The Belgaum Merchants Co-op Soc Ltd., Belgaum V. Income-Tax Officer, Ward - 2(1), Belgaum

ITA 24/PAN/2018

• Counselvise Citation: [2021] 104 COUNSELVISE.COM (IT) 8141 (ITAT-PANAJI)
• Duration Of Justice: 3 year(s) 10 month(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 17-11-2021
• Appeal Filed By: Assessee
• Order Result: PartlyAllowed
• Bench Allotted: SMC
• Assessment Year: 2013-2014
• Appeal Filed On: 17-01-2018
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Keywords: Business income
• Section: 80P

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL PANAJI BENCH, PANAJI – VIRTUAL COURT BEFORE SHRI INTURI RAMA RAO, AM AND SHRI S. S. VISWANETHRA RAVI, JM आयकर अपील सं. / ITA Nos.22 to 24/PAN/2018 िनधाᭅरण वषᭅ / Assessment Years : 2011-12 to 2013-14 The Belgaum Merchants Co-op. Society Ltd., CTS No.1605, Ansurkar Galli, Belgaum. PAN : AABAT7231N .......अपीलाथᱮ / Appellant बनाम / V/s. ITO, Ward- 1(2)/1(3), Belgaum. ......ᮧ᭜यथᱮ / Respondent Assessee by : None Revenue by : Shri Sourabh Nayak सुनवाई कᳱ तारीख / Date of Hearing : 11.11.2021 घोषणा कᳱ तारीख / Date of Pronouncement : 18.11.2021 आदेश / ORDER PER INTURI RAMA RAO, AM: These are the appeals filed by the assessee directed against the separate orders of ld. Commissioner of Income Tax (Appeals), Belagavi (‘CIT(A)’ for short) commonly dated 20.11.2017 for the assessment years 2011-12 to 2013-14 respectively. 2. Since the identical facts and issues are involved in all the above captioned appeals, we proceed to dispose of the same by this common order. 3. For the sake of convenience and clarity, the facts relevant to the appeal in ITA No.22/PAN/2018 for the assessment year 2011-12 are stated herein. 2 ITA Nos.22 to 24/PAN/2018 4. Briefly, the facts of the case are as under : The appellant is a cooperative society registered under the Karnataka State Co-operative Society Act, 1959 with the object of accepting deposits from its members and providing credit facilities to its members. The return of income for the assessment year 2011-12 was filed on 29.09.2011 declaring total income of Rs.10,16,501/- after claiming exemption u/s 80P(2)(a)(i) of the Income Tax Act, 1961 (‘the Act’) of Rs.10,16,501/-. Against the said return of income, the assessment was completed by the Income Tax Officer, Ward- 1(2), Belgaum (‘the Assessing Officer’) vide order dated 31.10.2013 passed u/s 143(3) of the Act at a total income of Rs.10,16,501/- denying the claim of exemption u/s 80P(2)(a)(i) on the ground that the appellant is a cooperative bank and hit by the provisions of sub-section (4) of section 80P of the Act. 5. Being aggrieved by the above action of the Assessing Officer, an appeal was preferred before the ld. CIT(A), who vide impugned order held as follows :- “a) For the Business activity of rendering credit facilities to its members, appellant being a "Co-operative society" and not "Co-operative Bank" deduction under section 80P(2)(a)(i) is to be allowed. b) Appellant being a Co-operative society as decided above paras, appellant is eligible for deduction under section 80P(2)(d) on the interest received from Co-operative societies. The same is to be allowed. c) Interest received from any SB A/cs of Other Banks/Scheduled Banks, appellant is eligible for deduction under section 80P(2)(a)(i) as discussed above para as such interest is attributable to business of the society. d) Interest earned on short term investments/deposits of period less than one year to be treated as attributable to business income of the society. The deduction under section 80P(2)(a)(i) is allowed. e) Interest earned on long term investments/deposits of period more than one year to be treated as "income from other sources" (as discussed above para). The deduction under section 80P(2)(a)(i)/ 80P(2)(d) is not eligible. Hence, the interest received from BDCC Banks and other Banks is treated as "Income from Other Sources". However, Assessing Officer is directed to allow the cost of fund if any and proportionate administrative expenses in respect of such income u/s 57(3) of the Act, 1961.” 3 ITA Nos.22 to 24/PAN/2018 6. Being aggrieved by the above findings of the ld. CIT(A), the appellant is in appeal before us in the present appeal. 7. When the appeal was called on for hearing, none appeared on behalf of the assessee despite due service of notice. 8. We heard the ld. Sr. DR and perused the material on record. The solitary issue in the present appeal relates to whether the income derived by a cooperative bank on the investments and deposits held with other cooperative banks is eligible for deduction u/s 80P(2)(d) or not?. On perusal of the assessment order, we find the Assessing Officer denied the claim for deduction u/s 80P(2)(a)(i) holding it to be a cooperative bank but this reasoning was turned down by the ld. CIT(A) by considering the facts and law of case. The finding of the ld. CIT(A), the appellant is not a cooperative bank, is not under challenge before us. The only issue which is under challenge before us is whether the income derived by the appellant society on the investments of surplus funds with other cooperative bank is eligible for deduction u/s 80P(2)(d) of the Act. The fact that the investments are held for period of more than one year or less has no relevance to decide the exemption of such income under the provisions of section 80P(2)(d) of the Act. What is relevant to be seen is whether the income was received by a cooperative bank from another cooperative society or not. Therefore, the conclusion reached by the ld. CIT(A) that interest income derived on investments of surplus funds with other cooperative bank held for a period of one year or less is not eligible for deduction u/s 80P of the Act and is not supported by any provisions of Income Tax Act. In the circumstances, the findings of the ld. CIT(A) to this extent are 4 ITA Nos.22 to 24/PAN/2018 reversed. However, we make it clear that the Assessing Officer shall allow the exemption u/s 80P(2)(d) only after due verification of fact that the interest income was derived by the appellant society from another cooperative society. Thus, this issue raised by the assessee in the grounds of appeal stands remanded back to the file of the Assessing Officer. 9. In the result, the appeal filed by the assessee in ITA No.22/PAN/2018 for the assessment year 2011-12 stands partly allowed for statistical purposes. ITA Nos.23 & 24/PAN/2018, A.Ys. 2012-13 & 2013-14 10. As mentioned earlier, the facts and issues involved in all the three appeals are identical, therefore, our decision in ITA No.22/PAN/2018 for the assessment year 2011-12 shall apply mutatis mutandis to remaining appeals in ITA Nos.23 & 24/PAN/2018 for the assessment years 2012-13 & 2013-14. Thus, grounds of appeal raised by the assessee in ITA Nos.23 & 24/PAN/2018 for the assessment years 2012-13 & 2013-14 are partly allowed for statistical purposes. 11. Resultantly, all the above three appeals filed by the assessee are partly allowed for statistical purposes. Order pronounced on this 18 th day of November, 2021. Sd/- Sd/- (S. S. VISWANETHRA RAVI) (INTURI RAMA RAO) ᭠याियक सद᭭य/JUDICIAL MEMBER लेखा सद᭭य/ACCOUNTANT MEMBER पुणे / Pune; ᳰदनांक / Dated : 18 th November, 2021. Sujeet 5 ITA Nos.22 to 24/PAN/2018 आदेश कᳱ ᮧितिलिप अᮕेिषत / Copy of the Order forwarded to : 1. अपीलाथᱮ / The Appellant. 2. ᮧ᭜यथᱮ / The Respondent. 3. The CIT(A), Belagavi. 4. The Pr. CIT, Belagavi. 5. DR, ITAT, Panaji. 6. गाडᭅ फ़ाइल / Guard File. आदेशानुसार / BY ORDER, // True Copy // Senior Private Secretary आयकर अपीलीय अिधकरण, पुणे / ITAT, Pune.