O.N.G.C Employees Co.Op. Credit & Thrift Society Ltd., Mehsana V. The Income Tax Officer, Ward-2, Mehsana

ITA 2846/AHD/2015

• Counselvise Citation: [2016] 133 COUNSELVISE.COM (IT) 1623 (ITAT-AHMEDABAD)
• Duration Of Justice: 7 month(s) 2 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 10-05-2016
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: SMC
• Next Hearing Date: 05-05-2016
• Assessment Year: 2012-2013
• Appeal Filed On: 08-10-2015
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: O P CHAUDHARY
• Assessee Lawyers: P M MEHTA
• Keywords: Proportionate interest
• Section: 56

Judgement Text

, , IN THE INCOME TAX APPELLATE TRIBUNAL SMC BENCH, AHMEDABAD BEFORE SHRI SHAILENDRA KUMAR YADAV, JUDICIAL MEMBER ./ I.T.A. NO.2846/AHD/2015 ( / ASSESSMENT YEAR : 2012-13 ) ONGC EMPLOYEES CO-OP. CREDIT & THRIFT SOCIETY LTD. ONGC CAMPUS PALAVASANA DIST.MEHSANA / VS. THE ITO WARD-2 MEHSANA ./ ./ PAN/GIR NO. AAAA 00243 L ( / APPELLANT ) .. ( / RESPONDENT ) / APPELLANT BY : SHRI P.M. MEHTA, AR / RESPONDENT BY : SHRI O.P. CHAUDHARY, DR / DATE OF HEARING 05/05/2016 !'# / DATE OF PRONOUNCEMENT 10/05/2016 / O R D E R THIS APPEAL BY THE ASSESSEE IS DIRECTED AGAINST T HE ORDER OF THE LEARNED COMMISSIONER OF INCOME TAX (APPEALS)-GANDHI NAGAR 24/07/2015 PASSED FOR ASSESSMENT YEAR 2012-13 BY RA ISING FOLLOWING GROUND OF APPEAL:- 1. IN LAW AND IN THE FACTS AND CIRCUMSTANCES OF TH E APPELLANTS CASE, LEARNED CIT(A) HAS GROSSLY ERRED IN UPHOLDING THE ACTION OF THE LEARNED ASSESSING OFFICER OF TREATING PART O F THE APPELLANTS INTEREST INCOME VIZ. RS.12,63,864, AS N OT BEING ITA NO.2846/AHD/201 5 ONGC EMPLOYEES CO.OP. CREDIT & THRIFT SOC.LTD. VS . ITO ASST.YEAR 2012-13 - 2 - ELIGIBLE TO DEDUCTION U/S.80P(2)(A)(I) AND IN SUBJE CTING TO TO TAX U/S.56 AND IN ACCORDINGLY, MAKING AN ADDITION OF RS .3,33,650/- TO THE APPELLANTS RETURNED INCOME ON THAT ACCOUNT (AFTER GRANTING DEDUCTING FOR PROPORTIONATE INTEREST AND A DMINISTRATIVE EXPENSES). HE OUGHT TO HAVE APPRECIATED THAT THE S AID INCOME WAS ELIGIBLE TO DEDUCTION U/S.80P(2)(A)(I) AND OUGH T, ACCORDINGLY, TO HAVE ORDERED FOR THE DELETION OF TH E ADDITION OF RS3,33,650. 2. IN ADDITION TO ABOVE, THE ASSESSEE HAS RAISED F OLLOWING ADDITIONAL GROUNDS OF APPEAL:- 1.IN LAW AND IN THE FACTS AND CIRCUMSTANCES OF THE APPELLANTS CASE, THE LEARNED CIT(APPEALS) HAS GROSSLY ERRED IN DIRECTING THE ASSESSING OFFICER TO CONSIDER THE ENTIRE INTERE ST INCOME EARNED BY THE APPELLANT FROM NATIONALIZED BANK OF R S.12,63,864 TO BE TAXED U/S.56 OF THE ACT AS AGAINST RS.3,33,65 0 ADDED BY THE ASSESSING OFFICER WHICH RESULTS INTO ENHANCEMEN T OF INCOME WHICH HAS BEEN DONE BY THE LEARNED CIT(APPEA LS) WHICH IS NOT IN ACCORDANCE WITH THE LAW AND AS SUCH ASSUMPTION OF JURISDICTION BY THE LEARNED CIT(APPEALS) IN GIVI NG SUCH DIRECTION IS BAD IN LAW. 2.WITHOUT PREJUDICE TO THE ABOVE, IN LAW AND IN THE FACTS AND CIRCUMSTANCES OF THE APPELLANTS CASE, THE LEARNED CIT(APPEALS) HAS GROSSLY ERRED IN CONFIRMING THE EF FECTIVE ADDITION OF RS.12,63,864 MADE BY THE ASSESSING OFFI CER ON ACCOUNT OF THE ABOVE DIRECTION AND AS SUCH THE SAID ADDITION MADE BY THE ASSESSING OFFICER OF RS12,63,864 REQUIR ES TO BE DELETED. ITA NO.2846/AHD/201 5 ONGC EMPLOYEES CO.OP. CREDIT & THRIFT SOC.LTD. VS . ITO ASST.YEAR 2012-13 - 3 - 3. I HAVE HEAR THE PARTIES. I FIND THAT SIMILARLY ISSUE HAS BEEN BEFORE THIS TRIBUNAL (ITAT B BENCH AHMEDABAD) IN THE CAS E OF ITO VS. M/S.JAFARI MOMIN VIKAS CO-OP.CREDIT SOCIETY LTD. IN ITA NO.148/AHD/2012 FOR AY 2009-10, DATED 31/10/2012, W HEREIN THE TRIBUNAL HAS DECIDED THE ISSUE IN FAVOUR OF ASSESSE E, BY OBSERVING AS UNDER:- 19.2 FROM THE ABOVE, IT EMERGES THAT - (A) THAT ASSESSEE (ISSUE BEFORE THE SUPREME COURT) HAD ADMITTED BEFORE THE AO THAT IT HAD INVESTED SURPLUS FUNDS, WHICH WE RE NOT IMMEDIATELY REQUIRED FOR THE PURPOSE OF ITS BUSINESS, IN SHORT TERM DEPOSITS; (B) THAT THE SURPLUS FUNDS AROSE OUT OF THE AMOUNT RETAINED FROM MARKETING THE AGRICULTURAL PRODUCE OF THE MEMBERS; (C) THAT ASSESSEE CARRIED ON TWO ACTIVITIES, NAMELY , (I) ACCEPTANCE OF DEPOSIT AND LENDING BY WAY OF DEPOSITS TO THE MEMBE RS; AND (II) MARKETING THE AGRICULTURAL PRODUCE; AND (D) THAT THE SURPLUS HAD ARISEN EMPHATICALLY FROM M ARKETING OF AGRICULTURAL PRODUCES. 19.3 IN THE PRESENT CASE UNDER CONSIDERATION, THE E NTIRE FUNDS WERE UTILIZED FOR THE PURPOSES OF BUSINESS AND THERE WER E F NO SURPLUS FUNDS. 19.4 WHILE COMPARING THE STATE OF AFFAIRS OF THE PR ESENT ASSESSEE WITH THAT ASSESSEE (BEFORE THE SUPREME COURT), THE FOLLOWING CLINCHING DISSIMILARITIES EMERGE, NAMELY: (1) IN THE CASE OF THE ASSESSEE, THE ENTIRE FUNDS W ERE UTILIZED FOR THE PURPOSES OF BUSINESS AND THAT THERE WERE NO SURPLUS FUNDS; ITA NO.2846/AHD/201 5 ONGC EMPLOYEES CO.OP. CREDIT & THRIFT SOC.LTD. VS . ITO ASST.YEAR 2012-13 - 4 - - IN THE CASE OF TOTGARS, IT HAD SURPLUS FUNDS, A S ADMITTED BEFORE THE AO, OUT OF RETAINED AMOUNTS ON MARKETING OF AGRICULTURA L PRODUCE OF ITS MEMBERS; (2) IN THE CASE OF PRESENT ASSESSEE, IT DID NOT C ARRY OUT ANY ACTIVITY EXCEPT IN PROVIDING CREDIT FACILITIES TO ITS MEMBER S AND THAT THE FUNDS WERE OF OPERATIONAL FUNDS. THE ONLY FUND AVAILABLE WITH THE ASSESSEE WAS DEPOSITS FROM ITS MEMBERS AND, THUS, THERE WAS NO SURPLUS FUNDS AS SUCH; - IN THE CASE OF TOTGARS, THE HON'BLE SUPREME COU RT HAD NOT SPELT OUT ANYTHING WITH REGARD TO OPERATIONAL FUNDS; 19.5 CONSIDERING THE ABOVE FACTS, WE FIND THAT THERE IS FORCE IN THE ARGUMENT OF THE ASSESSEE THAT THE ASSESSEE NOT A C O-OPERATIVE BANK, BUT ITS NATURE OF BUSINESS WAS COUPLED WITH BANK WITH I TS MEMBERS, AS IT ACCEPTS DEPOSITS FROM AND LENDS THE SAME TO ITS MEM BERS. TO MEET ANY EVENTUALITY, THE ASSESSEE WAS REQUIRED TO MAINTAIN SOME LIQUID FUNDS, THAT WAS WHY, IT WAS SUBMITTED BY THE ASSESSEE THAT IT HAD INVESTED IN SHORT-TERM DEPOSITS. FURTHERMORE, THE ASSESSEE HAD MAINTAINED OVERDRAFT FACILITY WITH DENA BANK AND THE BALANCE AS AT 31.3. 2009 WAS RS. 13,69,955/- [SOURCE: BALANCE SHEET OF THE ASSESSEE AVAILABLE ON RECORD] 19.6 IN OVERALL CONSIDERATION OF ALL THE ASPECTS, WE ARE OF THE [CONSIDERED VIEW THAT THE RATIO LAID DOWN BY THE HO N'BLE SUPREME COURT IN THE CASE OF TOTGARS CO-OP SALE SOCIETY LTD (SUPR A) CANNOT IN ANY WAY COME TO THE RESCUE OF EITHER THE LD. CIT (A) OR THE REVENUE. IN VIEW OF THE ABOVE FACTS, WE ARE OF THE FIRM VIEW THAT THE L EAMED CIT (A) WAS NOT JUSTIFIED IN COMING TO A CONCLUSION THAT THE SUM OF RS.9,40,639/- WAS TO BE TAXED U/S 56 OF THE ACT. IT IS ORDERED ACCORDING LY. 19.7 BEFORE PARTING WITH, WE WOULD, WITH DUE REGARD S, LIKE TO RECORD THAT THE RULING OF THE HON'BLE JURISDICTIONAL HIGH COURT IN THE CASE OF CIT V. ITA NO.2846/AHD/201 5 ONGC EMPLOYEES CO.OP. CREDIT & THRIFT SOC.LTD. VS . ITO ASST.YEAR 2012-13 - 5 - MANEKBANG CO-OP HOUSING SOCIETY LTD REPORTED IN (20 12) 22 TAXMANN.COM 220(GUJ) HAS BEEN KEPT IN VIEW WHILE DE CIDING THE ISSUE. 4. SINCE FACTS OF THE CASE ARE SIMILAR, I AM NOT I NCLINED TO CONCUR WITH THE FINDINGS OF THE CIT(A) WHO HAS UPHELD THE ACTION OF THE AO IN TREATING THE PART OF THE ASSESSEES INTEREST INCOME OF RS.12,62,864/- AS NOT BEING ELIGIBLE TO DEDUCTION U/S.80P(2)(A)(I) OF THE ACT AND IN SUBJECTING IT TO TAX U/S.56 AND, ACCORDINGLY, MAKING AN ADDITION OF RS.3,33,650/- TO THE ASSESSEES RETURNED INCOME ON THAT ACCOUNT (AFTER G RANTING DEDUCTION FOR PROPORTIONATE INTEREST AND ADMINISTRATIVE EXPENSES) . IT SHOULD BE APPRECIATED THE FACT THAT THE INTEREST INCOME IS EL IGIBLE FOR DEDUCTION U/S. 80P(2)(A)(I)AS PRAYED BY THE ASSESSEE BECAUSE THE S AME WAS ARISING FROM THE BUSINESS OF THE ASSESSEE. ACCORDINGLY, GROUND IS ALLOWED. 5. IN THE RESULT, THE APPEAL OF THE ASSESSEE IS ALL OWED. ORDER PRONOUNCED IN THE COURT ON 10 MAY, 2016 AT AHMEDABAD. SD/- ( SHAILENDRA KUMAR YADAV ) JU DICIAL MEMBER AHMEDABAD; DATED 10 / 05 /2016 &.., .(../ T.C. NAIR, SR. PS ITA NO.2846/AHD/201 5 ONGC EMPLOYEES CO.OP. CREDIT & THRIFT SOC.LTD. VS . ITO ASST.YEAR 2012-13 - 6 - !'#! / COPY OF THE ORDER FORWARDED TO : 1. / THE APPELLANT 2. / THE RESPONDENT. 3. )*+ , / CONCERNED CIT 4. , ( ) / THE CIT(A)-GANDHINAGAR 5. /01 ((*+ , *+# , ) / DR, ITAT, AHMEDABAD 6. 145 6 / GUARD FILE. # / BY ORDER, / ( //TRUE COPY// / ( DY./ASSTT.REGISTRAR) , / ITAT, AHMEDABAD 1. DATE OF DICTATION ..5.6.15 (DICTATION PAD 3 PAGE S ATTACHED WITH THIS FILE) 2. DATE ON WHICH THE TYPED DRAFT IS PLACED BEFORE THE DICTATING MEMBER .. 9.6.15 3. OTHER MEMBER... 4. DATE ON WHICH THE APPROVED DRAFT COMES TO THE SR.P. S./P.S.. 5. DATE ON WHICH THE FAIR ORDER IS PLACED BEFORE THE D ICTATING MEMBER FOR PRONOUNCEMENT 6. DATE ON WHICH THE FAIR ORDER COMES BACK TO THE SR.P .S./P.S. 10.5.16 7. DATE ON WHICH THE FILE GOES TO THE BENCH CLERK 10.5.16 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