ACIT, Cuttack V. The Urban Co-operative Bank Ltd, Cuttack

ITA 332/CTK/2012

• Counselvise Citation: [2012] 140 COUNSELVISE.COM (IT) 65130 (ITAT-CUTTACK)
• Duration Of Justice: 4 month(s) 14 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 28-09-2012
• Appeal Filed By: Department
• Bench Allotted: DB
• Assessment Year: 2004-2005
• Appeal Filed On: 14-05-2012
• Court: TRIBUNAL
• Department Lawyers: ARUP KUMAR PANDA
• Assessee Lawyers: MATI PARAMITA TRIPATHY
• Keywords: Business income; Assessment record
• Section: 56; 28

Judgement Text

, , IN THE INCOME TAX APPELLATE TRIBUNAL, CUTTACK BENCH, CUTTACK ( ) BEFORE . . , , HONBLE SHRI K.K.GUPTA, ACCOUNTANT MEMBER. /AND . . . , S HRI K.S.S.PRASAD RAO, JUDICIAL MEMBER / I.T.A.NO. 332/CTK/2012 / ASSESSMENT YEAR 2004 - 05 ASST.COMMISSIONER OF INCOME - TAX, CIRCLE 2(2), CUTTACK. - - - VERSUS - THE URBAN COOPERATIVE BANK LTD., TINIKONIA BAGICHA, CUTTACK PAN : AAAAT 0360 E ( /APPELLANT ) ( / RESPONDENT ) / FOR THE APPELLANT : / SHRI ARUP KUMAR PANDA, AR / FOR THE RESPONDENT: / SHRI MATI PARAMITA TRIPATHY, CIT - DR / DATE OF HEARING: 30 . 08 . 2012 / DATE OF PRONOUNCEMENT: 28.09.2012 / ORDER . . . , SHRI K.S.S.PRASAD RAO, JUDICIAL MEMBER . THIS APPEAL IS FILED BY THE DEPARTMENT HAVING BEEN AGGRIEVED BY THE ORDER OF THE COMMISSIONER OF I NCOME - TAX (APPEALS) DT.29.02.2012 FOR THE ASSESSMENT YEAR 2004 - 05 IN THE CASE OF THE ASSESSEE. 2. THE DEPARTMENT HAS RAISED THE FOLLOWING ISSUES IN THE GROUNDS OF APPEAL. 01. IN THE FACTS AND CIRCUMSTANCES OF THE CASE, THE LD.CIT(A) WAS NOT JUSTIFIED TO SIMPLY DIRECT TO GIVE EFFECT TO THE EARLIER FINDINGS OF HONBLE ITAT IN ITS ORDER DATED 02.09.2008 AND 25.02.2011 WITHOUT EXACTLY MAKING OF SPECIFIC ANALYSIS OF CASE LAWS WHICH WERE PRODUCED ON BEHALF OF THE ASSESSEE BEFORE THE HONBLE ITAT IN EARLIER PROC EEDING. INCIDENTALLY, IN THE EARLIER ORDER DATED 25.02.2011 FOR THE SAME ASSESSMENT YEAR I.E.2004 - 05 OF THE SAME ASSESSEE IN ITA NO:302/CTK/20T0, THE HONBLE ITAT HAD OBSERVED AS UNDER: WE HAVE HEARD THE RIVAL CONT ENTIONS AND PERUSED THE MATERIAL AVAILAB LE ON RECORD. ON OUR CAREFUL I.T.A.NO. 332/CTK/2012 2 CONSIDERATION OF THE FACTS AND CIRCUMSTANCE, WE ARE INCLINED TO HOLD THAT THE LD.CIT(A) APPEARS TO HAVE LOST SIGHT THE FACTUAL POSITION AS HAS BEEN ENUMERATED BY THE AO VIS - A - VIS THE ITAT ORDER WHEN THE INCOME BEING INTEREST ON FIXED DEPOSITS HELD BY THE ASSESSEE IN VARIOUS BANKS WAS GOVERNED BY THE RBI REGULATIONS CANNOT BE SEPARATED FOR THE PURPOSE OF TAXING THE SAME AS UNAPPROVED INVESTMENTS. THE INTEREST EARNED FROM SUCH DEPOSITS IS ON THE BASIS OF REGULAR BANKING BUSINESS O F THE ASSESSEE BANK AND COULD NOT BE CONSIDERED AS UNAPPROVED INVESTMENTS BEING GOVERNED BY REGULATIONS OF RBI. THE LD. CIT(A) HAS NOT CONSIDERED THE SAME IN ACCORDANCE WITH THE PROVISIONS OF THE CASE LAWS CITED THEREFORE IS RESTORED TO HIS FILE FOR CONSID ERATION AFRESH AS PRAYED FOR BY THE LEARNED COUNSEL BEFORE US IN ORDER TO VERIFY THE VERACITY OF THE CLAIM OF THE ASSESSEE IN ACCORDANCE WITH LAW. THUS THE HONBLE ITAT HAD DIRECTED TO FIRST APPELLATE AUTHORITY TO CONSIDER THE ISSUE AFRESH AFTER DUE EXAM INATION OF VARIOUS CASE LAWS CITED BY THE APPELLANT BEFORE THE ITAT. THE LD.CIT(A) HAS NOT FOLLOWED SUCH SPE CI IC DIRECTION IN ANALYZING THE APPLICABILITY OF VARIOUS CASE LAWS ON WHICH THE APPELLANT RELIED CLAIMING THAT INTEREST EARNED ON INVESTMENT WITH OT HER BA NKS WILL ALSO BE TREATED AS ELIG IBLE FOR DEDUCTION U/S.80(P) OF THE I.T.ACT, 1961 02. THE LD. CIT(A) FAILED TO EXAMINE THE CLEAR CUT DISTINCTION BETWEEN THE IMPLICATION OF THE TERM BUSINESS OF BANKING SPECIFIED IN U/S.80(P)(2)(A)(I) IN I.T.ACT,19 61 RESULTING IN PROFIT OR GAINS IN SUCH BUSINESS VIS - - VIS INCOME EARNED FORM FIXED DEPOSITS/ INVESTMENTS OF SURPLUS FUND WITH O THER BANKS AND INSTITUTIONS. THE PROFIT OR GAINS OF BUSINESS OF BANKING HAS TO B E CO MPUTED UNDER SECTIONS 28 TO 44 O F THE I T.AC T,1961. FROM SUCH COMPUTED PROFIT OR GAINS OF BUSINESS, DEDUCTION U/S.80(P)((2)(A)(I) CAN BE APPLIED. ON THE CONTRARY INTEREST INCOME EARNED FROM INVESTMENT OF SURPLUS FUND WITH OTHER BANKS/FINANCIAL INSTITUTIONS CANNOT BE CONSIDERED AS PROFIT OR GAIN OF B USINESS BUT AS INCOME FROM INVESTMENT OF SURPLUS FUND WITH OTHER BANKS/FINANCIAL INSTITUTIONS/NBFC/STATE GOVERNMENT/CENTRAL GOVERNMENT. SUCH INTEREST INCOME CANNOT B E COMPUTED U/S.28 TO 44 OF THE I T ACT,1961 BUT AS INCOME FROM OTHER SOURCES IN ACCORDANCE WITH PROVISION OF SECTION 56 OF I.T.ACT,1961. ON SUCH COMPUTED INCOME FROM OTHER SOURCE DEDUCTION U/S.80(P)(2)(A)(I) IS LAWFULLY NOT ADMISSIBLE. I.T.A.NO. 332/CTK/2012 3 3. BOTH THE PARTIES WERE HEARD REGARDING THE ISSUES RAISED IN THE APPEAL AND THEIR LEGAL IMPLICATIONS. 4. ON CAREFUL CONSIDERATION OF THE MATERIAL MADE AVAILABLE TO THE TRIBUNAL IN THE LIGHT OF THE SUBMISSIONS OF BOTH THE PARTIES, THE UNDISPUTED FACTS RELATING TO THE ISSUES ARE THAT THE ASSESSEE IS A COOPERATIVE SOCIETY ENGAGED IN THE BUSINESS OF BANKING. IT FILE D ITS RETURN FOR THE PERIOD UNDER CONSIDERATION ON 14.3.2005 SHOWING TOTAL INCOME AT NIL AFTER CLAIMING EXEMPTION OF NET INCOME OF 2,52,493 U/S.80P(2)(A)(I) OF THE I.T.ACT. BASING ON THIS RETURN ASSESSMENT WAS COMPLETED U/S.143(3) OF THE I.T.ACT ON 29.12. 2006 DETERMINING THE TOTAL INCOME AT 5,48,51,470. THIS INCOME WAS REDUCED TO 4,87,12,140 AFTER GIVING EFFECT TO THE ORDER OF THE LEARNED CIT(A). THEREAFTER THE ASSESSEE FILED APPEAL BEFORE THE TRIBUNAL AND THIS TRIBUNAL VIDE ORDER DT.2.9.2008 IN ITA NO.2 8/CTK/2008 SET ASIDE GROUND NO.3 SPECIFICALLY FOR REDOING THE SAME. ACCORDINGLY THE ASSESSING OFFICER ISSUED NOTICE U/S.142(1) TO THE ASSESSEE AND AFTER HEARING THE ASSESSEE AND CONSIDERING THE MATERIAL PLACED BY THE ASSESSEE BEFORE HIM, THE ASSESSING OFFI CER PASSED THE ORDER DT.31.12.2009 DETERMINING THE TOTAL INCOME OF THE ASSESSEE AT 2,64, 87,843. AGGRIEVED THE ASSESSEE APPEALED BEFORE THE FIRST APPELLATE AUTHORITY BY THIS ORDER, THE ASSESSEE FILED APPEAL BEFORE THE FIRST APPELLATE AUTHORITY AND THE LEAR NED CIT(A) AFTER HEARING THE ASSESSEE AND CONSIDERING THE ASSESSMENT RECORDS HAS PASSED THE IMPUGNED ORDER DT.29.02.2012 ALLOWING PARTLY THE APPEAL OF THE ASSESSEE HOLDING THAT THE ASSESSING OFFICER IS DIRECTED TO GIVE APPEAL EFFECT BY FOLLOWING PARA - 4 OF THE ORDER OF THE ITAT DT.02.09.2008 AND PARA - 5 OF THE ORDER DT.25.2.2011. HAVING BEEN AGGRIEVED BY THIS ORDER, THE DEPARTMENT HAS FILED THE PRESENT APPEAL BEFORE THE TRIBUNAL. I.T.A.NO. 332/CTK/2012 4 5. ON CAREFUL ANALYSIS OF THE IMPUGNED ORDERS OF THE AUTHORITIES BELOW IT IS FO UND THAT ORIGINALLY THE ASSESSEE FILED RETURN FOR THE PERIOD UNDER CONSIDERATION SHOWING INCOME OF 2,52,493 WHEREAS THE ASSESSMENT/S.143(3) WAS MADE ON 29.12.2006 ON A TOTAL INCOME OF 5,48,51,470. ON APPEAL BEFORE THE CIT(A), THE LEARNED CIT(A) PASSED TH E ORDER DT.6.11.2007 HOLDING THAT THE FIXED DEPOSITS WITH VARIOUS BANKS DOES NOT FORM PART OF THE EQUITY OF ANY OF THESE BANKS. THUS, THIS AMOUNT IS NOT COVERED AS PER ANNEXURE II AS THERE IS NO MENTION OF FIXED DEPOSITS WITH ANY BANK. THEREFORE ALL THE F IXED DEPOSITS WITH THE BANKS ARE INCLUDED IN ANNEXURE II. THUS ALL THE SECURITIES ARE UNAPPROVED SECURITIES AND THE INTEREST ON THE SAME IS TAXABLE AND NO DEDUCTION U/S.80P IS ADMISSIBLE. THUS HOLDING HE COMPUTED THE BUSINESS INCOME OF THE ASSESSEE AT 12, 46,52,722.14 OUT OF WHICH DEDUCTION U/S.80P ADMISSIBLE WOULD BE 7,67,94,210 AND INCOME FROM OTHER SOURCES WAS DETERMINED AT 8,53,629. THUS THE TOTAL INCOME WAS ASSESSED AT 4,87,12,140.64. AGGRIEVED THE ASSESSEE APPEALED BEFORE THE FIRST APPELLATE AUTHOR ITY BY THIS ORDER, THE ASSESSEE WENT IN APPEAL BEFORE THE TRIBUNAL AND THE TRIBUNAL HAS DISPOSED OF THE ISSUE NO.4. VIDE ORDER DT.2.9.2008 HOLDING THAT ON GROUND NO.4, THE LEARNED AR OF THE ASSESSEE MAINLY ARGUED ON GROUND NO.4(III) AND SUBMITTED THAT THE ISSUE IS COVERED BY MANY DECISIONS OF THE ITAT, CUTTACK BENCH WHICH HAVE BEEN DECIDED IN FAVOUR OF THE ASSESSEE. ACCORDINGLY THE ISSUE WAS DECIDED BY THE TRIBUNAL IN FAVOUR OF THE ASSESSEE. HOWEVER, WITH REGARD TO GROUND NO.4(I) AND GROUND NO.4(II), THE T RIBUNAL WAS NOT CONVINCED WITH THE ARGUMENT OF THE LEARNED AR OF THE ASSESSEE AND THE ISSUES WERE DECIDED AGAINST THE ASSESSEE. FOLLOWING THIS ORDER, THE ASSESSING OFFICER HAS PASSED THE ASSESSMENT ORDER DT.31.12.2009 DETERMINING THE TOTAL INCOME AT 2,64, 87,840. AGAIN THE ASSESSEE WENT IN APPEAL BEFORE THE CIT(A) AND THE LEARNED CIT(A) VIDE HIS ORDER DT.26.5.2010 I.T.A.NO. 332/CTK/2012 5 HELD THAT THE ORDER OF THE CIT(A) DT.15.1.2008 HAS BEEN MERGED WITH THE ORDER OF THE ITAT DT.2.9.2008, THEREFORE, NO FURTHER AMENDMENT TO THE ORD ER IS POSSIBLE AT THIS STAGE. THUS OBSERVING, HE DISMISSED THE APPEAL OF THE ASSESSEE. AGAINST THIS ORDER, THE CASE CAME IN APPEAL BEFORE THE TRIBUNAL. THE ASSESSEE FILED A STATEMENT OF COMPUTATION OF INCOME ALONG WITH THE COPY OF THE ASSESSMENT ORDERS AND APPELLATE ORDERS AND ALL THESE DOCUMENTS WERE SENT TO THE ASSESSING OFFICER FOR VERIFICATION AND HE WAS ASKED TO SEND REPORT ON THE NET INCOME. THEREAFTER THE ASSESSING OFFICER AFTER VERIFICATION OF THE ASSESSMENT RECORD ARRIVED AT THE INCOME OF 2,32 ,27,215. THIS REMAND REPORT WAS PUT TO THE ASSESSEE WHO HAS SUBMITTED BEFORE THE CIT(A) THAT THE NET INCOME OF 2,32,27,215 COMPUTED BY THE ASSESSING OFFICER IS NOT DISPUTED. BUT HOWEVER, IT WAS SUBMITTED BEFORE THE LEARNED CIT(A) THAT AFTER GIVING THE APP EAL EFFECT THE INCOME OF THE ASSESSEE COULD BE 8,53,631. 6. ON CAREFUL CONSIDERATION OF ALL THESE THINGS, THE LEARNED CIT(A) HAS DIRECTED THE ASSESSING OFFICER TO GIVE APPEAL EFFECT BY FOLLOWING PARA - 4 OF THE ITAT ORDER DT.2.9.2008 AND PARA 5 OF THE ORDER DT.25.2.2011. THUS OBSERVING HE PARTLY ALLOWED THE APPEAL OF THE ASSESSEE. 7. ON CAREFUL CONSIDERATION OF THE FINDINGS OF THE LEARNED CIT(A) IT IS SEEN THAT THE ORDER OF THE LEARNED CIT(A) IS IN CONSONANCE WITH THE DIRECTION GIVEN BY THE ITAT ORDER DT.2.9 .2008 AND PARA 5 OF THE CIT(A)S ORDER DT.25.2.2011. THE ASSESSING OFFICER HAS NOT STRICTLY FOLLOWED THE ORDER OF THE LEARNED CIT(A) BY PASSING THE IMPUGNED ASSESSMENT ORDER DT.31.12.2009. THE LEARNED CIT(A) HAVING FOUND THAT THIS ORDER IS NOT IN CONSONANC E WITH THE ORDER OF THE TRIBUNAL, HE HAS DIRECTED THE ASSESSING OFFICER TO PASSED THE ORDER BY FOLLOWING PARA 4 OF THE ITAT ORDER DT.2.9.2008 AND PARA 5 OF THE ORDER DT.25.2.2011. ON CAREFUL CONSIDERATION OF ALL THE ORDERS, WE FIND THAT THE LEARNED CIT(A) S ORDER IS IN CONSONANCE WITH THE ORDER OF THE TRIBUNAL IN I.T.A.NO. 332/CTK/2012 6 PARA 4 OF ITS ORDER DT.2.9.2008 AND PARA 5 OF THE ORDER DT.25.2.2011. THEREFORE, WE FIND NO INFIRMITY IN THE IMPUGNED ORDER OF THE LEARNED CIT(A) REQUIRING ANY INTERFERENCE AND THE SAME IS HEREBY U PHELD BY FINDING THE ISSUES RAISED BY THE DEPARTMENT AS DEVOID OF MERIT. 8. IN THE RESULT, THE APPEAL OF THE REVENUE IS DISMISSED. SD/ - SD/ - ( . . ) , , (K.K.GUPTA), ACCOUNTANT MEMBER. ( . . . ) , (K.S.S.PRASAD RAO), JUDICIAL MEMBER ( ) DATE: 28.09.2012 - COPY OF THE ORDER FORWARDED TO: 1 . / THE APPELLA NT : ASST.COMMISSIONER OF INCOME - TAX, CIRCLE 2(2), CUTTACK. 2 / THE RESPONDENT: THE URBAN COOPERATIVE BANK LTD., TINIKONIA BAGICHA, CUTTACK 3 . / THE CIT, 4 . ( )/ THE CIT(A), 5 . / DR, CUTTACK BENCH 6 . GUARD FILE . / TRUE COPY, / BY ORDER, APPENDIX XVII SEAL TO BE AFFIXED ON THE ORDER SHEET BY THE SR. P.S./P.S. AFTER DICTATION IS GIVEN 1. DATE OF DICTATION 25.09.2012 . 2. DATE ON WHICH THE TYPED DRAFT IS PLACED BEFORE THE DICTATING MEMBER 26.09.2012 OTHER MEMBER . 3. DATE ON WHICH THE APPRO VED DRAFT COMES TO THE SR. P.S./P.S. 4. DATE ON WHICH THE FAIR ORDER IS PLACED BEFORE THE DICTATING MEMBER FOR PRONOUNCEMENT.... 5. DATE ON WHICH THE FAIR ORDER COMES BACK TO THE SR. P.S./P.S . 6. DATE ON WH ICH THE FILE GOES TO THE BENCH CLERK 7. DATE ON WHICH THE FILE GOES TO THE HEAD CLERK .. 8. THE DATE ON WHICH THE FILE GOES TO THE ASSISTANT REGISTRAR FOR SIGNATURE ON THE ORDER ................ 9. DATE OF DESPATCH OF THE ORDER .. ( ), (H.K.PADHEE), SENIOR.PRIVATE SECRETARY.