Asstt. Commissioner of Income Tax-1, Kanpur V. M/s Brahmawart Commercial Co-operative Bank Ltd., Kanpur

ITA 325/LKW/2013

• Counselvise Citation: [2014] 140 COUNSELVISE.COM (IT) 78466 (ITAT-LUCKNOW)
• Duration Of Justice: 11 month(s) 8 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 11-04-2014
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: A
• Next Hearing Date: 07-03-2014
• Assessment Year: 2006-2007
• Appeal Filed On: 03-05-2013
• Result in Favour of: Assessee
• Court: TRIBUNAL

Judgement Text

1 IN THE INCOME TAX APPELLATE TRIBUNAL LUCKNOW BENCH A, LUCKNOW BEFORE SHRI SUNIL KUMAR YADAV, JUDICIAL MEMBER AND SHRI A.K. GARODIA, ACCOUNTANT MEMBER ITA NO.325/LKW/2013 ASSESSMENT YEAR:2006 - 07 A.C.I.T. - 1, KANPUR. VS. M/S BRAHMAWART COMMERCIAL CO - OPERATIVE BANK LIMITED, MIG - 90, RATAN LAL NAGAR, KANPUR. PAN:AAATB1875C (APPELLANT) (RESPONDENT) O R D E R PER SUNIL KUMAR YADAV: THIS APPEAL IS PREFERRED ON BEHALF OF REVENUE AGAINST THE ORDER OF CIT(A) ON A SOLITARY GROUND THAT THE CIT(A) HAS ERRED IN LAW AND ON FACTS IN DIRECTING THE ASSESSING OFFICER TO ALLOW DEDUCTION U/S 80P(2)(A) OF THE ACT AMOUNTING TO RS.14,97,230/ - ON THE I NCOME FROM NON SLR INVESTMENT WITHOUT APPRECIATING THE FACT THAT THE INVESTMENT OF ITS SURPLUS FUNDS OVER AND ABOVE THE STATUTORY RESERVES WAS NOT MADE BY THE ASSESSEE IN THE COURSE OF ORDINARY BANKING BUSINESS. THEREFORE, INCOME DERIVED FROM SUCH INVESTM ENT WAS TAXABLE UNDER THE HEAD INCOME FROM OTHER SOURCES AS N O DEDUCTION U/S 80(P)(2)(A) OF THE ACT IS ADMISSIBLE THEREON. THIS APPEAL CAME UP FOR HEARING ON 07/03/2014 BUT NONE APPEARED ON BEHALF OF THE ASSESSEE. HOWEVER, WRITTEN SUBMISSIONS ON BEHALF OF THE ASSESSEE ARE FILED, WHICH WERE TAKEN ON RECORD. APPELLANT BY SHRI P. K. DEY, D.R. RESPONDENT BY NONE (WRITTEN SUBMISSIONS) DATE OF HEARING 07/03/2014 DATE OF PRONOUNCEMENT 1 1 / 0 4 / 2 0 1 4 2 2. ON A CAREFUL PERUSAL OF THE ORDERS OF THE LOWER AUTHORITIES IN THE LIGHT OF THE WRITTEN SUBMISSIONS OF THE ASSESSEE, WE FIND THAT THE APPELLANT COMPANY IS A CO - OPERATIVE SOCIETY ENGAGED IN THE BANKING BUSINESS. THE ASSESSEE HAS CLAIMED EXEMPTION OF INTEREST INCOME RECEIVED U/S 80(P)(2)(A)(I) OF THE INCOME TAX ACT (HEREINAFTER REFERRED TO AS THE ACT). THE ASSESSING OFFICER HAS RECOMPUTED THE INCOME BY DISALLOWING THE EXEMPTION U/S 80(P)(2) OF THE ACT ON INTEREST INCOME EARNED FROM NON SLR INVESTMENT. 3. TH E ASSESSEE PREFERRED AN APPEAL BEFORE THE CIT(A) WITH THE SUBMISSION THAT THE ASSESSEE IS ENGAGED IN THE BUSINESS OF BANKING, THEREFORE, THE PROFIT & GAINS ATTRIBUTABLE TO BANKING BUSINESS SHOULD ALLOWED AS DEDUCTION U/S 80(P)(2)(A)(I) OF THE ACT. HE ALSO PLACED RELIANCE ON VARIOUS JUDGMENTS IN SUPPORT OF HIS CONTENTION. THE CIT(A) HAS RE - EXAMINED THE ISSUE AND BEING CONVINCED WITH THE ARGUMENTS OF THE ASSESSEE HAS DIRECTED THE ASSESSING OFFICER ALLOW DEDUCTION U/S 80(P)(2)(A) OF THE ACT. NOW THE REVENUE HAS PREFERRED AN APPEAL BEFORE THE TRIBUNAL AND PLACED RELIANCE UPON THE ORDER OF THE ASSESSING OFFICER. 4. THROUGH ITS WRITTEN SUBMISSIONS THE LEARNED COUNSEL FOR THE ASSESSEE HAS CONTENDED THAT SECTION 80(P)(2)(A)(I) OF THE ACT DOES NOT MAKE ANY DISTIN CTION BETWEEN THE INVESTMENT IN SLR AND NON SLR INVESTMENTS. HE PLACED RELIANCE UPON THE JUDGMENT OF HON'BLE APEX COURT IN THE CASE OF COMMISSIONER OF INCOME - TAX VS SRI RAM SAHAKARI BANK LTD. [2004] 266 ITR 632 (KAR) IN SUPPORT OF HIS CONTENTION THAT U/S 80(P)(2)(A)(I) OF THE ACT, INCOME FROM BOTH SLR AND NON SLR INVESTMENTS ARE ELIGIBLE FOR DEDUCTION AS THE INVESTMENT OF NON SLR BY THE BANK IS ALSO NORMAL BANKING ACTIVITY. IT CANNOT BE SAID THAT THE FUND INVESTED IN THE FORM OF FDR IN RBI AND INTEREST EA RNED THEREON IS NOT BANKING ACTIVITY AND ONLY LENDING OF MONEY IS A BANKING ACTIVITY. HE FURTHER PLACED RELIANCE UPON THE ORDER OF SPECIAL BENCH OF I.T.A.T., AHMEDABAD IN THE CASE OF SURAT 3 DISTRICT CO - OPERATIVE BANK LTD. & OTHERS VS. INCOME TAX OFFICER 78 TTJ 1 AND THE ORDER OF THIRD MEMBER OF I.T.A.T. AGRA BENCH IN THE CASE OF FARRUKHABAD GRAMIN BANK VS. ACIT [2006] 103 ITD 207 (TM). BESIDES THE RELIANCE IS ALSO PLACED UPON THE FOLLOWING JUDGMENTS: (I) COMMISSIONER OF INCOME - TAX VS KARNATAKA STATE CO - OP ERATIVE APEX BANK [2001] 251 ITR 194 (SC) (II) COMMISSIONER OF INCOME - TAX VS RAMANATHAPURAM DISTT. CO - OP. CENTRAL BANK LTD. [2002] 255 ITR 423 (III) CIT VS. RAJASTHAN STATE CO - OPERATIVE BANK [2004] 136 TAXMAN 459 (RAJ) 5. WE HAVE CAREFULLY EXAMINED THE OR DERS OF THE LOWER AUTHORITIES IN THE LIGHT OF WRITTEN SUBMISSIONS AND THE CASE LAWS REFERRED TO BY THE PARTIES, WE FIND THAT DEDUCTION U/S 80(P)(2) OF THE ACT IS AVAILABLE TO THE INTEREST INCOME EARNED ON THE INVESTMENT OF SLRS AND NON SLRS AS BOTH THE INV ESTMENTS IN SLR AND NON SLR ARE TO BE CONSIDERED AS PART OF THE BANKING ACTIVITY. THE CIT(A) HAS PROPERLY ADJUDICATED THE ISSUE IN THE LIGHT OF VARIOUS JUDICIAL PRONOUNCEMENTS. WE, THEREFORE, FIND NO INFIRMITY IN THE ORDER OF CIT(A) AND ACCORDINGLY CONFI RM THE SAME. 6. IN THE RESULT, THE APPEAL OF THE REVENUE IS DISMISSED. (ORDER WAS PRONOUNCED IN THE OPEN COURT ON 1 1 / 0 4 / 2 0 1 4 ) SD/. SD/. ( A. K. GARODIA ) (SUNIL KUMAR YADAV) ACCOUNTANT MEMBER JUDICIAL MEMBER DATED: 1 1 / 0 4 / 2 0 1 4 *C.L.SINGH COPY OF THE ORDER FORWARDED TO : 1. THE APPELLANT 2. THE RESPONDENT. 3. CONCERNED CIT 4. THE CIT(A) 5. D.R., I.T.A.T., LUCKNOW ASSTT. REGISTRAR