ITO 23(2)(3), MUMBAI V. INDIRA RASHTRIYA KAMGAR SAHAKARI SOCIETY LTD, MUMBAI

ITA 3253/MUM/2014

• Counselvise Citation: [2016] 132 COUNSELVISE.COM (IT) 2912 (ITAT-MUMBAI)
• Duration Of Justice: 2 year(s) 1 month(s) 17 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 24-06-2016
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: I
• Next Hearing Date: 07-03-2016
• Assessment Year: 2010-2011
• Appeal Filed On: 07-05-2014
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: R K SAHU
• Assessee Lawyers: SUBODH RATNAPARKHI

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL MUMBAI I BENCH, MUMBAI BEFORE SHRI SHAILENDRA KUMAR YADAV, JUDICIAL MEMBER, AND SHRI RAJESH KUMAR, ACCOUNTANT MEMBER. ITA. NO. 3253/MUM/2014 (ASSESSMENT YEAR:2010-11) INCOME-TAX OFFICER 23(2)(3), MUMBAI APPELLANT VS. INDIRA RASHTRIYA KAMGAR SAHAKARI SOCIETY LTD., MULUND GOREGAON LINK ROAD, NAHUR VILLAGE, MULUND WEST, MUMBAI - 400080 RESPONDENT PAN: AAAAI0008D /BY APPELLANT : SHRI R. K. SAHU, D.R. /BY RESPONDENT : SHRI SUBODH RATNAPARKHI, A.R. /DATE OF HEARING : 09.06.2016 /DATE OF PRONOUNCEMENT : 24.06.2016 ORDER PER SHAILENDRA KUMAR YADAV, J.M: THIS APPEAL HAS BEEN FILED BY REVENUE AGAINST THE O RDER OF COMMISSIONER OF INCOME-TAX (APPEALS)-33, MUMBAI, DA TED 07.02.2014 FOR A.Y. 2010-11 ON FOLLOWING GROUNDS: ITA NO.3253/MUM/14 A.Y. 10-11 [ITO VS. INDIRA RASHT RIYA KAMGAR SAHAKARI SOCIETY LTD.] PAGE 2 1. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE C ASE AND IN LAW, THE LD. CIT(A) ERRED IN DELETING THE ADDITI ON OF RS.71,99,690/- MADE BY THE A.O. WITHOUT APPRECIATIN G THE FACT BROUGHT OUT BY THE A.O. IN THE ASSESSMENT ORDER WHEREIN THE A.O. HAS DISCUSSED THE FACTS IN DETAIL FOR DENYING THE CLAIM OF DEDUCTION U/S80P(2) TO THE ASSESSEE. 2. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CAS E AND IN LAW, THE LD. CIT(A) ERRED IN ALLOWING THE ASSESS EE CLAIM OF DEDUCTION U/S 80P(2)(D) WITHOUT APPRECIATI NG THE FACT THAT THE FUNDS INVESTED IN FIXED DEPOSITS WITH CO-OPERATIVE BANKS ON WHICH THE INTEREST OF RS.71,99,690/- WAS EARNED BY THE ASSESSEE IS NOT OU T OF ANY FUNDS CONTRIBUTED BY THE MEMBERS OF THE SOCIETY, THEREBY RENDERING IT OUTSIDE THE PURVIEW O F MUTUALITY CONCEPT. 2. ASSESSEE IS A REGISTERED CO-OPERATIVE LABOUR SOC IETY AND ITS AIM IS TO SECURE EMPLOYMENT TO LABOUR MEMBERS O F THE SOCIETY AND TO GET REASONABLE RATE FOR THE WORK DON E BY THEM WITH A VIEW TO ENSURE NON-EXPLOITATION OF LABOUR BY PRIVATE CONTRACTORS AND GIVE BENEFIT AS PER GOVERNMENT RULE S & REGULATIONS. ASSESSEE CLAIMED THE SURPLUS FROM THI S ACTIVITY AS EXEMPT U/S.80P(2)(A)(VI) OF THE ACT. ASSESSEE INVE STED FOLLOWING AMOUNTS IN FIXED DEPOSITS AS UNDER: I. MUMBAI DISTRICT CENTRAL CO-OP. BANK LTD., MULUND: RS.5,30,00,000/- II. THE CHAMBUR NAGRIK SAHAKARI BANK LTD., CHUNABHATTI: RS.1,61,50,000/- ASSESSEE EARNED INTEREST OF RS.71,99,690/- FROM THE SE BANKS WHICH ARE CO-OPERATIVE SOCIETIES ENGAGED IN BANKI NG BUSINESS, HENCE ASSESSEE CLAIMED THIS INTEREST AS D EDUCTIBLE ITA NO.3253/MUM/14 A.Y. 10-11 [ITO VS. INDIRA RASHT RIYA KAMGAR SAHAKARI SOCIETY LTD.] PAGE 3 U/S.80P(2)(D) OF THE ACT. ASSESSING OFFICER DISAGR EED WITH THE SAME. 2.1 MATTER WAS CARRIED BEFORE THE FIRST APPELLATE A UTHORITY, WHEREIN VARIOUS CONTENTIONS WERE RAISED ON BEHALF O F ASSESSEE AND HAVING CONSIDERED THE SAME, CIT(A) GRANTED RELI EF TO THE ASSESSEE. 2.2 SAME HAS BEEN OPPOSED ON BEHALF OF REVENUE BEFO RE US INTER ALIA SUBMITTING THAT CIT(A) ERRED IN DELETING THE ADDITION OF RS.71,99,690/- MADE BY THE ASSESSING OFFICER. A CCORDING TO LD. DEPARTMENTAL REPRESENTATIVE, FUNDS INVESTED IN FIXED DEPOSITS WITH CO-OPERATIVE BANK ON WHICH INTEREST I N QUESTION WAS EARNED BY ASSESSEE IS NOT OUT OF ANY FUNDS CONT RIBUTED BY THE MEMBERS OF THE SOCIETY, THEREBY RENDERING IT OU TSIDE THE PURVIEW OF MUTUALITY CONCEPT. SO, THE ORDER OF CIT (A) BE SET ASIDE AND THAT OF ASSESSING OFFICER RE RESTORED. O N THE OTHER HAND, LD. AUTHORIZED REPRESENTATIVE SUPPORTED THE O RDER OF CIT(A). 2.3 AFTER GOING THROUGH RIVAL SUBMISSIONS AND MATER IAL ON RECORD, WE ARE INCLINED TO INTERFERE WITH THE ORDER OF CIT(A) BECAUSE ASSESSEE IS A CO-OPERATIVE SOCIETY AND HAD EARNED INTEREST ON DEPOSITS AND INVESTMENTS MADE WITH OTHE R CO- OPERATIVE BANKS AND HENCE IT HAS CLAIMED DEDUCTION U/S.80P(2)(D) OF THE ACT. HOWEVER, ASSESSING OFFIC ER WENT ON THE PRINCIPLE OF MUTUALITY AND STATED THAT INTEREST ON BANK DEPOSITS AMOUNTING TO RS.71,99,690/- WAS OUT OF THE PURVIEW OF SECTION 80P(2)(I)(A) OF THE ACT AND TAXED THE SA ME AS ITA NO.3253/MUM/14 A.Y. 10-11 [ITO VS. INDIRA RASHT RIYA KAMGAR SAHAKARI SOCIETY LTD.] PAGE 4 ASSESSEES INCOME. THE CASES OF CIT VS. COMMON AFF LUENT TREATMENT PLANT (THANE BELAPUR) (2010) 328 ITR 362 AND BANGALORE CLUB VS. CIT (CIVIL APPEAL NO.124 OF 200 7) RELIED UPON BY ASSESSING OFFICER ARE BASED ON PRINCIPLE OF MUTUALITY AND IN BOTH THESE CASES ASSESSES ARE NOT CO-OPERATI VE SOCIETIES. SO, THE RATIO OF THE SAME IS NOT APPLICABLE TO THE FACTS OF THE CASE. TAKING ALL THESE FACTS AND CIRCUMSTANCES OF THE CASE, CIT(A) WAS JUSTIFIED IN HOLDING THAT ASSESSEE IS EN TITLED TO DEDUCTION CLAIMED BY IT U/S.80P(2)(D) OF THE ACT IN RESPECT OF ANY INCOME BY WAY OF INTEREST DERIVED BY IT FROM IT S INVESTMENTS WITH ANY OTHER CO-OPERATIVE SOCIETY AND DIRECTED TO ALLOW THE SAME. THIS VIEW IS FORTIFIED BY THE DECI SION OF ITAT, MUMBAI BENCH IN CASE OF ACIT VS. MAHARASHTRA STATE CO-OP. MARKETING FEDERATION LTD. (2007) 15 SOT 83 (MUM), W HEREIN IT WAS HELD THAT WHOLE OF INCOME DERIVED BY WAY OF IN TEREST OR DIVIDEND BY A CO-OPERATIVE SOCIETY FROM ITS INVESTM ENTS WITH ANY OTHER CO-OPERATIVE SOCIETY IS DEDUCTIBLE U/S.80 P(2)(D) OF THE ACT. 3. IN THE RESULT, THE APPEAL OF REVENUE IS DISMISSE D. PRONOUNCED IN THE OPEN COURT ON THIS THE 24 TH DAY OF JUNE, 2016. SD/- SD/- ( RAJESH KUMAR ) (SHAILENDRA KUMAR YADAV) ACCOUNTANT MEMBER JUDICIAL MEMBE R MUMBAI: DATED 24/06/2016 TRUE COPY S.K.SINHA / COPY OF ORDER FORWARDED TO:- 1. / REVENUE ITA NO.3253/MUM/14 A.Y. 10-11 [ITO VS. INDIRA RASHT RIYA KAMGAR SAHAKARI SOCIETY LTD.] PAGE 5 2. / ASSESSEE 3. %&%'( ) / CONCERNED CIT 4. )- / CIT (A) 5.-./00'(, '( , %& / DR, ITAT, MUMBAI 6./4567 / GUARD FILE. BY ORDER / , / % , '( , %&