State Bank of India Employees Co.-Op. Credit & Supply Society Ltd., Ahmedabad V. The Income Tax Officer, Ward-3(4), Ahmedabad

ITA 318/AHD/2017

• Counselvise Citation: [2019] 118 COUNSELVISE.COM (IT) 5275 (ITAT-AHMEDABAD)
• Duration Of Justice: 1 year(s) 11 month(s) 21 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 29-01-2019
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: Not Allotted
• Assessment Year: 2012-2013
• Appeal Filed On: 07-02-2017
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Assessee Lawyers: S N DIVATIA
• Keywords: Principle of natural justice
• Section: 143(3)

Judgement Text

, IN THE INCOME TAX APPELLATE TRIBUNAL , D BENCH, AHMEDABAD BEFORE , JUSTICE SHR I P.P. BHATT, PRESIDENT AND SHRI WASEEM AHMED , ACCOUNTANT MEMBER ./ ITA NO.318/AHD/2017 / ASSTT. YEAR : 2012 - 2013 STATE BANK OF INDIA EMPLOYEES CO - OP. CREDIT & SUPPLY SOCIETY LTD., SBI MAIN BRANCH BHADRA , AHMEDABAD - 380001. PAN: AAAAS7450B VS . ITO, WARD - 3(4) , AHMEDABAD (APPLICANT) ( RESPON D ENT ) ASSESSEE BY : SHRI S.N. DIVATIA, A.R REVENUE BY : SHRI VINOD TANWANI , SR . DR / DATE OF HEARING : 03 / 01 / 201 9 / DATE OF PRONOUNCEMENT: 29 /01 /2 01 9 / O R D E R PER WASEEM AHMED, ACCOUNTANT MEMBER: THE CAPTIONED APPEAL HAS BEEN FILED AT THE INSTANCE OF THE AS SESSEE AGAINST THE ORDER OF THE COMMISS IONER OF INCOME TAX (APPEALS) - 10 , AHMEDABAD [ LD. CIT IN SHORT] , DATED 2 8 / 12 / 2016 ARISING IN THE MATTER OF ASSESSMENT ORDER PASSED UNDER S. 143(3) OF THE INCOME TAX ACT, 1961 ( HERE - IN - AFTER REFERRED TO AS 'THE ACT') DATED 13 / 1 1 / 201 4 RELEVANT TO ASSESSMENT YEAR (AY) 2012 - 13 . 2. THE ASSESSEE HAS RAISED THE FOLLOWING GROUNDS OF APPEAL: ITA NO.318/AHD/2017 ASSTT. YEAR 2012 - 13 2 1.1 THE ORDER PASSED U/S. 250 ON 28 - 12 - 2016 FOR A.Y.2012 - 13 BY CIT(A) - 10 ABAD, UPHOLDING THE FDR INTEREST FROM SBI AS INCOME FROM OTHER SOURCES AND DISALLOWANCE OF THE CLAIM U/S. 80P(2)(A)(I) OF RS.46,19,612/ - MADE BY AO IS WHOLLY ILLEGAL, UNLAWFUL AND AGAINST THE PRINCIPLES OF NATURAL JUSTICE. 1.2 THE LD. CIT(A) HAS GRIEVOUSLY ERRED IN LAW AND OR ON FACTS IN NOT CONSIDERING FULLY AND PROPERLY THE EXPLANATIONS FURNISHED AND THE EVIDENCE PRODUCED BY THE APPELLANT. 2.1 THE LD. CIT(A) HAS GRIEVOUSLY ERRED IN LAW AND OR ON FACTS IN UPHOLDING THAT INTEREST INCOME ON FDR'S WITH SBI OF RS.73,76,497/ - WAS ASSESSABLE UNDER THE HEAD 'INCOME FROM OTHER SOURCES '. THE LD. CIT(A) HAS GRIEVOUSLY ERRED IN LAW AND OR ON FACTS IN UP - HOLDING THAT THE INTEREST INCOME FROM FDR'S WITH SBI WAS NOT INCOME FROM OPERATIONS FROM THE SOCIETY. 2.2 THAT IN THE FACTS AND CIRCUMSTANCES OF THE CASE AS WELL AS IN LAW, THE ID. CIT(A)HAS GRIEVOUSLY ERRED IN UPHOLDING THAT INTEREST INCOME ON FDR'S WITH SBI WAS ASSESSABLE UNDER THE HEAD 'INCOME FROM OTHER SOURCES' AND INCOME FROM OPERATIONS OF THE BUSINESS OF THE SOCIETY. 3.1 THE ID. CIT(A) HAS GRIE VOUSLY ERRED IN UPHOLDING THAT INTEREST INCOME ON FDR'S WITH SBI OF RS.46,19,612/ - (RESTRICTED OUT OF RS.73,76,497/ - ) WAS NOT ELIGIBLE FOR DEDUCTION U/ S 80P(2)(A)(I). 3.2 THAT IN THE FACTS AND CIRCUMSTANCES OF THE CASE AS WELL AS IN LAW, THE ID. AO HAS G RIEVOUSLY ERRED IN HOLDING THAT INTEREST INCOME ON FDR'S WITH SBI OF RS.46,19,612/ - (RESTRICTED OUT OF RS.73,76,497/ - ) WAS NOT ELIGIBLE FOR DEDUCTION U/S 80P(2)(A)(I). 4.1 THE ID. CIT(A) HAS GRIEVOUSLY ERRED IN NOT ALLOWING PRO - RATA EXPENSES FROM INTEREST INCOME ON FDR'S WITH SBI AND THEREBY MAKING AN ADDITION OF THE ENTIRE INTEREST INCOME OF RS.73,76,497/ - . THE ID. AO HAS FAILED TO APPRECIATE THAT THE GROSS INTEREST INCOME WAS NOT LIABLE TO TAX WITHOUT ALLOWIN G EXPENSES LIKE INTEREST, ADMN . EXPENSES. 5.1 THE ID. CIT(A) HAS GRIEVOUSLY ERRED IN NOT ALLOWING BASIC DEDUCTION OF RS. 50,000/ - U/S 80P(2)(C)(II) OF THE ACT. IT IS THEREFORE PRAYED THAT THE ADDITION OF INTEREST INCOME FROM FDR'S WITH SBI OF RS.73,76,497/ - CONFIRMED BY CIT(A) SHOULD BE DELETED . ITA NO.318/AHD/2017 ASSTT. YEAR 2012 - 13 3 3. ALL THE ISSUES RAISED BY THE ASSESSEE ARE INTERCONNECTED . T HEREFORE WE H AVE CLUBBED ALL OF THEM TOGETHER FOR THE SAK E OF CONVENIENCE AND BREVITY TO ADJUDIC ATE THE ISSUE ON HAND. THE ISSUES RAISED IN THIS APPEAL ARE SUMM A RIZED ARE AS UNDER: I) THE FIRST ISSU E IS AGAINST TREAT ING THE INTEREST INCOME OF RS. 7 3 , 76 , 497/ - UNDER THE HEAD FROM OTHER SOURCES AND DENYING THE DEDUCTION U/S 80P(2)(A)(I) OF THE ACT FOR RS. 46,19,612/ - ONLY. II) THE SECOND ISSUE IS AGAINST THE EXPENSES INCURRED IN CONNECTION WITH THE INTEREST INCOME WHICH W AS NOT ALLOWED AS A DEDUCTION FOR WORKING OUT THE IN ELIGIBLE AMOUNT U/S 80P(2)(A)(I) OF THE ACT. III) THE THIRD ISSUE IS AGA INST FOR NOT ALLOWING BASIC DEDUCTION OF 50,000/ - U/S 80P(2)(C)(II) OF THE ACT 4 . THE FACT S OF THE CASE ARE THAT THE ASSESSEE IS A CO - OPERATIVE SOCIE TY AND ENGAGED IN THE ACTIVITY FINANCING TO ITS MEMBERS. THE ASSESSEE IN THE YEAR UNDER CONSIDERATION CLAIM ED DEDUCTION U/S 80(P)(2 ) (A)(I) OF THE ACT FOR AN AMOUNT OF RS. 46,19,612/ - ONLY. 5. THE AO DURING ASSESSMENT PROCEEDINGS OBSERVED THAT THE ASSESSEE HA D SHOWN INTEREST INCOME ON THE FD MADE WITH THE SBI FOR RS. 73,76,497.00 ONLY. AS PER THE AO , SUCH INTEREST INCOME IS INELIGIBLE FOR A DEDUCTION UNDER SECTION 80P(2)(A)(I) OF THE ACT. THE AO AL SO FOUND THAT THE ASSESSEE HAS NOT CLAIMED ANY EXPENSE S AGAINST THE INTEREST INCOME EARNED ON THE FIXED DEPOSIT WITH SBI. ACCORDINGLY , THE AO TREATED THE ENTIRE INTEREST INCOME UNDER THE HEAD THE OTH ER SOURCES AND NO DEDUCTION U/S 57 OF THE ACT WAS ALLOWED TO THE ASSESSEE. ACCORDINGLY, THE TREATED THE SAME AS INCOME UNDER THE HEAD OTHER ITA NO.318/AHD/2017 ASSTT. YEAR 2012 - 13 4 SOURCES AND DENIED THE DEDUCTION OF RS. 46,19,612/ - ONLY U/S 80(P)(2)(A)(I) OF THE ACT. 6 . AGGRIEVED ASSESSEE PREFERRED AN APPEAL TO LD.CIT (A) WHO HAS CONFIRMED THE ORDER OF THE AO BY TREATING THE INTEREST THE INCOME OF RS.73,76,497/ - UNDER THE HEAD INCOME FROM OTHER SOURCES AND ACCORDINGLY DENIED THE DEDUCTION CLAIM BY THE ASSESSEE FOR RS. 46,19,612/ - U/S 80P(2)(A)(I) OF THE ACT. 7 . HOWEVER, THE LD.CIT (A) REGARDING THE EXPENSES INCURRED AGAINST SUC H INTEREST INCOME DIRECT ED THE AO TO ALLOW THE DEDUCTION OF ADMINISTRATIVE EXPENSES IN THE MANNER AS PROVIDED UN DER RULE 8D OF INCOME TAX RULE. THUS THE LD .CIT (A) CONFIRMED THE ORDER OF THE AO IN PART. 8 . BEING AGGRIEVED BY THE ORDER OF LD.CIT (A) ASSESSEE IS IN APPEAL BEFORE US. 9 . THE LD.AR, BEFORE US , FILED A PAPER BOOK RUNNING FROM PAGES 1 TO 43 AND FAIRLY CONCEDED THE FACT THAT THE JURISDICTIONAL HIGH COURT HAS DECIDED THE ISSUE OF INTEREST INCOME ON THE FIXED DEPOSIT WITH THE SBI IN THE CASE OF STATE BANK OF INDIA VS. CIT REPORTED IN 389 ITR 578 AGAINST THE ASSESSEE. 10. HOWEVER THE LD.AR, FURTHER SUBMITTED THAT THE EXPENDITUR E INCURRED CORRESPONDING TO THE INTEREST INCOME SHOULD BE ALLOWED AS DEDUCTION. THUS THE BENEFIT U/S 80P(2) (A)(I) OF THE ACT CAN BE DENIED ON THE BALANCE AMOUNT OF INTEREST INCOME EARNED ON THE FIXED DEPOSIT . ITA NO.318/AHD/2017 ASSTT. YEAR 2012 - 13 5 10.1 THE LD. AR ALSO SUBMITTED THAT THE ASSES SEE IS ENTITLED TO THE BASIC DEDUCTION OF 50,000/ - U/S 80(P)(C)(II) OF THE ACT. 10.2 THE LD. AR, ALSO SUBMITTED THAT THE SIMILAR ISSUE WAS ALSO THERE IN THE EARLIER YEARS IN THE OWN CASE OF THE ASSESSEE WHICH HAS BEEN DECIDED AGAINST THE ASSESSEE BY THIS TRIBUNAL IN ITA NOS. 1201 - 1205 /AHD/2015 PERTAINING TO THE ASSESSMENT YEAR S 2007 - 08 TO 2011 - 12 . 10.3 THE LD. AR FURTHER SUBMITTED THAT THE IDENTICAL ISSUE WAS ADMITTED BY HON BLE SUPREME COURT IN VIDE SLP N OS . 31717 - 31718/2016 DATED 11 - 11 - 2016 IN THE PROCEEDINGS OF 263 OF THE ACT PERTAINING TO THE AY 2009 - 10 & 2010 - 11 IN THE OWN CASE OF THE ASSESSEE. THE LD.A R, IN SUPPORT ASSESSE E' S CLAIM , FILED A COPY OF THE ORDER OF HON BLE S.C . TO DEMONSTRATE THAT THE SPECIAL LEAVE PETITION HAS BEEN ADMITTED WHICH IS PLACED ON RECORD. 10.4 ACCORDINGLY , THE LD. AR REQUESTED THE BENCH TO GIVE DIRECTION TO THE AO THAT THE MATTER SHOULD BE KEPT IN A BEYANCE TILL THE DISPOSAL OF THE APPEAL BY THE HON BLE APEX COURT AS PER THE PROVISION OF SECTION 158A OF THE ACT. THE LD.AR, IN SUPPORT OF HIS CLAIM , FILED THE DECLARATION IN FORM N O. 8 AS PER RULE 16 OF INCOME TAX RULE. 11. ON THE OTHER HAND THE LD. DR VEHEMENTLY SUPPORTED THE ORDER OF AUTHOR ITIES BELOW. 12. WE HAVE HEARD THE RIVAL CONTENTIONS AND PERUSED THE MATERIAL S AVAILABLE ON RECORD . T HERE IS NO AMBIGUITY THAT THE INTEREST INCOME EARNED FROM THE FIXED DEPOSIT WITH THE SBI IS NOT ELIGIBLE FOR DEDUCTION U/S 80P( 2 )(A)(I) OF THE ACT GIVEN T HE JUDGMENT OF HON BLE HIGH COURT IN THE CASE OF STATE BANK OF ITA NO.318/AHD/2017 ASSTT. YEAR 2012 - 13 6 INDIA VS. CIT REPORTED IN 389 ITR 578 . ACCORDINGLY , WE DO NOT FIND ANY INFIRMITY IN THE ORDER OF LD. CIT (A) REGARDING THE NON - AVAILABILITY OF DEDUCTION U/S 80P(2)(A)(I) OF THE ACT IN RESPECT OF IMPUGNED INTEREST INCOME. 12.1 REGARDING THE EXPENSES INCURRED BY THE ASSESSEE AGAINST SUCH INCOME, WE NOT E THAT THE ASSESSEE HAS NOT PRODUCED THE DETAILS OF THE EXPENSES BEFORE THE AUTHORITIES BELOW AGAINST SUCH INTEREST INCOME . T HEREFORE , THE LD.CIT(A) DIRECTED TO ALLOW THE DEDUCTION OF THE ADMINISTRATIVE EXPENSES INCURRED AGAINST SUCH INCOME IN THE MANNER AS PROVIDED UNDER RULE 8D OF INCOME TAX RULE. THERE IS NO AMBIGUITY THAT THE PROVISION OF SECTION 57 OF THE ACT ENTITLE S THE ASSESSEE TO CLAIM THE DEDUCTION OF THE EXPENSES INCURRED IN CONNECTION WITH THE INCOME . T HEREFORE IN THE INTEREST OF JUSTICE AND FAIR PLAY WE ARE INCLINED TO RESTORE THE MATTER TO THE FILE OF AO FOR FRESH ADJUDICATION AS PER THE PROVISION OF LAW WITH THE DIRECTION TO ALLOW THE DEDUCTION OF THE EXPENSES WHICH HAVE A DIRECT NEXUS WITH THE IMPUGNED INTEREST INCOME. 12.2 REGARDING THE BASIC DEDUCTION OF RS. 50,000/ - U/S 80P(2)(C)(II) OF THE ACT, WE FIND THAT THE LD.AO H AS ALREADY GIVEN THE BENEFIT OF THIS DEDUCTION AS CL AIMED BY THE ASSESSEE. THEREFORE, WE ARE OF THE VIEW THAT THERE IS NO GRIEVANCE TO THE ASSESSEE AS CLAIM IN ITS GROUND OF APPEALS. 12.3 REGARDING THE DIRECTION TO THE AO U/S 1 58A OF THE ACT, WE NOTE THAT THE ASSESSEE HAS FILED A DECLARATION IN FORM NO. 8 AS PER THE RULE 16 OF INCOME TAX RULE WHICH IS AVAILABLE ON REC ORD. IN THIS CONNECTION, WE FURTHER NOTE THAT THE PROVISION OF SECTION 158A OF THE ACT REQUIRES TO OBTAIN THE COMMENTS FROM THE AO BEFORE HOLDING THAT THERE IS AN IDENTICAL ISSUE IN THE YEAR UN DER CONSIDERATION WHICH IS PENDING BEFORE THE HON BLE APEX COURT. HOWEVER, WE ARE OF THE VIEW THAT THE JUSTICE WILL BE SERVED TO THE ASSESSEE AND REVENUE IF ITA NO.318/AHD/2017 ASSTT. YEAR 2012 - 13 7 THE MATTER IS RESTORE D TO THE FILE OF THE AO FOR CONSIDERING THE APPLICATION OF THE ASSESSEE FILED IN FORM NO.8 AS DISCUSSED ABOVE. IT IS ALSO PERTINENT TO NOTE THAT THE ABOVE DIRECTION HAS BEEN ISSUED IN THE PECULIAR FACTS AND CIRCUMSTANCES C ONSIDERING THE SMALLNESS OF THE AMOUNT INVOLVED. THEREFORE SUCH DIRECTION SHOULD NOT BE TR EATED/ QUOTED AS A PRECEDENT IN THE OTHER CASES. 13. IN VIEW OF THE ABOVE , THE GROUNDS OF APPEAL OF THE ASSESSEE IS PARTLY ALLOWED FOR STATISTICAL PURPOSE. O RDER PRONOUNCED IN THE COURT ON 29 /01 / 2019 AT AHMEDABAD. - SD - - SD - (JUSTICE P.P. BHATT ) (WASEEM AHMED) PRESIDENT ACCOUNTANT MEMBER (TRUE COPY) A HMEDABAD; DATED 29 / 01/2019 M ANISH / COPY OF THE ORDER FORWARDED TO : / BY ORDER, / ( DY./ASSTT.REGISTRAR) , / ITAT, AHMEDABAD 1. / THE APPELLANT 2. / THE RESPONDENT. 3. / CONCERNED CIT 4. ( ) / THE CIT 5. , / DR, ITAT, 6. / GUARD FILE .