The Sindh Co. Op. Credit Socity Limited, Vadodara V. The Income Tax Officer, Ward-3(1)(2), Vadodara

ITA 251/AHD/2017

• Counselvise Citation: [2018] 125 COUNSELVISE.COM (IT) 2892 (ITAT-AHMEDABAD)
• Duration Of Justice: 1 year(s) 6 month(s) 28 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 29-08-2018
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: SMC
• Assessment Year: 2013-2014
• Appeal Filed On: 31-01-2017
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: APPORVA BHARDWAJA
• Assessee Lawyers: SHANKAR CHETWANI

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.251/AHD/2017 / ASSESSMENT YEAR: 2013-14 THE SINDH CO-OP. CREDIT SOCIETY LTD. T-43, SANT KANWAR NAGAR NR.RTO, WARASIA VADODARA 390006. PAN : AAAAS 7586 G VS ITO, WARD-3(1)(2) VADODARA. / (APPELLANT) / (RESPONDENT) ASSESSEE BY : SHRI SHANKAR CHETWANI, AR REVENUE BY : MS.APPORVA BHARDWAJA, SR.DR / DATE OF HEARING : 06/08/2018 /DATE OF PRONOUNCEMENT : 29/08/2018 O R D E R PER RAJPAL YADAV, JUDICIAL MEMBER : PRESENT APPEAL IS DIRECTED AT THE INSTANCE OF THE ASSESSEE AGAINST OR DER OF LD.CIT(A)-4, VADODARA DATED 30.9.2016 FOR THE ASSESSMENT YEAR 20 13-14. 2. IN THIS APPEAL, THE ASSESSEE HAS CHALLENGED ACTI ON OF THE LD.CIT(A) IN CONFIRMING ORDER OF THE LD.AO WHEREBY THE LD.AO HAS DISALLOWED THE CLAIM OF DEDUCTION UNDER SECTION 80P(2)(A)(I) OF TH E INCOME TAX ACT, 1961 TO THE ASSESSEE. ITA NO.251/AHD/2017 - 2 - 3. BRIEF FACTS OF THE CASE ARE THAT THE ASSESSEE IS A COOPERATIVE CREDIT SOCIETY ENGAGED IN PROVIDING FINANCIAL ASSISTANCE T O ITS MEMBERS. ASSESSEE-SOCIETY HAS FILED ITS RETURN OF INCOME SHO WING NIL INCOME. THE RETURN OF INCOME WAS SELECTED FOR SCRUTINY ASSE SSMENT, AND IN THE SCRUTINY ASSESSMENT IT WAS NOTICED BY THE AO THAT T HE ASSESSEE HAS SHOWN A TOTAL INCOME OF RS.22,83,614/- WHICH WAS CL AIMED AS DEDUCTION UNDER SECTION 80P(2)(A)(I) OF THE ACT. ON VERIFICA TION OF RECORD, IT WAS REVEALED TO THE AO THAT ASSESSEE HAS EARNED INTERES T INCOME FROM FIXED DEPOSITS WITH BANKS OF RS.34,07,945/-. TO THE SHOW CAUSE, THE ASSESSEE SUBMITTED THAT THE INTEREST INCOME EARNED BY THE AS SESSEE-SOCIETY FROM FIXED DEPOSITS WITH THE BANKS, WHICH IS PART AND PA RCEL OF ITS REGULAR INCOME, AND SUCH INVESTMENT WAS VERY MUCH RELATED T O THE BUSINESS OF THE ASSESSEE, AND THEREFORE, ELIGIBLE FOR DEDUCTION UNDER SECTION 80P(2)(A)(I) OF THE ACT. THE LD.AO DID NOT ACCEP T THIS SUBMISSION OF THE ASSESSEE. THE LD.AO HELD THAT DEDUCTION WAS ALLOWA BLE ONLY IF THE INVESTMENT WAS MADE IN OTHER COOPERATIVE SOCIETIES AND NOT IN SCHEDULED BANKS. HE ACCORDINGLY DISALLOWED THE CLA IM OF THE ASSESSEE AND ADDED TO THE TOTAL INCOME OF THE ASSESSEE. IN APPEAL BEFORE THE LD.FIRST APPELLATE ALSO THE ASSESSEE DID NOT SUCCEE D, HENCE, THE ASSESSEE IN FURTHER APPEAL BEFORE THE TRIBUNAL. 4. BEFORE US, THE LD.COUNSEL FOR THE ASSESSEE FILED WRITTEN SUBMISSIONS. THE ASSESSEE WHILE REITERATING THE SUBMISSIONS MADE BEFORE THE LOWER AUTHORITIES, INTERALIA PLEADED THAT LOGIC OF THE LD.AO FOR SEGREGATING TH E INVESTMENT BETWEEN INVESTMENT IN COOPERATIVE BANK A ND SCHEDULED BANKS IS NOT JUSTIFIABLE, BECAUSE INVESTMENT WAS MA DE IN THE SCHEDULED BANK FOR THE PURPOSE OF SAFETY AND SECURITY AND EAS Y LIQUIDITY, AND INVESTMENT IN SUCH NATURE IS VERY MUCH RELATED TO T HE BUSINESS OF ITA NO.251/AHD/2017 - 3 - BANKING OR PROVIDING CREDIT FACILITIES TO ITS MEMBE RS OF THE SOCIETY. THE LD.AR ACCORDINGLY PRAYED FOR SETTING ASIDE IMPUGNED ORDERS OF THE REVENUE AUTHORITIES AND ALLOWANCE OF DEDUCTION UNDE R SECTION 80P(2)(A)(I) OF THE ACT. 5. ON THE OTHER HAND, THE LD.DR SUBMITTED THAT ISSU E IS COVERED IN FAVOUR OF THE REVENUE BY JUDGMENT OF THE HONBLE JU RISDICTIONAL HIGH COURT IN THE CASE OF STATE BANK OF INDIA CO-OPERATI VE SOCIETY 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 THE APPEAL OF THE ASSESSEE MAY BE DISMISSED. 6. 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. WE FIND THAT HONBLE JURISDICTIONAL H IGH COURT HAS HELD THAT INTEREST EARNED FROM INVESTMENT MADE IN NATION ALIZED BANK BY A COOPERATIVE SOCIETY ENGAGED IN PROVIDING CREDIT FAC ILITIES TO ITS MEMBERS, IS NOT ELIGIBLE FOR DEDUCTION UNDER SECTION 80P. T HE TRIBUNAL IN EARLIER OCCASIONS ON SIMILAR ISSUE HAS TAKEN A CONSISTENT V IEW BY FOLLOWING ABOVE JUDGMENT OF THE HONBLE JURISDICTIONAL HIGH C OURT. SINCE ORDERS OF THE REVENUE AUTHORITIES ARE IN ACCORDANCE WITH J UDGMENT OF THE HONBLE JURISDICTIONAL HIGH COURT CITED SUPRA, NO I NTERFERE IS CALLED FOR ITA NO.251/AHD/2017 - 4 - IN THE IMPUGNED ORDERS, WHICH WE CONFIRM. HOWEVER, ANY EXPENDITURE INCURRED BY THE ASSESSEE FOR EARNING SUCH INCOME CO ULD 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 THEREAFTER THAT INCOME HAS TO BE EXCLUDED FROM THE ADMISSIBILITY OF DEDUCTION UNDER SECTION 80P(2) OF THE ACT. 7. IN THE RESULT, APPEAL OF THE ASSESSEE IS PARTLY ALLOWED FOR STATISTICAL PURPOSE. PRONOUNCED IN THE OPEN COURT ON 29 TH AUGUST, 2018. SD/- SD/- (WASEEM AHMED) ACCOUNTANT MEMBER (RAJPAL YADAV) JUDICIAL MEMBER