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

ITA 2399/AHD/2015

• Counselvise Citation: [2016] 133 COUNSELVISE.COM (IT) 9759 (ITAT-AHMEDABAD)
• Duration Of Justice: 5 month(s) 15 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 28-01-2016
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: SMC
• Assessment Year: 2012-2013
• Appeal Filed On: 12-08-2015
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: LALA PHILIPS
• Section: 143(3)

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL AHMEDABAD SMC BENCH AHMEDABAD BEFORE S/SHRI RAJPAL YADAV, JM, & MANISH BORAD, AM. ITA NOS. 2399/AHD/2015 ASST. YEAR: 2012-13 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: 28/01/2016 O R D E R PER MANISH BORAD, ACCOUNTANT MEMBER. THIS APPEAL BY THE ASSESSEE IS DIRECTED AGAINST ORD ER OF CIT(A)-4, AHMEDABAD IN APPEAL NO.CIT(A)-4/376/ACIT/ BK/PALANPUR/ 14-15 DATED 9 TH JUNE, 2015 .ASSESSMENT WAS FRAMED U/S 143(3) OF THE INCOME-TAX ACT, 1961 (HEREINAFTER REFERRED TO A S THE ACT) FOR ASST. YEAR 2012-13 ON 26/02.2015. THE ASSESSEE HAS RAIS ED SEVERAL GROUNDS BUT THE SOLITARY GRIEVANCE AS CULLED OUT FR OM THE GROUNDS IS AGAINST DENYING OF DEDUCTION U/S 80P(2)(D) OF THE A CT AT RS.1,01,653/- . ITA NO. 2399/AHD/2015 ASST. YEAR 2012-13 2 2. BRIEFLY STATED FACTS ARE THAT THE ASSESSEE IS A CREDIT CO-OP. SOCIETY. IT FILED ITS RETURN OF INCOME ON 20/09/201 2 DECLARING TOTAL INCOME AT RS.NIL. THE CASE WAS SELECTED FOR SCRUTIN Y ASSESSMENT AND NOTICE U/S 143(2) OF THE ACT WAS ISSUED AND DUL Y SERVED UPON THE ASSESSEE. IN THE COMPUTATION OF INCOME ASSESSEE SOC IETY HAS CLAIMED DEDUCTION U/S 80P(2)(D) OF THE ACT OF RS.1, 01,653/- ON ACCOUNT OF INCOME DERIVED FROM INTEREST FROM INVEST MENT WITH ANOTHER CO-OPERATIVE SOCIETY. DURING ASSESSMENT PROCEEDINGS ASSESSING OFFICER OBSERVED THAT ASSESSEE HAS CLAIMED INTEREST INCOME FROM DEPOSITS WITH BANAS BANK U/S 80P(2)(D) OF THE ACT C LAIMING THAT BANAS BANK IS A CO-OPERATIVE BANK AND BASICALLY A C O-OPERATIVE SOCIETY. ASSESSING OFFICER DID NOT ACCEPT THIS CLAI M GIVING A REASONING THAT SECTION 80P(4) CLEARLY DISTINGUISHES A CO-OPER ATIVE BANK WITH OTHER CO-OPERATIVE SOCIETIES AND, THEREFORE, INTERE ST INCOME FROM BANAS BANK WAS NOT TREATED AS INCOME FROM CO-OPERAT IVE SOCIETY AND ACCORDINGLY DISALLOWED THE DEDUCTION U/S 80P(2)(D) OF THE ACT AT RS.1,01,653/-. 3. AGGRIEVED, ASSESSEE WENT IN APPEAL BEFORE CIT(A) WHO ALSO CONFIRMED THE ADDITION AFTER DISCUSSING VARIOUS JUD ICIAL PRONOUNCEMENTS IN HIS APPELLATE ORDER AND OBSERVED AS UNDER :- 6.6 FROM THE ABOVE DISCUSSED JUDICIAL PRONOUNCEMEN TS, IT IS VERY CLEAR THAT AFTER THE INSERTION OF SEC.80P(4), THE S TATUTE HAS DIFFERENTIATED BETWEEN A CO-OP. SOCIETY AND CO-OP. BANK. THEREFORE, THE WORDS CO-OPERATIVE SOCIETY USED IN SECTION 80 P(2)(D) REFER EXCLUSIVELY TO CO-OPERATIVE SOCIETIES AND CANNOT BE APPLIED TO ANY CO-OP. BANK. THUS, THE INTEREST AND DIVIDEND RECEI VED BY THE APPELLANT FROM A CO-OP. BANK IS NOT ELIGIBLE FOR CL AIMING DEDUCTION U/S ITA NO. 2399/AHD/2015 ASST. YEAR 2012-13 3 80P(2)(D) OF THE ACT. THEREFORE, IT IS HELD THAT AP PELLANT IS NOT ELIGIBLE FOR CLAIMING DEDUCTION U/S 80P(2)(D) OF THE ACT . A CCORDINGLY, THIS GROUND IS DISMISSED. 4. AGGRIEVED, ASSESSEE IS NOW IN APPEAL BEFORE THE TRIBUNAL. NONE APPEARED ON BEHALF OF THE ASSESSEE. 5. FROM PERUSAL OF THE RECORDS WE FIND THAT DURING THE COURSE OF ASSESSMENT PROCEEDINGS ASSESSEE HAS CLAIMED DEDUCTI ON U/S 80P(2)(D) OF THE ACT CLAIMING THE INTEREST INCOME F ROM BANAS BANK AS ELIGIBLE FOR DEDUCTION U/S 80P(2)(D) OF THE ACT AND ALSO IN THE GROUNDS OF APPEAL ASSESSEE HAS TAKEN AN ALTERNATE CLAIM THA T IT HAS DEPOSITED OWN FUNDS IN THE SCHEDULED CO-OPERATIVE BANK IN THE NORMAL COURSE OF BUSINESS TO PROVIDE CREDIT FACILITIES TO ITS MEMBER S AND NOT DURING ANY SELLING ACTIVITIES DURING THE YEAR AND, THEREFORE, INVESTMENT INCOME IS ELIGIBLE TO DEDUCTION U/S 80P(2)(A)(I) OF THE ACT. HOWEVER, LD. CIT(A) HAS DECIDED THE APPEAL AGAINST THE FIRST CLAIM OF D EDUCTION U/S 80P(2)(D) OF THE ACT AND CONFIRMED THE ADDITION MAD E BY THE ASSESSING OFFICER BUT HAS NOT ADJUDICATED THE ALTER NATE CLAIM OF THE ASSESSEE ALLEGEDLY FOR DEDUCTION UNDER SECTION 80P( 2)(A)(I) OF THE ACT. 6. THE LD. DR SUPPORTED THE ORDERS OF LOWER AUTHORI TIES. 7. WE HAVE HEARD THE LD. DR AND PERUSED THE MATERIA L ON RECORD. WE FIND THAT ASSESSEE AT THE TIME OF FILING ITS RET URN OF INCOME AND DURING ASSESSMENT PROCEEDINGS HAS CLAIMED DEDUCTION U/S 80P(2)(D) OF THE ACT FOR INTEREST INCOME RECEIVED FROM DEPOSI TS HELD WITH BANAS ITA NO. 2399/AHD/2015 ASST. YEAR 2012-13 4 BANK BY TREATING BANAS BANK (WHICH IS A CO-OPERATIV E BANK) AS CO- OPERATIVE SOCIETY AND CLAIMED DEDUCTION AT RS.1,01, 653/- AND THIS DEDUCTION WAS NOT ADMITTED BY THE ASSESSING OFFICER . THEREAFTER ASSESSEE WENT IN APPEAL BEFORE CIT(A) AND FROM GOIN G THROUGH THE ORDER OF LD. CIT(A) WE FIND THAT HE HAS ELABORATELY DISCUSSED THE ISSUE OF INADMISSIBILITY OF DEDUCTION U/S 80P(2)(D) OF TH E ACT WHEREIN HE HAS CONFIRMED THE ADDITION MADE BY THE ASSESSING OFFICE R. 8. SECTION 80P(2)(D) OF THE ACT REFERS TO THE ALLOW ABILITY OF DEDUCTION IN RESPECT OF ANY INCOME BY WAY OF INTEREST OR DIVIDENDS DERIVED BY THE CO-OPERATIVE SOCIETY FROM ITS INVEST MENTS WITH ANY OTHER CO-OPERATIVE SOCIETY. LOOKING TO THE FACTS OF THE CASE OF ASSESSEE IT IS SHOWN THAT INCOME FROM INTEREST FROM A CO-OPERATIVE BANK NAMELY BANAS BANK WHICH IS CERTAINLY NOT CO-OP ERATIVE SOCIETY PURSUANT TO AMENDMENT BY FINANCE ACT W.E.F. 1.4.200 6 TO 1.4.2007 WHEN SECTION 80P(4) WAS INTRODUCED. [ DEDUCTION IN RESPECT OF INCOME OF CO-OPERATIVE SOCI ETIES. 80P (4) THE PROVISIONS OF THIS SECTION SHALL NOT APPLY IN RELATION TO ANY CO-OPERATIVE BANK OTHER THAN A PRIMARY AGRICULTURAL CREDIT SOCIETY OR A PRIMARY CO-OPERATIVE AGRICULTURAL AND RURAL DEVELOPMENT BANK. EXPLANATION.FOR THE PURPOSES OF THIS SUB-SECTION, (A) CO-OPERATIVE BANK AND PRIMARY AGRICULTURAL C REDIT SOCIETY SHALL HAVE THE MEANINGS RESPECTIVELY ASSIGNED TO THEM IN PART V OF THE BANK ING REGULATION ACT, 1949 (10 OF 1949); (B) PRIMARY CO-OPERATIVE AGRICULTURAL AND RURAL DE VELOPMENT BANK MEANS A SOCIETY HAVING ITS AREA OF OPERATION CONFINED TO A TALUK AN D THE PRINCIPAL OBJECT OF WHICH IS TO PROVIDE FOR LONG-TERM CREDIT FOR AGRICULTURAL AND R URAL DEVELOPMENT ACTIVITIES.] ITA NO. 2399/AHD/2015 ASST. YEAR 2012-13 5 BY INSERTION OF THIS PROVISION THERE WAS CLEARLY DI STINCTION LAID DOWN IN BETWEEN A CO-OP. BANK AND A CO-OP. SOCIETY DUE TO W HICH THE PROVISIONS RELATING TO DEDUCTION AVAILABLE U/S 80P WERE NOT AVAILABLE TO ANY CO-OP. BANK OTHER THAN A PRIMARY AGRICULTURA L CREDIT SOCIETY OR A PRIMARY CO-OPERATIVE AGRICULTURAL AND RURAL DEVELOP MENT BANK. THE ASSESSEE HAS BEEN UNABLE TO PROVE THAT BANAS BANK C OMES IN THE EXCEPTION MENTIONED U/S 80P(4) AND, THEREFORE, THE INTEREST INCOME RECEIVED FROM CO-OPERATIVE BANK IS NOT COVERED IN T HE PROVISIONS OF SECTION 80P(2)(D) WHICH REFERS TO INTEREST DERIVED FROM COOPERATIVE SOCIETY AND, THEREFORE, HAS RIGHTLY CONFIRMED THE A DDITION OF DISALLOWING THE DEDUCTION U/S 80P(2)(D) OF THE ACT FOR INTEREST RECEIVED FROM CO-OPERATIVE BANK. 9. FURTHER IN THE GROUNDS OF APPEAL IN GROUND NO.2 ASSESSEE HAS TAKEN ALTERNATE CLAIM FOR ELIGIBILITY FOR DEDUCTION U/S 80P(2)(A)(I) OF THE ACT FOR INTEREST INCOME EARNED FROM OWN FUNDS INVES TED IN BANAS BANK AND ASSESSEE HAS CLAIMED IN THE GROUND NO.4 TH AT LD. CT(A) HAS NOT DULY HELD THE CLAIM OF ASSESSEE FOR DEDUCTION U /S 80P(2)(A)(I) OF THE ACT. 10. FROM GOING THROUGH THE ORDER OF LD. CIT(A) WE F IND CORRECTNESS IN THE SUBMISSIONS OF LD. AR THAT LD. CIT(A) HAS NO T DEALT THE ASSESSEES ALTERNATIVE CLAIM OF GETTING DEDUCTION U /S 80P(2)(A)(I) OF THE ACT FOR INTEREST INCOME EARNED FROM INVESTMENT OF OWN FUNDS. WE WOULD LIKE HERE TO REFER TO THE DECISION OF CO-ORDI NATE BANCH IN ITA NO.2398/AHD/2015 VIDE ITS ORDER DATED 26/11/2015 I N ASSESSEES OWN CASE FOR ASST. YEAR 2010-11 ON SIMILAR ISSUE WH EREIN MATTER HAS BEEN REMITTED BACK TO THE FILE OF ASSESSING OFFICER TO EXAMINE THE ITA NO. 2399/AHD/2015 ASST. YEAR 2012-13 6 POSSIBILITY OF ELIGIBILITY OF ASSESSEE FOR CLAIMING DEDUCTION U/S 80P(2)(A)(I) OF THE ACT. RELEVANT PORTION OF THE AB OVE DECISION OF CO- ORDINATE BENCH IN ITA NO.2398/AHD/2015 IS MENTIONED AS FOLLOWS :- 8. AS THE ADDITION OF RS.1,15,213/- HAS NOT BEEN D EALT 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. THEREFORE, IN VIEW OF ABOVE, WE REMIT BACK THE ISSU E MENTIONED IN ALTERNATE CLAIM MADE BY THE ASSESSEE FOR CLAIMING D EDUCTION U/S 80P(2)(A)(I) OF THE ACT FOR INTEREST INCOME EARNED FROM CO-OPERATIVE ITA NO. 2399/AHD/2015 ASST. YEAR 2012-13 7 BANK TO THE FILE OF ASSESSING OFFICER FOR FRESH ORD ER AFTER GIVING REASONABLE OPPORTUNITY OF HEARING TO THE ASSESSEE. 11. OTHER GROUNDS ARE OF GENERAL NATURE, WHICH DO N OT REQUIRE ANY ADJUDICATION. 12. IN THE RESULT APPEAL IS PARTLY ALLOWED FOR STATISTI CAL PURPOSES. ORDER PRONOUNCED IN THE OPEN COURT ON 28TH JANUARY. 2016 SD/- SD/- (RAJPAL YADAV) JUDICIAL MEMBER (MANISH BORAD) ACCOUNTANT MEMBER DATED 28/01/2016 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 NO. 2399/AHD/2015 ASST. YEAR 2012-13 8 1. DATE OF DICTATION: 22/01/2016 2. DATE ON WHICH THE TYPED DRAFT IS PLACED BEFORE T HE DICTATING MEMBER: 27/01/2016 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: 28/1/2016 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: