Anand Urban Co-op Bank Ltd., Anand V. The Income Tax Officer, Ward-1, Anand

ITA 2731/AHD/2013

• Counselvise Citation: [2017] 128 COUNSELVISE.COM (IT) 5782 (ITAT-AHMEDABAD)
• Duration Of Justice: 3 year(s) 6 month(s) 7 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 29-05-2017
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: SMC
• Next Hearing Date: 06-03-2017
• Assessment Year: 2010-2011
• Appeal Filed On: 22-11-2013
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: RICHHA RASTOGI
• Assessee Lawyers: M G PATEL
• Keywords: Business income; Cancellation of registration
• Section: 72(1); 142(1)

Judgement Text

, *,L *,L*,L *,L- -- -,E ,E,E ,E- -- -LH* LH*LH* LH* IN THE INCOME TAX APPELLATE TRIBUNAL SMC BENCH, AHMEDABAD BEFORE SHRI N.K. BILLAIYA, ACCOUNTANT MEMBER AND SHRI MAHAVIR PRASAD, JUDICIAL MEMBER !# I.T.A. NO.2731/AHD/2013 ( / ASSESSMENT YEAR :2010-11 ) ANAND URBAN CO-OP BANK LTD. URBAN CHAMBER, URBAN BANK ROAD, ANAND 388001. # VS. INCOME TAX OFFICER WARD-1, ANAND. $ # % & # PAN/GIR NO. : AADFA 3041 J ( !$' / APPELLANT ) .. ( ($' # RESPONDENT ) !$') # APPELLANT BY : SHRI M.G. PATEL, AR ($'*) / RESPONDENT BY : MS. RICHHA RASTOGI, SR. DR + ,*-. / DATE OF HEARING 06/03/2017 /012*-. / DATE OF PRONOUNCEMENT 29/05/2017 3# O R D E R PER SHRI MAHAVIR PRASAD, JUDICIAL MEMBER : THIS APPEAL BY THE ASSESSEE IS DIRECTED AGAINST THE ORDER OF THE COMMISSIONER OF INCOME TAX(APPEALS)-IV, BARODA, DAT ED 27/09/2013 FOR THE ASSESSMENT YEAR (AY) 2010-11. ITA NO.2731/AHD /2013 ANAND URBAN CO-OP BANK LTD. VS. ITO ASST.YEAR 2010-11 - 2 - 2. ASSESSEE HAS BEEN TAKEN FOLLOWING GROUNDS OF APP EALS: (I) THE LEARNED COMMISSIONER OF INCOME TAX (APPEALS )-IV, BARODA HAS ERRED IN LAW AND ON FACTS OF THE CASE BY TREATI NG THE INCOME OF RS.36,76,825/- AS INCOME FROM OTHER SOURCES INST EAD OF INCOME FROM BUSINESS. (II) THE LEARNED COMMISSIONER OF INCOME TAX (APPEAL S)-IV, BARODA HAS ERRED IN LAW AND ON FACTS OF THE CASE BY NOT AL LOWING SET OFF BROUGHT FORWARD BUSINESS LOSS OF EARLIER YEARS AGAI NST INCOME OF RS.36,76,825/-. (III) THE LEARNED COMMISSIONER OF INCOME TAX (APPEA LS)-IV, BARODA HAS ERRED IN LAW AND ON FACTS OF THE CASE BY NOT AL LOWING DEDUCTION U/S. 80(P)(2)(A)(I) OF THE IT ACT, 1961. 3. THE RELEVANT FACTS AS CULLED OUT FROM THE MATERI ALS ON RECORD ARE AS UNDER:- 3.1 ASSESSEE WAS A CO-OPERATIVE BANK. AT PRESENT, T HE ASSESSEE IS IN LIQUIDATION PROCESS. NO BANKING ACTIVITIES HAVE BEE N CARRIED OUT BY THE BANK. THE BANK EARNS INTEREST INCOME FROM DEPOSITS WITH BANK. 3.2 IN ITS PROFIT AND LOSS ACCOUNT, THE ASSESSEE HA S SHOWN INTEREST OF RS.36,76,825/- ON FIXED DEPOSITS WITH BANKS. THE AS SESSEE HAS ALSO SHOWN INTEREST RECEIVED ON ADVANCES WITH ITS MEMBER S AT RS.2,64,27,420/- AS ALSO CLAIMED INTEREST REBATE AT RS.3,07,56,618/- AND ULTIMATELY A LOSS OF RS.43,29,198/- WAS DEBITED IN ITS PROFIT AND LOSS ACCOUNT. ITA NO.2731/AHD /2013 ANAND URBAN CO-OP BANK LTD. VS. ITO ASST.YEAR 2010-11 - 3 - 3.3 VIDE QUESTIONNAIRE U/S. 142(1) OF THE INCOME-TA X ACT, 1961, THE ASSESSEE WAS REQUESTED TO STATE AS UNDER: IT IS NOTICED THAT NO BANKING ACTIVITIES HAVE BEEN CARRIED OUT BY THE BANK. IT WAS FURTHER NOTICED THAT YOUR BANKING LICE NSE FOR CARRYING ON BANKING BUSINESS IN INDIA WAS CANCELLED U/S.22 OF T HE BANKING REGULATION ACT, 1949 BY THE RESERVE BANK OF INDIA O N 27/03/2007. SINCE THE SOCIETY WAS IN THE PROCESS OF BEING WINDE D UP BY THE OFFICER LIQUIDATOR AS STATED BY YOUR AUDITOR. HENCE, THE RE CEIPTS DURING THE PREVIOUS YEAR RELEVANT TO ASSESSMENT YEAR UNDER CON SIDERATION WERE NOT ON ACCOUNT OF ENGAGING IN ANY BUSINESS OF PROFESSIO N. DURING THE PREVIOUS YEAR RELEVANT TO AY 2010-11, THE ASSESSEE S INCOME WAS EXCLUSIVELY FROM INTEREST RECEIPTS. THE ASSESSEE HA S NOT CARRIED ON ANY BUSINESS DURING THE PREVIOUS YEAR AND, AS PER THE P ROVISIONS OF SECTION 28(1) OF THE ACT, THE INCOME COULD NOT BE COMPUTED UNDER THE HEAD PROFITS AND GAINS OF BUSINESS OR PROFESSION. THUS , THE INTEREST INCOME DERIVED BY YOU IS CHARGEABLE TO INCOME TAX UNDER TH E HEAD INCOME FROM OTHER SOURCES. PLEASE FILE YOUR EXPLANATION I N THIS REGARD. AS MENTIONED ABOVE, THE INCOME OF THE CURRENT ASSES SMENT YEAR WAS CHARGEABLE UNDER THE HEAD INCOME FROM OTHER SOURCE S, HENCE BROUGHT FORWARD BUSINESS LOSS COULD NOT BE SET OFF AGAINST SUCH INCOME AS PER THE PROVISIONS OF SECTION 72(1) OF THE ACT. ALSO NO CAR RIED FORWARD BROUGHT FORWARD LOSS WILL BE ALLOWED TO BE CARRIED FORWARD. 3.4 IN RESPONSE TO THIS, THE ASSESSEE VIDE ITS LETT ER DATED 04/12/2012 HAS FURNISHED ITS WRITTEN SUBMISSION. IT WAS CONTENTED THAT THE ASSESSEE IS A CO-OPERATIVE CREDIT SOCIETY CARRYING ON BUSINESS OF PROVIDING CREDIT FACILITIES TO MEMBERS AND EARNING INCOME FROM IT. T HE INCOME CONSISTS OF INTEREST EARNED ON ADVANCE TO MEMBERS AND INVESTMEN T. THE EXPENSES CONSIST OF INTEREST PAYABLE ON DEPOSITS AND BORROWI NGS. IN ORDER TO SPEED UP THE RECOVERY OF ADVANCES AND EARN INTEREST ON NO N-PERFORMING ASSETS THE REGISTRAR OF CO-OPERATIVE SOCIETIES, GANDHINAGA R HAS DEPUTED OFFICER ITA NO.2731/AHD /2013 ANAND URBAN CO-OP BANK LTD. VS. ITO ASST.YEAR 2010-11 - 4 - TO LOOK AFTER AND MONITOR THE CREDIT SOCIETY WITH A ONETIME SETTLEMENT SCHEME ANNOUNCE FROM TIME TO TIME ANNOUNCED FROM TI ME TO TIME. IT IS PLANNED IMPROVE THE LIQUIDITY IN THE BUSINESS BY EA RLY RECOVERY FOR SMOOTH AND EFFICIENT FUNCTIONING OF THE CREDIT BUSI NESS. THE ADVANCES AND INVESTMENT OF CREDIT SOCIETY MADE OUT OF DEPOSITS, BORROWING AND RESERVE. THE CREDIT SOCIETY IS REGISTERED ON 05/04/1965 AND SINCE THEN IT REGULARLY AND PERPETUALLY CARRYING CREDIT FACILITIES TO MEMBE RS AS PROVIDED U/S. 80P (2)(A)(I) OF THE ACT. 3.5 IT WAS FURTHER STATED THAT OUR SOCIETY IS A CO- OPERATIVE SOCIETY CARRYING ON BUSINESS OF PROVIDING CREDIT FACILITY T O THE MEMBERS. PRIOR TO JULY, 2003, THE ASSESSEE WAS FUNCTION AS BANK HAVIN G GRANTED BANKING LICENSE FROM RESERVE BANK OF INDIA. THEREAFTER, DUE TO NON-FULFILLMENT OF CERTAIN RULES AND REGULATION, THE LICENSE WAS CANCE LLED SUBJECT TO RESTART UPON FULFILLMENT OF IT. THE REGULAR BUSINESS OF EAR NING INCOME OF INTEREST FROM INVESTMENT AND ADVANCE TO MEMBERS IS CONTINUED EVEN AFTER CANCELLATION OF CREDIT SOCIETY AS BANK AS PER BANKI NG REGULATION ACT. THE CANCELLATION OF REGISTRATION DOES NOT DISENTITLE TO CARRY ON BUSINESS OF PROVIDING CREDIT FACILITIES TO THE MEMBERS. THE SOU RCE OF INTEREST INCOME IS OUT OF INVESTMENT AND ADVANCE TO MEMBERS. THE IN COME CONSISTS OF INTEREST EARNED ON ADVANCE TO MEMBERS AND INVESTMEN T. THE EXPENSE CONSISTS OF INTEREST PAYABLE ON DEPOSITS AND BORROW INGS. THERE IS NO CHANGE IN ANY SOURCE OF INCOME OR LOSS IN THE BANK. THE ADVANCES AND INVESTMENT OF CREDIT SOCIETY MADE OUT OF DEPOSITS, BORROWING AND RESERVE. ITA NO.2731/AHD /2013 ANAND URBAN CO-OP BANK LTD. VS. ITO ASST.YEAR 2010-11 - 5 - THE NET LOSS OF EARLIER YEAR IS CARRIED FORWARD AND SET OF IN FUTURE YEAR UPON STARTING THE ADVANCE AS PERFORMING ASSETS AND EARN INTEREST INCOME IS TO BE ALLOWED U/S.72(1) OF THE INCOME-TAX ACT. T HE SOURCE OF EARNING OF INTEREST IS CONTINUED TILL THIS ASSESSMENT YEAR HAV ING FILED REGULARLY PROFIT AND LOSS ACCOUNT AND BALANCE SHEET IN RETURN OF INC OME. IT WAS STATED THAT THE LOSS AS INCURRED IN EARLIER YEAR BE ALLOWED AS SET OFF IN DETERMINING TOTAL INCOME OF THIS YEAR. 3.6 IT WAS FURTHER CONTENDED THAT ALTERNATIVELY SIN CE OUR SOCIETY DULY REGISTERED AND FUNCTIONING AS CREDIT SOCIETIES BE A LLOWED EXEMPTION U/S.80P (2)(A)(I) OF THE INCOME TAX ACT IN ACCORDAN CE WITH THE LAW. 4. LEARNED CIT(A) WAS NOT AGREE WITH THE CONTENTION OF THE ASSESSEE. HENCE TREATING THE INCOME OF RS.36,76,825/- AS INCO ME FROM OTHER SOURCES INSTEAD OF INCOME FROM BUSINESS. 5. AGAINST THE SAID ORDER APPEAL OF THE APPELLANT I S BEFORE US. 6. WE HAVE GONE THROUGH THE RELEVANT RECORD AND IMP UGNED ORDER. UNDOUBTEDLY, THIS SOCIETY HAS BEEN REGISTERED UNDER THE GUJARAT SOCIETY ACT. APPELLANT HAS FILED A COPY OF RESOLUTION NO.NS B/12/2005/M.97/CH, PASSED BY THE GUJARAT GOVERNMENT, AGRICULTURE AND C O-OPERATIVE DEPARTMENT, WHICH HAS BEEN REPRODUCED AS UNDER: ITA NO.2731/AHD /2013 ANAND URBAN CO-OP BANK LTD. VS. ITO ASST.YEAR 2010-11 - 6 - (1). PROVISIONS OF CLAUSE 3; CLAUSE 107 TO 115 OF GUJARAT CO- OPERATIVE SOCIETY ACT. BY RESOLUTION DATED 18/05/2007, SETTLEMENT SCHEME W AS DECLARED FOR RECOVERING DUES FROM THE BORROWERS OF THE CO-OPERATIVE BANKS IN LIQUIDATION IN THE STATE. THE PURPOSE OF T HIS SCHEME WAS TO RECOVER DUES FROM THE BORROWERS, TO RETURN DEPOSITS TO DEPOSIT-HOLDERS AND MOREOVER TO KEEP CO-OPERATIVE SECTOR INTACT AND TO MAKE THE CONFIDENCE OF THE PEOPLE SUSTAIN IN THE CO-OPERATIV E SECTOR. THERE WAS PROVISION IN THE SCHEME PASSED UNDER THE ABOVE RESO LUTION NOT TO GIVE BENEFIT OF THIS SCHEME IN THE CASES OF WILLFUL DEFA ULTER, FRAUD AND MALFEASANCE. BECAUSE OF LACK OF AWARENESS OF ABOVE SCHEME AMONGS T THE BORROWERS, NOT ALLOWING BENEFIT OF THE SCHEME IN TH E CASES OF WILLFUL DEFAULTER, FRAUD AND MALFEASANCE AND PROVISIONS OF CHARGING INTEREST AS MUCH AS AT 8%, 10% AND 12%, FEW DEBTORS HAD COME FO RWARD TO TAKE BENEFIT OF THIS SCHEME. AS A RESULT, THE MAIN PURPO SE OF GETTING RECOVERY WAS NOT ACHIEVED. CONSEQUENT UPON CANCELLING OF BANKING LICENSE OF NA GRIK CO- OPERATIVE BANKS BY THE RESERVE BANK OF INDIA, BANKI NG FUNCTION OF THE NAGRIK CO-OPERATIVE BANKS UNDER LIQUIDATION COMES T O CLOSE. AND AS PER THE DIRECTION OF RESERVE BANK, BANK IS TAKEN INTO L IQUIDATION AS PER PROVISIONS OF CO-OPERATIVE ACT IN WHICH A LIQUIDATI ON OFFICER (LIQUIDATOR) IS APPOINTED BY THE REGISTRAR AS PER P ROVISIONS OF CO- OPERATIVE ACT. BANK LOSES ITS STATUS AS A BANK ONCE GONE IN LIQUIDATION. HOWEVER, IT CONTINUES TO EXIST AS A CO-OPERATIVE SO CIETY UNDER CO- OPERATIVE ACT AND IT HOLDS STATUS OF CREDIT SOCIETY OF DIFFERENT NATURE. THE LIQUIDATION OFFICER (LIQUIDATOR) ACTS IN THE PL ACE OF BOARD OF DIRECTORS OF NAGRIK CO-OPERATIVE BANKS IN LIQUIDATI ON TILL REGISTRATION OF SOCIETY IS NOT CANCELLED UNDER CLAUSE-20 OF GUJARAT CO-OPERATIVE SOCIETY ACT, 1961 AND HE ATTAINS ALL ADMINISTRATIVE POWERS UNDER CLAUSE 74 OF CO-OPERATIVE ACT AND ATTAINS POWER UNDER CLAUSE 110 . AS PER CLAUSE 108(4) OF CO-OPERATIVE ACT, THE LIQUIDATION OFFICER (LIQUIDATOR) SHALL FUNCTION UNDER THE GUIDANCE, SUPERVISION AND CONTRO L OF REGISTRAR. THEREFORE, THE PROVISIONS OF GUIDE-LINES AND BANKIN G REGULATION ACT OF ITA NO.2731/AHD /2013 ANAND URBAN CO-OP BANK LTD. VS. ITO ASST.YEAR 2010-11 - 7 - RESERVE BANK OF INDIA BECOME USELESS IN THE CASE OF CO-OPERATIVE BANKS GONE IN LIQUIDATION. MOREOVER, IT WAS FELT NECESSARY THAT STATE GOVERNME NT DECLARES ONE TIME SETTLEMENT SCHEME AND IS IMPLEMENTED UNIFO RMLY SO THAT CONFIDENCE OF THE PEOPLE IN CO-OPERATIVE SECTOR IS SUSTAINED, CO- OPERATIVE ACTIVITIES ARE ENCOURAGED, DEPOSIT-HOLDER ARE PAID BACK THEIR DEPOSIT, CREDIBILITY OF THE BANKS ARE STRENGTHENED, MEMBERS ARE GIVEN BACK THEIR INSTITUTION AND TO MAINTAIN CONSISTENCY IN RECOVERY OF DUES OF THE BANKS AND FOR MAINTAINING TRANSPARENCY IN TRANS ACTION OF RECOVERY OF DUES OF THE BANK, A CONDUCIVE ATMOSPHERE IS CREATED IN CO-OPERATIVE SECTOR. RESOLUTION AT THE END OF EXPANDED DISCUSSED, IT IS RESOLVED T O IMPLEMENT A SPECIAL ONE-TIME SETTLEMENT SCHEME FOR THE PURPOSE FOR EFFECTING OVERDUE RECOVERY OF NAGRIK CO-OPERATI VE BANK OF THE STATE GOVERNMENT UNDER LIQUIDATION SUBJECT TO GUIDE -LINES AND CONDITIONS MENTIONED IN ANNEXURE ENCLOSED. 7. IN THIS CASE, RBI HAS RESTRICTED THE OPERATIONS OF THE BANK FROM 27/03/2007, AND SINCE THEN THE BANK HAS NOT ACCEPTE D ANY DEPOSITS OR GIVEN ANY LOAN TO PUBLIC. 7.1 INVESTMENTS ARE STATED AT THE COST OF ACQUISITI ON. RS.1 CRORE WAS INVESTED WITH INTEREST @12.5%, WITH A PREMIUM OF RS .4.25 LACS. THIS AMOUNT WAS RECEIVED AND CREDITED TO ACCOUNT WITH AX IS BANK ON ITS MATURITY. HOWEVER, THE PREMIUM AMOUNT IS SHOWN IN T HE BALANCE SHEET AS OTHER CURRENT ASSET, AND NOT EXPENSED OUT IN THE PR OFIT AND LOSS ACCOUNT. ITA NO.2731/AHD /2013 ANAND URBAN CO-OP BANK LTD. VS. ITO ASST.YEAR 2010-11 - 8 - 7.2 IT HAS BEEN HELD IN CASE OF JAFARI MOMIN VIKAS CO-OP CREDIT SOCIETY LTD. VS. CIT. ITA NO.902/AHD/2012, IN MATTE R, CO-OPERATIVE CREDIT SOCIETY PURELY FUNCTIONING AS SOCIETY WITHOU T BANK IS ENTITLED TO EXEMPTION AS PROVIDED ABOVE IN THE ACT. 7.3 SINCE THE SOCIETY DULY REGISTERED AND FUNCTIONI NG AS CREDIT SOCIETIES BE ALLOWED EXEMPTION U/S.80(P)(2)(A)(I) OF THE ACT. 8. ASSESSEE HAS CITED THE JUDGMENT OF JURISDICTIONA L HIGH COURT [1976] 104 ITR 568 (GUJARAT) IN THE CASE OF MORVI M ERCANTILE BANK LTD. VS. COMMISSIONER OF INCOME TAX: SECTION 56, READ WITH SECTION 28(I) OF THE INCOME TAX ACT, 1961 - INCOME FROM OTHER SOURCES - CHARGEABLE AS - ASSESSM ENT YEAR 1969-70 - WHETHER WHERE ASSESSEE A BANKING COMPANY WAS WOUND UP AND ITS LICENCE TO CARRY ON BUSINESS OF BANKING HAD BEEN SU SPENDED BY RESERVE BANK OF INDIA, IT COULD NOT BE SAID THAT LIQUIDATOR WHEN HE WAS REALISING ASSETS AND INVESTING REALISATION IN SHORT-TERM DEPO SITS WITH PERMISSION OF COURT PENDING DISTRIBUTION AMONGST CREDITORS WAS REALLY CARRYING ON BUSINESS HELD, YES - WHETHER THEREFORE, RECEIVED BY LIQUIDATOR IN SUCH DEPOSITS WAS TAXABLE AS INCOME FROM OTHER SOURCES A ND NOT AS BUSINESS INCOME - HELD, YE FACTS THE ASSESSEE, A BANKING COMPANY WAS COMPULSORILY WO UND UP AND THE OFFICIAL LIQUIDATOR OF THE HIGH COURT WAS APPOINTED AS THE PROVISIONAL LIQUIDATOR. THE RESERVE BANK OF INDIA SUSPENDED THE LICENCE OF THE ASSESSEE-COMPANY. THE LIQUIDATOR REALISED THE ASSET S AND INVESTED THE MONEY IN SHORT-TERM DEPOSITS PENDING DISTRIBUTION. THE ITO TREATED THIS INCOME AS INCOME FROM OTHER SOURCES. ON APPEAL, THE AAC HELD THAT THE INCOME SHOULD BE TREATED AS A BUSINESS INCOME SINCE IN HIS OPINION THE ITA NO.2731/AHD /2013 ANAND URBAN CO-OP BANK LTD. VS. ITO ASST.YEAR 2010-11 - 9 - LIQUIDATOR WAS CARRYING ON THE BUSINESS FOR BENEFIC IAL WINDING UP OF THE COMPANY. THE TRIBUNAL HELD THAT THE INCOME SHOULD B E TREATED AS INCOME FROM OTHER SOURCES AND DISALLOWED THE CARRY- FORWARD OF LOSSES. ON REFERENCE: HELD NO COMPANY CAN CARRY ON BANKING BUSINESS WITHOUT LI CENSE ISSUED BY THE RESERVE BANK OF INDIA SAVE AS OTHERWISE PROVIDE D IN SECTION 22 OF THE BANKING REGULATION ACT, 1949, AND IT IS ONLY SU CH BANKING COMPANY WHICH CAN CARRY ON ADDITIONAL BUSINESS AS SPECIFIED IN SECTION 6 OF THE AFORESAID ACT IT WAS COMMON GROUND, THAT THE MAIN B USINESS OF THE ASSESSEE-COMPANY HAD COME TO AN END AS THE COMPULSO RY WINDING UP ORDER HAD BEEN PASSED BY THE HIGH COURT. IT WAS ALS O COMMON GROUND THAT THERE WAS NO QUESTION OF ACCEPTING DEPOSITS FR OM PUBLIC OR WITHDRAWALS BY CHEQUES, DRAFTS, ORDERS OR OTHERWISE . THE RESERVE BANK OF INDIA HAD SUSPENDED THE LICENSE OF THE ASSESSEE- COMPANY, SO FAR AS CARRYING ON THE BUSINESS OF BANKING WAS CONCERNED. THE NET EFFECT WOULD BE, THEREFORE, THAT THE ASSESSEE-COMPANY CEAS ED TO BE COMPETENT TO CARRY ON BANKING BUSINESS. IF, THEREFORE, IT CEA SED TO BE COMPETENT TO CARRY ON BANKING BUSINESS, AS UNDOUBTEDLY IT DID, I T COULD NOT BE SAID TO BE LEGALLY COMPETENT TO CARRY ON THE ADDITIONAL BUS INESS UNDER SECTION 6 OF THE BANKING REGULATION ACT, 1949. WHEN THE LIQUIDATOR REALISED THE ASSETS AND INVESTE D THE MONEY IN SHORT- TERM DEPOSITS PENDING DISTRIBUTION HE WAS NOT EMBAR KING UPON ANY BUSINESS. THE REALISATION AND DISTRIBUTION OF ASSET S CANNOT, BE SAID TO BE CARRYING ON BUSINESS. IT IS OBLIGATORY UPON THE LIQ UIDATOR TO REALISE THE ASSETS AND TO DISTRIBUTE THE MONEY AMONGST THE CRED ITORS, AND IF PENDING DISTRIBUTION HE INVESTED THE AMOUNT, IT CANNOT BE S AID THAT HE WAS CARRYING ON THE BUSINESS OF INVESTMENT MERELY BECAU SE IT MAY BE ONE OF THE OBJECTS EITHER UNDER THE MEMORANDUM OR UNDER TH E STATUTE. THE ASSETS WHICH THE LIQUIDATOR SEIZED AND WHICH HE TRIED TO REALISE FOR PURPOSES OF WINDING UP WERE OF CAPITAL NATURE AND T HEY COULD NOT BE SAID TO BE BUSINESS ASSETS, NOR COULD IT BE SAID TH AT MERELY BECAUSE HE WAS INVESTING THE REALISATIONS, ASSUMING THAT THAT WAS PERMISSIBLE EITHER UNDER THE MEMORANDUM OR UNDER THE STATUTE, THE ACTI VITIES WHICH HE WAS CARRYING ON AS A LIQUIDATOR WERE THOSE OF A BUSINES SMAN. IN THE CIRCUMSTANCES, THEREFORE, IT COULD NOT BE HELD THAT THE LIQUIDATOR WAS ITA NO.2731/AHD /2013 ANAND URBAN CO-OP BANK LTD. VS. ITO ASST.YEAR 2010-11 - 10 - MAKING FOR MERCANTILE NECESSITY THE INVESTMENT OF R EALISATIONS AS A BUSINESS FOR BENEFICIAL WINDING' UP OF THE COMPANY. THE TRIBUNAL HAD FOUND AS A FACT THAT THE MAIN BUSINESS OF THE ASSES SEE-COMPANY HAVING GONE AS A RESULT OF THE WINDING-UP ORDER, THERE DID NOT REMAIN ANY OTHER ACTIVITY WHICH COULD BE LEGITIMATELY SAID TO BE A B USINESS ACTIVITY AND WHATEVER THE LIQUIDATOR DID WAS MERELY AS A LIQUIDA TOR FOR PURPOSES OF LIQUIDATION OF THE COMPANY. THERE WERE NO JUSTIFYIN G GROUNDS FOR DISTURBING THIS FINDING OF FACT. THEREFORE, THE TRIBUNAL WAS RIGHT IN LAW IN HOLDING THAT THE INTEREST ON DEPOSITS WAS TAXABLE AS INCOME FROM OTHER SOURCES A ND NOT AS A BUSINESS INCOME. 9. WE ALLOW THE SET OFF BROUGHT FORWARD BUSINESS LO SS OF EARLIER YEARS AGAINST INCOME OF RS.36,76,825/-. 10. IN THE RESULT APPEAL FILED BY THE ASSESSEE IS A LLOWED. THIS ORDER PRONOUNCED IN OPEN COURT ON 29/05/2017 SD/- SD/- ( ) 4 5 ( N. K. BILLAIYA ) ( MAHAVIR PRASAD ) ACCOUNTANT MEMBER JUDICIAL MEMBER AHMEDABAD; DATED 29/05/2017 PRITI YADAV, SR.PS ITA NO.2731/AHD /2013 ANAND URBAN CO-OP BANK LTD. VS. ITO ASST.YEAR 2010-11 - 11 - !'# $#! # COPY OF THE ORDER FORWARDED TO : 1. !$' / THE APPELLANT 2. ($' / THE RESPONDENT. 3. 67- + 8- / CONCERNED CIT 4. + 8- 4!5 / THE CIT(A)-IV, BARODA. 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 15/05/2017 (DICTATION-PAD 6 P AGES ATTACHED AT THE END OF THIS APPEAL-FILE) 2. DATE ON WHICH THE TYPED DRAFT IS PLACED BEFORE THE DICTATING MEMBER 15/05/2017 3. OTHER MEMBER 4. DATE ON WHICH THE APPROVED DRAFT COMES TO THE SR.P. S./P.S 16/05/2017 5. DATE ON WHICH THE FAIR ORDER IS PLACED BEFORE THE D ICTATING MEMBER FOR PRONOUNCEMENT 16/05/2017 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 29/05/2017 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