Appeal details
Counselvise Citation
[2018] 125 COUNSELVISE.COM (IT) 8254 (ITAT-AHMEDABAD)
Assessee PAN
Bench
Appeal Number
Duration Of Justice
1 year(s) 5 month(s) 11 day(s)
Appellant
Respondent
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
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 LUNAWADA TALUKA PRIMARY SCHOOL TEACHERS CO - OP. CREDIT SOCIETY LTD. PARAM, AT & POST LUNAWADA, TAL. LUNAWADA, DIST. MAHISAGAR PAN: AAAAT2876N (APPELLANT) VS THE ITO, LUNAWADA (RESPONDENT) REVENUE BY : S H RI V.K. SINGH , SR. D . R. ASSESSEE BY: S H RI BANDISH SOPARKAR , A.R. DATE OF HEARING : 20 - 03 - 2 018 DATE O F PRONOUNCEMENT : 10 - 05 - 2 018 / ORD ER P ER : AMARJIT SINGH, ACCOUNTANT MEMBER : - THESE TWO APPEAL S FILED BY ASSESSEE FOR A.Y. 2012 - 13 TO 2013 - 14 , AR ISE FROM ORDER OF THE CIT(A) - 4, VADODARA DATED 22 - 07 - 2016 , IN PROCEEDINGS UNDER SECTION 143(3) OF THE INCOME TAX ACT, 1961; IN SHORT THE A CT . 2. AS THE F ACTS IN BOTH THE APPEALS ARE SIMILAR, SO, WE TAKE THE FACTS OF ITA NO. 3143/AHD/2016 AND DECIDE BOTH THE APPEALS FOR THE SAKE OF CONVENIENCE. I T A NO S . 3143 /AHD/2016 & 97 / A HD/20 17 A SSESSMENT YEAR 2012 - 13 TO 2013 - 14 I.T.A NO S.3143 / AHD/2016 &97/AHD/2017 A.Y. 2012 - 1 3 TO 2013 - 14 PAGE NO LUNAWADA TALUKA PRIMARY SCHOOL TEACHERS CO - OP. CREDIT SOCIETY 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 DISALLOWANCE MADE BY AO OF RS. 1, 34, 40, 673/ - 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 THE 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 HOL DING THAT INTEREST DERIVED BY DEPOSITING 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 FACT S IN NOT ADJUDICATING GROUND OF APPEAL CHALLENGING DISALLOWANCE BY AO OF RS. 35,26,419/ - 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 DISALL OWANCE OF DEDUCTION OF INTEREST RECEIVED 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 PROCE EDINGS NOT APPLICABLE TO THE FACTS 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. INI TIATION OF PENALTY U/S 271 (1)(C) OF THE ACT IS NOT JUSTIFIED. 4 . THE GROUNDS OF APPEAL 1 TO 6 ARE INTERCONNECTED THEREFORE THEY ARE ADJUDICATED TOGETHER AS UNDER: - 5. THE BRIEF FACT OF THE CASE IS THAT , ON SCRUTINY, THE ASSESSING OFFICER HAS NOTICED T HAT ASSESSEE IS A CO - OPERATIVE CREDIT SOCIETY ENGAGED IN THE BUSINESS OF PROVIDING CREDIT FACILITIES TO ITS AS MEMBERS AS PER THE BYE LAWS OF THE SOCIETY. ON VERIFICATION , OF PROFIT AND LOSS ACCOUNT, IT IS OBSERVED THAT ASSESSEE HAS CLAIMED DEDUCTION U/S. 80P(2)(A)(I) OF THE ACT ON AMOUNT OF INTEREST RECEIVED ON DEPOSIT MAINTAI NED WITH THE NATIONALIZED BANK. IT WAS DISCERNED TO THE ASSESSING OFFICER T HAT ASSESSEE IS ELIGIBL E TO DEDUCTION U/S. 80P(2)(A)(I ) ON THE PROFIT AND GAIN ON BUSINESS ATTRIBUTABLE T O ITS ACTIVITIES IN PROVIDING CREDIT FACILITIES TO ITS MEMBERS. HOWEVER, EARNING O F INTEREST ON FIXED DEPOSIT MAINTAINED WITH THE NATIONALIZED BANK IS NOT ELIGIBLE FOR DEDUCTION U/S. 80P(2)(A)(I) OF THE ACT. CONSEQUENTLY , THE ASSESSING OFFICER HAS DISA LLOWED THE CLAIM OF 80P(2)(A)(I) ON I.T.A NO S.3143 / AHD/2016 &97/AHD/2017 A.Y. 2012 - 1 3 TO 2013 - 14 PAGE NO LUNAWADA TALUKA PRIMARY SCHOOL TEACHERS CO - OP. CREDIT SOCIETY LTD. VS. ITO 3 THE AMOUNT OF RS. 1,34,40,673/ - AS INTEREST RECEIVED FROM FIXED DEPOSIT MAINTAINED WITH THE BANK. 6 . AGGRIEVED ASSESSEE FILED APPEAL BEFORE THE LD. CIT(A). THE LD. CIT(A) HAS CONFIRMED DISALLOWANCE MADE BY THE ASSESSIN G OFFICER . HE HAS STAT ED THAT ONLY THE INTEREST DERIVED FROM THE CREDIT PROVIDED TO ITS MEMBERS IS DEDUCTIBLE U/S. 80P(2)(A)(I) AND INTEREST DERIVED BY DEPOSITING FUNDS WITH THE NATIONALIZED BANK CANNOT BE DEDUCTED U/S. 80P(2)(A)(I) OF THE ACT AS SUCH IN TEREST IS NOT ATTRIBUTABLE TO THE BUSINESS CARRIED BY THE ASSESSEE. 7 . 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 ACCOUNT OF INTEREST OF RS. 1,34,40,673 / - EARNED ON FIXED DEPOSIT MAD E WITH THE COMMERCIAL BANK. THE BUSINESS OF THE ASSESS EE 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 CLAIM ED 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 T PART O F THE BUSINESS OF PROVIDING CREDIT FACILITIE S 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 THEREFORE 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 REVEN UE 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) OF THE ACT. REGARDING THE OTHER PART OF GROUND OF APPEAL OF NOT A LLOWING THE DEDUCTION OF INTEREST EXPENDITURE INCURRED ON EARNING INTEREST INCOME FROM COMMERCIAL BANK B Y THE ASSESSING I.T.A NO S.3143 / AHD/2016 &97/AHD/2017 A.Y. 2012 - 1 3 TO 2013 - 14 PAGE NO LUNAWADA TALUKA PRIMARY SCHOOL TEACHERS CO - OP. CREDIT SOCIETY LTD. VS. ITO 4 OFFICER, WE DIRECT THE ASSESSING OFFICER TO VERIFY THE ASSESSEE S CLAM ON PRO RATA EXPENSE S BY EXAMINATION O F THE RECORD TO BE SHOWN FOR VERIFICATION BY THE ASSESSEE AND ACCORDINGLY NETTING OF TO BE ALLOWED BY THE ASSESSING OFFICER AS DECIDED IN A MEMBER OF JUDICIAL PRONOUNCEMENTS BY THE VARIOUS C - ORDINATE BENCHES OF ITAT, AHMEDABAD. IN THE RESULT, THE APPEAL OF THE ASSESS EE IS PARTLY ALL OWED. THE GROUNDS OF APPEAL OF CHALLENGING OF INTEREST U/S. 234 A , 234B, 234C/234D AND INITIATION OF PENALTY ARE OF GENERAL NATURE AND T H E SAME ARE DISMISSED. IN THE RESULT, THE APPEAL OF THE ASSESSEEE IS PARTLY ALLOWED. 8 . IN THE COMBINED 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, AHMEDABAD 6. GUARD FILE. BY ORDER/ , / ,
