ACIT, Cir.-29, Kolkata V. Steel Authority of India emp.Co.Op.Cr. Society Ltd , Kolkata

ITA 269/KOL/2021

• Counselvise Citation: [2022] 105 COUNSELVISE.COM (IT) 4459 (ITAT-KOLKATA)
• Duration Of Justice: 7 month(s) 26 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 17-04-2022
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: B
• Assessment Year: 2014-2015
• Appeal Filed On: 22-08-2021
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: MANISH KANOJIA
• Keywords: Business income; Rule of consistency; Earning of tax free income; Co-operative Credit Society; Rule 8D; Capital Gains
• Section: 11; 14A; 80P

Judgement Text

1 ITA Nos.425 to 428/Kol/2020 & ITA Nos. 258/Kol/2021, 268-269/Kol/2021 Steel Authority of India Employees’ Co-op Credit Society Ltd. AYs 2008-09, 2012-13 to 2014-15 IN THE INCOME TAX APPELLATE TRIBUNAL “B” BENCH, KOLKATA [Before Shri A. T. Varkey, JM & Shri Rajesh Kumar, AM ] I.T.A. No. 425/Kol/2020 Assessment Year:2008-09 & I.T.A. Nos. 426 to 428/Kol/2020 Assessment Years:2012-13 to 2014-15 Steel Authority of India Employees’ Co-operative Credit Society Ltd. (PAN: AADAS9699B) Vs. Assistant Commissioner of Income-tax, Circle-28, Kolkata. Appellant Respondent & I.T.A. No. 258/Kol/2021 Assessment Year:2013-14 & I.T.A. Nos. 268 to 269/Kol/2021 Assessment Years: 2012-13 & 2014-15 Assistant Commissioner of Income-tax, Circle-29, Kolkata. Vs. Steel Authority of India Employees’ Co- operative Credit Society Ltd. Appellant Respondent Date of Hearing 21.03.2022 Date of Pronouncement 18.04.2022 For the Assessee Shri S. K. Tulsiyan, Advocate For the Department Shri Manish Kanojia, CIT & Smt. Ranu Biswas, Addl. CIT ORDER Per Bench: All these appeal preferred by assessee are against the separate orders of the Ld. CIT(A)- 8, Kolkata dated 28.02.2020 for AYs 2008-09, 2012-13 to 2014-15 and all these appeals preferred by the revenue are against the separate orders of the Ld. CIT(A)-8, Kolkata dated 24.02.2020 for AYs. 2013-14, 2012-13 and 2014-15 respectively. 2 ITA Nos.425 to 428/Kol/2020 & ITA Nos. 258/Kol/2021, 268-269/Kol/2021 Steel Authority of India Employees’ Co-op Credit Society Ltd. AYs 2008-09, 2012-13 to 2014-15 2. All these revenue’s appeals are time barred by 451 days (AY 2013-14) and 462 days (AYs. 2012-13 & 2014-15) respectively. And all these assessee’s appeals are time barred by 70 days. After hearing both the sides and perusing the reasons given in the petition for condoning the delay which was mainly due to Covid-19 pandemic, we condone the delay and admit all the appeals for hearing. 3. First of all we will take up the appeals preferred by the revenue. Since grounds of appeal are common and facts are identical, we dispose of all the revenue’s appeal by a consolidated order for the sake of convenience. Grounds of appeal raised by the revenue in ITA No. 268/Kol/2021 for AY 2012-13 are extracted below: “1. That in law and on the facts of the case, the CIT(A) erred in consenting to the contention made by the assessee without having any evidence on records to warrant the same. 2. That in law and on the facts of the case the CIT(A) was not justified in accepting assessee's estimate of expenditure incurred in relation to exempt income and again subject the same to be apportioned under sub-rule 2(ii) of Rule 8D. 3. That in law and on the facts of the case the CIT(A) was not justified in accepting assessee's estimate of expenditure incurred in relation to exempt income as Rule 8D of IT Rules already provide the cases where exact assessment of costs cannot be made. 4. That in law and on the facts of the case the CIT(A) got himself misdirected by following orders of his predecessors as res judicata does not apply in tax matters. 5. That the appellant humbly craves leave to add, amend, alter, withdraw, delete or substitute all or any of the ground(s) of appeal at the time of hearing.” 4. From a perusal of the grounds it is discernible that first ground is general in nature and does not require any adjudication so, the same is dismissed. 5. First of all, we will take up the ground No. 4 of revenue’s appeal wherein the Ld. CIT(A) has held that even though the principles of res judicata is not applicable, however, as per the rule of consistency, the action of the AO in accepting the assessee’s treatment of the income from the sale of mutual funds and shares as income from business should be accepted. It is noted that the AO on this issue has taken note of the fact that for the previous assessment year i.e. AY 2011-12 even though the assessee has treated the units of mutual 3 ITA Nos.425 to 428/Kol/2020 & ITA Nos. 258/Kol/2021, 268-269/Kol/2021 Steel Authority of India Employees’ Co-op Credit Society Ltd. AYs 2008-09, 2012-13 to 2014-15 fund and equity as trading commodity, the predecessor AO has treated it as capital gains (AY 2011-12) and, therefore, the AO following the same action of AO for AY 2011-12 held that the assessee is doing investment in mutual funds and shares and, therefore, the gain derived from it is of the nature of capital gains. Aggrieved, the assessee preferred an appeal before the Ld. CIT(A), who vide the impugned consolidated order was pleased to hold that the assessee is/was a trader; and the Ld. CIT(A) noted that all along the assessee from AY 2005-06 onwards was showing the receipt from sale of shares and mutual funds as business income and treated the shares of mutual fund as a trading commodity and the income derived there from as business income. The fact showing that assessee consistently shown the income derived there from as business income can be seen from the chart placed at page 1 of the paper book from AY 2005-06 onwards. It is noted that from AYs 2005-06 to 2007- 08, the AO has accepted the assessee’s treatment of income from sale of mutual fund and shares as income as business income deviated only in AY 2008-09. And it is noted that for AY 2009-10 it was accepted as business income whereas for AY 2011-12 the AO treated the same as short term capital gain which action of his was reversed by the Ld. CIT(A) and which action of the Ld. CIT(A) was not challenged by the department/AO before this Tribunal which means the action of Ld. CIT(A) on this issue crystallized. Thus, the Ld. CIT(A) while adjudicating the grounds of appeal of the assessee challenging the action of the AO to treat the income from sale of shares and mutual fund as short term capital gain instead of business income was accepted by the Ld. CIT(A) by taking into consideration the CBDT Circular No. 6/2016 dated 29.02.2016 wherein it has addressed the issue on “Taxability of surplus on sale of shares and securities - Capital Gains or Business Income” wherein it was held as under: “CBDT realizing that major part of shares/securities transactions takes place in respect of the listed ones and with a view to reduce litigation and uncertainty in the matter in partial modification to the aforesaid Circulars, further instructs that the Assessing Officer in holding whether the surplus generated from sale of listed shares or other securities would be treated as Capital Gain or Business Income, shall take into account the following – a) Where the assessee itself, irrespective of the period of holding the listed shares and securities, opts to treat them as stock-in-trade, the income arising from transfer of such shares/securities would be treated as its business income. 4 ITA Nos.425 to 428/Kol/2020 & ITA Nos. 258/Kol/2021, 268-269/Kol/2021 Steel Authority of India Employees’ Co-op Credit Society Ltd. AYs 2008-09, 2012-13 to 2014-15 b) In respect of listed shares and securities held for a period of more than 12 months immediately preceding the date of its transfer, if the assessee desires to treat the income arising from the transfer thereof as Capital Gain, the same shall not be put to dispute by the Assessing Officer. However, this stand, once taken by the assessee in a particular Assessment Year, shall remain applicable in subsequent Assessment Years also and the taxpayers shall not be allowed to adopt a different/contrary stand in this regard in subsequent years.” 6. It is also noted that the Ld. CIT(A) has examined the adverse observations of the AO that the ratio of opening stock, purchase, sales and closing stock were not commensurate to show that the activities of the assessee were in the nature of business income. The Ld. CIT(A) after examining this issue as pointed out by the AO repelled the same and found that “I have carefully examined this aspect and I find that the ratio of sales to closing stock of shares for the AY 2008-09 is 1.145 for assessment year 2012-13 the ratio of sales to closing stock of shares 3.666 for assessment year 2013-14 the ratio of sales to closing stock of shares is 3.921 and of Mutual funds is 1.144 and for assessment year 2014-15 the ratio of sales to closing stock of shares is 3.462 and of Mutual fund is 1.984.” After making this finding of fact the Ld. CIT(A) held that the ratio clearly shows that the turnover of the assessee as compared to the closing stock in each of the years are high and shows the clear pattern of regular trading in shares and mutual funds in an organized manner which is indicative of an activity of the business rather than investment. Thus, it is seen that the Ld. CIT(A) while holding the assessee as a trader in mutual fund as well as shares, reversed the decision of the AO by observing as under: “I have considered the assessment order, the submissions of the assessee along with the paper book filed as well as the orders passed by the CIT(A) for the assessment years 2009-10 and 2011-12. An examination of the assessment order shows that one of the principle reasons for treating the income from Shares and Mutual Funds as Capital Gains by the AO was on the alleged ground that the ratio of Opening Stock. Purchases, sales and Closing Stock were not commensurate to show that the activities of the assessee were in the nature of business income. I have carefully examined this aspect and I find that the ratio of sales to closing stock of shares for the Ay 2008-09 is 1.145 for assessment year 2012-13 the ratio of sales to closing stock of shares is 3.666, for assessment year 2013-14 the ratio of sales to closing stock of shares is 3.921 and of Mutual funds is 1.144 and for assessment year 2014-15 the ratio of sales to closing stock of shares is 3.462 and of Mutual fund is 1.984. These ratios clearly show that the turnover of the assessee as compared to the closing stock in each of the years is considerably high and shows a clear pattern of regular trading in shares and mutual funds in an organized manner which is indicative of an activity of business rather than investment. It is also evident that the assessee has purchased shares and mutual funds out of borrowed funds on which it pays interest and therefore, this also goes to show that the assessee is involved in a business activity since an investor usually does not invest borrowed funds for the purpose of investments 5 ITA Nos.425 to 428/Kol/2020 & ITA Nos. 258/Kol/2021, 268-269/Kol/2021 Steel Authority of India Employees’ Co-op Credit Society Ltd. AYs 2008-09, 2012-13 to 2014-15 or majority of the funds for investments are from investor’s own fund. This issue was also dealt with by my predecessor-in-office in his Appellate order for assessment year 2011-12 at page 14 of his order wherein after analyzing the contentions of the assessee my predecessor-in-office held that the activity of purchase and sale of shares by the assessee was in the nature of business and was therefore, to be accordingly treated for the purpose of computation of income of the assessee. It has also been brought to my notice that the AO did not go in further appeal against the said order passed by my predecessor-in-office and the view taken by my predecessor has therefore become final. Once the view that the assessee is a trader in shares and mutual funds is accepted by the AO then on similar facts without any material change, the Ld. AO cannot take a different view in other years as has been held by the Hon’ble Supreme Court in the case of Radhasoami Satsang Vs. CIT (1992) reported in 193 ITR 321. This view is also fortified by the CBDT Circular No. 6/2016 dated 29.02.2016 wherein the CBDT has instructed the AO to accept the stand of an assessee in subsequent years once the assessee has taken a stand in respect of treatment of trading in shares and mutual funds as either business income or capital gains. In view of the above, I direct the AO to treat the income of the assessee from shares and mutual funds under the head ‘Business Income’. 7. It is true that principles of res judicata is not applicable in income tax proceedings. However in this case, we note that the revenue has consistently accepted the stand of the assessee that it is a trader of shares and mutual funds from AYs 2005-06 to 2007-08 and the AO deviated only in AY 2008-09 which has been reversed by the Ld. CIT(A) by passing the impugned order. Meanwhile, the AO had again treated the assessee’s action as capital gain from investments for AY 2011-12 which was reversed by the Ld. CIT(A) and held it as business income which action of the Ld. CIT(A) has not been challenged by the AO, so the finding of Ld CIT(A) that assessee is a trader of of shares and mutual funds crystallises. Therefore, applying the principle of rule of consistency as held by the Hon’ble Supreme Court in the case of Radhesoami Satsang Vs. CIT (1992) 193 ITR 321 (SC) since the fundamental facts permeating in the earlier years have not changed, and when certain position has been accepted by the department, then without any change in law, the consistent position/finding cannot be allowed to be changed. The Hon’ble Supreme Court has held and observed as under: “We are aware of the fact that, strictly speaking, res judicata does not apply to income-tax proceedings. Again, each assessment year being a unit, what is decided in one year may not apply in the following but where a fundamental aspect permeating through the different assessment years as been found as a fact one way or the other and parties have allowed that position to be sustained by not challenging the order, it would not be at all appropriate to allow the position to be changed in a subsequent year. On these reasonings, in the absence of any material change justifying the Revenue to take a different view of the matter and, if there was no change, it was in support of the assessee-we do 6 ITA Nos.425 to 428/Kol/2020 & ITA Nos. 258/Kol/2021, 268-269/Kol/2021 Steel Authority of India Employees’ Co-op Credit Society Ltd. AYs 2008-09, 2012-13 to 2014-15 not think the question should have been reopened and contrary to what had been decided by the Commissioner of Income-tax in the earlier proceedings, a different and contradictory stand should have been taken. We are, therefore, of the view that these appeals should be allowed and the question should be answered in the affirmative, namely, that the Tribunal was justified in holding that the income derived by the Radhasoami Satsang was entitled to exemption under sections 11 and 12 of the Income-tax Act of 1961. Counsel for the Revenue had told us that the facts of this case being very special, nothing should be said in a manner which would have general application. We are inclined to accept this submission and would like to state in clear terms that the decision is confined to the facts of the case and may not be treated as an authority on aspects which have been decided for general application.” 8. In the light of the facts and circumstances as afore-stated, we sustain the order of the Ld. CIT(A) and dismiss this ground of appeal of the revenue. 9. The second and third grounds of appeal of the revenue and the cross appeals of the assessee are against the action of the Ld. CIT(A) in interfering with the action of the AO wherein he has disallowed expenditure by invoking section 14A of the Income-tax Act, 1961 (hereinafter referred to as the “Act”) read with Rule 8D(2)(ii) & (iii) of the Income-tax Rules, 1962 (hereinafter referred to as the “Rules”). Aggrieved, the assessee preferred an appeal before the Ld. CIT(A), who was pleased to hold as under: “I have examined the contention of the assessee and the assessee’s reliance on the decision of the Hon’ble Apex court in the case of Maxopp Investment Ltd. Vs. CIT reported in 402 ITR 640 (SC). On a reading of the decision of the Hon’ble Supreme court, it is not discernible that any such view has been accepted by the Hon’ble Supreme court that the provisions of section 14A, read with Rule 8D are not applicable in the case of shares held as stock in trade. It is an admitted fact that dividend has been earned on shares and mutual funds held by the assessee during the year. Once an assessee earns exempt income then the provisions of section 14A automatically become applicable and disallowance has to be computed by taking into account Rule 8D of the Income Tax Rules. Therefore, I hold that the AO has rightly invoked the provisions of section 14A, read with Rule 8D in the case of the assessee. However, the AO has computed the disallowance of interest and expenses by taking into account the entire interest expenses of the assessee in the formula for the purpose of rule 8D. However, only the amount of interest and expenses which have been allocated for the purpose computing the business income in shares and mutual funds can be considered in the formula for the purpose of rule 8D. Therefore, the AO is directed to recomputed the disallowance u/s. 14A, read with Rule 8D of the I. T. rules by only considering the figures of interest and other related expenses as have been allocated for the purpose of computation of Business Income in the first ground of appeal as decided earlier in this appellate order. The AO is directed accordingly. The grounds are partly allowed.” 10. Aggrieved, the revenue as well as the assessee both are in appeal before us. 7 ITA Nos.425 to 428/Kol/2020 & ITA Nos. 258/Kol/2021, 268-269/Kol/2021 Steel Authority of India Employees’ Co-op Credit Society Ltd. AYs 2008-09, 2012-13 to 2014-15 11. We have heard the rival submissions and perused the material placed on record. The Ld. AR submitted that the assessee is a dealer in shares and the income earned thereon was assessed as “Business Income”. According to him, the dividend derived in the course of share trading is incidental to the principal business which is to earn profit. He thus contended that the provisions of Section 14A of the Act and Rule 8D cannot be applied in the given facts of the present case. Per contra the Ld. DR submitted that merely because the assessee was a dealer in shares, it could not take a stand that expenditure incurred in connection with earning of tax free income was not disallowable u/s 14A of the Act. Both the parties relied on the findings given by the Hon’ble Supreme Court in the case of Maxopp Investment Ltd Vs CIT (402 ITR 640) which had considered the issue of disallowability of the expenditure incurred in the assessment of an assessee who derived exempt dividend income from shares held as stock-in-trade. 12. In order to address the issue at hand, it is first relevant to examine the findings given by the Hon’ble Supreme Court in the case of Maxopp Investment Ltd Vs CIT (supra). It was brought to our notice that Hon’ble Supreme Court in their decision dated 12.02.2018 had decided a large number of appeals which inter alia included Maxopp Investment Ltd (supra) as well as appeal filed by the Revenue in the case of State Bank of Patiala, decided by the Hon’ble Punjab & Haryana High Court reported in 391 ITR 218 wherein it was held that provisions of Section 14A cannot be applied to shares & securities held as ‘stock-in-trade’ by banking companies in the course of their banking business. It is noted that Revenue’s appeal in the case of State Bank of Patiala was dismissed by the Hon’ble Supreme Court, by holding as under: 36. There is yet another aspect which still needs to be looked into. What happens when the shares are held as 'stock-in-trade' and not as 'investment', particularly, by the banks? On this specific aspect, CBDT has issued circular No. 18/2015 dated November 02, 2015. 37. This Circular has already been reproduced in Para 19 above. This Circular takes note of the judgment of this Court in Nawanshahar case wherein it is held that investments made by a banking concern are part of the business or banking. Therefore, 8 ITA Nos.425 to 428/Kol/2020 & ITA Nos. 258/Kol/2021, 268-269/Kol/2021 Steel Authority of India Employees’ Co-op Credit Society Ltd. AYs 2008-09, 2012-13 to 2014-15 the income arises from such investments is attributable to business of banking falling under the head 'profits and gains of business and profession'. On that basis, the Circular contains the decision of the Board that no appeal would be filed on this ground by the officers of the Department and if the appeals are already filed, they should be withdrawn. A reading of this circular would make it clear that the issue was as to whether income by way of interest on securities shall be chargeable to income tax under the head 'income from other sources' or it is to fall under the head 'profits and gains of business and profession'. The Board, going by the decision of this Court in Nawanshahar case, clarified that it has to be treated as income falling under the head 'profits and gains of business and profession'. The Board also went to the extent of saying that this would not be limited only to co-operative societies/Banks claiming deduction under Section 80P(2)(a)(i) of the Act but would also be applicable to all banks/commercial banks, to which Banking Regulation Act, 1949 applies. 38. From this, Punjab and Haryana High Court pointed out that this circular carves out a distinction between 'stock-in-trade' and 'investment' and provides that if the motive behind purchase and sale of shares is to earn profit, then the same would be treated as trading profit and if the object is to derive income by way of dividend then the profit would be said to have accrued from investment. To this extent, the High Court may be correct. At the same time, we do not agree with the test of dominant intention applied by the Punjab and Haryana High Court, which we have already discarded. In that event, the question is as to on what basis those cases are to be decided where the shares of other companies are purchased by the assessees as 'stock-in-trade' and not as 'investment'. We proceed to discuss this aspect hereinafter. ...... 40. We note from the facts in the State Bank of Patiala cases that the AO, while passing the assessment order, had already restricted the disallowance to the amount which was claimed as exempt income by applying the formula contained in Rule 8D of the Rules and holding that section 14A of the Act would be applicable. In spite of this exercise of apportionment of expenditure carried out by the AO, CIT(A) disallowed the entire deduction of expenditure. That view of the CIT(A) was clearly untenable and rightly set aside by the ITAT. Therefore, on facts, the Punjab and Haryana High Court has arrived at a correct conclusion by affirming the view of the ITAT, though we are not subscribing to the theory of dominant intention applied by the High Court. It is to be kept in mind that in those cases where shares are held as 'stock-in-trade', it becomes a business activity of the assessee to deal in those shares as a business proposition. Whether dividend is earned or not becomes immaterial. In fact, it would be a quirk of fate that when the investee company declared dividend, those shares are held by the assessee, though the assessee has to ultimately trade those shares by selling them to earn profits. The situation here is, therefore, different from the case like Maxopp Investment Ltd. where the assessee would continue to hold those shares as it wants to retain control over the investee company. In that case, whenever dividend is declared by the investee company that would necessarily 9 ITA Nos.425 to 428/Kol/2020 & ITA Nos. 258/Kol/2021, 268-269/Kol/2021 Steel Authority of India Employees’ Co-op Credit Society Ltd. AYs 2008-09, 2012-13 to 2014-15 be earned by the assessee and the assessee alone. Therefore, even at the time of investing into those shares, the assessee knows that it may generate dividend income as well and as and when such dividend income is generated that would be earned by the assessee. In contrast, where the shares are held as stock-in-trade, this may not be necessarily a situation. The main purpose is to liquidate those shares whenever the share price goes up in order to earn profits. In the result, the appeals filed by the Revenue challenging the judgment of the Punjab and Haryana High Court in State Bank of Patiala also fail, though law in this respect has been clarified hereinabove. (emphasis supplied) 13. We thus note that although the Hon’ble Supreme Court did observe in the case of a dealer in shares, earning dividend income from its stock-in-trade, may expose to the rigors of Section 14A of the Act, but at the same time we find merit in the Ld. AR’s submissions that in the above judgment, the Hon’ble Supreme Court also extensively dealt with this issue in the Revenue’s appeal in the case of a banking company, State Bank of Patiala (supra) and dismissed the same, wherein the High Court had held that, since the banking companies in the course of carrying on their banking business were required to hold shares & securities, the expenses were incurred in connection with such banking business and accordingly no disallowance was warranted u/s 14A of the Act. For this, the Hon’ble High Court had taken note of the Board’s Circular No. 18 dated 02.11.2015 issued in relation to cooperative societies/banking companies and had also relied on the judgment of the Hon’ble Supreme Court in the case of CIT Vs Nawanshahar Central Co-operative Bank Ltd (289 ITR 6). 14. We note that this particular proposition laid down in the above judgment (supra), was reiterated by the Hon’ble Supreme Court in their decision rendered in the case of another banking company, South Indian Bank Ltd Vs CIT (438 ITR 1) also rendered of a banking company. The Hon’ble Supreme Court took note of the Board’s Circular No. 18 dated 02.11.2015 issued in the context of cooperative societies & banking companies, and their earlier judgment in the case of CIT Vs Nawanshahar Central Co-operative Bank Ltd (supra), and it held that the income arising from trading in securities was attributable to banking business of the assessee and therefore the expenses were also relatable to the business of banking, and hence provisions of 10 ITA Nos.425 to 428/Kol/2020 & ITA Nos. 258/Kol/2021, 268-269/Kol/2021 Steel Authority of India Employees’ Co-op Credit Society Ltd. AYs 2008-09, 2012-13 to 2014-15 Section 14A were not attracted in case of banking companies. The relevant findings of the Hon’ble Apex Court is as follows: 25. Proceeding now to another aspect, it is seen that the Central Board of Direct Taxes (CBDT) had issued the Circular no. 18 of 2015 dated 2-11-2015, which had analyzed and then explained that all shares and securities held by a bank which are not bought to maintain Statutory Liquidity Ratio (SLR) are its stock-in-trade and not investments and income arising out of those is attributable, to business of banking. This Circular came to be issued in the aftermath of CIT v. Nawanshahar Central Co-operative Bank Ltd. [2007] 160 Taxman 48/289 ITR 6 (SC), wherein this Court had held that investments made by a banking concern is part of their banking business. Hence the income earned through such investments would fall under the head Profits & Gains of business. The Punjab and Haryana High Court, in the case of Pr CIT v. State Bank of Patiala [2017] 88 taxmann.com 667/393 ITR 476 (Punj. & Har.), while adverting to the CBDT Circular, concluded correctly that shares and securities held by a bank are stock-in-trade, and all income received on such shares and securities must be considered to be business income. That is why section 14A would not be attracted to such income. (emphasis supplied) 15. From the above discussion, the ratio decidendi which emerges is that, it was qua the assessee’s covered by the Board Circular No. 18 of 2015 viz., cooperative societies & banks (to whom Section 80P was applicable), that the Hon’ble Supreme Court (supra) held that the provisions of disallowance u/s 14A cannot be applied to such assessee’s. In the facts of the present case, the assessee is also a cooperative society which is engaged in the business of providing financial assistance to its members and is eligible for deduction u/s 80P of the Act. In our considered view therefore the above the judgment rendered by the Supreme Court in case of State Bank of Patiala (supra) and South Indian Bank Ltd Vs CIT (supra) is squarely applicable to the facts of the present case. We thus hold that the provisions of Section 14A cannot be applied to the assessee cooperative society and accordingly the AO is directed to delete the disallowance so made u/s 14A of the Act. Accordingly, the second and third grounds of appeal of the revenue stands dismissed and the ground in cross appeals of the assessee is allowed. 11 ITA Nos.425 to 428/Kol/2020 & ITA Nos. 258/Kol/2021, 268-269/Kol/2021 Steel Authority of India Employees’ Co-op Credit Society Ltd. AYs 2008-09, 2012-13 to 2014-15 16. In the result, all the appeals of the revenue are dismissed and all the appeals of the assessee are allowed. Order is pronounced in the open court on 18th April, 2022. Sd/- Sd/- (Rajesh Kumar) (Aby. T. Varkey) Accountant Member Judicial Member Dated : 18 th April, 2022 JD(Sr.P.S.) Copy of the order forwarded to: 1. Revenue – ACIT, Circle-29, Kolkata. . 2 Assessee – M/s. Steel Authority of India Employees’ Co-operative Credit Society Ltd., 12, Ispat Cooperative House, Charu Chandra Place East, Ispat Cooperative House, Charu Market, Kolkata-700 033. 3. 4. 5. CIT(A)-8, Kolkata.. (sent through e-mal) CIT , Kolkata DR, ITAT, Kolkata. (sent through e-mal) /True Copy, By order, Assistant Registrar