The Sarvodaya Co. Op. Credit Soc. Ltd., Mahisagar V. The Income Tax Officer, Vadodara

ITA 3142/AHD/2016

• Counselvise Citation: [2018] 125 COUNSELVISE.COM (IT) 8261 (ITAT-AHMEDABAD)
• Duration Of Justice: 1 year(s) 5 month(s) 11 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 10-05-2018
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: Not Allotted
• Assessment Year: 2012-2013
• Appeal Filed On: 29-11-2016
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: V K SINGH
• Section: 143(3)

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL AHMEDABAD D BENCH BEFORE: SHR I RAJPAL YADAV , JUDICIAL MEMBER AND SHRI AMARJIT SINGH, ACCOUNTANT MEMBER THE SARVODAYA CO - OP CREDIT SOC. LTD. AT & POST PARAMA, TAL. LUNAWADA, DIST: MAHISAGAR PAN: AAAAT2867M (APPELLANT) VS THE ITO, LUNAWADA (RESPONDENT) REVENUE BY : S H RI V.K. SING H , SR. D . R. ASSESSEE BY: S H RI BANDISH SOPARKAR , A.R. DATE OF HEARING : 20 - 03 - 2 018 DATE OF PRONOUNCEMENT : 10 - 05 - 2 018 / ORDER P ER : AMARJIT SINGH, ACCO UNTANT MEMBER : - THE S E TWO APPEALS FILED BY ASSESSEE FOR A.Y. 2012 - 13 TO 2013 - 14 , AR ISE FROM ORDER OF THE CIT(A) - 4, VADODARA DATED 29 - 07 - 2016 , IN PROCEEDINGS UNDER SECTION 143(3) OF THE INCOME TAX ACT, 1961; IN SHORT THE ACT . 2. AS THE FACTS IN BOTH THE APPEALS ARE SIMILAR, SO, WE TAKE THE FACTS OF ITA NO. 3142/AHD/2016 AND DECIDE BOTH THE APPEALS FOR THE SAKE OF CONVENIENCE. I T A NO S . 3142 / A HD/20 16 & 96/AHD/2017 A SSESSMENT YEAR 2012 - 13 TO 2013 - 14 I.T.A NO S . 3142 /AHD/20 16 & 96/AHD/2017 A.Y. 2012 - 13 TO 2013 - 14 PAGE NO THE SARVODAYA CO - OP. CREDIT SOC. LTD. VS. ITO 2 3. THE ASSESSEE HAS RAISED FOLLOWING GROUNDS OF APPEAL: - 1. LD. CIT (A) ERRED IN LAW AND ON FACTS IN CONFIRMING DISALLOWA NCE MADE BY AO OF RS. 66, 20, 609/ - DEDUCTION CLAIMED U/S 80P(2)(A)(I) OF THE ACT. LD. CIT (A) OUGHT TO HAVE ALLOWED DEDUCTION CLAIMED OF INTEREST RECEIVED ON THE OPERATIONAL FUNDS DEPOSITED WITH NATIONALIZED BANKS. 2. LD. CIT (A) ERRED IN LAW AND ON T HE FACTS CONFIRMING DISALLOWANCE BY AO TREATING INTEREST EARNED AS INCOME FROM OTHER SOURCES. LD. CIT (A) OUGHT TO HAVE HELD INTEREST EARNED AS PROFITS & GAINS OF BUSINESS. 3. LD. CIT (A) ERRED IN LAW AND ON FACTS HOLDING THAT INTEREST DERIVED BY DEP OSITING SURPLUS FUNDS WITH NATIONALIZED BANKS IS NOT ATTRIBUTABLE TO THE BUSINESS CARRIED ON BY THE APPELLANT CREDIT SOCIETY AND HENCE NOT DEDUCTIBLE U/S80P(2)(A)(I) OF THE ACT. 4. LD. CIT (A) ERRED IN LAW AND ON FACTS IN NOT ADJUDICATING GROUND OF A PPEAL CHALLENGING DISALLOWANCE BY AO OF RS. 22,66,458/ - EXPENDITURE INCURRED BY THE APPELLANT FOR EARNING OF THE INCOME. 5. LD. CIT (A) ERRED IN LAW AND ON FACTS IN NOT ADJUDICATING GROUND OF APPEAL CHALLENGING DISALLOWANCE OF DEDUCTION OF INTEREST R ECEIVED FROM CO - OPERATIVE BANKS & SOCIETIES ALLOWABLE U/S 80P(2)(D) OF THE ACT. 6. LD. CIT (A) ERRED IN LAW AND ON FACTS CONFIRMING DISALLOWANCE OF THE CLAIM OF DEDUCTION RELYING ON JUDGMENT RENDERED IN REVISIONARY PROCEEDINGS NOT APPLICABLE TO THE FACT S OF THE CASE. LD. CIT (A) OUGHT TO HAVE APPRECIATED RATIO OF THE JUDICIAL CITATIONS DIRECTLY ON THE ISSUE & ALLOWED DEDUCTION. 7. LEVY OF INTEREST U/S 234A/234B/234C & 234D OF THE ACT IS NOT JUSTIFIED. 8. INITIATION OF PENALTY U/S 271 (1)(C) OF THE ACT IS NOT JUSTIFIED. 4. DURING THE COURSE OF ASSESSMENT PROCEEDINGS IT WAS DISCERNED TO THE ASSESSING OFFICER THAT ASSESSEE HAS CLAIMED DEDUCTION U/S. 80P(2)(A)(I) OF THE ACT ON INTEREST EARNED ON FIXED DEPOSIT MADE WITH COMMERCIAL BAN K TO THE AMOUNT OF RS. 66,20,609/ - . THE ASSESSING OFFICER OBSERVE THAT ASSESSEEE IS ENGAGED IN PROVIDING CREDIT FACILITY TO ITS MEMBERS , TH EREFORE, THE PROFIT AND GAIN OF BUSINESS ATTRIBUTABLE TO SUCH ACTIVITIES WOULD BE DEDUCTIBLE . HOWEVER , EARNING O F INTEREST FROM FIXED DEPOSIT MADE WITH COMMERCIAL BANK CANNOT BE DEDUCTIBLE UNDER THE PROVISION OF SECTION 80P(2)(A)(I) OF THE ACT. CONSEQUENTLY, THE ASSESSING OFFICER HAS DISALLOWED THE CLAIM OF 80P DEDUCTION O N INTEREST EARNED I.T.A NO S . 3142 /AHD/20 16 & 96/AHD/2017 A.Y. 2012 - 13 TO 2013 - 14 PAGE NO THE SARVODAYA CO - OP. CREDIT SOC. LTD. VS. ITO 3 ON FIXED DEPOSIT MAINTA INED WITH COMMERCIAL BANK TO THE AMOUNT OF RS. 66,20,609/ - . 5. AGGRIEVED ASSESSEE FILED APPEAL BEFORE THE LD. CIT(A). THE LD. CIT(A) HAS CONFIRMED THE DISALLOWANCE AFTER PLACING RELIANCE ON THE DECISION OF JURISDICTIONAL HIGH COURT IN THE CASE OF STATE BANK OF INDIA VS. CIT (2016) 72 TAXMANN.COM 64 (GUJARAT). 6. WE HAVE HEARD THE RIVAL CONTENTIONS AND PERUSED THE MATERIAL ON RECORD CAREFULLY. ASSESSEE HAS CLAIMED DEDUCTION U/S. 80P(2)(D) OF THE ACT ON ACCOUN T OF INTEREST OF RS. 66,20,609 / - EARNED ON FIXED DEPOSIT MADE UNDER THE COMMERCIAL BANK. THE BUSINESS OF THE ASSESSEE IS OF PROVIDING CREDIT TO ITS MEMBERS AND THE INTEREST INCOME EARNED THERE FROM THE MEMBERS IS DEDUCTIBLE U/S. 80P(2)(A)(I) OF THE ACT. HOWEVER, THE ASSESSEE HAS CLAIMED DEDUCTION UNDER THE AFORESAID PROVISION ON INTEREST LEARNED FROM SURPLUS FUNDS DEPOSITED WITH THE NATIONALIZED BANKS IN THE FORM OF FIXED DEPOSIT. WE ARE INCLINED WITH THE FINDINGS OF THE LD. CIT(A) THAT INVESTING SURPLUS FUNDS IN A BANK IS NO PART OF THE BUSINES S OF PROVIDING CREDIT FACILITIES TO ITS MEMBERS WHICH IS DEDUCTIBLE UNDER SECTION 80P(2)(A)(I) OF THE ACT, AND THE INTEREST DERIVED BY DEPOSITING SURPLUS FUNDS WITH THE NATIONALIZED BANK NOT BEING ATTRIBUTABLE TO THE BUSINESS CARRIED ON BY THE ASSESSEE AND THE SAME CANNOT BE DEDUCTED U/S. 80P(2)(A)(I). WE HAVE PERUSED ALL THE JUDICIAL PRONOUNCEMENT REFERRED BY THE ASSESSEE, HOWEVER, WE FIND THAT THE HON BLE JURISDICTIONAL HIGH COURT HAS DECIDED THE IDENTICAL ISSUE IN FAVOUR OF THE REVENUE VIDE STATE BANK O F INDIA VS. CIT (2016) 72 TAXMANN.COM 64 (GUJARAT) THAT INTEREST INCOME ON DEPOSIT PLACED WITH THE COMMERCIAL BANKS IS NOT EXEMPT U/S. 80P(2)(A)(I) OF THE ACT. REGARDING THE OTHER PART OF THE GROUND OF APPEAL OF NOT ALLOWING THE DEDUCTION OF INTEREST EXPE NDITURE INCURRED ON EARNING INTEREST INCOME FROM COMMERCIAL BANK BY THE ASSESSING OFFICER, WE DIRECT THE ASSESSING OFFICER TO VERIFY THE ASSESSEE S CLAM ON PRO RATA EXPENSES BY EXAMINATION ON THE RECORD TO BE SHOWN FOR VERIFICATION BY THE ASSESSEE AND I.T.A NO S . 3142 /AHD/20 16 & 96/AHD/2017 A.Y. 2012 - 13 TO 2013 - 14 PAGE NO THE SARVODAYA CO - OP. CREDIT SOC. LTD. VS. ITO 4 ACCO RDINGLY NETTING OF TO BE ALLOWED BY THE ASSESSING OFFICER AS DECIDED IN A MEMBER OF JUDICIAL PRONOUNCEMENTS BY THE C - ORDINATE BENCHES OF ITAT, AHMEDABAD. IN THE RESULT, THE APPEAL OF THE ASSESSEE IS PARTLY ALLOWED. THE GROUNDS OF APPEAL OF CHALLENGING OF INTEREST U/S. 234A, 234B,234C/234D IS OF GENERAL NATURE AND THE SAME IS DISMISSED . SIMILARLY, GROUND OF APPEAL AGAINST INITIATION OF PENALTY U/S. 271(1)(C) IS PREMATURE AT TH IS STAGE, THEREFORE, THE SAME AL SO STANDS DISMISSED. 7. IN THE RESULT, BOTH THE APPEALS OF THE ASSESSEE ARE PARTLY ALLOWED. ORDER PR ONOUNCED IN THE OPEN C OURT ON 10 - 05 - 201 8 SD/ - SD/ - ( RAJPAL YADAV ) ( AMARJIT SINGH ) JUDICIAL MEMBER ACCOUNTANT MEMBER AHMEDABAD : DATED 10 /05 /2018 / COPY OF ORDER FORWARDED TO: - 1. ASSESSEE 2. REVENUE 3. CONCERNED CIT 4. CIT (A) 5. DR, ITAT, AH MEDABAD 6. GUARD FILE. BY ORDER/ , / ,