The Painkulam Primary Agri. Co-operative Bank Ltd., Kanyakumari V. CIT(A), Madurai

ITA 3214/CHNY/2016

• Counselvise Citation: [2017] 130 COUNSELVISE.COM (IT) 7405 (ITAT-CHENNAI)
• Duration Of Justice: 4 month(s) 5 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 29-03-2017
• Appeal Filed By: Assessee
• Order Result: Dismissed
• Bench Allotted: D
• Next Hearing Date: 01-03-2017
• Assessment Year: 2006-2007
• Appeal Filed On: 23-11-2016
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Department Lawyers: R CLEMENT RAMESH KUMAR
• Assessee Lawyers: R ANJALOSE
• Keywords: Business expenditure

Judgement Text

, , IN THE INCOME TAX APPELLATE TRIBUNAL D (SMC) BENCH : CHENNAI . , ! [BEFORE SHRI ABRAHAM P. GEORGE, ACCOUNTANT M EMBER ] ./I.T.A. NO. 3214/MDS/2016 / ASSESSMENT YEAR : 2006-2007. THE PAINKULAM PRIMARY AGRICULTURAL CO- OPERATIVE BANK LTD, PAINKULAM, KANYAKUMAR DIST. [ PAN AACFT 5079N] VS THE INCOME TAX OFFICER, WARD 1(2) NAGARCOIL. ( '# / APPELLANT) ( $%'# /RESPONDENT) / APPELLANT BY : SHRI. R.ANJALOSE, C.A. /RESPONDENT BY : SHRI. R. CLEMENT RAMESH KUMAR, JCIT. /DATE OF HEARING : 01-03-2017 ! /DATE OF PRONOUNCEMENT : 29-03-2017 & / O R D E R ASSESSEE IN THIS APPEAL IS AGGRIEVED THAT IT WAS D ENIED DEDUCTION CLAIMED U/S.80P(2) OF THE INCOME TAX ACT, 1961 (IN SHORT THE ACT). 2. ASSESSEE HAS FILED THIS APPEAL WITH A DELAY OF ONE DAY. CONDONATION PETITION HAS BEEN FILED. REASON SHOWN FOR THE DELAY ITA NO. 3214/MDS/2016 :- 2 -: SEEMS TO BE JUSTIFIED. LD. DEPARTMENTAL REPRESENTAT IVE DID NOT RAISE ANY SERIOUS OBJECTION. DELAY IS CONDONED. APPEAL IS ADMITTED. 3. FACTS APROPOS ARE THAT ASSESSEE A CO-OPERATIVE BANK HAD FILED RETURN FOR THE IMPUGNED ASSESSMENT YEAR DISCL OSING NIL INCOME AFTER CLAIMING DEDUCTION U/S.80P(2)(A)(I) AND 80P ( 2)(D) OF THE ACT. DURING THE COURSE OF ASSESSMENT PROCEEDINGS, ASSESS EE ALSO CLAIMED DEDUCTION U/S. 80P(2)(C) OF THE ACT. LD. ASSESSING OFFICER WAS OF THE OPINION THAT DEDUCTION U/S. 80P(2)(C) (I) OF THE AC T COULD BE ALLOWED TO THE EXTENT SUM OF D 1,00,000/- FOR ITS TRADING I NCOME AND BALANCE TRADING INCOME WAS TAXABLE. HENCE OUT OF THE TRAD E PROFIT D6,11,819/- SHOWN BY IT IN ITS PROFIT AND LOSS ACCOUNT, EXEMPTI ON OF D1,00,000/- WAS GIVEN AND BALANCE OF D5,11,819/- WAS COMPUTED O N TOTAL INCOME OF THE ASSESSEE . 4. AGGRIEVED, ASSESSEE MOVED IN APPEAL BEFORE LD. COMMISSIONER OF INCOME TAX (APPEALS). LD. COMMISSI ONER OF INCOME TAX (APPEALS) AFTER GOING THROUGH THE NET PROFIT AN D LOSS ACCOUNT OF THE ASSESSEE FOUND THAT THE TRADING PROFIT OF D6,1 1,819/- DERIVED FROM TRADING IN RICE, WHEAT, SUJI, KEROSENE, SALT, MAIDA ETC WAS A PART OF TOTAL PROFIT OF D10,30,235/-. THE BALANCE OF THE P ROFIT, AS PER LD. COMMISSIONER OF INCOME TAX (APPEALS), REPRESENTED I NTEREST INCOME FROM CO-OPERATIVE BANK. LD. COMMISSIONER OF INCOME TAX (APPEALS) ITA NO. 3214/MDS/2016 :- 3 -: NOTED THAT ASSESSEE HAS CLAIMED EXEMPTION FOR INTER EST RECEIPTS FROM CO-OPERATIVE BANKS U/S. 80P(2)(D) OF THE ACT CONS IDERING THE GROSS AMOUNT WITHOUT NETTING THE INTEREST PAYMENT OF D5 7,33,287/- AND ESTABLISHMENT EXPENDITURE OF D10,94,948/-. ACCORDI NG TO HIM ASSESSEE COULD NOT HAVE EARNED INTEREST INCOME FROM CO-OPERA TIVE BANKS WITHOUT PAYING INTEREST OF D57,33,287/- ON DEPOSIT S RAISED BY IT. CONSIDERING THE FACTS AND CIRCUMSTANCES, HE DID NOT MAKE ANY ENHANCEMENT OF INCOME BUT UPHELD THE RESTRICTION MA DE BY THE LD. ASSESSING OFFICER ON ITS CLAIM U/SEC. 80P(2)(C) (I) OF THE ACT. 5. NOW BEFORE ME, LD. AUTHORISED REPRESENTATIVE SUBMIT TED THAT DEDUCTION U/S. 80P(2)(A) OF THE ACT COULD NOT BE L IMITED TO NET INTEREST WHEN NEXUS BETWEEN INTEREST RECEIVED AND PAID WAS N OT ESTABLISHED BY THE LD. ASSESSING OFFICER. ACCORDING TO HIM, BY VI RTUE OF SEC. 80P(2) (A) (I) OF THE ACT, GROSS INTEREST COULD BE DEDUCTE D. FURTHER, ACCORDING TO HIM, THE RESTRICTION MADE BY THE LD. ASSESSING O FFICER U/S. 80P(2) (C) OF THE ACT WAS UNJUSTIFIED. 6. PER CONTRA, LD. DEPARTMENTAL REPRESENTATIVE STRONG LY SUPPORTED THE ORDERS OF THE AUTHORITIES BELOW. 7. I HAVE CONSIDERED THE RIVAL CONTENTIONS AND PERUSED THE ORDERS OF THE AUTHORITIES BELOW. DURING THE COURSE OF ASSESSMENT BEFORE LD. ASSESSING OFFICER, ASSESSEE FILED A REV ISED TRADING ACCOUNT ITA NO. 3214/MDS/2016 :- 4 -: WHICH REFLECTED TRADING PROFIT D6,11,819/-. IT IS NOT DISPUTED THAT ASSESSEE WAS HAVING TRADING BUSINESS OF RICE, WHEAT , SUJI, KEROSENE, SALT, MAIDA ETC. APART FROM ITS BANKING FACILITIES. IT IS NOT DISPUTED BY THE LD. AUTHORISED REPRESENTATIVE THAT THE ACTIVITY OF THE ASSESSEE IN SO FAR AS IT RELATED TO SUCH TRADING CAME WITHIN CLAU SE (C) OF SEC. 80P(2) OF THE ACT. ASSESSEE HAD CLAIMED AND WAS GIVEN DEDU CTION U/SEC. 80P(2) (A) (I) OF THE ACT FOR ITS BANKING BUSINESS. THERE IS NO CLAIM MADE BY THE ASSESSEE THAT AGRICULTURAL PRODUCE SOLD BY IT WAS GROWN BY ITS MEMBERS FOR AVAILING DEDUCTION U/S. 80P(2)( A) (III) OF THE ACT. ONCE SEC. 80P(2) (C) OF THE ACT APPLIED THE RESTRIC TION OF SUCH DEDUCTION TO D1,00,000/- IS AUTOMATIC. CONTENTION OF THE LD. AUTHORISED REPRESENTATIVE IS THAT THE PROFIT ON WHI CH SUCH DEDUCTION IS TO BE GIVEN ON PROFITS AFTER DEDUCTING ALL NECESSAR Y EXPENDITURE INCURRED FOR EARNING THE INCOME. WHAT WE FIND IS T HAT LD. ASSESSING OFFICER HAD GIVEN DEDUCTION OF D 1,00,000/- U/S. 80 P(2) (C) (I) OF THE ACT FROM THE TRADING PROFIT AND NOT FROM THE GROSS RECEIPTS. IN SO FAR AS CLAIM UNDER SECTION 80P(2)(A)(I) OF THE ACT IS CONC ERNED THE DEDUCTION IS THE AMOUNT OF PROFITS AND GAINS ATTRIBUTABLE TO THE BUSINESS OF BANKING OR PROVIDING CREDIT FACILITIES TO MEMBERS A ND NOT ON GROSS INTEREST RECEIPT BEFORE SETTING OFF INTEREST EXPEND ITURE AND OTHER BUSINESS EXPENDITURE. THIS VIEW OF LD. COMMISSIONE R OF INCOME TAX (APPEALS) WAS ALSO CORRECT. HENCE, I AM OF THE O PINION THAT LOWER ITA NO. 3214/MDS/2016 :- 5 -: AUTHORITIES WERE JUSTIFIED IN RESTRICTING SUCH DED UCTION TO A SUM OF D 1,00,000/- FROM THE TRADING PROFIT SHOWN BY THE ASS ESSEE IN ITS AUDITED PROFIT AND LOSS ACCOUNT. WE DO NOT FIND ANY REASON TO INTERFERE WITH THE ORDERS OF THE LOWER AUTHORITIES. 8. IN THE RESULT, THE APPEAL OF THE ASSESSEE IS DISMIS SED. ORDER PRONOUNCED ON WEDNESDAY, THE 29TH DAY OF MARCH, 2017, AT CHENNAI SD/- ( . ) (ABRAHAM P. GEORGE) / ACCOUNTANT MEMBER '# / CHENNAI $% / DATED:29TH MARCH, 2017 KV %& '()( / COPY TO: 1 . / APPELLANT 3. *+, / CIT(A) 5. (-. / / DR 2. / RESPONDENT 4. * / CIT 6. .01 / GF