The Bhiladi Mercantile Credit Co.Operative Society Ltd., Banaskantha V. The ACIT.,B.K.Circle, Banaskantha

ITA 2398/AHD/2015

• Counselvise Citation: [2015] 121 COUNSELVISE.COM (IT) 1214 (ITAT-AHMEDABAD)
• Duration Of Justice: 3 month(s) 14 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 26-11-2015
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: SMC
• Assessment Year: 2010-2011
• Appeal Filed On: 12-08-2015
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: LALA PHILIPS
• Section: 143(3); 154

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL AHMEDABAD SMC BENCH AHMEDABAD BEFORE S/SHRI RAJPAL YADAV, JM, & MANISH BORAD, AM. ITA NO.2398/AHD/2015 ASST. YEAR: 2010-11 THE BHILDI MERCANTILE CREDIT CO-OP. SOC. LTD., GANI BAZAR, BHILDI, DIST. B.K. VS. ASSTT. C.I.T., BANASKANTHA CIRCLE, PALANPUR. APPELLANT RESPONDENT PAN AABAT 9726A APPELLANT BY NONE RESPONDENT BY MR. LALA PHILIPS, SR.DR DATE OF HEARING: 18/11/2015 DATE OF PRONOUNCEMENT: 26/11/2015 O R D E R PER MANISH BORAD, ACCOUNTANT MEMBER. THIS APPEAL OF THE ASSESSEE IS DIRECTED AGAINST ORD ER OF CIT(A)- 4, AHMEDABAD IN APPEAL NO.CIT(A)-4/347/ACIT/BK/PALA NPUR/14-15 DATED 9 TH JUNE, 2015 FOR ASSESSMENT YEAR 2010-11. ASSESSMENT WAS FRAMED U/S 143 (3) OF THE INCOME-TAX ACT, 1961 (HER EIN AFTER REFERRED O AS THE ACT) BY ACIT, BANASKANTHA CIRCLE, PALANPUR ON 7.12.2012. THE ASSESSEE HAS RAISED FOLLOWING GROUNDS OF APPEAL :- 1. BOTH THE LD. CIT(A) AND LD. AO HAVE ERRED IN LAW AND ON FACTS IN DENYING THE DEDUCTION ADMISSIBLE TO THE APPELLANT C O-OPERATIVE SOCIETY UNDER SECTION 80P OF THE INCOME-TAX ACT, 19 61 ON THE GROUND THAT DEPOSIT OF EXCESS MONEY WAS PART AND PA RCEL OF THE ITA NOS.2398 & 2399/AHD/2015 ASST. YEAR 2010-11 & 2012-13 2 BANKING BUSINESS THE INTEREST THERE FROM IS ELIGIBL E FOR THE DEDUCTION U/S 80P OF IT ACT, 1961. 2. BOTH THE LD. CIT(A) AND LD. AO HAVE ERRED IN LAW AND ON FACTS IN HOLDING THAT OUR CO-OPERATIVE SOCIETY HAVE DEPOSITE D OWN FUNDS IN THE SCHEDULE CO-OPERATIVE BANKS IN THE NOR MAL COURSE OF BUSINESS AND AS PER OUR CO-OPERATIVE SOCIETIES R ULES AND REGULATION ALSO CARING ON THE BUSINESS OF BANKING O R PROVIDING CREDIT FACILITIES TO OUR MEMBERS ONLY AND NOT DOING ANY SELLING ACTIVITIES DURING THE YEAR. THEREFORE, OUR OWN FUND S INVESTMENT AND EARNING INTEREST ON THAT ARE ELIGIBLE TO DEDUCT ION U/S 80P(2)(A)(II) OF INCOME-TAX ACT, 1961. 3. THE ORDER OF THE LD. AO AND LD. CIT(A) MAY, THER EFORE, BE REVERSED AND THE AO MAY BE DIRECTED TO GRANT THE DE DUCTION U/S 80P(2) OF THE ACT, 1961. 4. THE APPELLANT CRAVES LEAVE TO ADD, ALTER OR AMEN D ANY OF THE GROUNDS TILL THE APPEALS IS FINALLY HEARD AND DECID ED. 2. BRIEFLY STATED FACTS ARE THAT THE ASSESSEE IS A CREDIT CO- OPERATIVE SOCIETY ENGAGED IN THE BUSINESS OF GIVING CREDIT FACILITIES TO ITS MEMBERS. THE ASSESSEE CO-OPERATIVE SOCIETY IS R EGISTERED UNDER THE CO-OPERATIVE SOCIETIES ACT. THE CREDIT SOCIETY HAD FILED ITS RETURN OF INCOME FOR ASST. YEAR 2010-11 ON 5/10/2010 DECLA RING TOTAL INCOME AT NIL AFTER CLAIMING THE DEDUCTION ADMISSIBLE U/S 80P OF THE ACT. THIS RETURN WAS PROCESSED U/S 143(1) BY ACIT BANGALORE O N 24/02/2011AND ASSESSED INCOME WITHOUT DEDUCTION CLA IM AND MADE TO THE ADDITION TO THE INCOME. AGAINST THIS ORDER T HE ASSESSEE HAD PREFERRED A RECTIFICATION REQUEST ON 21/10/2011 AND AGAIN THE ACIT BANGALORE PASSED SAME ORDER U/S 154 OF THE ACT. AGG RIEVED, THE ASSESSEE PREFERRED AN APPEAL BEFORE THE CIT(A). THE APPEAL WAS WITHDRAWN AND DISMISSED. ITA NOS.2398 & 2399/AHD/2015 ASST. YEAR 2010-11 & 2012-13 3 3. IN BETWEEN THE CASE WAS SELECTED FOR SCRUTINY. N OTICE U/S 143(2) WAS ISSUED AND SERVED ON THE ASSESSEE ON 7/9 /2011. THE ASSESSING OFFICER AFTER DISCUSSING THE REASONS COMP UTED THE INCOME OF THE ASSESSEE AT RS.12,44,436/-. AGAIN AGGRIEVED WITH THE ASSESSMENT ORDER THE ASSESSEE FILED AN APPEAL BEFOR E CIT(A)-XX AND THE LD. CIT(A) VIDE HIS ORDER DATED 25.2.2014 PARTL Y ALLOWED THE APPEAL AND ALSO DIRECTED THE ASSESSING OFFICER TO L OOK INTO THE CASE WHETHER THE INTEREST ON DEPOSIT/INVESTMENTS ARE TAX ABLE OR NOT AS PER DECISION OF THE CASE. 4. AT THE TIME OF GIVING EFFECT TO THE APPELLATE OR DER, THE ASSESSING OFFICER MADE AN ADDITION ON INTEREST INCOME RECEIVE D BY THE ASSESSEE FROM ITS DEPOSIT WITH CO-OP. BANK ALTHOUGH THAT IS DEDUCTIBLE U/S 80P(2)(A)(I) OF THE ACT. AGAIN AGAIN ST THAT APPEAL EFFECT ORDER, ASSESSEE PREFERRED AN APPEAL BEFORE THE LD. CIT(A) AND THE SAME WAS DISMISSED BY LD. CIT(A)-4, AHMEDABAD. 5. BEING AGGRIEVED, THE ASSESSEE IS NOW IN APPEAL B EFORE THE TRIBUNAL. 6. AT THE TIME OF HEARING OF THE APPEAL, NONE APPEA RED ON BEHALF OF THE ASSESSEE. SO, AFTER HEARING THE LD. DR AND G OING THROUGH THE MATERIAL ON RECORD, WE PROCEED TO DECIDE THE APPEAL ON MERIT. 7. THE ONLY ISSUE NEEDS TO BE DECIDED IS WHETHER TH E APPELLANT- ASSESSEE WHICH IS A CO-OPERATIVE SOCIETY AND REGIST ERED UNDER THE ITA NOS.2398 & 2399/AHD/2015 ASST. YEAR 2010-11 & 2012-13 4 CO-OPERATIVE CREDIT SOCIETIES ACT IS ENTITLED TO DE DUCTION UNDER SECTION 80P(2)(A)(I) OF THE ACT FOR THE INTEREST IN COME AT RS.1,15,213/- RECEIVED FROM SHORT-TERM DEPOSIT AND GOVERNMENT SEC URITIES. FROM THE PERUSAL OF THE RECORD, WE FIND THAT THE ASSESSI NG OFFICER WHILE FRAMING THE ASSESSMENT ORDER UNDER SECTION 143(3) O F THE ACT, COMPLETED THE ASSESSMENT BY ASSESSING THE ASSESSEE CO-OPERATIVE SOCIETY BY TREATING AS CO-OPERATIVE BANK OTHER THAN A PRIMARY AGRICULTURAL CREDIT SOCIETY OR A PRIMARY CO-OPERATI VE AGRICULTURAL AND RURAL DEVELOPMENT BANK AND ACCORDINGLY DENIED THE D EDUCTION TO THE ASSESSEE UNDER SECTION 80P(2)(A)(I) OF THE ACT WHER EIN DEDUCTION IS AVAILABLE FOR THE PROFITS EARNED BY A CO-OPERATIVE SOCIETY ENGAGED IN CARRYING ON THE BUSINESS OF PAYING OR PROVIDING CRE DIT FACILITIES TO ITS MEMBERS. HOWEVER, THE ASSESSING OFFICER ALLOWED DED UCTION U/S 80P(2)(D) AT RS.1,77,980/- WHICH REFERS TO INCOME E ARNED BY CO- OPERATIVE SOCIETY FROM ITS INVESTMENTS WITH ANOTHER CO-OPERATIVE SOCIETY. APART FROM THIS ISSUE, NOTHING ELSE HAS BE EN OBSERVED AND DEALT WITH BY THE ASSESSING OFFICER. THEREAFTER REC TIFICATION ORDER WAS PASSED BY THE ASSESSING OFFICER ON 16.6.2014 GIVING EFFECT TO THE ORDER OF LD. CIT(A)-XX, AHMEDABAD, WHO PARTLY ALLOW ED THE APPEAL OF THE ASSESSEE AND DELETED THE ADDITION MADE BY THE A SSESSING OFFICER MADE ON ACCOUNT OF DISALLOWANCE CLAIMED OF DEDUCTIO N U/S 80P(2)(A)(I) OF THE ACT. HOWEVER, THROUGH THIS RECT IFICATION ORDER ON ONE HAND, ASSESSING OFFICER ALLOWED THE CLAIM UNDER SECTION 80P(20(A)(I) OF THE ACT AT RS.12,44,440/- OUT OF TH E TOTAL INCOME ASSESSED BY HIM AS PER HIS ORDER U/S 143(3) OF THE ACT ON 7.12.2012 AND ON THE OTHER HAND MADE ADDITION OF RS.1,15,213/ - ON ACCOUNT OF INTEREST RECEIVED FROM SHORT-TERM DEPOSIT AND GOVT. SECURITIES. THIS ITA NOS.2398 & 2399/AHD/2015 ASST. YEAR 2010-11 & 2012-13 5 ADDITION OF RS.1,15,213/- HAS NEITHER BEEN DISCUSSE D BY THE ASSESSING OFFICER IN HIS ASSESSMENT ORDER U/S 143(3 ) NOR HAS IT BEEN DEALT IN BY THE LD. CIT(A). LD. CIT(A) HAS ONLY DEC IDED THAT ASSESSEE SOCIETY IS NOT A CO-OPERATIVE BANK AS CONTEMPLATED U/S 80P(4) OF THE ACT AS WELL AS IN GUIDANCE NOTES TO THE AMENDMENT I N SECTION 2(24)(7A) AND ACCORDINGLY DECIDED THAT ASSESSEE WAS ELIGIBLE FOR DEDUCTION U/S 80P(2)(A)(I) OF THE ACT. 8. AS THE ADDITION OF RS.1,15,213/- HAS NOT BEEN DE ALT ON MERIT EITHER AT THE LEVEL OF ASSESSING OFFICER OR AT THE LEVEL OF LD. CIT(A), WE ARE UNABLE TO ADJUDICATE THE ISSUE BECAUSE THE DETA ILS OF INCOME ON ACCOUNT OF INTEREST RECEIVED FROM SHORT-TERM DEPOSI TS AND GOVT. SECURITIES ARE NOT AVAILABLE AS TO WHETHER THEY HAV E BEEN RECEIVED FROM NATIONALIZED BANK OR CO-OPERATIVE BANKS AS WEL L AS WHETHER THERE WERE EXTRA IDLE FUNDS AVAILABLE WITH THE ASSE SSEE WHICH MAY NOT HAVE BEEN UTILIZED FOR EARNING INTEREST INCOME. ALSO NONE APPEARED ON BEHALF OF THE ASSESSEE TO PROVIDE THESE DETAILS AND IN THESE CIRCUMSTANCES WE HAVE NO OTHER OPTION BUT EXC EPT TO REMIT BACK THE ISSUE TO THE FILE OF ASSESSING OFFICER WIT H THE DIRECTION TO RE- ASSESS THE ASSESSEE-CO-OPERATIVE-SOCIETY BY TREATIN G IT AS CREDIT CO- OPERATIVE SOCIETY AND NOT A BANK AND ELIGIBLE FOR D EDUCTION UNDER SECTION 80P(2)(A)(I) OF THE ACT AFTER GIVING REASON ABLE OPPORTUNITY TO THE ASSESSEE OF BEING HEARD AND TO FURNISH ALL FINA NCIAL RECORDS TO EXAMINE ANY DETAIL, THE INCOME FROM INTEREST RECEIV ED FROM SHORT-TERM DEPOSITS AND GOVT. SECURITIES. ACCORDINGLY, THE APP EAL OF THE ASSESSEE IS ALLOWED FOR STATISTICAL PURPOSES. ITA NOS.2398 & 2399/AHD/2015 ASST. YEAR 2010-11 & 2012-13 6 9. OTHER GROUNDS ARE OF GENERAL NATURE, WHICH DO N OT REQUIRE ANY ADJUDICATION. 10. IN THE RESULT, THE APPEAL OF ASSESSEE IS ALLOWE D FOR STATISTICAL PURPOSES. ORDER PRONOUNCED IN THE OPEN COURT ON 26 TH NOV. 2015 SD/- SD/- (RAJPAL YADAV) JUDICIAL MEMBER (MANISH BORAD) ACCOUNTANT MEMBER DATED 26/11/2015 MAHATA/- COPY OF THE ORDER FORWARDED TO: 1. THE APPELLANT 2. THE RESPONDENT 3. THE CIT CONCERNED 4. THE CIT(A) CONCERNED 5. THE DR, ITAT, AHMEDABAD 6. GUARD FILE BY ORDER ASST. REGISTRAR, ITAT, AHMEDABAD ITA NOS.2398 & 2399/AHD/2015 ASST. YEAR 2010-11 & 2012-13 7 1. DATE OF DICTATION: 24/11/2015 2. DATE ON WHICH THE TYPED DRAFT IS PLACED BEFORE T HE DICTATING MEMBER: 26/11/2015 OTHER MEMBER: 3. DATE ON WHICH APPROVED DRAFT COMES TO THE SR. P. S./P.S.: 4. DATE ON WHICH THE FAIR ORDER IS PLACED BEFORE TH E DICTATING MEMBER FOR PRONOUNCEMENT: __________ 5. DATE ON WHICH THE FAIR ORDER COMES BACK TO THE S R. P.S./P.S.: 6. DATE ON WHICH THE FILE GOES TO THE BENCH CLERK: 26/11/2015 7. DATE ON WHICH THE FILE GOES TO THE HEAD CLERK: 8. THE DATE ON WHICH THE FILE GOES TO THE ASSISTANT REGISTRAR FOR SIGNATURE ON THE ORDER: 9. DATE OF DESPATCH OF THE ORDER: