Shree Yogeshwar Co.Op.Credit Society Ltd., Mehsana V. The Income Tax Officer,Patan Ward-4, Unjha

ITA 2624/AHD/2015

• Counselvise Citation: [2017] 127 COUNSELVISE.COM (IT) 8702 (ITAT-AHMEDABAD)
• Duration Of Justice: 1 year(s) 11 month(s) 3 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 18-08-2017
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: Not Allotted
• Assessment Year: 2012-2013
• Appeal Filed On: 14-09-2015
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: SULABH P SHAH
• Assessee Lawyers: VIMAL I MEHTA
• Keywords: Bad and doubtful debts; Provision of bad debts
• Section: 143(3); 56

Judgement Text

, * ** * ,LK ,LK,LK ,LK- -- -,E ,E,E ,E- -- -LH LHLH LH- -- -*MH *MH *MH *MH IN THE INCOME TAX APPELLATE TRIBUNAL SMC (D) BENCH, AHMEDABAD BEFORE SHRI N.K. BILLAIYA, ACCOUNTANT MEMBER AND SHRI MAHAVIR PRASAD, JUDICIAL MEMBER !# I.T.A. NO.2624/AHD/2015 ( / ASSESSMENT YEAR : 2012-13) SHRI YOGESWAR CO.OP. CREDIT SOCIETY LTD. AT & POST. KAHODA. TALUKA UNJHA, MEHSANA - 384130 # VS. INCOME TAX OFFICER WARD 4 UNJHA $ # % & # PAN/GIR NO. : AAAJS 1127 N ( !$' / APPELLANT ) .. ( ($' # RESPONDENT ) !$') # APPELLANT BY : SHRI VIMAL I. MEHTA, SR.D.R. ($'*) / RESPONDENT BY : SHRI SULABH P. SHAH, C.A. + ,*-. / DATE OF HEARING 16/08/2017 /012*-. / DATE OF PRONOUNCEMENT 18/08/2017 3# O R D E R PER SHRI MAHAVIR PRASAD, JUDICIAL MEMBER : THIS IS AN APPEAL BY THE ASSESSEE AGAINST THE OR DER OF THE COMMISSIONER OF INCOME TAX(APPEALS)- GANDHINAGAR, A HMEDABAD, DATED 12/06/2015, IN THE MATTER OF ASSESSMENT UNDER SECTION 143(3) OF THE INCOME TAX ACT, 1961 (THE ACT HEREINAFTER), FOR THE ASSESSMENT YEAR (AY) 2012-13, ON THE GROUNDS: I. THE CIT(A) HAS ERRED IN DIRECTING THE AO TO TAX THE WHOLE INTEREST INCOME RECEIVED BY THE APPELLANT FROM FIXE D DEPOSIT OF NATIONALIZED BANKS OF RS.19,54,732/- UNDER THE HEAD INCOME FROM ITA NO.2624/AHD /2015 SHRI YOGESWAR CO-OP CREDIT SOCIETY VS. ITO ASST.YEAR 2012-13 - 2 - OTHER SOURCES U/S.56 OF THE INCOME TAX ACT, 1961 BY NOT GRANTING DEDUCTION U/S.80P OF THE ACT. II. WITHOUT PREJUDICE TO THE ABOVE, IT IS SUBMITTED THA T EVEN IF SUCH INTEREST INCOME OF RS.19,54,732/- IS TAXABLE U/S.56 OF THE ACT, THEN EXPENDITURE INCURRED FOR EARNING SUCH INCOME M UST BE ALLOWED U/S. 57 OF THE ACT AND PRO-RATA INTEREST IN COME RECEIVED FROM FIXED DEPOSIT WITH NATIONALIZED BANKS ONLY CAN BE TAXED. IT IS SUBMITTED THAT THE SAME BE ALLOWED NOW. 2. THE RELEVANT FACTS AS CULLED OUT FROM THE MATERI ALS ON RECORD ARE AS UNDER:- THE ASSESSEE IS A CO-OPERATIVE CREDIT SOCIETY AND I TS MAIN PURPOSE IS TO PROVIDE CREDIT FACILITY TO MEMBERS OF THE SOC IETY BY ACCEPTING DEPOSITS, SAVINGS ETC. AND PROVIDING LOAN AND ADVAN CES TO ITS MEMBERS. 2.2 ON VERIFICATION OF THE COMPUTATION OF TOTAL INC OME, IT IS NOTICED THAT THE ASSESSEE HAS NOT ADDED BACK THE FOLLOWING PROVISIONS DEBITED IN THE PROFIT & LOSS ACCOUNT TO ARRIVE AT GROSS TOTAL INCOME ELIGIBLE FOR DEDUCTION U/S.80P OF THE IT ACT, AND HAS STRAIGHTAW AY CLAIMED THE NET PROFIT AS DEDUCTION U/S.80P. PF EXPENSES RS. 18,288/- BUILDING FUND PROOF RS. 1,00,000/- GRATUITY FUND RS. 25,000/- SABHASAD PROSTAHAN PROV RS.10,50,000/- BAD DEBTS PROVISION RS. 90,000/- GRAMVIKAS FUND RS. 25,000/- RS.13,08,288/- ITA NO.2624/AHD /2015 SHRI YOGESWAR CO-OP CREDIT SOCIETY VS. ITO ASST.YEAR 2012-13 - 3 - 2.3 ON VERIFICATION OF PROFIT AND LOSS ACCOUNT AND DETAILS SUBMITTED BY ASSESSEE, IT IS SEEN THAT THE ASSESSEE HAS EARNE D INTEREST INCOME OTHER THAN CO-OP BANK AS UNDER: I. INTEREST INCOME FROM DENA BANK F.D. : RS. 2,78,875 /- II. BANK OF BARODA F.D. INTEREST : RS.10,29,792/- III. DENA BANK GRAMIN INTEREST : RS. 6,44,135/- IV. BANK OF BARODA SAVING : RS. 1,838/- V. BANK OF BARODA SAVING INTEREST : RS. 92 /- TOTAL : RS. 19,54, 732/- SINCE THE ABOVE INTEREST INCOME IS NOT ELIGIBLE FOR DEDUCTION U/S.80P OF THE I.T. ACT, THE CASE WAS DISCUSSED WITH ASSESSEE AND THE ASSESSEE WAS ASKED TO SHOW CAUSE AS TO WHY THE ABOVE INTEREST IN COME OF RS.19,54,732/- SHOULD NOT BE TAXED U/S.56 OF THE IT ACT AS INCOME FROM OTHER SOURCES. THE CONTENTION OF THE ASSESSEE TO A LLOW PROPORTIONATE EXPENSES WAS NOT ENTERTAINED BY CIT(A) ON SIMILAR I SSUE IN ASSESSEES OWN CASE FOR A.Y. 2007-08. THE AR OF THE ASSESSEE H AS BEEN CONFRONTED ON THIS ISSUE BUT NO WRITTEN SUBMISSION REGARDING O BJECTIONS WAS FILED BY THE ASSESSEE. 2.4 ACCORDINGLY, ADDITION OF RS.19,54,732/- WAS MAD E. 3. AGAINST THE SAID ORDER ASSESSEE PREFERRED FIRST STATUTORY APPEAL BEFORE THE LEARNED CIT(A), WHO PARTLY ALLOWED THE A PPEAL OF THE ASSESSEE. 4. NOW APPELLANTS APPEAL IS BEFORE US. ITA NO.2624/AHD /2015 SHRI YOGESWAR CO-OP CREDIT SOCIETY VS. ITO ASST.YEAR 2012-13 - 4 - 5. SO FAR INTEREST INCOME RECEIVED BY THE APPELLANT FROM FIXED DEPOSIT OF NATIONALIZED BANKS OF RS.19,54,732/- UND ER THE HEAD INCOME FROM OTHER SOURCES U/S.56 OF THE INCOME TAX ACT, 19 61 IS CONCERNED. IT IS STATED ABOVE THAT THE ASSESSEE DEPOSITED THE AMOUNT IN NATIONALIZED BANK NOT IN CO-OPERATIVE BANK. SO FAR INTEREST INCOME IS NOT ELIGIBLE FOR DEDUCTION U/S.80P OF THE I.T. ACT. THEREFORE, WE AR E NOT INCLINED TO GIVEN ANY RELIEF TO THE ASSESSEE WITH REGARD TO GROUND NO .1. 6. SO FAR GROUND NO.2 IS CONCERNED. ASSESSEE INCURR ED SOME EXPENSES ON THE DEPOSIT FOR MAKING FD AND ALSO INCU RRED EXPENSES WITH REGARD TO INTEREST ETC. FOR THIS LEARNED AR CITED A JUDGMENT [2015] 58 TAXMANN.COM 35 (KARNATAKA) IN THE MATTER OF TOTGARS CO-OPERATIVE SALE SOCIETY LTD. VS. INCOME TAX OFFICER, IN THIS CASE HONBLE HIGH COURT HELD AS UNDER: SECTION 57, READ WITH SECTION 56 AND SECTION 80P(1) OF THE INCOME-TAX ACT, 1961 - INCOME FROM OTHER SOURCES - DEDUCTIONS (ADMINISTRATIVE AND OTHER EXPENSES) - ASSESSMENT YEARS 1991-92 TO 1999- 2000 - ASSESSEE WAS A CO-OPERATIVE SOCIETY ENGAGED IN BUSINESS OF M ARKETING AGRICULTURAL PRODUCE AND WAS ALSO PROVIDING CREDIT FACILITIES TO ITS MEMBERS - IT CLAIMED BENEFIT OF DEDUCTION UNDER SEC TION 80P(2)(A)(I) IN RESPECT OF INTEREST, EARNED ON DEPOSITS KEPT WITH S CHEDULED BANKS, INDRA VIKAS PATRA, NSC ETC. - ASSESSING OFFICER REJECTED ASSESSEE'S CLAIM AND BROUGHT SAID INTEREST INCOME TO TAX UNDER SECTION 5 'INCOME FROM OTHER SOURCES' - TRIBUNAL CONFIRMED ASSESSING OFFICER'S O RDER - ASSESSEE FILED INSTANT APPEAL SEEKING DIRECTION TO PASS FRESH ORDE R BY GIVING PERMISSIBLE DEDUCTION UNDER SECTION 57 - WHETHER ON FACTS, ONLY NET INTEREST INCOME, I.E., INTEREST INCOME REDUCED BY A DMINISTRATIVE EXPENSES AND OTHER PROPORTIONATE EXPENSES TO SAID INCOME HAD TO BE BROUGHT TO ITA NO.2624/AHD /2015 SHRI YOGESWAR CO-OP CREDIT SOCIETY VS. ITO ASST.YEAR 2012-13 - 5 - TAX UNDER SECTION 56 - HELD, YES AND ASSESSEES APP EAL WAS PARTLY ALLOWED BY THE HONBLE HIGH COURT 7. RESPECTFULLY, FOLLOWING THE JUDGMENT OF HONBLE KARNATAKA HIGH COURT, THE APPELLANT IS ENTITLE FOR DEDUCTION OF PR OPORTIONATE EXPENDITURE OR ACTUAL EXPENDITURE WHICH THE APPELLANT MAY HAVE INCURRED IN MOBILIZING THE FUNDS PLACED IN DEPOSIT WITH THE BAN K AND THE SAME NEEDS TO BE CALCULATED BY THE ASSESSING AUTHORITY. WE REM IT THIS MATTER BACK TO THE FILE OF THE ASSESSING OFFICER WHO WILL EXAMINE THE CASE OF THE ASSESSEE THAT HOW MUCH EXPENDITURE HE HAS INCURRED IN MOBILIZING THE FUNDS AND THEREAFTER, ASSESSING OFFICER WILL PASS A N APPROPRIATE ORDER. THEREFORE, WE PARTLY ALLOW THIS APPEAL. 8. IN THE RESULT, APPEAL FILED BY THE ASSESSEE IS P ARTLY ALLOWED. THIS ORDER PRONOUNCED IN OPEN COURT ON 18/08/2017 SD/- SD/- ( ) 4 5 ( N.K. BILLAIYA ) ( MAHAVIR PRASAD ) ACCOUNTANT MEMBER JUDICIAL MEMBER AHMEDABAD; DATED 18/08/2017 PRITI YADAV, SR. PS ITA NO.2624/AHD /2015 SHRI YOGESWAR CO-OP CREDIT SOCIETY VS. ITO ASST.YEAR 2012-13 - 6 - !'# $#! # COPY OF THE ORDER FORWARDED TO : 1. !$' / THE APPELLANT 2. ($' / THE RESPONDENT. 3. 67- + 8- / CONCERNED CIT 4. + 8- 4!5 / THE CIT(A)- GANDHINAGAR, AHMEDABAD. 5. 9:;-67 !.!672 ! / DR, ITAT, AHMEDABAD 6. ;<=, # GUARD FILE. % & / BY ORDER, (9-- //TRUE COPY// '/& () ( DY./ASSTT.REGISTRAR) , / ITAT, AHMEDABAD TRUE COPY 1. DATE OF DICTATION 16/08/2017 (DICTATION-PAD 4 PAG ES ATTACHED AT THE END OF THIS APPEAL-FILE) 2. DATE ON WHICH THE TYPED DRAFT IS PLACED BEFORE THE DICTATING MEMBER 17/08/2017 3. OTHER MEMBER 4. DATE ON WHICH THE APPROVED DRAFT COMES TO THE SR.P. S./P.S.. 5. DATE ON WHICH THE FAIR ORDER IS PLACED BEFORE THE D ICTATING MEMBER FOR PRONOUNCEMENT 6. DATE ON WHICH THE FAIR ORDER COMES BACK TO THE SR.P .S./P.S. 7. DATE ON WHICH THE FILE GOES TO THE BENCH CLERK 8. DATE ON WHICH THE FILE GOES TO THE HEAD CLERK ... 9. THE DATE ON WHICH THE FILE GOES TO THE ASSISTANT RE GISTRAR FOR SIGNATURE ON THE ORDER.. 10. DATE OF DESPATCH OF THE ORDER