The ACIT, Bhopal V. M/s M.P. Van Sahakari Bank Maryadit, Apex Bank, Bhopal

ITA 274/IND/2009

• Counselvise Citation: [2009] 114 COUNSELVISE.COM (IT) 8713 (ITAT-INDORE)
• Duration Of Justice: 2 month(s) 3 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 24-07-2009
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: DB
• Next Hearing Date: 17-07-2009
• Assessment Year: 2006-2007
• Appeal Filed On: 21-05-2009
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: V K KARAN
• Keywords: Period of limitation
• Section: 250; 251

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL INDORE BENCH : INDORE BEFORE SHRI N.K.SAINI, A.M. AND SHRI BHAVNESH SAINI, J.M. PAN NO. : N.A. I.T.A.NO.274/IND/2009. A.Y. : 2006-07 ASSISTANT COMMISSIONER OF INCOME-TAX, M/S. M.P.RAJYA SAHAKARI BANK MARYADIT, 1(1), VS APEX BANK, T.T.NAGAR, BHOPAL. BHOPAL. APPELLANT RESPONDENT C.O.NO.46/IND/2009. (ARISING OUT OF I.T.A.NO. 274/IND/2009) M/S. M.P.RAJYA SAHAKARI BANK MYDT. ASSISTANT COMMISSIONER OF INCOME- TAX, APEX BANK, T.T.NAGAR, VS 1(1), BHOPAL. BHOPAL. CROSS OBJECTOR RESPONDENT DEPARTMENT BY : SHRI V.K.KARAN, ADDL. CIT DR ASSESSEE BY : NONE. -: 2 :- 2 O R D E R PER N. K. SAINI, A.M. THE APPEAL BY THE DEPARTMENT AND CROSS OBJECTION BY THE ASSESSEE ARE DIRECTED AGAINST THE ORDER OF THE CIT(A)-I, BHO PAL, DATED 12 TH MARCH, 2009. 2. IN THE DEPARTMENTAL APPEAL, THE ONLY GROUND RAISED READS AS UNDER :- ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE, THE LD.CIT(A) HAS ERRED IN DELETING THE ADDITION OF RS. 13,69,85,521/- MADE BY THE ASSESSING OFFICER CONSID ERING THE INCOME FROM NON BANKING ACTIVITIES NOT ELIGIBLE FOR DEDUCTION U/S 80 P OF THE INCOME-TAX ACT. 3. THE ONLY ISSUE INVOLVED IN THIS APPEAL RELATES TO T HE DEDUCTION U/S 80-P OF THE INCOME-TAX ACT, 1961. 4. THE FACTS RELATED TO THE ISSUE IN BRIEF ARE THAT TH E ASSESSEE A COOPERATIVE BANK EARNED INTEREST FROM INVESTMENTS A ND SECURITIES AND -: 3 :- 3 UTILIZED ITS INCOME IN THE ORDINARY COURSE OF BANKI NG BUSINESS AND THE DEDUCTION WAS CLAIMED U/S 80P(2)(A)(I) OF THE INCOM E-TAX ACT, 1961, ON THE BASIS THAT ENTIRE INCOME WAS ATTRIBUTED TO THE BUSINESS OF BANKING. THE AO, HOWEVER, DENIED THE CLAIM AND HELD THAT THE ACTIVITIES, WHICH NON BANKERS WERE PERMITTED TO DO E.G. BUYING AND SE LLING OF SECURITIES, SHARES ETC. SHOULD NOT ESSENTIALLY BE CONSIDERED AS BANKING BUSINESS. THE RELIANCE WAS PLACED ON THE FOLLOWING CASE LAWS :- (I) GUJARAT STATE COOP. BANK LTD. VS. CIT, (2001) 250 ITR 229. (II) M.P. COOP. BANK LIMITED VS. ADDL. CIT, (1996) 218 ITR 438 ( S. C.) 5. THE ASSESSEE CARRIED THE MATTER TO THE LD.CIT(A) A ND SUBMITTED THAT THE DECISIONS RELIED UPON BY THE ASS ESSING OFFICER HAD BEEN SPECIFICALLY OVERRULED BY THE HON'BLE SUPREME COURT AND THE ADDITION BASED ON OVERRULED JUDGMENT COULD NOT BE S AID TO BE CORRECT. THE RELIANCE WAS PLACED ON THE FOLLOWING CASE LAWS :- (A) MEHSANA DISTRICT CENTRAL COOP. BANK LTD. VS. ITO, (2001) 251 ITR 522 ( S. C. ) -: 4 :- 4 (B) CIT VS. KARNATAKAK STATE COOP APEX BANK LIMITE D (2001) 251 ITR 194 ( S. C.) IT WAS EXPLAINED THAT THE BANKS ARE REQUIRED TO MAI NTAIN STATUTORY LIQUIDITY RATIO AND FOR THIS PURPOSE ONLY IT IS MAN DATORY FOR THEM TO INVEST IN SECURITIES OF GOVERNMENT AND THE INCOME I N QUESTION PERTAINED TO SUCH MANDATORY INVESTMENTS, WHICH WAS CERTAINLY ATTRIBUTABLE TO BANKING BUSINESS AND HENCE DEDUCTIBLE U/S 80P(2)(A) (I) OF THE INCOME- TAX ACT, 1961. 6. THE LD.CIT(A) AFTER CONSIDERING THE SUBMISSIONS OF THE ASSESSEE OBSERVED THAT ALMOST ALL THE CONTROVERSIES IN SUCH TYPE OF CASES HAD BEEN SET AT REST BY THE HON'BLE SUPREME COURT I N THE CASE OF CIT VS. NAWANSHAHAR CENTRAL COOP. BANK LIMITED, (2007) 289 ITR 6 ( S.C. ) AND, ACCORDINGLY, THE AO WAS DIRECTED TO ALLOW TH E CLAIM OF THE ASSESSEE BY HOLDING THAT ALL THE AMOUNT OF PROFITS AND GAINS OF BUSINESS ATTRIBUTABLE TO THE BANKING BUSINESS IS DEDUCTIBLE, SO IS THE INTEREST INCOME RECEIVED FROM INVESTMENT AND TRADING IN SECU RITIES AND SHARES. -: 5 :- 5 7. WE HAVE HEARD THE LEARNED DEPARTMENTAL REPRESENTATI VE AND PERUSED THE MATERIAL AVAILABLE ON RECORD. IT IS NOT ICED THAT THE ISSUE IN QUESTION IS SQUARELY COVERED BY THE JUDGMENT OF THE HON'BLE SUPREME COURT IN THE CASE OF CIT VS. NAWANSHAHAR CENTRAL C OOP. BANK LIMITED (SUPRA). IN THE SAID, CASE, IT HAS BEEN HELD AS UND ER :- WHERE A CO-OPERATIVE BANK CARRYING ON BUSINESS OF BANKING IS STATUTORILY REQUIRED TO PLACE A PART OF ITS FUNDS IN APPROVED SECURITIES, THE INCOME ATTRIBUTABLE THE RETO IS DEDUCTIBLE U/S 80P(2))(A)(I) OF THE INCOME-TAX ACT, 1961. 8. IN THE INSTANT CASE ALSO, THE ASSESSEE IS CARRYING ON BUSINESS OF BANKING AND STATUTORILY REQUIRED TO PLACE A PART OF ITS FUND IN APPROVED SECURITIES. THE INCOME FROM THOSE SECURITIES IS DED UCTIBLE U/S 80P(2)(A)(I) OF THE INCOME-TAX ACT, 1961.WE, THEREF ORE, DO NOT SEE ANY INFIRMITY IN THE IMPUGNED ORDER OF THE LD.CIT(A) ON THIS ISSUE. 9. IN THE CROSS OBJECTION, THE ASSESSEE IS SUPPORTIN G THE ORDER OF THE LD.CIT(A) AND NO RELIEF IS SOUGHT. SO THIS CROS S OBJECTION DESERVES TO BE DISMISSED AS INFRUCTUOUS, SINCE NO SPECIFIC R ELIEF HAS BEEN SOUGHT. -: 6 :- 6 FOR THE AFORESAID VIEW, WE ARE FORTIFIED BY THE JUD GMENT OF THE HON'BLE MADRAS HIGH COURT IN THE CASE OF CIT VS. SUNDARAM C LAYTON LIMITED, (1982) 136 ITR 315, WHEREIN THEIR LORDSHIPS AT PAGE 322 HAD OBSERVED AS UNDER :- A CROSS OBJECTION IS ONLY IN THE NATURE OF AN APP EAL. A PERSON WHO HAS SUBSTANTIALLY SUCCEEDED IN A FORUM M AY NOT THINK IT NECESSARY TO FILE AN APPEAL; BUT WHEN AN APPEAL IS ACTUALLY FILED, HE MAY TAKE ADVANTAGE OF THE FILING OF THE APPEAL BY THE OTHER SIDE SO AS TO FIL E CROSS OBJECTION TO GET RID OF THE ORDER IN SO FAR AS IT I S ADVERSE TO HIM, AS THE PERIOD OF LIMITATION FOR THE FILING OF THE CROSS OBJECTIONS IS CALCULATED FROM THE DATE OF THE SERVI CE OF THE APPELLATE GROUNDS. IN EFFECT, IN SUCH A CASE, A PAR TY WHO DID NOT FILE AN APPEAL, GETS AN EXTENDED PERIOD OF LIMITATION FOR FILING WHAT IS IN EFFECT AN APPEAL. WHEN THE ASSESSEE HAS SUCCEEDED WHOLLY BEFORE THE APPELLATE ASSISTANT COMMISSIONER AND THE TRIBUNAL, THERE WAS NO -: 7 :- 7 SCOPE FOR FILING AN APPEAL OR CROSS OBJECTION. THE TRIBUNAL SHOULD HAVE DISMISSED THE CROSS OBJECTION IN LIMINE AS NOT BEING ENTERTAINABLE. THE PROCEDURE OF FILING CROSS OBJECTIONS IS NOT TO BE GONE THROUGH MERELY F OR THE PURPOSE OF PUTTING FORWARD ARGUMENTS IN SUPPORT OF AN ORDER WHICH IS IN FAVOUR OF THE CROSS OBJECTIOR. WE, THEREFORE, CONSIDERING THE RATIO LAID DOWN BY T HE HONBLE MADRAS HIGH COURT, IN THE AFORESAID REFERRED TO CASE, DISM ISS THE CROSS OBJECTION OF THE ASSESSEE AS INFRUCTUOUS. 10. IN THE RESULT, THE APPEAL OF THE DEPARTMENT AS WELL AS THE CROSS OBJECTION OF THE ASSESSEE ARE DISMISSED. THIS ORDER HAS BEEN PRONOUNCED ON 24 TH JULY, 2009. SD/- SD/- (BHAVNESH SAINI) (N. K. SAINI) JUDICIAL MEMBER ACCOUNTANT MEMBER DATED : 24TH JULY, 2009. CPU* 17207