Kharel Vibhag Vividh Karyakari Sahakari Mandal Ltd., Navsari V. The Income Tax Officer, Ward-2, Navsari

ITA 3030/AHD/2015

• Counselvise Citation: [2016] 133 COUNSELVISE.COM (IT) 9876 (ITAT-AHMEDABAD)
• Duration Of Justice: 2 month(s) 7 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 06-01-2016
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: SMC
• Assessment Year: 2011-2012
• Appeal Filed On: 29-10-2015
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Assessee Lawyers: P B PARMAR
• Keywords: Principle of natural justice; Question of law

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL SMC BENCH, AHMEDABAD BEFORE SHRI SHAILENDRA KUMAR YADAV, JUDICIAL MEMBER ./ ITA NO. 3030/AHD/2015 / ASSESSMENT YEAR: 2011-12 KHAREL VIBHAG VIVIDH KARYAKARI SAHKARI MANDALI LTD., AT & POST: GANDEVA, TAL. GANDEVI, DIST: NAVSARI .. APPELLAN T PAN : AAAAK 0870 D VS INCOME TAX OFFICER, WARD-2 NAVSARI .. RESPONDENT ASSESSEE(S) BY : SHRI P.B. PARMAR, AR REVENUE BY : SHRI RAKESH JHA, SR - DR / DATE OF HEARING 31/12/2015 /DATE OF PRONOUNCEMENT 06/01/2016 / O R D E R THIS APPEAL BY THE ASSESSEE IS DIRECTED AGAINST THE ORDER OF THE LEARNED COMMISSIONER OF INCOME TAX (APPEALS), V ALSAD DATED 20.08.2015 FOR ASSESSMENT YEAR 2011-12, ON TH E FOLLOWING GROUNDS:- 1. THE LEARNED C1T(A) HAS ERRED BOTH IN LAW AND ON THE LADS OF THE CASE IN CONFIRMING THE ACTION OF AO IN NOT ALLOWING CLAIM OF DEDUCTION U/S 80P OF THE ACT IN T HE SUM OF RS.2,72,174/- AND FURTHER ERRED IN HOLDING THAT THY SAID INCOME IS TAXABLE IN HANDS OF THE APPELLANT SEPARAT ELY AS INCOME FROM OTHER SOURCES. 2. BOTH THE LOWER AUTHORITIES HAVE ERRED IN NOT APPRECIATING THAT INVESTMENTS IS AN INTEGRAL PART O F PROVIDING CREDIT FACILITIES AND THEREFORE, ANY INCO ME EARNED BY CARRYING OUT THE SAID ACTIVITIES QUALIFIES FOR C LAIM OF DEDUCTION U/S 80P OF THE ACT. (SMC) ITA NO.3030/AHD/2015 KHAREL VIBHAG VIVIDH KARYAKARI VS. ITO AY 2011-12 2 3. ALTERNATIVELY AND WITHOUT PREJUDICE, BOTH THE LO WER AUTHORITIES OUGHT TO HAVE ALLOWED EXPENDITURE INCUR RED FOR EARNING SUCH INCOME AND OUGHT TO HAVE TAXED ONLY TH E NET INCOME INSTEAD OF GROSS RECEIPT AS HAS BEEN DONE, 4. BOTH THE LOWER AUTHORITIES HAVE PASSED THE ORDER S WITHOUT PROPERLY APPRECIATING THE FACT AND THAT THE Y FURTHER ERRED IN GROSSLY IGNORING VARIOUS SUBMISSIO NS, EXPLANATIONS AND INFORMATION SUBMITTED BY THE APPEL LANT FROM TIME TO TIME WHICH OUGHT TO HAVE BEEN CONSIDER ED BEFORE PASSING THE IMPUGNED ORDER. THIS ACTION OF T HE LOWER AUTHORITIES IS IN CLEAR BREACH OF LAW AND PRI NCIPLES OF NATURAL JUSTICE AND THEREFORE DESERVES TO BE QUASHE D. 5. THE LEARNED CIT(A) HAS ERRED IN LAW AND ON FACTS OF THE CASE IN CONFIRMING ACTION OF THE LD. AO IN LEVYING INTEREST U/S 234A/B/C OF THE ACT. 6. THE LEARNED CIT(A) HAS ERRED IN LAW AND ON FACTS OF THE CASE IN CONFIRMING ACTION OF THE LD. AO IN INITIATI NG PENALTY U/S 271(1)(C) OF THE ACT. 2. THE ONLY ISSUE IN THIS CASE IS REGARDING THE ALL OWABILITY OF CLAIM OF DEDUCTION U/S 80P OF THE INCOME-TAX ACT. AT THE TIME OF HEARING BEFORE ME, THE LD. AUTHORIZED REPRESENTA TIVE FOR THE ASSESSEE POINTED OUT THAT THIS ISSUE IS SQUARELY CO VERED OF THE ASSESSEE BY THE DECISION OF CO-ORDINATE BENCH OF TH IS TRIBUNAL IN THE CASE OF MORALI BAZAR VIBHAG VIVIDH KARYAKARI SAHKARI MANDI LIMITED VS. ITO, IN ITA NOS. 3130/AHD 2014 AN D 1834/AHD/2013, WHEREIN THE TRIBUNAL HAS DECIDED THI S ISSUE, FOLLOWING THE DECISION OF CO-ORDINATE BENCH OF THIS TRIBUNAL IN THE CASE OF AMAALSAD VIBHAG VIVIDH KARYAKARI SAHKAR I KHEDUT MANDALI LIMITED VS. ITO IN ITA NOS. 1710 & 1711/AHD /2011, BY OBSERVING AS UNDER:- 5. LEARNED REPRESENTATIVES FAIRLY AGREE THAT THE IS SUE IS COVERED IN FAVOUR OF THE ASSESSEE, BY A DECISION OF THE CO- ORDINATE BENCH OF THIS TRIBUNAL IN THE CASE OF AMAA LSAD (SMC) ITA NO.3030/AHD/2015 KHAREL VIBHAG VIVIDH KARYAKARI VS. ITO AY 2011-12 3 VIBHAG VIVIDH KARYAKARI SAHKARI KHEDUT MANDALI LIMI TED VS. ITO IN ITA NOS.1710 & 1711/AHD/2011 WHEREIN VID E ORDER DATED 13.08.2015, THE TRIBUNAL HAS, INTER ALI A, OBSERVED AS FOLLOWS :- '7. WE HAVE HEARD THE RIVAL SUBMISSIONS AND PERUSED THE MATERIAL ON RECORD. THE ISSUE IN THE PRESENT CA SE IS WITH RESPECT TO GRANTING OF DEDUCTION UNDER 80P ON THE INTEREST EARNED ON THE DEPOSITS KEPT WITH BANK. IT IS AN UNDISPUTED FACT THAT THE ASSESSEE IS A CO-OPERATIVE SOCIETY. IT IS ASSESSEE'S SUBMISSION THAT THE AMOUN TS THAT WERE NOT IMMEDIATELY REQUIRED BY THE ASSESSEE WERE DEPOSITED IN THE BANK SO AS TO EARN INTEREST. THE AFORESAID SUBMISSION OF THE ASSESSEE HAS NOT BEEN CONTROVERTED BY REVENUE. WE FIND THAT THE HON'BLE KARNATAKA HIGH COURT IN THE CASE OF TUMKUR MERCHANTS SOUHARDA CREDIT CO-OPERATIVE LTD. (SUPRA) HAD DECIDED THE ISSUE IN FAVOUR OF THE ASSESSEE BY OBSERVING AS UNDER: '10. IN THE INSTANT CASE, THE AMOUNT WHICH WAS INVESTED IN BANKS TO EARN INTEREST WAS NOT AN AMOUNT DUE TO ANY MEMBERS. IT WAS NOT THE LIABILITY . IT WAS NOT SHOWN AS LIABILITY IN THEIR ACCOUNT. IN FACT THIS AMOUNT WHICH IS IN THE NATURE OF PROFITS AND GAINS, WAS NOT IMMEDIATELY REQUIRED BY THE ASSESSEE FOR LENDING MONEY TO THE MEMBERS, AS THERE WERE NO TAKERS. THEREFORE, THEY HAD DEPOSITED THE MONEY IN A BANK SO AS TO EARN INTEREST. THE SAID INTEREST INCO ME IS ATTRIBUTABLE TO CARRYING ON THE BUSINESS OF BANK ING AND THEREFORE IT IS LIABLE TO BE DEDUCTED IN TERMS OF SECTION 80P (1) OF THE ACT. IN FACT SIMILAR VIEW IS TAKEN BY THE ANDHRA PRADESH HIGH COURT IN THE CASE OF CIT V/S. ANDHRA PRADESH STATE CO-OPERATIVE BANK LTD., [2011] 200 TAXMAN 220/12 TAXMANN.COM 66. IN THAT VIEW OF THE MATTER, THE ORDER PASSED BY THE APPELLATE AUTHORITIES DENYING THE BENEFIT OF DEDUCT ION OF THE AFORESAID AMOUNT IS UNSUSTAINABLE IN LAW. ACCORDINGLY IT IS HEREBY SET ASIDE. THE SUBSTANTIAL QUESTION OF LAW IS ANSWERED IN FAVOUR OF THE ASSESS EE AND AGAINST THE REVENUE.' (SMC) ITA NO.3030/AHD/2015 KHAREL VIBHAG VIVIDH KARYAKARI VS. ITO AY 2011-12 4 8. WE ARE OF THE VIEW THAT THE FACTS OF THE CASE AR E IDENTICAL TO THAT IN THE CASE OF TUMKAR MERCHANTS SOUHARDA CREDIT CO-OPERATIVE LTD. (SUPRA) WHICH HAS BEEN DECIDED BY HON'BLE KARNATAKA HIGH COURT AND THEREFORE CONSIDERING THE FACTS OF THE PRESENT CASE IN THE LIGHT OF THE AFORESAID DECISION OF HON'BLE KARN ATAKA HIGH COURT AND IN THE ABSENCE OF ANY CONTRARY BINDI NG DECISION POINTED OUT BY REVENUE, WE ARE OF THE VIEW THAT THE INTEREST EARNED BY THE ASSESSEE IS ELIGIBL E FOR DEDUCTION UNDER SECTION 80P. WE THEREFORE SET ASIDE THE ORDER OF A.O. IN THE RESULT THE GROUND OF THE ASSESSEE IS ALLOWED.' 6. I SEE NO REASONS TO TAKE ANY OTHER VIEW OF THE M ATTER THAN THE VIEW SO TAKEN BY THE CO-ORDINATE BENCH. THEREFORE, RESPECTFULLY FOLLOWING THE ABOVE DECISIO N OF THE TRIBUNAL DATED 13.08.2015, I APPROVE THE ORDER OF T HE LD. CIT(A) AND DECLINE TO INTERFERE IN THE MATTER. THUS , APPEAL FILED BY THE ASSESSEE FOR ASSESSMENT YEAR 2010-11 I S ALLOWED. 3. NOTHING CONTRARY WAS BROUGHT TO OUR KNOWLEDGE ON BEHALF OF THE REVENUE. FACTS BEING SIMILAR, SO FOLLOWING T HE SAME REASONING I AM NOT INCLINED TO CONCUR WITH THE FIND INGS OF THE LD. CIT(A); THEREFORE, RESPECTFULLY FOLLOWING THE D ECISION OF CO- ORDINATE BENCH OF THIS TRIBUNAL IN THE CASE OF MARO LI BAZAR VIBHAG VIVIDH KARYAKARI SAHKARI MANDI LIMITED (SUPR A), I HEREBY DIRECT THE ASSESSING OFFICER TO ALLOW DEDUCT ION U/S 80P AS CLAIMED BY THE ASSESSEE. 4. IN THE RESULT, THE APPEAL OF THE ASSESSEE IS ALL OWED. ORDER PRONOUNCED IN THE COURT ON 6TH JANUARY, 2016 AT AHMEDABAD. SD/- ( SHAILENDRA KUMAR YADAV ) JUDICIAL MEMBER AHMEDABAD; DATED 06/01/2016 BIJU T., PS (SMC) ITA NO.3030/AHD/2015 KHAREL VIBHAG VIVIDH KARYAKARI VS. ITO AY 2011-12 5 / COPY OF THE ORDER FORWARDED TO : 1. / THE APPELLANT 2. / THE RESPONDENT. 3. ! ' ' # / CONCERNED CIT 4. ' ' # ( ) / THE CIT(A) 5. &'( ! , ' ! , / DR, ITAT, AHMEDABAD 6. (- . / GUARD FILE. / BY ORDER, TRUE COPY / ( DY./ASSTT.REGISTRAR) !', / ITAT, AHMEDABAD