Appeal Details
Counselvise Citation
[2017] 127 COUNSELVISE.COM (IT) 7953 (ITAT-AHMEDABAD)
Assessee PAN
Bench
Appeal Number
Duration Of Justice
1 year(s) 1 month(s) 27 day(s)
Appellant
Respondent
Appeal Type
Income Tax Appeal
Pronouncement Date
22-12-2017
Appeal Filed By
Assessee
Order Result
Allowed
Bench Allotted
SMC
Assessment Year
2013-2014
Appeal Filed On
26-10-2016
Judgement Text
, * ** * ,L ,L,L ,L- -- -,E ,E,E ,E- -- -LH LHLH LH- -- - * ** * IN THE INCOME TAX APPELLATE TRIBUNAL SMC BENCH, AHMEDABAD LOZJH EGKOHJ IZLKN] U;KF;D LNL; ,OA VEJTHR FLAG] LOZJH EGKOHJ IZLKN] U;KF;D LNL; ,OA VEJTHR FLAG] LOZJH EGKOHJ IZLKN] U;KF;D LNL; ,OA VEJTHR FLAG] LOZJH EGKOHJ IZLKN] U;KF;D LNL; ,OA VEJTHR FLAG] YS [KK LNL; DS LE{KA YS[KK LNL; DS LE{KA YS[KK LNL; DS LE{KA YS[KK LNL; DS LE{KA (BEFORE SHRI MAHAVIR PRASAD, JUDICIAL MEMBER & SHRI AMARJIT SINGH, ACCOUNTANT MEMBER ) ./ I.T.A. NO.2814/AHD/2016 ( / ASSESSMENT YEAR : 2013-14) VADODARA MAHANAGAR SEVA SADAN EMPLOYEES CO. OPERATIVE CREDIT SOCIETY LTD. 1 ST FLOOR, OLD PO BUILDING, OPPOSITE KHANDERAO MARKET, VADODARA. / VS. ITO, WARD 3(1)(3), BARODA. ./ ./ PAN/GIR NO. : AAAAV 6708 P ( / APPELLANT ) .. ( / RESPONDENT ) / APPELLANT BY : SHRI BANDISH SOPARKAR, A.R. / RESPONDENT BY : SHRI JAMES KURIUN, SR. D.R. / DATE OF HEARING 24/11/2017 !'# / DATE OF PRONOUNCEMENT 22/12/2017 $% / O R D E R PER MAHAVIR PRASAD, JUDICIAL MEMBER : THIS IS AN APPEAL BY THE ASSESSEE AGAINST THE OR DER OF THE COMMISSIONER OF INCOME TAX(APPEALS)-3, VADODARA, VI DE APPEAL NO.CAB-3/433/2015-16 DATED 30/08/2016 FOR THE ASSE SSMENT YEAR (AY) 2013-14, ON THE FOLLOWING GROUNDS: ITA NO.2814/AHD /2016 VADODARA MAHANAGAR SEVA SADAN EMPLOYEES CO.OP CREDI T SOCIETY LTD. VS. ITO ASST.YEAR 2013-14 - 2 - 1. THE LEARNED CIT (APPEALS)-3 HAS ERRED IN ERRED IN L AW AND ON THE FACTS IN CONFIRMING THE ORDER OF THE ASSESSING OFFICER HOLDING THAT THE AMOUNT OF INTEREST INCOME EARNED ON FIXED DEPOS ITS MADE WITH NATIONALIZED BANKS AND CO OPERATIVE BANK IS NOT PRO FITS AND GAINS ATTRIBUTABLE TO THE ACTIVITY OF PROVIDING CREDIT FA CILITIES TO MEMBERS AND HENCE NOT ELIGIBLE FOR DEDUCTION UNDER SECTION 80P OF THE ACT AND THEREBY CONSIDERING THE AMOUNT OF INTEREST OF R S.1,59,761/- AS INCOME FROM OTHER SOURCES LIABLE TO BE TAXED UNDER SECTION 56 OF THE ACT. 2. THE AO HAS DISALLOWED THE CLAIM OF DEDUCTION U/S .80P OF THE ACT ON THE INTEREST INCOME EARNED FROM NATIONALIZED BAN KS BY OBSERVING AS UNDER: DURING THE COURSE OF ASSESSMENT PROCEEDINGS, ON VE RIFICATION OF INCOME & EXPENDITURE ACCOUNT, IT WAS SEEN THAT DURI NG THE RELEVANT YEAR THE ASSESSEE HAS DISCLOSED INTEREST INCOME OF RS.L,30,13,353/-. FROM THE DETAILS, IT WAS FOUND THAT THE INTEREST IN COME OF RS.1,30,13,353/- WAS INCLUDED IN THE RECEIPT OF INT EREST BANK/S AMOUNTING TO RS.1,50,102/- ON DEPOSITS. THE ASSESSE E SOCIETY WAS REQUESTED TO FILE BANK WISE DETAILS OF INTEREST INC OME OF RS.1,50,102/- WHICH THE SOCIETY HAS FILED. AS PER DETAILS, INTERE ST AMOUNT OF RS.1,20,422/- RS.39,209/- & RS. 471/- WAS RECEIVED FORM ALLAHABAD BANK, BANK OF BARODA 8S BARODA CENTER CO-OP. BANK R ESPECTIVELY. FROM THE DETAILS, IT CAN BE SEEN THAT THE RECEIPTS OF IN TEREST OF RS.1,20,422/- & RS. 39,209/-(TOTALING TO RS. 1,59,671/-) OBTAIN ACT ION AMOUNT AS AN P&L IT IS NEARLY RS,1,50,000/- HAS BEEN RECEIVED FROM O THER THAN CO- OPERATIVE ORGANIZATION I.E. FROM NATIONALIZED BANKS ON FDRS. AS CALCULATED ABOVE, THE ASSESSEE HAS DISCLOSED THE EA RNING OF INTEREST FROM NON CO-OPERATIVE ORGANIZATION I.E. NATIONALIZED BAN KS TO THE TUNE OF RS.L,59,67L/- & NOT OFFERED FOR TAXATION. AS DISCLO SED ABOVE, THE INTEREST INCOME OF RS.1,59,671/- IS EARNED FROM NON COOPERAT IVE ORGANIZATION I.E. NATIONALIZED BANKS WHICH IS NOTHING BUT INTERE ST EARNED ON SURPLUS FUNDS INVESTED IN BANK DEPOSITS I.E. FDRS CONSIDERI NG THE ABOVE, IT IS CLEAR THAT THE ABOVE EARNING CANNOT BE TREATED AS E ARNED ON PROVIDING CREDIT FACILITIES TO ITS MEMBERS. THEREFORE, THE AS SESSES WILL NOT BE ITA NO.2814/AHD /2016 VADODARA MAHANAGAR SEVA SADAN EMPLOYEES CO.OP CREDI T SOCIETY LTD. VS. ITO ASST.YEAR 2013-14 - 3 - INTEREST INCOME OF RS.1,59,761/- AS CLAIMED BY THE SOCIETY. THE INCOME OF RS.1,59,671/- IS REQUIRED TO BE ASSESSED U/S.56 AS INCOME FROM OTHER SOURCES. THE ABOVE FACTS WERE BROUGHT TO THE NOTICE OF THE A .R. OF THE ASSESSEE & REQUESTED TO JUSTIFY HOW THE ABOVE INTEREST INCOME IS ELIGIBLE FOR DEDUCTION U/S.80P(2)(A)(I)/80P(2)(D) OF THE ACT. VI DE SUBMISSION, THE SOCIETY HAS TRIED TO JUSTIFY ITS CLAIM OF DEDUCTION U/S.80P OF THE ACT ALSO EXPLAINED THAT OUT FUNDS RECEIVED FROM THE MEMBERS, THE INVESTMENT IN FDRS WERE MADE & TRIED TO PROVE THE DIRECT & PROXIM ATE CONNECTION WITH SOURCE OF FUNDS USED IN KEEPING FOR SINCE THE SOCIETY IS ENGAGED IN ACTIVITY FORM PROVIDING CREDIT FACILITY TO ITS M EMBERS. THE AR OF THE SOCIETY IS RELIED ON VARIOUS NOTIFICATION ISSUED BY GOVERNMENT OF GUJARAT AND ALSO SUBMITTED GUJARAT H.C. DECISION IN THE CASE OF BARODA PEOPLES CO. OP. BANK LIST (149 TAXMAN 509(GUJ) & CA SE LAWS WHICH ARE ALSO DULY CONSIDERED. THE SUBMISSION OF THE A.R OF THE ASSESSEE HAS BEEN DULY CONSIDERED 8S FOUND NOT CONVINCING. AS DI SCUSSED ABOVE, THE EARNING OF INTEREST FROM NON COOPERATIVE ORGANIZATI ON BANKS IS EARNING OF INTEREST ONLY ON SURPLUS FUNDS INVESTED IN BANK DEPOSITS 8S THEREFORE CANNOT BE COVERED FOR EXEMPTION U/S.80P OR ANY OTHE R SUB SECTION OF 80P OF THE ACT, IT CANNOT BE TREATED AS BUSINESS OF BANKING OR PROVIDING CREDIT FACILITIES TO THE MEMBERS OF THE SOCIETY. AS HELD IN THE CASE OF THE TOTGARS CO-OP. SALES SOCIETY LTD., VS. ITO(SC) 322 ITR 283; 35 DTR 25, SURPLUS FUNDS INVESTED IN BANK DEPOSITS & GOVT. SECURITIES INTEREST IS INCOME FROM OTHER SOURCES' TO BE ASSESSED U/S.56 & NOT ELIGIBLE FOR DEDUCTION U/S.80P(2)(I) OF THE ACT AS IT IS NOT REL ATED TO THE BUSINESS OF PROVIDING CREDIT FACILITY TO ITS MEMBERS. CONSIDERI NG ALL THE ABOVE FACTS, IT IS CLEAR THAT THE ASSESSEE IS NOT LIABLE FOR DED UCTION U/S.80P(2)(A)(I)/80P(2)(D) OF THE INTEREST INCOME O F THE ACT ON THE INTEREST INCOME OF RS.L,59,671/- AS WORKED OUT IN A BOVE PAR. IN THE CASE OF THE ASSESSEE, DEDUCTION U/S.80P(2)(A)(I) OF THE ACT IS NOT DENIED IN TO BUT NOT CONSIDERED ON PART OF EARNING OF INTEREST F ROM FIXED DEPOSITS WITH NATIONALIZED BANKS I.E. EARNED FROM NON CO-OPE RATIVE ORGANIZATION. CONSIDERING THE ABOVE DISCUSSION, DEDUCTION U/S.80P (2)(A)(I) OF THE ACT IS NOT ALLOWED ON THE INTEREST INCOME OF RS.1,59,67 1/-. ACCORDINGLY, FROM EARNING OF INTEREST FROM NON COOPERATIVE ORGAN IZATION I.E. NATIONALIZED BANK OF RS.1.59,671 /-, IS TAXED AS IN COME FROM OTHER SOURCES & ACCORDINGLY ADDED TO THE RETURNED INCOME OF THE ASSESSEE. ITA NO.2814/AHD /2016 VADODARA MAHANAGAR SEVA SADAN EMPLOYEES CO.OP CREDI T SOCIETY LTD. VS. ITO ASST.YEAR 2013-14 - 4 - 3. AGAINST THE SAID ORDER ASSESSEE PREFERRED FIRST STATUTORY APPEAL BEFORE THE LD. CIT(A) WHO DISMISSED THE APPEAL OF T HE ASSESSEE. 4. WE HAVE GONE THROUGH THE RELEVANT RECORD AND IMP UGNED ORDER. IN THIS CASE, INTEREST AMOUNT OF RS.1,20,422/-, RS.39, 209/- & RS. 471/- WAS RECEIVED FORM ALLAHABAD BANK, BANK OF BARODA AND BA RODA CENTER CO-OP. BANK RESPECTIVELY. FROM THE DETAILS, IT CAN BE SEEN THAT THE RECEIPTS OF INTEREST OF RS.1,20,422/- & RS.39,209/- (TOTALING T O RS. 1,59,671/-) HAS BEEN RECEIVED FROM OTHER THAN CO-OPERATIVE ORGANIZA TION I.E. FROM NATIONALIZED BANKS ON FDRS, WHICH IS NOTHING BUT IN TEREST EARNED ON SURPLUS FUNDS INVESTED IN BANK DEPOSITS I.E. FDRS. 5. LD. AR FILED AN ORDER OF CO-ORDINATE BENCH IN IT A NO.2426/AHD/2013 FOR A.Y.2009-10 DATED 24/01/2017 W HEREIN, SIMILAR ISSUE WAS DECIDED IN FAVOUR OF THE ASSESSEE AND IT WAS HELD AS BELOW: (3) ASSESSEE WILL ALSO BE ELIGIBLE TO CLAIM PRO RA TA EXPENSES FOR EARNING INTEREST INCOME OF RS.8,55,854/- ASSESSEE'S CLAIM OF PRO RATA EXPENSES OF RS.5,77,423/- AGAINST THE INTEREST INCO ME OF RS.8,55,854/- AFTER DUE VERIFICATION BY THE LEARNED ASSESSING OFF ICER. WE, THEREFORE, DIRECT THE ASSESSING OFFICER TO VERI FY ASSESSEE'S CLAIM OF PRO RATA EXPENSES BY EXAMINING THE RECORD TO BE SHO WN FOR VERIFICATION BY THE ASSESSEE. NEEDLESS TO MENTION PROPER OPPORTU NITY OF BEING HEARD IS TO BE GIVEN TO THE ASSESSEE. WE ORDER ACCORDINGL Y. THE APPEAL OF THE ASSESSEE IS PARTLY ALLOWED FOR STATISTICAL PURPOSES . ITA NO.2814/AHD /2016 VADODARA MAHANAGAR SEVA SADAN EMPLOYEES CO.OP CREDI T SOCIETY LTD. VS. ITO ASST.YEAR 2013-14 - 5 - 6. RESPECTFULLY FOLLOWING THE AFORESAID ORDER, WE D IRECT THE ASSESSING OFFICER TO VERIFY THE ASSESSEES CLAIMS OF PRO RATA EXPENSES BY EXAMINATION THE RECORD TO BE SHOWN FOR VERIFICATION BY THE ASSESSEE AND ACCORDINGLY, NETTING OF TO BE ALLOWED. 7. IN THE RESULT, APPEAL FILED BY THE ASSESSEE IS A LLOWED. THIS ORDER PRONOUNCED IN OPEN COURT ON 22/12/2017 SD/- SD/- VEJTHR FLAG VEJTHR FLAG VEJTHR FLAG VEJTHR FLAG &' $ ( $ ) ()* $ ) ( AMARJIT SINGH ) ( MAHAVIR PR ASAD ) ACCOUNTANT MEMBER JUDICIAL MEMBER AHMEDABAD; DATED 22/12/2017 PRITI YADAV, SR. PS !'# $#! / COPY OF THE ORDER FORWARDED TO : 1. / THE APPELLANT 2. / THE RESPONDENT. 3. , -. / / CONCERNED CIT 4. / () / THE CIT(A)-3, VADODARA. 5. 012 **-. , -.# , '&$,$ / DR, ITAT, AHMEDABAD 6. 245 6 / GUARD FILE. % & / BY ORDER, 0 * //TRUE COPY// '/& () ( DY./ASSTT.REGISTRAR) , / ITAT, AHMEDABAD
