The Samarpan Co.Op.Credit Society Ltd., Deesa V. The ACIT, B.K.Circle, Palanpur

ITA 2400/AHD/2015

• Counselvise Citation: [2016] 133 COUNSELVISE.COM (IT) 9659 (ITAT-AHMEDABAD)
• Duration Of Justice: 5 month(s) 24 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 05-02-2016
• Appeal Filed By: Assessee
• Order Result: Dismissed
• Bench Allotted: SMC
• Next Hearing Date: 22-12-2015
• Assessment Year: 2010-2011
• Appeal Filed On: 12-08-2015
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Department Lawyers: R P MAURYA
• Assessee Lawyers: THAKKAR
• Keywords: Question of law
• Section: 56

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL AHMEDABAD A BENCH AHMADABAD , BEFORE: SHRI PRAMOD KUMAR, ACCOUNTANT MEMBER SHRI RAJPAL YADAV, JUDICIAL MEMBER ITA NOS. 2400 & 2401/AHD/2015 ASSESSMENT YEARS :2010-11 & 2012-13 THE SAMARPAN CO-OP. CREDIT SOCIETY LTD. 124-125, RAJIV GANDHI COMPLEX, LALCHALI ROAD, OPP. OLD BUS STAND DEESA, DIST. B. K. 385535 V/S . THE ACIT, BANASKANTHA CIRCLE, PALANPUR, 2 ND FLOOR, SHREE HARI COMPLEX, ABU HIGH WAY, PALANPUR, DIST. B. K. 385001 PAN NO. AAAAT8371A (APPELLANT) .. (RESPONDENT) /BY ASSESSEE SHRI M. S. THAKKAR, A.R. /BY REVENUE SHRI R. P. MAURYA, D.R. /DATE OF HEARING 22.12.2015 /DATE OF PRONOUNCEMENT 05.02.2016 O R D E R PER : RAJPAL YADAV, JUDICIAL MEMBER THE PRESENT TWO APPEALS ARE DIRECTED AT THE INSTANC E OF ASSESSEE AGAINST SEPARATE ORDERS OF EVEN DATED I.E. 09 TH JUNE, 2015 PASSED BY LD. CIT(A)-4, ITA NOS. 2400 & 2401/AHD/15 A.YS. 10-11 & 12-13 (THE SAMARPAN CO-OP. CREDIT SOCIETY LTD. VS. ACIT) PAGE 2 AHMEDABAD ON THE APPEALS OF ASSESSEE FOR A.YS.2010- 11 & 2012-13. SINCE, COMMON ISSUES ARE INVOLVED, THEREFORE, WE HEARD BOT H THE APPEALS TOGETHER AND IT MAY BE APPROPRIATE TO DISPOSE OF THEM BY THIS CO MMON ORDER. 2. FIRST WE TAKE ITA NO.2401/AHD/2015 I.E. APPEAL F OR A.Y. 2012-13. THE GROUNDS OF APPEAL TAKEN BY ASSESSEE ARE NOT IN CONS ONANCE WITH RULE 8 OF ITAT RULES, 1963. THEY ARE DESCRIPTIVE AND ARGUMENTATIV E IN NATURE. IN BRIEF, THE GRIEVANCE OF THE ASSESSEE IS THAT LD. CIT(A) ERRED IN DENYING THE CLAIM OF ASSESSEE FOR GRANT OF DEDUCTION U/S.80P(2)(A)(I) ON A SUM OF RS.3,77,515/- WHICH WAS EARNED BY THE ASSESSEE AS INTEREST INCOME ON FI X DEPOSITS WITH THE BANKS. 3. THE BRIEF FACTS OF THE CASE ARE THAT THE ASSESSE E IS A CO-OPERATIVE SOCIETY REGISTERED UNDER GUJARAT CO-OPERATIVE SOCIETY ACT, 1961 CARRYING ON THE BUSINESS OF PROVIDING CREDIT FACILITIES TO ITS MEMB ER. IT HAS FILED ITS RETURN OF INCOME ON 29 TH OF SEPTEMBER, 2012 DECLARING TOTAL INCOME AT NIL. THE CASE OF THE ASSESSEE WAS SELECTED FOR SCRUTINY ASSESSMENT A ND A NOTICE U/S.143(2) OF THE INCOME TAX ACT WAS ISSUED AND SERVED UPON THE ASSES SEE. ON SCRUTINY OF THE ACCOUNTS, IT REVEALED TO THE ASSESSING OFFICER THAT ASSESSEE SOCIETY HAS EARNED INCOME BY WAY OF INTEREST DERIVED FROM ITS INVESTME NTS OTHER THAN CO-OPERATIVE SOCIETY. HE WORKED OUT THE TOTAL INTEREST INCOME O F RS.3,77,517/-. LD. A.O. REJECTED THE PRAYER OF ASSESSEE TO GRANT EXEMPTION U/S.80P(2)(A)(I) OF THE INCOME TAX ACT ON THIS AMOUNT. ACCORDINGLY, INCOME OF THE ASSESSEE WAS DETERMINED AT RS.3,77,520/-. 4. APPEAL TO THE LD. CIT(A) DID NOT BRING ANY RELIE F TO THE ASSESSEE. 5. THE LD. COUNSEL FOR THE ASSESSEE, AT THE VERY OU TSET, SUBMITTED THAT THIS ISSUE IS COVERED IN FAVOUR OF THE ASSESSEE BY THE O RDER OF ITAT, AHMEDABAD IN THE CASE OF ITO VS. JAFARI MOMIN VIKAS CO.-OP. CRED IT SOCIETY LTD. IN ITA NO.1491/AHD/2012. THE APPEAL OF THE REVENUE AGAINS T THIS ORDER HAS ALSO BEEN ITA NOS. 2400 & 2401/AHD/15 A.YS. 10-11 & 12-13 (THE SAMARPAN CO-OP. CREDIT SOCIETY LTD. VS. ACIT) PAGE 3 DISMISSED BY THE HONBLE GUJARAT HIGH COURT AND THE ORDER OF THE HONBLE GUJARAT HIGH COURT REPORTED IN [2014] 49 TAXMANN.CO M 571 (GUJARAT). THE QUESTION FRAMED BY THE HONBLE HIGH COURT IN THIS C ASE READ AS UNDER: WHETHER THE HONBLE TRIBUNAL IS CORRECT IN ALLOWIN G THE DEDUCTION UNDER SECTION 80P(2)(A)(I) TO THE ASSESSEES SOCIETY EVEN THOUGH THE SAME IS COVERED UNDER SECTION 80P(4) READ WITH SECTION 2(24)(VIIA) BEING INCOME F ROM PROVIDING CREDIT FACILITIES CARRIED ON BY A CO-OPERATIVE SOCIETY WITH ITS MEMBE R? THE HONBLE HIGH COURT WAS ANSWERED THE QUESTION AG AINST THE REVENUE BY OBSERVING AS UNDER: 6. HAD THIS BEEN THE PLAIN STATUTORY PROVISIONS UN DER CONSIDERATION IN ISOLATION, IN OUR OPINION, THE QUESTION OF LAW COULD BE STATED TO HAV E ARISEN. WHEN, AS CONTENDED BY THE ASSESSEE, BY VIRTUE OF SUB-SECTION (4) ONLY CO-OPER ATIVE BANKS OTHER THAN THOSE MENTIONED THEREIN WERE MEANT TO BE EXCLUDED FOR THE PURPOSE O F DEDUCTION UNDER SECTION 80P, A QUESTION WOULD ARISE WHY THEN THE LEGISLATURE SPECI FIED PRIMARY AGRICULTURAL CREDIT SOCIETIES ALONG WITH PRIMARY CO-OPERATIVE AGRICULTU RAL AND RURAL DEVELOPMENT BANKS FOR EXCLUSION FROM SUCH EXCLUSION AND, IN OTHER WORDS, CONTINUED TO HOLD SUCH ENTITY AS ELIGIBLE FOR DEDUCTION. HOWEVER, THE ISSUE HAS BEEN CONSIDERABLY SIMPLIFIED BY VIRTUE OF THE CENTRAL BOARD OF DIRECT TAXES CIRCULAR NO. 133 OF 2007, DATED MAY 9, 2007. CIRCULAR PROVIDES AS UNDER : 'SUBJECT : CLARIFICATION REGARDING ADMISSIBILITY OF DEDUCTION UNDER SECTION 80P OF THE INCOME-TAX ACT, 1961. 1. PLEASE REFER TO YOUR LETTER NO. DCUS/30688/2007, DATED MARCH 28, 2007, ADDRESSED TO THE CHAIRMAN, CENTRAL BOARD OF DIRECT TAXES, ON THE ABOVE GIVEN SUBJECT. 2. IN THIS REGARD, I HAVE BEEN DIRECTED TO STATE TH AT SUB-SECTION(4) OF SECTION 80P PROVIDES THAT DEDUCTION UNDER THE SAID SECTION SHAL L NOT BE ALLOWABLE TO ANY CO- OPERATIVE BANK OTHER THAN A PRIMARY AGRICULTURAL CR EDIT SOCIETY OR A PRIMARY CO- OPERATIVE AGRICULTURAL AND RURAL DEVELOPMENT BANK. FOR THE PURPOSE OF THE SAID SUB- SECTION, CO-OPERATIVE BANK SHALL HAVE THE MEANING A SSIGNED TO IT IN PART V OF THE BANKING REGULATION ACT, 1949. 3. IN PART V OF THE BANKING REGULATION ACT, 'CO-OPE RATIVE BANK' MEANS A STATE CO- OPERATIVE BANK, A CENTRAL CO-OPERATIVE BANK AND A P RIMARY CO-OPERATIVE BANK. 4. THUS, IF THE DELHI CO-OP. URBAN THRIFT AND CREDI T SOCIETY LTD. DOES NOT FALL WITHIN THE MEANING OF 'CO-OPERATIVE BANK' AS DEFINED IN PA RT V OF THE BANKING REGULATION ACT, 1949, SUB-SECTION (4) OF SECTION 80P WILL NOT APPLY IN THIS CASE. 5. THIS IS ISSUED WITH THE APPROVAL OF THE CHAIRMAN , CENTRAL BOARD OF DIRECT TAXES.' ITA NOS. 2400 & 2401/AHD/15 A.YS. 10-11 & 12-13 (THE SAMARPAN CO-OP. CREDIT SOCIETY LTD. VS. ACIT) PAGE 4 7. FROM THE ABOVE CLARIFICATION, IT CAN BE GATHERED THAT SUB-SECTION (4) OF SECTION 80P WILL NOT APPLY TO AN ASSESSEE WHICH IS NOT A CO-OPE RATIVE BANK. IN THE CASE CLARIFIED BY THE CENTRAL BOARD OF DIRECT TAXES, THE DELHI CO-OP. URBAN THRIFT AND CREDIT SOCIETY LTD. WAS UNDER CONSIDERATION. THE CIRCULAR CLARIFIE D THAT THE SAID ENTITY NOT BEING A CO- OPERATIVE BANK, SECTION 80P(4) OF THE ACT WOULD NOT APPLY TO IT. IN VIEW OF SUCH CLARIFICATION, WE CANNOT ENTERTAIN THE REVENUE'S CO NTENTION THAT SECTION 80P(4) WOULD EXCLUDE NOT ONLY THE CO-OPERATIVE BANKS OTHER THAN THOSE FULFILLING THE DESCRIPTION CONTAINED THEREIN BUT ALSO CREDIT SOCIETIES, WHICH ARE NOT CO-OPERATIVE BANKS. IN THE PRESENT CASE, THE RESPONDENT-ASSESSEE IS ADMITTEDLY NOT A CREDIT CO-OPERATIVE BANK BUT A CREDIT CO-OPERATIVE SOCIETY. THE EXCLUSION CLAUSE O F SUB-SECTION(4) OF SECTION 80P, THEREFORE, WOULD NOT APPLY. IN THE RESULT, THE TAX APPEALS ARE DISMISSED. SIMILARLY, IDENTICAL QUESTION HAS COME BEFORE HONB LE KARNATAKA HIGH COURT IN THE CASE OF GUTTIGEDARARA CREDIT CO-OPERATIVE SOCIE TY LTD. VS. ITO REPORTED IN [2015] 60 TAXMANN.COM 215 (KARNATAKA). THE QUESTIO NS FRAMED BY HONBLE KARNATAKA HIGH COURT RENDERED AS UNDER: (I) WHETHER THE TRIBUNAL FAILED IN LAW TO APPRECIA TE THAT THE INTEREST EARNED ON SHORT-TERM DEPOSITS IN BANKS WERE ONLY INVESTMENT I N THE COURSE OF ACTIVITY OF PROVIDING CREDIT FACILITIES TO MEMBERS AND THAT THE SAME CANNOT BE CONSIDERED AS INVESTMENT MADE FOR THE PURPOSE OF EARNING INTEREST INCOME AND CONSEQUENTLY PASSED A PERVERSE ORDER ? (II) WHETHER THE TRIBUNAL IS CORRECT IN LAW IN HOLD ING THAT THE INTEREST EARNED ON THE DEPOSITS BY THE APPELLANT/CO-OPERATIVE SOCIETY DOES NOT QUALIFY FOR DEDUCTION UNDER SECTION 80P(2)(A)(I) OF THE INCOME TAX ACT, 1 961 ON THE FACTS AND CIRCUMSTANCES OF THE CASE? (III) WITHOUT PREJUDICE, WHETHER THE TRIBUNAL IS JU STIFIED IN NOT HOLDING THAT IF AT ALL THE INTEREST EARNED FROM DEPOSITS WITH SCHEDULED BA NKS IS HELD TO BE NOT ATTRIBUTABLE TO THE ACTIVITY OF PROVIDING CREDIT TO MEMBERS, THEN T HE WHOLE OF SUCH INCOME IS NOT LIABLE TO TAX BUT ONLY THE NET INCOME AFTER REDUCING THE E XPENDITURE INCURRED TO EARN SUCH INTEREST INCOME WOULD BE LIABLE TO TAX ON THE FACTS AND CIRCUMSTANCES OF THE CASE? THE HONBLE KARNATAKA HIGH COURT HAS RECORDED THE F OLLOWING FINDINGS WHILE DECIDING THE ABOVE QUESTIONS IN FAVOUR OF ASSESSEE: 7. FROM THE AFORESAID FACTS AND RIVAL CONTENTIONS, THE UNDISPUTED FACTS WHICH EMERGE ARE, CERTAIN SUMS OF INTEREST WERE EARNED FR OM SHORT-TERM DEPOSITS AND FROM SAVINGS BANK ACCOUNT. THE ASSESSEE IS A CO-OPERATIV E SOCIETY PROVIDING CREDIT FACILITIES TO ITS MEMBERS. IT IS NOT CARRYING ON AN Y OTHER BUSINESS. THE INTEREST INCOME EARNED BY THE ASSESSEE BY PROVIDING CREDIT FACILITI ES TO ITS MEMBERS IS DEPOSITED IN THE BANKS FOR A SHORT DURATION WHICH HAS EARNED INTERES T. THEREFORE, WHETHER THIS INTEREST IS ATTRIBUTABLE TO THE BUSINESS OF PROVIDING CREDIT FACILITIES TO ITS MEMBERS, IS THE QUESTION. ITA NOS. 2400 & 2401/AHD/15 A.YS. 10-11 & 12-13 (THE SAMARPAN CO-OP. CREDIT SOCIETY LTD. VS. ACIT) PAGE 5 8. IN THIS REGARD, IT IS NECESSARY TO NOTICE THE RE LEVANT PROVISION OF LAW I.E., SECTION 80P(2)(A)(I): 80P DEDUCTION IN RESPECT OF INCOME OF CO- OPERATIV E SOCIETIES: (1) WHERE, IN THE CASE OF AN ASSESSEE BEING A CO-OPERATIVE SOC IETY, THE GROSS TOTAL INCOME INCLUDES ANY INCOME REFERRED TO IN SUB-SECTION (2), THERE SHALL BE DEDUCTED, IN ACCORDANCE WITH AND SUBJECT TO THE PROVISIONS OF TH IS SECTION, THE SUMS SPECIFIED IN SUB-SECTION (2), IN COMPUTING THE TOTA L INCOME OF THE ASSESSEE. (2) THE SUMS REFERRED TO IN SUB-SECTION (1) SHALL B E THE FOLLOWING, NAMELY: (A) IN THE CASE OF CO-OPERATIVE SOCIETY ENGAGED IN (I) CARRYING ON THE BUSINESS OF BANKING OR PROVIDIN G CREDIT FACILITIES TO ITS MEMBERS, OR (II) TO (VII) ** ** ** THE WHOLE OF THE AMOUNT OF PROFITS AND GAINS OF BUS INESS ATTRIBUTABLE TO ANY ONE OR MORE OF SUCH ACTIVITIES.' 9. THE WORD 'ATTRIBUTABLE' USED IN THE SAID SECTION IS OF GREAT IMPORTANCE. THE APEX COURT HAD AN OCCASION TO CONSIDER THE MEANING OF THE WORD 'ATTRIBUTABLE' AS SUPPOSED TO DERIVE FROM ITS USE IN VARIOUS OTHER PR OVISIONS OF THE STATUTE IN THE CASE OF CAMBAY ELECTRIC SUPPLY INDUSTRIAL CO. LTD. V. CIT [ 1978] 113 ITR 84 (AT PAGE 93) AS UNDER: 'AS REGARDS THE ASPECT EMERGING FROM THE EXPRESSION 'ATTRIBUTABLE TO' OCCURRING IN THE PHRASE 'PROFITS AND GAINS ATTRIBUT ABLE TO THE BUSINESS OF THE SPECIFIED INDUSTRY (HERE GENERATION AND DISTRIBUTIO N OF ELECTRICITY) ON WHICH THE LEARNED SOLICITOR-GENERAL RELIED, IT WILL BE PE RTINENT TO OBSERVE THAT THE LEGISLATURE HAS DELIBERATELY USED THE EXPRESSION 'A TTRIBUTABLE TO' AND NOT THE EXPRESSION 'DERIVED FROM'. IT CANNOT BE DISPUTED TH AT THE EXPRESSION 'ATTRIBUTABLE TO' IS CERTAINLY WIDER IN IMPORT THAN THE EXPRESSION 'DERIVED FROM'. HAD THE EXPRESSION 'DERIVED FROM' BEEN USED, IT COULD HAVE WITH SOME FORCE BEEN CONTENDED THAT A BALANCING CHARGE ARISIN G FROM THE SALE OF OLD MACHINERY AND BUILDINGS CANNOT BE REGARDED AS PROFI TS AND GAINS DERIVED FROM THE CONDUCT OF THE BUSINESS OF GENERATION AND DISTR IBUTION OF ELECTRICITY. IN THIS CONNECTION, IT MAY BE POINTED OUT THAT WHENEVER THE LEGISLATURE WANTED TO GIVE A RESTRICTED MEANING IN THE MANNER SUGGESTED BY THE LEARNED SOLICITOR- GENERAL, IT HAS USED THE EXPRESSION 'DERIVED FROM', AS. FOR INSTANCE, IN SECTION 80J. IN OUR VIEW, SINCE THE EXPRESSION OF WIDER IMP ORT, NAMELY, 'ATTRIBUTABLE TO', HAS BEEN USED, THE LEGISLATURE INTENDED TO COV ER RECEIPTS FROM SOURCES OTHER THAN THE ACTUAL CONDUCT OF THE BUSINESS OF GE NERATION AND DISTRIBUTION OF ELECTRICITY.' 10. THEREFORE, THE WORD 'ATTRIBUTABLE TO' IS CERTAI NLY WIDER IN IMPORT THAN THE EXPRESSION 'DERIVED FROM. WHENEVER THE LEGISLATUR E WANTED TO GIVE A RESTRICTED MEANING, THEY HAVE USED THE EXPRESSION DERIVED FRO M'. THE EXPRESSION 'ATTRIBUTABLE TO' BEING OF WIDER IMPORT, THE SAID EXPRESSION IS U SED BY THE LEGISLATURE WHENEVER THEY INTENDED TO GATHER RECEIPTS FROM SOURCES OTHER THAN THE ACTUAL CONDUCT OF THE BUSINESS. ITA NOS. 2400 & 2401/AHD/15 A.YS. 10-11 & 12-13 (THE SAMARPAN CO-OP. CREDIT SOCIETY LTD. VS. ACIT) PAGE 6 A CO-OPERATIVE SOCIETY WHICH IS CARRYING ON THE BUS INESS OF PROVIDING CREDIT FACILITIES TO ITS MEMBERS, EARNS PROFITS AND GAINS OF BUSINESS BY PROVIDING CREDIT FACILITIES TO ITS MEMBERS. THE INTEREST INCOME SO DERIVED OR THE CAPI TAL, IF NOT IMMEDIATELY REQUIRED TO BE LENT TO THE MEMBERS, THE SOCIETY CANNOT KEEP THE SAID AMOUNT IDLE. IF THEY DEPOSIT THIS AMOUNT IN BANK SO AS TO EARN INTEREST, THE SAI D INTEREST INCOME IS ATTRIBUTABLE TO THE PROFITS AND GAINS OF THE BUSINESS OF PROVIDING CREDIT FACILITIES TO ITS MEMBERS ONLY. THE SOCIETY IS NOT CARRYING ON ANY SEPARATE BUSINES S FOR EARNING SUCH INTEREST INCOME. THE INCOME SO DERIVED IS THE AMOUNT OF PROFITS AND GAINS OF BUSINESS ATTRIBUTABLE TO THE ACTIVITY OF CARRYING ON THE BUSINESS OF BANKING OR PROVIDING CREDIT FACILITIES TO ITS MEMBERS BY A CO-OPERATIVE SOCIETY AND IS LIABLE TO BE DEDUCTED FROM THE GROSS TOTAL INCOME UNDER SECTION 80P OF THE ACT. 11. IN THIS CONTEXT WHEN WE LOOK AT THE JUDGMENT OF THE APEX COURT IN TOTGARS CO- OPERATIVE SALE SOCIETY'S CASE (SUPRA), ON WHICH REL IANCE IS PLACED, THE SUPREME COURT WAS DEALING WITH A CASE WHERE THE ASSESSEE/CO-OPERA TIVE SOCIETY, APART FROM PROVIDING CREDIT FACILITIES TO THE MEMBERS, WAS AL SO IN THE BUSINESS OF MARKETING OF AGRICULTURAL PRODUCE GROWN BY ITS MEMBERS. THE SALE CONSIDERATION RECEIVED FROM MARKETING AGRICULTURAL PRODUCE OF ITS MEMBERS WAS R ETAINED IN MANY CASES. THE SAID RETAINED AMOUNT WHICH WAS PAYABLE TO ITS MEMBERS FR OM WHOM PRODUCE WAS BOUGHT. WAS INVESTED IN A SHORT-TERM DEPOSIT/SECURITY. SUCH AN AMOUNT WHICH WAS RETAINED BY THE ASSESSEE-S OCIERY WAS A LIABILITY AND IT WAS SHOWN IN THE BALANCE SHEET ON THE LIABILITY SIDE. T HEREFORE, TO THAT EXTENT, SUCH INTEREST INCOME CANNOT BE SAID TO BE ATTRIBUTABLE EITHER TO THE ACTIVITY MENTIONED IN SECTION 80P(2)(A)(I) OF THE ACT OR UNDER SECTION 80P(2)(A)( III) OF THE ACT. THEREFORE IN THE FACTS OF THE SAID CASE, THE APEX COURT HELD THE ASS ESSING OFFICER WAS RIGHT IN TAXING THE INTEREST INCOME INDICATED ABOVE UNDER SECTION 56 OF THE ACT. FURTHER THEY MADE IT CLEAR THAT THEY ARE CONFINING THE SAID JUDGMENT TO THE FACTS OF THAT CASE. THEREFORE IT IS CLEAR, SUPREME COURT WAS NOT LAYING DOWN ANY LAW. 12. IN THE INSTANT CASE, THE AMOUNT WHICH WAS INVES TED IN BANKS TO EARN INTEREST WAS NOT AN AMOUNT DUE TO ANY MEMBERS. IT WAS NOT THE LI ABILITY. IT WAS NOT SHOWN AS LIABILITY IN THEIR ACCOUNT. IN FACT THIS AMOUNT WHI CH IS IN THE NATURE OF PROFITS AND GAINS, WAS NOT IMMEDIATELY REQUIRED BY THE ASSESSEE FOR LENDING MONEY TO ITS MEMBERS, AS THERE WERE NO TAKERS. THEREFORE THEY HA D DEPOSITED THE MONEY IN A BANK SO AS TO EARN INTEREST. THE SAID INTEREST INCOME IS ATTRIBUTABLE TO CARRYING ON THE BUSINESS OF BANKING AND THEREFORE IT IS LIABLE TO B E DEDUCTED IN TERMS OF SECTION 80P(1) OF THE ACT. IN FACT SIMILAR VIEW IS TAKEN BY THE ANDHRA PRADESH HIGH COURT IN THE CASE OF CIT V. ANDHRA PRADESH STATE CO-OPERATIV E BANK LTD. [2011] 336 ITR 516/200 TAXMAN 220/12 TAXMANN.COM 66. 13. IN THAT VIEW OF THE MATTER, THE ORDER PASSED BY THE APPELLATE AUTHORITIES DENYING THE BENEFIT OF DEDUCTION OF THE AFORESAID AMOUNT IS UNSUSTAINABLE IN LAW. ACCORDINGLY IT IS HEREBY SET ASIDE. THE SUBSTANTIAL QUESTIONS O F LAW ARE ANSWERED IN FAVOUR OF THE ASSESSEE AND AGAINST THE REVENUE. HENCE, WE PASS TH E FOLLOWING ORDER: APPEAL IS ALLOWED. THE IMPUGNED ORDER DATED 19.9.20 14 IS SET ASIDE. PARTIES TO BEAR THEIR OWN COSTS. ITA NOS. 2400 & 2401/AHD/15 A.YS. 10-11 & 12-13 (THE SAMARPAN CO-OP. CREDIT SOCIETY LTD. VS. ACIT) PAGE 7 THE HONBLE KARNATAKA HIGH COURT HAS REVERSED THE O RDER OF THE TRIBUNAL AND HELD THAT INTEREST INCOME EARNED BY A CREDIT CO-OPE RATIVE SOCIETY FROM THE DEPOSITS WITH SCHEDULED BANK IS LIABLE TO BE CONSID ERED AS ELIGIBLE FOR CLAIM OF DEDUCTION U/S.80P(2)(A)(I) OF THE INCOME TAX ACT. 6. ON THE OTHER HAND, LD. D.R. RELIED UPON THE ORDE R OF ASSESSING OFFICER. 7. ON DUE CONSIDERATION OF THE FACTS AND CIRCUMSTAN CES, WE FIND THAT ISSUE IN DISPUTE IS PURELY COVERED IN FAVOUR OF THE ASSESSEE PARTLY BY THE DECISION OF HONBLE KARNATAKA HIGH COURT WHEREIN IT HAS BEEN SP ECIFICALLY HELD THAT INTEREST INCOME EARNED BY THE CREDIT CO-OPERATIVE SOCIETY FR OM DEPOSITS MADE WITH SCHEDULED BANK WOULD ALSO QUALIFY FOR GRANT OF DEDU CTION U/S.80P(2)(A)(I) OF THE INCOME TAX ACT. THEREFORE, WE ALLOW THE APPEAL OF THE ASSESSEE AND DIRECT THE ASSESSING OFFICER TO GRANT DEDUCTION U/S.80P(2)(A)( I) OF THE INCOME TAX ACT AND THE INTEREST INCOME OF RS.3,77,517/-. 8. NOW WE TAKE ITA NO.2400/AHD/2015 I.E. APPEAL FOR A.Y. 2010-11. 9. IN THIS APPEAL, THE GRIEVANCE OF THE ASSESSEE IS THAT LD. CIT(A) HAS ERRED IN UPHOLDING THE DENIAL OF DEDUCTION U/S.80P(2)(A)(I) OF THE INCOME TAX ACT OF RS.56,359/- WHICH WAS EARNED BY THE ASSESSEE AS INT EREST INCOME. 10. THE BRIEF FACTS OF THE CASE ARE THAT ASSESSEE H AS FILED ITS RETURN OF INCOME ON 08.10.2010 DECLARING TOTAL INCOME AT NIL. THE L D. ASSESSING OFFICER HAS PASSED AN ASSESSMENT ORDER U/S.143((3) OF THE ACT O N 07.12.2012. THE LD. ASSESSING OFFICER HAS HELD THAT ASSESSEE SOCIETY IS CARRYING OUT BUSINESS OF BANKING AND CLAIMED DEDUCTION U/S.80P(2)(A)(I) OF T HE INCOME TAX ACT. HE WAS OF THE OPINION THAT IN VIEW OF SUB-SECTION (4) OF S ECTION 80P INSERTED WITH EFFECT FROM 01.04.2007. THE ASSESSEE IS NOT ENTITLED FOR DEDUCTION U/S.80P(2)(A)(I) OF ITA NOS. 2400 & 2401/AHD/15 A.YS. 10-11 & 12-13 (THE SAMARPAN CO-OP. CREDIT SOCIETY LTD. VS. ACIT) PAGE 8 THE INCOME TAX ACT. THE LD. ASSESSING OFFICER HAS DETERMINED THE TAXABLE INCOME OF THE ASSESSEE AT RS.14,02,150/-. 11. DISSATISFIED BY THIS ASSESSMENT ORDER, ASSESSEE CARRIED THE MATTER IN APPEAL BEFORE THE LD. CIT(A). LD. CIT(A) HAS PARTL Y ALLOWED THE APPEAL OF THE ASSESSEE. THE LD. CIT(A) HAS HELD THAT INTEREST RE CEIVED BY THE ASSESSEE ON SHORT TERM DEPOSITS AND GOVERNMENT SECURITIES WOULD BE AS SESSED AS INCOME FROM OTHER SOURCES AND DEDUCTION U/S.80P(2)(A)(I) OF THE INCOME TAX ACT WILL NOT BE ADMISSIBLE TO THE ASSESSEE. THE FINDING GIVEN BY T HE LD. CIT(A) IN PARAGRAPH NO.4.12 READ AS UNDER: 4.12 AO IS DIRECTED TO VERIFY WHETHER ANY INTEREST WAS RECEIVED BY THE APPELLANT ON SHORT-TERM DEPOSITS AND GOVERNMENT SECURITIES. HE SHALL ASSESS SUCH INTEREST UNDER THE HEAD INCOME FROM OTHER SOURCES AS LAID DOWN B Y THE ABOVE MENTIONED DECISION OF THE SUPREME COURT AND NO DEDUCTION BE ALLOWED U/ S.80P(2) ON SUCH INTEREST INCOME. THEREFORE, HE SHALL RESTRICT THE DEDUCTION U/S.80P(2)(A)(I) ACCORDINGLY. 12. THE LD. ASSESSING OFFICER HAS GIVEN EFFECT TO T HIS ORDER OF LD. CIT(A) DATED 25 TH FEBRUARY, 2014. THE LD. ASSESSING OFFICER HAS WO RKED OUT THE INTEREST OF RS.56,359/-. HE DENIED THE DEDUCTION T O THE ASSESSEE ON THIS AMOUNT U/S.80P(2)(A)(I) OF THE INCOME TAX ACT. 13. DISSATISFIED WITH THIS ORDER OF A.O., ASSESSEE WENT IN APPEAL BEFORE THE LD. CIT(A). LD. FIRST APPELLATE AUTHORITY HAS CONFIRME D THE ORDER OF ASSESSING OFFICER AND DISMISSED THE APPEAL OF THE ASSESSEE. 14. LD. COUNSEL FOR THE ASSESSEE HAS REITERATED THE CONTENTIONS AS WERE RAISED IN A.Y. 2012-13. ON THE OTHER HAND, LD. D.R. RELIE D UPON THE ORDER OF A.O. 15. ON DUE CONSIDERATION OF THE FACTS AND CIRCUMSTA NCES, WE ARE OF THE OPINION THAT ASSESSEE CANNOT DRAW ANY BENEFIT FROM THE ARGUMENTS MADE IN A.Y. 2012-13 BECAUSE THE ASSESSING OFFICER WHILE PASSING THE ORDER DATED 16 TH JUNE 2014 WAS GIVING EFFECT TO THE ORDER OF LD. CIT(A). THE ASSESSEE IF AGGRIEVED ITA NOS. 2400 & 2401/AHD/15 A.YS. 10-11 & 12-13 (THE SAMARPAN CO-OP. CREDIT SOCIETY LTD. VS. ACIT) PAGE 9 WITH THE DIRECTIONS OF THE LD. CIT(A) GIVEN IN ORDE R DATED 25 TH FEBRUARY 2014, THEN IT SHOULD CHALLENGE THAT ORDER BEFORE THE TRIB UNAL. THE ASSESSING OFFICER WAS ACTING MERELY AS AN EXECUTING COURT WHO CANNOT GO BEYOND THE DECREE. THE ASSESSING OFFICER HAS NO JURISDICTION TO TAKE A DIFFERENT VIEW THAN THAT THE ONE DIRECTED BY THE LD. CIT(A). THE ORDER OF THE L D. CIT(A) WAS NOT CHALLENGED BY THE ASSESSEE AND THEREFORE, UNDER THE GARB OF RE CTIFICATION, ASSESSEE CANNOT BE PERMITTED TO CHALLENGE THE ORDER OF THE LD. CIT(A) WHICH HAS BEEN BECOME FINAL. THEREFORE, THE APPEAL FOR A.Y. 2010-11 IS DISMISSED . 16. IN THE RESULT, THE APPEAL OF THE ASSESSEE FOR A .Y. 2012-13 IS ALLOWED WHEREAS APPEAL FOR A.Y. 2010-11 IS DISMISSED. THIS ORDER PRONOUNCED IN OPEN COURT ON 05.02.2016 SD/- SD/- ( PRAMOD KUMAR) (RAJPAL YADAV) ACCOUNTANT MEMBER JUDIC IAL MEMBER AHMEDABAD: DATED 05.02.2016 TRUE COPY S.K.SINHA / COPY OF ORDER FORWARDED TO:- 1. / APPELLANT 2. ! / RESPONDENT 3. '#'$% ! ! & / CONCERNED CIT 4. ! ! & - / CIT (A) 5. '( )! **$% , ! ! $% , # / DR, ITAT, AHMEDABAD 6. ) -. / GUARD FILE. BY ORDER/ , / ! ' ! ! $% , #