ITO 1(3)(4), MUMBAI V. THE MAHARASHTRA MANTRALAYA & ALLIED OFFICES CO.-OP BANK LTD, MUMBAI

ITA 2782/MUM/2010

• Counselvise Citation: 278219914 RSA 2010
• Duration Of Justice: 1 year(s) 5 month(s) 7 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 16-09-2011
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: F
• Next Hearing Date: 06-09-2011
• Assessment Year: 2003-2004
• Appeal Filed On: 09-04-2010
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: PARTHASARTHI NAIK
• Assessee Lawyers: D P TRIPATHI
• Keywords: Business income

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL F BENCH, MUMBAI BEFORE SHRI J. SUDHAKAR REDDY, ACCOUNTANT MEMBER AN D SHRI V. DURGA RAO, JUDICIAL MEMBER ITA NO. 2782/MUM./2010 (ASSESSMENT YEAR : 2003-04 ) ASSTT. COMMISSIONER OF INCOME TAX-1(3) AAYAKAR BHAVAN, M.K. ROAD MUMBAI 400 020 .. APPELLANT V/S THE MAHARASHTRA MANTRALAYA & ALLIED OFFICES CO-OPERATIVE BANK LTD. MANTRALAYA COMPOUND, MANTRALAYA MUMBAI 400 032 PAN AAAAM0300J .... RESPONDENT C.O. NO.5/MUM./2011 (ARISING OUT OF ITA NO. 2782/MUM./2010 ) (ASSESSMENT YEAR : 2003-04 ) THE MAHARASHTRA MANTRALAYA & ALLIED OFFICES CO-OPERATIVE BANK LTD. MANTRALAYA COMPOUND, MANTRALAYA MUMBAI 400 032 PAN AAAAM0300J .. CROSS OBJECTOR V/S ASSTT. COMMISSIONER OF INCOME TAX-1(3) AAYAKAR BHAVAN, M.K. ROAD MUMBAI 400 020 . RESPONDENT REVENUE BY : MR. PARTHASARTHI NAIK ASSESSEE BY : MR. D.P. TRIPATHI DATE OF HEARING 6.9.2011 DATE OF ORDER 06.09.2011 THE MAHARASHTRA MANTRALAYA & ALLIED OFFICES CO-OP. BANK LTD. 2 O R D E R PER J. SUDHAKAR REDDY, A.M. APPEAL PREFERRED BY THE REVENUE AS WELL AS THE CRO SS OBJECTION FILED BY THE ASSESSEE, ARE DIRECTED AGAINST THE IMPUGNED ORD ER DATED 25 TH JANUARY 2010, PASSED BY THE COMMISSIONER (APPEALS)-II, MUMB AI, FOR ASSESSMENT YEAR 2003-04. FIRST, WE TAKE UP REVENUES APPEAL AN D THE SOLE GROUND RAISED BY THE REVENUE, READS AS FOLLOWS:- ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE A ND IN LAW, THE LEARNED CIT(A) ERRED IN HOLDING THAT INCOME IN THE FORM OF INTEREST FROM INVESTMENT OF SURPLUS FUND WITH OTHER BANKS QU ALIFY FOR DEDUCTION U/S 80P(2)(A) OF THE ACT WHICH IS NOT IN CONSONANCE WITH THE SUPREME COURT DECISION IN THE CASE OF M/S. THE TOTGARS CO. OP. SALE SOCIETY LTD. V/S ITO, KARNATAKA IN CIVIL APPEAL NO.1622 OF 2010 (ARISING OUT OF SLP(C) NO.7572 OF 2009) DECIDED ON 8.2.2010. 2. THE ASSESSEE IS IN THE BUSINESS OF BANKING. IT IS A CO OPERATIVE BANK AND IS GOVERNED BY THE BANKING REGULATIONS ACT, 194 9. THE ASSESSEE, AS PER THE REQUIREMENTS OF THE BANKING REGULATIONS ACT, 19 49, INVESTED IN IDBI AND ICICI BONDS. THE INTEREST EARNED ON SUCH BONDS WAS DECLARED AS INCOME UNDER THE HEAD BUSINESS INCOME . THE ASSESSING OFFICER ALSO ASSESSED THE SAME UNDER THE HEAD BUSINESS INCOME . THE ASSESSEE CLAIMED DEDUCTION UNDER SECTION 80P(2)(A)(I) OF THE INCOME TAX ACT, 1 961 (FOR SHORT THE ACT ), WHICH WAS DISALLOWED BY THE ASSESSING OFFICER. 3. THE ASSESSEE, BEING AGGRIEVED, CARRIED THE MATTER B EFORE THE FIRST APPELLATE AUTHORITY WHEREIN THE COMMISSIONER (APPEA LS) ALLOWED THE CLAIM OF THE ASSESSEE. AGGRIEVED, THE REVENUE IS IN APPEAL B EFORE THE TRIBUNAL. 4. BEFORE US, THE LEARNED DEPARTMENTAL REPRESENTATIVE, MR. PARTHASARTHI NAIK, RELIES ON THE JUDGMENT OF THE HON'BLE SUPREME COURT IN THE TOTGARS CO-OPERATIVE SALE SOCIETY LTD. V/S ITO, (2010) 322 ITR 283 (SC), AND SUBMITS THAT INTEREST INCOME IS NOT ELIGIBLE FOR DE DUCTION UNDER SECTION 80P(2). THE ASSESSEE ALSO RELIES ON THE FOLLOWING C ASE LAWS:- THE MAHARASHTRA MANTRALAYA & ALLIED OFFICES CO-OP. BANK LTD. 3 CIT V/S NAWANSHAHAR CENTRAL COOPERATIVE BANK LTD. (2007) 289 ITR 6 (SC); CIT V/S KARNATAKA STATE COOPERATIVE APEX BANK (2001) 251 ITR 194 (SC); AND MEHSANA DISTRICT CENTRAL CO-OPERATIVE BANK LTD. V/S ITO (2001) 251 ITR 522 (SC). 5. RIVAL CONTENTIONS HEARD. ON A CAREFUL CONSIDERATION OF THE FACTS AND CIRCUMSTANCES OF THE CASE AND ON PERUSAL OF THE PAP ERS ON RECORD, AS WELL AS THE CASE LAWS CITED BEFORE US, WE HOLD AS FOLLOWS:- 6. ON AN EXAMINATION OF THESE CASE LAWS, WE FOUND THAT THE JUDGMENT OF HON'BLE SUPREME COURT IN THE TOTGARS CO-OPERATIVE S ALE SOCIETY LTD. (SUPRA) IS NOT APPLICABLE, AS IN THAT CASE, THE CO-OPERATIV E SOCIETY WAS NOT A CO- OPERATIVE BANK, BUT WAS MARKETING THE PRODUCE OF IT S MEMBERS. THE SURPLUS SALE PROCEEDS WERE RETAINED IN BANK DEPOSITS AND TH E INTEREST EARNED WAS ASSESSED BY THE ASSESSING OFFICER UNDER THE HEAD INCOME FROM OTHER SOURCES . NO SUCH CIRCUMSTANCE EXISTS IN THE PRESENT CASE. THE PRESENT CASE RELATES TO A CO-OPERATIVE BANK AND THE BONDS WERE S UBSCRIBED AS PER THE REQUIREMENT OF THE BANKING REGULATIONS ACT, 1949. T HE INVESTMENT WAS MADE IN APPROVED SECURITIES IN TERMS OF SECTION 5(A ) OF THE BANKING REGULATIONS ACT, 1949. THE INTEREST EARNED IS TAXAB LE UNDER THE HEAD INCOME FROM BUSINESS AND HAS BEEN ASSESSED AS SUCH BY THE ASSESSING OFFICER. HENCE, THE ISSUE STANDS COVERED IN FAVOUR OF THE ASSESSEE BY THE JUDGMENTS OF HON'BLE SUPREME COURT IN KARNATAKA STA TE COOPERATIVE APEX BANK (SUPRA) AND MEHSANA DISTRICT CENTRAL CO-OPERAT IVE BANK LTD. (SUPRA). RESPECTFULLY FOLLOWING THE PROPOSITIONS LAID DOWN B Y THE HON'BLE SUPREME COURT IN THE AFORESAID TWO JUDGMENTS, THE GROUND RA ISED BY THE REVENUE IS DISMISSED. 7. IN THE RESULT, REVENUES APPEAL IS DISMISSED. NOW, WE TAKE UP CROSS OBJECTION FILED BY THE ASSESS EE. THE MAHARASHTRA MANTRALAYA & ALLIED OFFICES CO-OP. BANK LTD. 4 8. AFTER HEARING BOTH THE PARTIES, WE FIND THAT THE AS SESSEE HAS FILED THIS CROSS OBJECTION IN SUPPORT OF THE APPEAL FILED BY T HE REVENUE. KEEPING IN VIEW OUR FINDINGS IN REVENUES APPEAL VIDE PARA-6 A BOVE, THE GROUND RAISED BY THE ASSESSEE BECOMES INFRUCTUOUS. CONSEQUENTLY, THIS GROUND IS DISMISSED AS INFRUCTUOUS. 9. IN THE RESULT, THE CROSS OBJECTION FILED BY THE ASS ESSEE IS DISMISSED. 10. TO SUM UP, APPEAL FILED BY THE REVENUE AS WELL AS T HE CROSS OBJECTION FILED BY THE ASSESSEE ARE DISMISSED. ORDER PRONOUNCED IN THE OPEN COURT ON 16 TH SEPTEMBER 2011. SD/- V. DURGA RAO JUDICIAL MEMBER SD/- J. SUDHAKAR REDDY ACCOUNTANT MEMBER MUMBAI, DATED: 16 TH SEPTEMBER 2011 COPY TO : (1) THE ASSESSEE; (2) THE RESPONDENT; (3) THE CIT(A), MUMBAI, CONCERNED; (4) THE CIT, MUMBAI CITY CONCERNED; (5) THE DR, F BENCH, ITAT, MUMBAI. TRUE COPY BY ORDER PRADEEP J. CHOWDHURY ASSISTANT REGISTRAR SR. PRIVATE SECRETARY ITAT, MUMBAI BENCHES, MUMBAI