The Lambra Kangri Multipurpose Co., Distt. Hoshiarpur V. The Income-tax Officer-3, Hoshiarpur

ITA 271/ASR/2012

• Counselvise Citation: [2014] 140 COUNSELVISE.COM (IT) 73345 (ITAT-AMRITSAR)
• Duration Of Justice: 1 year(s) 9 month(s) 6 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 18-03-2014
• Appeal Filed By: Assessee
• Order Result: Dismissed
• Bench Allotted: DB
• Next Hearing Date: 04-03-2014
• Assessment Year: 2007-2008
• Appeal Filed On: 12-06-2012
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Department Lawyers: AMRIK CHAND
• Assessee Lawyers: J S BHASIN

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL AMRITSAR BENCH; AMRITSAR. BEFORE SH. H.S. SIDHU, JUDICIAL MEMBER AND SH. B.P.JAIN, ACCOUNTANT MEMBER I.T.A. NO.271(ASR)/2012 ASSESSMENT YEAR:2007-08 PAN :AABTT3233H M/S. THE LAMBRA KANGRI MULTIPURPOSE VS. INCOME TAX OFFICER, CO-OP. SOCIETY, VPO LAMBRA, WARD-3, HOSHIARPUR. DISTT. HOSHIARUR. (APPELLANT) (RESPONDENT) APPELLANT BY:SH.J.S.BHASIN, ADVOCATE RESPONDENT BY:SH.AMRIK CHAND, DR DATE OF HEARING: 04/03/2014 DATE OF PRONOUNCEMENT:18/03/2014 ORDER PER BENCH ; THIS APPEAL OF THE ASSESSSEE ARISES FROM THE ORDER OF THE CIT(A), JALANDHAR DATED 22.03.2012 FOR THE ASSESSMENT YEAR 2007-08. THE ASSESSEE HAS RAISED FOLLOWING GROUNDS OF APPEAL: 1. THAT THE CIT(A) HAS GROSSLY ERRED IN CONFIRMING THE ADDITION OF RS.4,01,940/- BEING INTEREST EARNED FROM BANKS, AS NOT ENTITLED TO DEDUCTION U/S 80P(2)(A)(I). ITA NO.271(ASR)/2012 2 2. THAT THE CIT(A) HAS GROSSLY ERRED IN CONFIRMING IDENTICAL DISALLOWANCE IN RESPECT OF RENTAL INCOME OF RS.13,3 95/- ON THE ANOLOGY OF HIS FINDINGS, AGITATED BY WAY OF FIRST G ROUND. 3. THAT THE IMPUGNED ORDER, TO THE EXTENT DISPUTED HEREINABOVE, IS AGAINST THE LAW AND FACTS OF THE CASE. 2. THE BRIEF FACTS OF THE CASE AS EMANATING FROM TH E ORDER OF THE AO ARE REPRODUCED AS UNDER: 3. THE SOCIETY HAS EARNED INTEREST INCOME FROM MEMB ERS AND FORM THE INVESTMENT OF ITS FUNDS MADE WITH VARIOUS BANKS & SOCIETIES. THE PERUSAL OF DOCUMENTS REVEALS THAT THE ASSESSEE HAS EARNED I NTEREST ON INVESTMENTS FROM THE BANKS OTHER THAN THE INVESTMEN TS WITH CO- OPERATIVE SOCIETIES. VIDE ORDER SHEET ENTRY DATED 2 0.10.2009, IT WAS POINTED OUT TO THE ASSESSEE THAT THE SOCIETY HAS E ARNED INTEREST FROM ITS DEPOSITORS WITH HOSHIARPUR CENTRAL CO-OPERATIVE BANK, PUNJAB & SIND BANK, PUNJAB GRAMIN BANK & NORTH ZONE BANK STA FF COOPERATIVE SOCIETY. THE INTEREST EARNED FROM INVES TMENTS WITH BANKS OTHER THAN COOPERATIVE SOCIETIES IS NOT EXEMP T AS UNDER: PUNJAB GRAMIN BANK RS. 9,378/- PUNJAB & SIND BANK RS. 19,679/- HDFC BANK RS. 292/- PUNJAB & SIND BANK RS.3,72,591 TOTAL: RS.4,01,940/- THE ABOVE INTEREST OF RS.4,01,940/- IS NOT EXEMPT U /S 80(P)(2)(A) AS IT HAS NOT BEEN EARNED FROM INVESTMENTS WITH THE OTHER COOPERATIVE SOCIETIES. THE ASSESSEE, VIDE ITS REPLY DATED 29.10.2009 STATE D AS UNDER: DURING THE COURSE OF ASSESSMENT PROCEEDINGS THE AS SESSEE AS WAS ASKED TO EXPLAIN WHY INTT. ON DEPOSITS KEPT WITH BA NKS OTHER THAN CO- OPERATIVE BANK OR CO-OPERATIVE SOCIETIES SHOULD NO T BE DISALLOWED U/S 80P. IN THIS CONNECTION, IT IS SUBMITTED THAT T HE PRIMARY OBJECTIVE OF SOCIETY IS BANKING BUSINESS AND PROVIDING CREDIT FACILITIES TO ITS MEMBERS. THE ASSESSEE SOCIETY HAS KEPT CERTAIN FUND S IN THE SHAPE OF FDRS & SECURITY DEPOSITS WITH BANKS TO MEET CERTAIN CONTINGENCIES. THIS ACTIVITY IS A PART OF BANKING BUSINESS. AS PE R SECTION 80P ITA NO.271(ASR)/2012 3 ASSESSEE SOCIETY ENGAGED IN BANKING BUSINESS OR PRO VIDING CREDIT FACILITIES TO ITS MEMBERS IS ENTITLED TO DEDUCTION IN RESPECT OF ALL INCOME. SO THIS INTEREST IS DEDUCTIBLE U/S 80P. AS PER CLAUSE (D) OF SUB-SECTION (2) OF SECTION 80P , ANY INCOME BY WAY OF INTEREST OR DIVIDEND EARNED BY COOPERATIVE SOCIE TY FROM ITS INVESTMENTS WITH ANY OTHER COOPERATIVE SOCIETY, THE WHOLE OF SUCH INCOME IS EXEMPT U/S 80P(2)(A). THE SOCIETY HAS MAD E CERTAIN INVESTMENTS OF ITS FUNDS WITH PUNJAB & SIND BANK, PUNJAB GRAMIN BANK AND HDFC BANK. THE CONTENTION RAISED BY THE AS SESSEE THAT INTEREST EARNED FROM BANKS OTHER THAN THE COOPERA TIVE SOCIETIES IS DEDUCTIBLE U/S 80P IS NOT ACCEPTABLE BECAUSE AS PER SECTION 80P(2)(D) THE INCOME ONLY BY WAY OF INTT. OR DIVIDENDS DERIVE D BY A COOPERATIVE SOCIETY IS EXEMPT AS A WHOLE. THEREFORE, THE INTERE ST AMOUNTING TO RS.4,01,940/- EARNED FROM THE BANKS OTHER THAN THE COOPERATIVE SOCIETIES DOES NOT QUALIFY FOR EXEMPTION U/S 80P(2) (D) BUT ITS EXEMPTION IS AVAILABLE U/S 80P(2)(C)(II). AS SUCH, THE DEDUCTION CLAIMED U/S 80P(2)(D) ON INTEREST OF RS.4,01,940/- IS DISALLOWED SUBJECT TO DEDUCTION U/S 80P(2)(C)(II). PENALTY PR OCEEDINGS U/S 271(1)(C) OF THE ACT ARE INITIATED FOR FURNISHING I NACCURATE PARTICULARS OF INCOME. DURING THE VERIFICATION OF BOOKS OF ACCOUNT IT WAS NOTICED THAT THE ASSESSEE HAS RECEIVED RENTAL INCOME OF RS.13,394/- FROM LETTING OUT OF THE SHOPS TO THE PERSONS, OTHER THAN FOR THE PURPOS E OF STORAGE, PROCESSING OR FACILITATING THE MARKETING OF COMMODI TIES AS PROVIDED IN CLAUSE (E) OF SUB-SECTION (2) OF SECTION 80P. DURIN G THE COURSE OF DISCUSSION THE ASSESSEE WAS POINTED ABOUT THE INADM ISSIBILITY OF DEDUCTION U/S 80P OF THE RENTAL INCOME OF RS.13,394 /-,. THE ASSESSEE COULD NOT PUT FORTH ANY SATISFACTORY ARGUMENT ON T HIS ISSUE. THEREFORE, DEDUCTION U/S 80P IS NOT ALLOWED ON THE SAID RENTAL INCOME OF RS.13,394/- WHICH IS ADDED IN THE TAXABLE INCOME OF THE ASSESSEE AS UNDER: RENTAL INCOME RS.13,394/- LESS: DEDUCTION U/S 24 @ 30% RS. 4,018/- BALANCE RS.9376/- ITA NO.271(ASR)/2012 4 ACCORDINGLY, AN ADDITION OF RS.9376/- IS MADE ON TH IS ACCOUNT. PENALTY PROCEEDINGS U/S 271(1)(C) OF THE INCOME-TAX ACT, 1961 ARE INITIATED FOR FURNISHING INACCURATE PARTICULARS OF INCOME. 3. THE LD. CIT(A) CONFIRMED THE ACTION OF THE ASSES SING OFFICER. 4. THE LD. COUNSEL FOR THE ASSESSEE, MR. J.S. BHASI N, ADVOCATE ARGUED THAT THE ASSESEE IS COVERED UNDER SECTION 80P(2)(A) (II) OF THE ACT AND NOT UNDER ANY SUB-SECTION OF SECTION 80P OF THE ACT. HE ARGUED THAT THE LD. CIT(A) HAS DECIDED THE ISSUE ON THE BASIS OF DECISI ON BY THE LD. CIT(A) FOR THE ASSESSMENT YEAR 2006-07 IN ASSESSEES OWN CASE DATED 25.07.2011 AND THERE IS NO APPEAL AGAINST THE SAID ORDER BEFORE T HE ITAT. THE LD. COUNSEL FOR THE ASSESSEE RELIED UPON THE DECISIONS OF VARI OUS COURTS OF LAW AS UNDER: 1. CIT VS. IQBALPUR COOP. CANE DEVELOPMENT UNIONS, ROORKEE IN ITA NO.135 OF 2007 DATED 08.05.2009. (2009) 315 IT R 441 (UTTRAKHAND) 2. PUNJAB STATE CO-OPERATIVE FEDERATION OF HOUSING BUI LDING SOCIETIES LTD. VS. ACIT (2010) 38 DTR 284 3. CIT VS. HARYANA STATE COOPERATIVE APEX BANK LTD. (2 010) 322 ITR 404 (P&H). 4. CIT VS. PUNJAB STATE CO-OP. BANK LTD. (2008) 300 IT R 24 (P&H). 5. THE LD. DR, ON THE OTHER HAND, RELIED UPON THE O RDERS OF BOTH THE AUTHORITIES BELOW. 6. WE HAVE HEARD THE RIVAL CONTENTIONS AND PERUSED THE FACTS OF THE CASE. THE ARGUMENTS MADE BY THE LD. COUNSEL FOR THE ASSES SEE, MR. J.S. BHASIN, ITA NO.271(ASR)/2012 5 ADVOCATE, WERE MAINLY THAT THE ASSESSEE FALLS U/S 8 0P(2)(A)(II) OF THE ACT WHERE GROSS TOTAL INCOME OF THE ASSESSEE BEING A CO OPERATIVE SOCIETY REFERRED TO IN SECTION 80P(1) IS DEDUCTIBLE U/S 80P (2)(A)(I), IF THE SAID CO- OPERATIVE SOCIETY IS ENGAGED IN CARRYING ON BUSINES S OF THE BANK OR PROVIDING CREDIT FACILITIES TO ITS MEMBERS. IT WAS ASKED BY THE BENCH TO MR. J.S.BHASIN, ADVOCATE WHETHER THERE IS ANYTHING ON RECORD, WHERE IT CAN BE ESTABLISHED THAT THE ASSESSEE IS CARRYING ON THE BU SINESS OF BANKING OR PROVIDING CREDIT FACILITIES TO ITS MEMBERS, THE LD. COUNSEL FOR THE ASSESSEE COULD NOT ESTABLISH THAT IT CARRIES ON THE BANKING BUSINESS OR PROVIDING CREDIT FACILITIES TO ITS MEMBERS WITH THE HELP OF ANY DOC UMENTARY EVIDENCE OR OTHERWISE. THERE IS NO PAPER BOOK PLACED ON RECORD EXCEPT THE DECISIONS OF VARIOUS COURTS OF LAW. IN THE FACTS AND CIRCUMSTANC ES, THE EARNING OF INTEREST FROM THE DEPOSITS WITH VARIOUS BANKS AS STATED BY T HE AO CANNOT BE HELD TO BE ACTIVITY OF CARRYING ON BUSINESS OF BANKING OR P ROVIDING CREDIT FACILITIES TO ITS MEMBERS IN THE FACTS AND CIRCUMSTANCES, THE CAS ES RELIED UPON BY THE ASSESSEE CANNOT BE OF ANY HELP TO THE ASSESSEE. ACC ORDINGLY, WE FIND NO INFIRMITY IN THE ORDER OF THE LD. CIT(A), WHO HAS R IGHTLY CONFIRMED THE ACTION OF THE A.O. ACCORDINGLY, GROUND NO.1 OF THE ASSESSE E IS DISMISSED. ITA NO.271(ASR)/2012 6 7. WE ALSO DISMISS GROUND NO.2 OF THE ASSESSEE ON T HE SAME ANALOGY, AS LD. CIT(A) HAS RIGHTLY CONFIRMED THE ACTION OF THE A.O. ACCORDINGLY, BOTH THE GROUNDS OF ASSESSEES APPEAL ARE DISMISSED. 8. IN THE RESULT, THE APPEAL OF THE ASSESSEE IN ITA NO.271(ASR)/2012 IS DISMISSED. ORDER PRONOUNCED IN THE OPEN COURT ON 18TH MARCH, 2014. SD/- SD/- (H.S. SIDHU) (B.P. JAIN) JUDICIAL MEMBER ACCOUNTANT MEMBER DATED: 18TH MARCH, 2014 /SKR/ COPY OF THE ORDER FORWARDED TO: 1. THE ASSESSEE:M/S. THE LMBRA KANGRI MULTIPURPOSE CO- OP SOCIETY VPO LAMBRA, DISTT. HOSHIARPUR. 2. THE ITO WARD 3, HOSHIARPUR. 3. THE CIT(A), JLR. 4. THE CIT, JLR. 5. THE SR DR, ITAT, AMRITSAR. TRUE COPY BY ORDER (ASSISTANT REGISTRAR) INCOME TAX APPELLATE TRIBUNAL, AMRITSAR BENCH: AMRITSAR