Income tax Officer, V. Shri Laxmi Narayan Nagari Sahakari Pat Sanstha, Kolhapur

ITA 2827/PUN/2016

• Counselvise Citation: [2018] 125 COUNSELVISE.COM (IT) 0043 (ITAT-PUNE)
• Duration Of Justice: 1 year(s) 9 month(s) 6 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 19-09-2018
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: B
• Assessment Year: 2013-2014
• Appeal Filed On: 13-12-2016
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Keywords: Business income

Judgement Text

, IN THE INCOME TAX APPELLATE TRIBUNAL PUNE BENCH B, PUNE . , , BEFORE SHRI D. KARUNAKARA RAO, AM AND SHRI VIKAS AWASTHY, JM . / ITA NO.2827/PUN/2016 / ASSESSMENT YEAR : 2013-14 THE INCOME TAX OFFICER, WARD 1(3), KOLHAPUR . /APPELLANT VS. SHRI LAXMI NARAYAN NAGARI SAHAKARI PAT SANSTHA, A/P- MURGUD, TAL. KAGAL, KOLHAPUR. PAN : AAAAS1174N . / RESPONDENT / APPELLANT BY : SHRI PANKAJ GARG / RESPONDENT BY : NONE / DATE OF HEARING : 10.09.2018 / DATE OF PRONOUNCEMENT: 19.09.2018 / ORDER PER D. KARUNAKARA RAO, AM : THIS APPEAL IS FILED BY THE REVENUE AGAINST THE ORDER OF CI T(A)-1, KOLHAPUR, DATED 25-10-2016 FOR THE ASSESSMENT YEAR 2013-14. 2. DURING THE PROCEEDINGS BEFORE US, THERE IS NONE TO R EPRESENT THE ASSESSEE DESPITE SERVICE OF NOTICE. ACKNOWLEDGMENT IS PLAC ED ON RECORD. LD. DR FOR THE REVENUE EXPLAINED THE FACTS OF THE CASE AN D READ OUT THE CONTENTS OF PARA NO.7 OF THE ORDER OF CIT(A) AND RELIED ON THE ARGUMENTS GROUNDS RAISED BEFORE US. TAXABILITY OF THE INTEREST INCOM E EARNED FROM THE FIXED DEPOSITS WITH BANKS OTHER THAN THE COOPERA TIVE BANKS/SOCIETIES WITH REFERENCE TO THE PROVISION OF SECTION 80P OF THE ACT, IS THE CORE ISSUE. CONSIDERING THE SETTLED NATURE OF THE ISSUE AND HEARING ITA NO.2827/PUN/2016 SHRI LAXMI NARAYAN NAGARI SAHAKARI PAT SANSTHA 2 THE LD. DR FOR THE REVENUE, WE PROCEED TO ADJUDICATE TH E APPEAL IN THE SUCCEEDING PARAGRAPHS. 3. GROUNDS RAISED BY THE REVENUE READ AS UNDER: 1 . WHETHER ON THE FACTS AND IN THE CIRCUMSTANCES OF T HE CASE AND IN LAW, THE LD.CIT(A) WAS JUSTIFIED IN HOLDING THAT THE ASS ESSEE SOCIETY WAS ELIGIBLE FOR DEDUCTION U/S.80P (2)(A)(I) OF THE INC OME TAX ACT, 1961, IN RESPECT OF INTEREST INCOME ON BANK DEPOSITS WITH BA NKS OTHER THAN CO- OPERATIVE BANKS/SOCIETIES, IGNORING THE PROVISIONS OF SECTION 80P(2) (D) OF THE INCOME TAX ACT, 1961? 2. WHETHER ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE AND IN LAW, THE LD.CIT (A) WAS JUSTIFIED IN DISTINGUISHING THE HON'BLE APEX CO URT'S DECISION IN TOTGARS CO-OP SALE SOCIETY LTD VS. ITO REPORTED AS 322 ITR 283 (SC), IGNORING THE CLEAR PROVISIONS OF SECTION 80P( 2) (D) OF THE INCOME TAX ACT, 1961, WHEREIN INCOME BY WAY OF INTEREST OR DIV IDEND DERIVED BY CO- OPERATIVE SOCIETY FROM ITS INVESTMENT WITH ANY OTHE R CO-OPERATIVE SOCIETY IS ELIGIBLE FOR DEDUCTION AND NOT INCOME BY WAY OF INT EREST FROM BANKS OTHER THAN CO-OPERATIVE BANKS/SOCIETIES? 3. THE APPELLANT CRAVES LEAVE TO ADD, ALTER, AMEND, SUBSTITUTE OR DELETE ANY OF THE GROUNDS URGED HEREIN ABOVE AS AND WHEN FOUND NECESSARY. 4. BRIEFLY STATED RELEVANT FACTS OF THE ASSESSEE ARE THA T THE ASSESSEE IS A CO-OPERATIVE CREDIT SOCIETY ENGAGED IN THE BUSINESS OF PROVIDING BANKING OR CREDIT FACILITIES TO ITS MEMBERS. ASSESSEE FILED ITS RETURN OF INCOME FOR ASSESSMENT YEAR UNDER APPEAL ON 27.09.2013 DE CLARING TOTAL INCOME AT NIL. IN THE ASSESSMENT U/S.143(3) OF THE ACT, THE AO AS SESSED THE TOTAL INCOME OF ASSESSEE AT RS.66,88,243/- BY WAY OF I NTEREST FROM THE BANK OTHER THAN FROM OTHER CO-OPERATIVE SOCIETIES O R WITH OTHER CO- OP. AO OPINED THAT THE ASSESSEE, BEING A PAT SANSTHA, IS REQUIRED TO INVEST ITS FUNDS IN SPECIFIED ONES TO BE ELIGIBLE FOR DEDUCTION U/S.80P(2)(A)(I) OF THE ACT. THUS, AO DISALLOWED THE CLAIM OF DED UCTION U/S.80P(2)(A)(I) OF THE ACT. 5. IN THE FIRST APPELLATE PROCEEDINGS, CIT(A), AFTER PLACING RELIANCE ON THE DECISIONS OF THE TRIBUNAL IN ASSESSEES OWN CASES FOR A.Y. 2010-11 AS WELL AS ANOTHER DECISION OF THE TRIBUNAL IN ITA NO.257/PUN/ 2016 FOR THE ITA NO.2827/PUN/2016 SHRI LAXMI NARAYAN NAGARI SAHAKARI PAT SANSTHA 3 A.Y. 2012-13, ALLOWED THE CLAIM OF THE ASSESSEE FOR THE YEAR UNDER CONSIDERATION. AGGRIEVED WITH THE ORDER OF CIT(A), THE REVE NUE FILED THE PRESENT APPEAL BEFORE THE TRIBUNAL RAISING THE GROUNDS EXTRACTED ABOVE. 6. LD. DR FOR THE REVENUE PLACED RELIANCE ON THE ORDER OF AO. HE FURTHER SUBMITTED THAT WHILE DEALING WITH THE ISSUE, CIT(A) IGNORED THE PROVISIONS OF SECTION 80P(2)(D) OF THE ACT WHEREIN IT HAS BEEN HELD THAT INCOME BY WAY OF INTEREST OR DIVIDEND DERIVED BY CO-OPER ATIVE SOCIETY FROM ITS INVESTMENT WITH ANY OTHER CO-OPERATIVE SOCIETY I S ELIGIBLE FOR DEDUCTION AND NOT INCOME BY WAY OF INTEREST FROM BANKS OTHER THAN CO- OPERATIVE BANKS/SOCIETIES. LD. DR HAS PLACED RELIANCE ON T HE DECISION OF HONBLE APEX COURT IN THE CASE OF TOTGARS CO-OP. SALE S OCIETY LTD. VS. ITO, REPORTED AS 322 ITR 283(SC). 7. AFTER HEARING THE LD. DR FOR THE REVENUE AND PERUSING THE ORDERS OF THE REVENUE AND THE MATERIAL AVAILABLE ON RECORD, WE FIND THE CORE ISSUE RAISED IN THE APPEAL RELATES TO TAXATION OF INTEREST INCOME EARNED FROM THE FIXED DEPOSITS KEPT WITH THE BANKS (BANK OF IND IA AND HDFC BANK) OTHER THAN CO-OPERATIVE BANKS/SOCIETIES. AO IS OF THE OPINION THAT THE SAID INCOME IS TAXABLE AND THE EXEMPTION U/S.80P(2)(A)(I) OF THE ACT IS NOT AVAILABLE TO SUCH RECEIPTS. CIT(A) GRANTED RELIEF TO THE ASSESSEE RELYING ON THE DECISION OF THE TRIBUNAL IN THE ASSESSEE S OWN CASE IN ITA NO.604/PUN/2014, DATED 16-08-2015 READ WITH THE JUDGME NT OF HONBLE SUPREME COURT IN THE CASE OF CIT VS. VEGETABLE PRODUCTS 88 ITR 192. CONTENTS OF PARA NO.7 OF THE ORDER OF CIT(A) ARE RELEVANT. FURTHER, WE HAVE ALSO PERUSED THE CONTENTS OF PARA NO. 7 OF THE ORD ER OF CIT(A) AND FIND THE ISSUE NOW STANDS COVERED IN FAVOUR OF THE ASSESS EE. FOR THE SAKE OF COMPLETENESS, WE FIND IT RELEVANT TO EXTRACT THE SAID OP ERATIONAL PARA AND THE SAME READS AS UNDER: ITA NO.2827/PUN/2016 SHRI LAXMI NARAYAN NAGARI SAHAKARI PAT SANSTHA 4 7. I HAVE CONSIDERED THE SUBMISSIONS OF THE APPELLA NT. AN IDENTICAL ISSUE WAS DEALT WITH BY THE HON'BLE ITAT, B BENCH, PUNE IN APPELLANT'S OWN CASE FOR ASSESSMENT YEAR 2010-11 IN ITA NO.604/PN/2 014 DATED 19/08/2015. WHILE DECIDING THE ISSUE, THE HON'BLE T RIBUNAL RELIED ON THE JUDGMENT OF HON'BLE SUPREME COURT IN THE CASE OF CI T VS. VEGETABLE PRODUCTS REPORTED IN 88 ITR 192 AND HELD THAT THE I NTEREST INCOME EARNED ON SHORT TERM DEPOSITS KEPT WITH BANKS HAS TO BE AL LOWED AS DEDUCTION UNDER SECTION 80P(2)(A)(I). FURTHER, I HAVE ALSO PE RUSED THE ORDER OF THE HONOURABLE ITAT, SMC BENCH, PUNE IN APPELLANT'S CAS E FOR ASSESSMENT YEAR 2012-13 WHEREIN THE DEPARTMENT WAS IN APPEAL A GAINST THE DECISION OF CIT(A)-I, KOLHAPUR ALLOWING APPELLANT'S CLAIM OF DEDUCTION UNDER SECTION 80P(2)(A)(I). I FIND THAT THE HON'BLE TRIBUNAL VIDE ITS ORDER IN ITA NO.257 /PN /2016 HAS UPHELD THE ORDER OF THE CIT(A)-I, KOLHAPU R FOLLOWING THE ITAT, B BENCH, PUNE'S ORDER CITED SUPRA. THEREFORE, RESPECT FULLY FOLLOWING THE DECISION OF THE JURISDICTIONAL TRIBUNAL, IN APPELLA NT'S OWN CASE FOR ASSESSMENT YEARS 2010-11 AND 2012-13, I HOLD THAT T HE ASSESSING OFFICER WAS NOT JUSTIFIED IN DENYING THE APPELLANT'S CLAIM OF DEDUCTION U/S 80P(2)(A)(I) OF THE ACT. IN THE RESULT, THE CLAIM O F THE APPELLANT U/S 80P(2)(A)(I) OF THE ACT FOR THE YEAR UNDER CONSIDER ATION IS ALLOWED. CONSIDERING THE PRECEDENT ON THE SAME ISSUE BY THE CO -ORDINATE BENCH OF THE TRIBUNAL, WE ARE OF THE OPINION THAT THE ASS ESSEE IS ENTITLED TO DEDUCTION U/S.80P(2)(A)(I) IN RESPECT OF THE INTEREST INCOME EARNED ON FIXED DEPOSITS KEPT WITH THE NATIONALIZED BANKS/SCHEDULED BANKS AND THE SAME CONSTITUTE AS BUSINESS INCOME OF THE ASSESSE E. WE THEREFORE UPHOLD THE ORDER OF CIT(A) AND DIRECT THE AO TO ALLOW THE CLAIM OF ASSESSEE. ACCORDINGLY, THE GROUNDS RAISED BY THE REVE NUE ARE DISMISSED AND IN FAVOUR OF THE ASSESSEE. 8. IN THE RESULT, APPEAL OF THE REVENUE IS DISMISSED. ORDER PRONOUNCED ON THIS 19 TH DAY OF SEPTEMBER, 2018. SD/- SD/- (VIKAS AWASTHY) (D.KARU NAKARA RAO ) / JUDICIAL MEMBER / ACCOUNTANT MEMBER / PUNE; DATED : 19 TH SEPTEMBER, 2018. SATISH ITA NO.2827/PUN/2016 SHRI LAXMI NARAYAN NAGARI SAHAKARI PAT SANSTHA 5 / COPY OF THE ORDER IS FORWARDED TO : 1. / THE APPELLANT; 2. / THE RESPONDENT; 3. ( ) / THE CIT(A)-1, KOLHAPUR. 4. / THE PR. CIT-1, KOLHAPUR. 5. , , / DR B, ITAT, PUNE; 6. / GUARD FILE. / BY ORDER, // TRUE COPY // SENIOR PRIVATE SECRETARY , / ITAT, PUNE.