PA RKED WITH THE NATIONALISED BANKS, IS NOT ELIGIBLE FOR DEDUCTION U NDER SECTION 80P(2)(A)(I) OF THE ACT. SINCE IMPUGNED ORDERS OF REVENUE AUTHORITIES ARE IN CONSONANCE WITH JUDGMENT OF THE HONBLE HIGH COURT CITED SUPRA, NO INTERFERENCE THEREOF IS REQUIRED AND ALL THE APP EALS OF THE ASSESSEE MAY BE DISMISSED. HOWEVER, THE LD.COUNSEL FOR THE ASSESSEE DOES NOT CONTEST JUDGMENT OF HONBLE GUJARAT HIGH COURT, BUT SUBMITTED THAT IN CASE CLAIM OF THE ASSESSEE IS NOT FOUND TO BE ADMIS SIBLE, THEN PROPORTIONATE ADMINISTRATIVE AND FINANCIAL EXPENSES INCURRED FOR EARNING SUCH INTEREST/INVESTMENT INCOME BE ALLOWED TO THE ASSESSEE. 4. HAVING HEARD BOTH THE PARTIES AND ON PERUSAL OF THE RECORD, WE FIND THAT ASSESSEE IS A COOPERATIVE SOCIETY REGISTE RED UNDER GUJARAT CO- OPERATIVE SOCIETIES ACT, 1961 AND ENGAGED IN PROVID ING CREDIT FACILITIES TO ITS MEMBERS. THE ASSESSEE-SOCIETY HAS FILED RETURN OF INCOME DECLARING NIL INCOME, AFTER CLAIMING DEDUCTION UNDER SECTION 80P(2)(A)(I) FOR THE INTEREST INCOME EARNED ON FDRS. WITH THE BANKS. TH IS CLAIM WAS DENIED BY THE AO ON THE GROUND THAT PROVISIONS OF SECTION 80P(2)(A)(I) DOES NOT COVER ASSESSEE-SOCIETY. THE LD.CIT(A) CONCURRED WIT H THE ORDER OF THE AO BY RELYING UPON THE JUDGMENT OF HONBLE JURISDIC TIONAL HIGH COURT IN THE CASE OF STATE BANK OF INDIA CO-OPERATIVE SOC IETY (SUPRA). WE FIND ITA NO.2320/AHD/2014 2 OTHERS - 3 - THAT HONBLE JURISDICTIONAL HIGH COURT HAS HELD THA T INTEREST EARNED FROM INVESTMENT MADE IN NATIONALIZED BANK BY A COOPERATI VE SOCIETY ENGAGED IN PROVIDING CREDIT FACILITIES TO ITS MEMBERS, IS N OT ELIGIBLE FOR DEDUCTION UNDER SECTION 80P. THE TRIBUNAL IN EARLIER OCCASIO NS ON SIMILAR ISSUE HAS TAKEN A CONSISTENT VIEW BY FOLLOWING ABOVE JUDGMENT OF THE HONBLE JURISDICTIONAL HIGH COURT. SINCE ORDERS OF THE REVE NUE AUTHORITIES ARE IN ACCORDANCE WITH THE JUDGMENT OF THE HONBLE JURISDI CTIONAL HIGH COURT CITED SUPRA, NO INTERFERE IS CALLED FOR IN THE IMPU GNED ORDERS, WHICH WE CONFIRM. HOWEVER, ANY EXPENDITURE INCURRED BY THE A SSESSEE FOR EARNING SUCH INCOME COULD BE ALLOWED TO IT, IF NOT ALREADY ALLOWED. IN OTHER WORDS, THE LD.AO HAS TO DETERMINE THE NET INTEREST INCOME AS WELL AS MISC. INCOME EARNED BY THE ASSESSEE, AND ONLY THERE AFTER THAT INCOME HAS TO BE EXCLUDED FROM THE ADMISSIBILITY OF DEDUCTION UNDER SECTION 80P OF THE ACT. 5. IN THE RESULT, APPEALS OF THE ASSESSEE ARE PARTL Y ALLOWED FOR STATISTICAL PURPOSE. PRONOUNCED IN THE OPEN COURT ON 28 TH AUGUST, 2018. SD/- SD/- (WASEEM AHMED) ACCOUNTANT MEMBER (RAJPAL YADAV) JUDICIAL MEMBER