M/s. Posun Credit Co. Op. Society Ltd., Anand V. The Deputy Commissioner of Income Tax, Anand Circle, Anand

ITA 302/AHD/2017

• Counselvise Citation: [2018] 121 COUNSELVISE.COM (IT) 9684 (ITAT-AHMEDABAD)
• Duration Of Justice: 1 year(s) 7 month(s) 23 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 26-09-2018
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: Not Allotted
• Assessment Year: 2012-2013
• Appeal Filed On: 03-02-2017
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: LALIT P JAIN
• Assessee Lawyers: S N DIVETIA
• Section: 143(3); 56

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL AHMEDABAD D BENCH BEFORE: SHRI AMARJIT SINGH, ACCOUNTANT MEMBER AND MS. MADHUMITA ROY, JUDICIAL MEMBER M/S. POSUN CREDIT CO - OP SOCIETY LTD. 1 ST FLOOR, LILAWATI CENTER, M.G. ROAD, STATION ROAD, ANAND PAN: AAAP0756D (APPELLANT) VS THE DCIT , ANAND CIRCLE, ANAND (RESPONDENT) REVENUE BY : S H RI LALIT P. JAIN , SR. D . R. ASSESSEE BY: S H RI S.N. DIVETIA , A.R. DATE OF HEARING : 10 - 08 - 2 018 DATE OF PRONOUNCEMENT : 26 - 09 - 2 018 / ORDER P ER : AMARJIT SINGH, ACCOUNTANT MEMBER : - THIS ASSESSEE S APPEAL FOR A.Y. 2012 - 13 , ARIS ES FROM ORDER OF THE CIT(A) - 4, VADODARA, DATED 30 - 09 - 2016 , IN PROCEEDINGS UNDER SECTION 143(3) OF THE INCOME TAX ACT, 1961; IN SHORT THE ACT . 2. THE ASSESSEE HAS RAISED FOLLOW ING GROUNDS OF APPEAL: - THE ASSESSEE IS A CO - OPERATIVE SOCIETY AND IS IN THE BUSINESS OF LENDING MONEY AND ACCEPTING DEPOSITS FROM ITS MEMBERS. IT IS ALSO REGULATED BY THE CO.OP.SOCIETIES ACT. THE LEARNED ASSESSING OFFICER HAS ERRED ON FACTS AND LAW IN DI SALLOWING DEDUCTION U/S.80P OF RS.17,14,448.00 CLAIMED BY THE ASSESSEE. 3. THE BRIEF FACT OF THE ACT IS THAT ASSESSE HAS FILED RETURN OF INCOME DECLARING INCOME AT RS. NIL . SUBSEQUENTLY, THE CASE WAS SELECTED UNDER SCRUTINY BY ISS UING OF NOTICE U/S. 14 3(2) ON 07.08 2013 . DURING THE COURSE OF ASSESSMENT I T A NO . 302 / A HD/20 1 7 A SSESSMENT YEAR 2012 - 13 I.T.A NO. 302 /AHD/20 17 A.Y. 2012 - 13 PAGE NO M/S. POSUN CREDIT CO - OP. SOCIETY LTD. VS. DCIT 2 PROCEEDINGS, THE ASSESSING OFFICER NOTICED THAT ASSESSEE HAS EARNED INTEREST INCOME TOTALING TO RS 17,14,448/ ON SURPLUS FUNDS DEPOSITED WITH NATIONALIZED BANK ON WHICH DEDUCTION UNDER CHAPTER VIA OF THE ACT U/S. 80P(2)(A)(I) WAS CLAIMED . THE ASSESSING OFFICER OBSERVED THAT EXEMPTION U/S. 80P(2)(A)(I) IS AVAILABLE ON INCOME WHICH IS ATTRIBUTABLE TO BUSINESS OPERATION OF THE ASSESSEE CO - OPERATIVE SOCIETY AND THE INTEREST EARNED ON THE FUND INVESTED WITH T HE BANK IS NOT OPERATIONAL INCOME FROM PROVIDING CREDIT FACILITIES TO ITS MEMBERS. CONSEQUENTLY, HE HAS TREATED THE INTEREST INCOME OF RS 17,14,448/ AS INCOME FROM OTHER SOURCES U/S. 56 OF THE ACT AND DISALLOWED THE CLAIM OF DEDUCTION U/S. 80P(2)(A)(I) OF THE ACT . 4. AGGRIEVED ASSESSEE FILED APPEAL BEFORE THE LD. CIT(A). THE LD. CIT(A) HAS SUSTAINED THE DISALLOWANCE AFTER PLACING RELIANCE ON THE DECISION OF JURISDICTIONAL HON BLE HIGH COURT OF GUJARAT IN THE CASE OF SBI VS. CIT (2016) 72 TAXMANN.COM 64 . 5. WE HAVE HEARD THE RIVAL CONTENTIONS AND PERUSED THE MATERIAL ON RECORD CAREFULLY. THE ASSESSEE IS ENGAGED IN THE BUSINESS OF PROVIDING CREDIT FACILITIES TO ITS MEMBERS. THE ASSESSING OFFICER HAS NOTICED THAT IN ADDITION TO THE INTEREST INCOME EARNED ON LOAN AND ADVANCES TO ITS MEMBERS, THE ASSESSE HAS CLAIMED DEDUCTION U/S. 80P(2)(A)(I) OF THE ACT ON INTEREST INCOME EARNED FROM FIXED DEPOSIT MAINTAINED WITH THE COMMERCIAL BANK. IT IS NOTICED THAT A S PER SECTION 80P(2)(A)(I) OF THE ACT THE INTEREST I NCOME EARNED ON PROVIDING CREDIT FACILITY TO ITS MEMBERS IS DEDUCTIBLE U/S. 80P(2)(A)(I) OF THE ACT , HOWEVER, THE SAID DEDUCTION IS NOT AVAILABLE ON THE INTEREST EARNED ON DEPOSIT MAINTAINED WITH THE COMMERCIAL BANK. WE FIND THAT THE HON BLE JURISDICTION AL HIGH COURT HAS DECIDED THE IDENTICAL ISSUE IN FAVOUR OF THE REVENUE VIDE STATE BANK OF INDIA VS. CIT (2016) 72 TAXMANN.COM 64 (GUJARAT) WHEREIN IT IS HELD THAT INTEREST INCOME ON DEPOSIT PLACED WITH THE COMMERCIAL BANKS IS NOT EXEMPT U/S. 80P(2)(A)(I) O F THE ACT. I.T.A NO. 302 /AHD/20 17 A.Y. 2012 - 13 PAGE NO M/S. POSUN CREDIT CO - OP. SOCIETY LTD. VS. DCIT 3 IN VIEW OF THE ABOVE FACTS AND LEGAL FINDINGS WE ARE INCLINED WITH THE DECISION OF THE LD. CIT(A) THAT INVESTING SURPLUS FUNDS IN A COMMERCIAL BANK IS NO T PART OF THE BUSINESS OF ASSESSEE OF PROVIDING CREDIT FACILITIES TO ITS MEMBERS , THEREF ORE, THE SAME IS NOT DEDUCTIBLE UNDER SECTION 80P(2)(A)(I) OF THE ACT. HOWEVER AS DECIDED IN THE VARIOUS DECISION OF THE CO - ORDINATE BENCHES OF ITAT AHMEDABAD WE DIRECT THE ASSESSING OFFICER TO ALLOW PRO RATA EXPENSES IN RESPECT OF INTEREST EARNED FROM DE POSIT HELD WITH NATIONALIZED BANK FOR COMPUTING DEDUCTION U/S. 80P(2)(A)(I) AFTER EXAMINING/VERIFICATION AND AFFORDING ADEQUATE OPPORTUNITY TO THE ASSESSEE. THEREFORE, THE APPEAL OF THE ASSESSEE IS PARTLY ALLOWED FOR STATISTICAL PURPOSES. 6. IN THE RESUL T, THE APPEAL OF THE ASSESSEE IS PARTLY ALLOWED FOR STATISTICAL PURPOSES. ORDER PR ONOUNCED IN THE OPEN C OURT ON 26 - 09 - 201 8 SD/ - SD/ - ( MADHUMITA ROY ) ( AMARJIT SINGH ) JUDICIAL MEMBER ACCOUNTANT MEMBER AHMEDABAD : DATED 26 /09 /2018 / COPY OF ORDER FORWARDED TO: - 1. ASSESSEE 2. REVENUE 3. CONCERNED CIT 4. CIT (A) 5. DR, ITAT, AHMEDABAD 6. GUARD FILE. BY ORDER/ , / ,