The ITO, Ward-1(3)(5), Ahmedabad V. M/s. State Bank of India Employees Co-Op. Credit & Supply Society Ltd., Ahmedabad

ITA 3339/AHD/2016

• Counselvise Citation: [2018] 125 COUNSELVISE.COM (IT) 8410 (ITAT-AHMEDABAD)
• Duration Of Justice: 1 year(s) 4 month(s) 10 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 23-04-2018
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: SMC
• Assessment Year: 2011-2012
• Appeal Filed On: 13-12-2016
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Assessee Lawyers: S N DIVATIA
• Keywords: Business income; Wrong claim
• Section: 27

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL AHMEDABAD SMC BENC H (BEFORE SHRI RAJPAL YADAV, JUDICIAL MEMBER & SHRI N.K. BILLAIYA, ACCOUNTANT MEMBER) ITA. NO: 3339/AHD/2016 & C.O. NO. 22/AHD/17 (ASSESSMENT YEAR: 2011-12) ITO, WARD-1(3)(5), AHMEDABAD STATE BANK OF INDIA EMPLOYEES CO.OP. CREDIT & SUPPLY SOCIETY LTD. SBI MAIN BRANCH BHADRA, AHMEDABAD V/S V/S STATE BANK OF INDIA EMPLOYEES CO.OP. CREDIT & SUPPLY SOCIETY LTD. SBI MAIN BRANCH BHADRA, AHMEDABAD ITO, WARD-1(3)(5), AHMEDABAD (APPELLANT) (RESPONDENT) PAN: AAAAS7450B APPELLANT BY : SMT. PRAJNA PARAMITA, SR. D.R. RESPONDENT BY : SHRI S. N. DIVATIA, A.R. ( )/ ORDER DATE OF HEARING : 19 -04-201 8 DATE OF PRONOUNCEMENT : 23-04-2018 PER N.K. BILLAIYA, ACCOUNTANT MEMBER ITA NOS. 3339/ AHD/16 & C.O. 22/AHD/16 . A.Y. 2011-1 2 2 1. ITA NO. 3339/AHD/2016 & C.O. NO. 22/AHD/2017 ARE AP PEAL BY THE REVENUE AND CROSS OBJECTION OF THE ASSESSEE DIRECTE D AGAINST THE ORDER OF THE LD. CIT(A)-10, AHMEDABAD DATED 13.09.2016 PERTAININ G TO A.Y. 2011-12. 2. THE ONLY GRIEVANCE OF THE REVENUE IS THAT THE LD. C IT(A) ERRED IN DELETING THE PENALTY OF RS. 13,14,324/- LEVIED U/S. 271(1)(C) OF THE ACT. 3. THE ROOTS FOR THE LEVY OF PENALTY LIE IN THE ASSESS MENT ORDER DATED 09.01.2014 R.W.S. 147 OF THE ACT. THE ASSESSMENT WAS COMPLETED AFTER MAKING ADDITION OF RS. 48,92,450/- BY DISALLOWING WRONG CLAIM OF DEDUC TION CLAIMED BY THE ASSESSEE SOCIETY U/S. 80P(2)(A)(I) OF THE ACT. PENA L PROCEEDINGS U/S. 271(1)(C) OF THE ACT WERE SEPARATELY INITIATED. 4. DURING THE COURSE OF THE PENALTY PROCEEDINGS, THE A SSESSEE WAS ASKED TO EXPLAIN WHY PENALTY U/S. 271(1)(C) OF THE ACT SHOULD NOT BE LEVIED ON WRONG CLAIM OF DEDUCTION MADE BY IT U/S. 80P(2)(A)(I) OF THE ACT. IN ITS REPLY, THE ASSESSEE STRONGLY OBJECTED FOR THE LEVY OF PENALTY. THE SUBM ISSIONS MADE BY THE ASSESSEE READ AS UNDER:- '2.2 AT THE OUTSET, WE WOULD LIKE TO POINT THE BRIEF FACTS RELATING TO THE ASSESSEE- SOCIETY, IT IS A REGISTERED SOCIETY WITH SUB-REGIST RAR, GUJARAT STATE CO-OP. ACT (FOR SHORT' GCSA) AND IT IS GOVERNED BY THE BYE-LAWS CALL ED 'LEAFLET-N'. IT IS GOVERNED BY THE NOTIFICATION, GUIDELINES, CIRCULARS ETC. ISS UED BY SUB-REGISTRAR, GCSA FROM TIME TO TIME AND THE BOOKS OF ACCOUNT, OTHER RECORD ARE A/SO MAINTAINED ACCORDINGLY. IT IS REGISTERED WITH THE OBJECTS OF A CCEPTING DEPOSITS FROM THE SALARIED PERSONS OF SBI, GUJARAT REGION WITH A VIEW TO ENCOURAGING THRIFT AND PROVIDING CREDIT FACILITY TO THEM. ACCORDINGLY, THE ASSESSEE-SOCIETY HAS LAUNCHED VARIOUS DEPOSITS SCHEMES, SUCH AS TERM DEPOSIT, REC URRING DEPOSIT, AID TO YOUR FAMILY SCHEME, MEMBERS RETIRING BENEFIT FUND (MRBF) , ETC. AND AT THE SAME TIME, IT IS ADVANCING LOANS TO THE MEMBERS SUCH AS CONSUMER GOOD LOAN, CAR- VEHICLE LOAN, FOOD GRAIN LOAN AND GENERAL PURPOSES LOAN, ETC. THUS, THE ENTIRE WORKING OF THE ASSESSEE-SOCIETY IS AIMED AT ACHIEVI NG THE AFORESAID OBJECTS. IT ITA NOS. 3339/ AHD/16 & C.O. 22/AHD/16 . A.Y. 2011-1 2 3 MAINTAINS REGULAR BOOKS OF ACCOUNT AND OTHER RECORD WHICH ARE SUBJECT TO AUDIT BY SUB-REGISTRAR AND TAX AUDITOR. IT IS REGULARLY F ILING ITS RETURN OF INCOME SINCE LONG. 2.2 DURING THE COURSE OF ASSESSMENT PROCEEDINGS, TH E A.O. HAS DISALLOW THE CLAIM OF DEDUCTION U/S 80P(2)(A)(I) IN RESPECT OF FD INTE REST RECEIVED FROM SBI MAINLY ON THE GROUND THAT THE FDS WERE NOT IN NATURE OF LOAN/ CREDIT FACILITIES PROVIDED TO THE MEMBERS & IT WOULD FALL UNDER THE HEAD 'INCOME F ROM OTHER SOURCES' RATHER THAN 'BUSINESS INCOME' 2.3 BEING AGGRIEVED, THE ASSESSES SOCIETY HAVE PRE FERRED APPEAL BEFORE CIT(A) WHO HAS CONFIRMED THE ADDITION VIDE ORDER DT. 04-02 -2015. THE SECOND APPEAL HAS BEEN FILLED BEFORE TRIBUNAL ON 07-05-2015 BEING ITA NO. 1205/AHD/2015 WHICH IS PENDING DISPOSAL. 2.4 MEANWHILE YOU HAVE PROPOSED TO COMPLETE PENALTY PROCEEDINGS U/S 271(L)(C). WE SUBMIT THAT WE HAVE NEITHER FURNISHED INACCURATE PARTICULAR OF INCOME NOR CONCEAL INCOME TO THE EXTENT OF DISALLOWANCE SO MAD E. THE DETAILS RELATING TO THE SBI FDRS & INTEREST THEREON WERE ALREADY ON YOUR RE CORD & WE HAVE NOT CONCEALED THE SAID PARTICULARS. IT IS A CASE OF DIF FERENCE OF OPINION AS TO THE ALLOWABILITY OF SAID INTEREST & A MATTER OF INTERPR ETATION. RECENTLY ITT AHMEDABAD BATCH HAS DELETED IDENTICAL ADDITION IN C ASE OF ITO VS. JAFARI MOMIN VIKAS CO-OP. CREDIT SOCIETY LTD. (1491/AHD/2012 DT. 31-10-2012) AND SIMILAR OTHER DECISIONS HAVE BEEN RENDERED. THEREFORE, NO P ENALTY IS ATTRACTED. 2.5 SECONDLY THE CLAIM OF DEDUCTION SO MADE IF GENU INE & IT CANNOT BEEN SAID AS BOGUS CLAIMED. MERELY BECAUSE THE CLAIMED MADE BY T HE ASSESSEE HAS BEEN REJECTED BY A.O., NO PENALTY U/S 271(L)(C) IS ATTRA CTED FOR DISALLOWANCE OF SUCH CLAIM. REFER TO RELIANCE PETRO PRODUCTS PVT. LTD. ( 322 ITR 158)SC. 2.6 THIRDLY, IT WILL ALSO BE APPRECIATED THAT THE G ROSS INTEREST OF RS. 48,92F453/- HAS BEEN BROUGHT TO TAX BUT THE NET INTEREST BY DED UCTING PRO-RATA EXPENSES SHOULD HAVE BEEN TAXED, AS PROPOSED BY A.O, IN HIS ORIGINAL SHOW CAUSE NOTICE. THEREFORE, THE GROSS INTEREST SHOULD BE REDUCED TO THAT EXTENT. 2.2 DURING THE COURSE OF ASSESSMENT PROCEEDIN GS, THE A.O, HAS DISALLOW THE CLAIM OF DEDUCTION U/S 80P(2)(A)(I) IN RESPECT OF F D INTEREST RECEIVED FROM SBI MAINLY ON THE GROUND THAT THE FDS WERE NOT IN NATUR E OF LOAN/CREDIT FACILITIES ITA NOS. 3339/ AHD/16 & C.O. 22/AHD/16 . A.Y. 2011-1 2 4 PROVIDED TO THE MEMBERS & IT WOULD FALL UNDER THE H EAD 'INCOME FROM OTHER SOURCES' RATHER THAN 'BUSINESS INCOME. 2.3 BEING AGGRIEVED, THE ASSESSEE SOCIETY HAVE PREF ERRED APPEAL BEFORE CIT(A) WHO HAS CONFIRMED THE ADDITION VIDE ORDER DT. 04-02 -2015. THE SECOND APPEAL HAS BEEN FILLED BEFORE TRIBUNAL ON 07-05-2015 BEING ITA NO. 1205/AHD/2015 WHICH IS PENDING DISPOSAL. 2.4 MEANWHILE YOU HAVE PROPOSED TO COMPLETE PENALTY PROCEEDINGS U/S 271(L)(C). WE SUBMIT THAT WE HAVE NEITHER FURNISHED INACCURATE PARTICULAR OF INCOME NOR CONCEAL INCOME TO THE EXTENT OF DISALLOWANCE SO MAD E. THE DETAILS RELATING TO THE SBI FDRS & INTEREST THEREON WERE ALREADY ON YOUR RE CORD & WE HAVE NOT CONCEALED THE SAID PARTICULARS. IT IS A CASE OF DIF FERENCE OF OPINION AS TO THE ALLOWABILITY OF SAID INTEREST & A MATTER OF INTERPR ETATION. RECENTLY ITT AHMEDABAD BATCH HAS DELETED IDENTICAL ADDITION IN C ASE OF ITO VS. JAFARI MOMIN VIKAS CO-OP. CREDIT SOCIETY LTD. (1491/AHD/2012 DT. 31-10-2012) AND SIMILAR OTHER DECISIONS HAVE BEEN RENDERED. THEREFORE, NO P ENALTY IS ATTRACTED. 2.5 SECONDLY THE CLAIM OF DEDUCTION SO MADE IF GENU INE & IT CANNOT BEEN SAID AS BOGUS CLAIMED. MERELY BECAUSE THE CLAIMED MADE BY T HE ASSESSES HAS BEEN REJECTED BY A.O., NO PENALTY U/S 27 1(1)(C) IS ATTR ACTED FOR DISALLOWANCE OF SUCH CLAIM. REFER TO RELIANCE PETRO PRODUCTS PVT. LTD.(3 22 ITR 158)SC. 2.6 THIRDLY, IT WILL ALSO BE APPRECIATED THAT THE G ROSS INTEREST OF RS. 48,92,453/- HAS BEEN BROUGHT TO TAX BUT THE NET INTEREST BY DED UCTING PRO-RATA EXPENSES SHOULD HAVE BEEN TAXED, AS PROPOSED BY A.O. IN HIS ORIGINAL SHOW CAUSE NOTICE. THEREFORE, THE GROSS INTEREST SHOULD BE REDUCED TO THAT EXTENT. 2.7 IT IS ALSO FURTHER SUBMITTED THAT THE CBDT VIDE CIRCULAR NO. 18/2015, DATED 02/11/2015 HAS CLARIFIED THE DECISION OF BOARD THAT NO APPEALS WILL BE FILLED BY THE DEPARTMENT IN VIEW OF THE SUPREME COURT DECISIO N IN CASE OF CIT VS. NAWANSHAHAR CENTRAL CO-OPERATIVE BANK LTD. 160 TAXM ANN 48 (SC), WHEREIN THE COURT HELD THAT THE INVESTMENT MADE BY BANKING CONC ERN ARE PART OF BUSINESS OF BANKING. THEREFORE, THE INCOME ARISING FROM SUCH IN VESTMENTS IS ATTRIBUTABLE TO THE BUSINESS OF BANKING FALLING UNDER THE HEAD 'PROF IT AND GAINS OF BUSINESS AND PROFESSION '. IT A/SO CLARIFIED THAT THOUGH THE DECI SION WAS IN THE CONTEXT OF CO- OPERATIVE SOCIETIES/ BANKS CLAIMING DEDUCTION U/S. 80P(2)(A)(I) OF THE INCOME-TAX ITA NOS. 3339/ AHD/16 & C.O. 22/AHD/16 . A.Y. 2011-1 2 5 ACT, THE PRINCIPLE IS EQUALLY APPLICABLE TO ALL BAN KS/COMMERCIAL BANKS, TO WHICH BANKING REGULATION ACT, 1949 APPLIES. THE BOARD HAS ISSUED ABOVE CLARIFICATION IN VIEW OF THE FACT THAT FIELD OFFICERS ARE TAKING A VIEW THAT, 'EXPENSES RELATED TO INVESTMENT IN NON-SLR SECURITIES NEED TO BE DISALLOWED U/S. 57(I) OF THE ACT AS INTEREST ON NON-SLR SECURITIES IS INCOME FROM OTHER SOURCES'. IN VIEW OF ABOVE, THE PROPOSED PENALTY U/S 271( L)(C) MAY PLEASE BE DROPPED OR IN THE ALTERNATIVE, IT MAY BE KEPT IN ABEYANCE TILL THE DISPOSAL OF APPEAL BY TRIBUNAL. 5. THE DETAILED SUBMISSIONS MADE BY THE ASSESSEE DID N OT FIND ANY FAVOUR WITH THE A.O. WHO COMPLETED THE PENALTY PROCEEDED BY LEVYING PENALTY OF RS. 13,14,34/-. 6. ASSESSEE CARRIED THE MATTER BEFORE THE LD. CIT(A) A ND POINTED OUT THAT THE TRIBUNAL HAS DELETED THE DISALLOWANCES MADE BY THE A.O. AND THEREFORE THERE IS NO BASIS FOR THE LEVY OF PENALTY. THE LD. CIT(A) FO UND THAT THE TRIBUNAL HAS DECIDED THE ISSUE IN FAVOUR OF THE ASSESSEE BY FOLL OWING A DIVISION BENCH ORDER OF THE TRIBUNAL IN THE CASE OF SBI SUPERVISING OFFI CIALS CO-OPERATIVE CREDIT SOCIETY LTD. IN ITA NOS. 905 TO 908/AHD/2015. FOLLO WING THE SAME, THE LD. CIT(A) FOUND THAT SINCE THE BASIS HAS BEEN REMOVED, NO PENALTY IS LEVIABLE U/S. 271(1)(C) OF THE ACT. 7. AGGRIEVED BY THIS, THE REVENUE IS BEFORE US. 8. THE LD. D.R. STRONGLY POINTED OUT THAT THE ORDER OF THE TRIBUNAL HAS BEEN REVERSED BY THE HONBLE HIGH COURT IN 389 ITR 578 A ND THEREFORE, THE LEVY OF PENALTY IS JUSTIFIED. PER CONTRA, THE LD. COUNSEL P OINTED OUT THAT THE ASSESSEE HAS ITA NOS. 3339/ AHD/16 & C.O. 22/AHD/16 . A.Y. 2011-1 2 6 PREFERRED CROSS OBJECTION BECAUSE THE FIRST APPELLA TE AUTHORITY HAS NOT DELETED THE PENALTY ON MERITS OF THE CASE BUT HAS DELETED T HE PENALTY BECAUSE THE QUANTUM ADDITION HAS BEEN DELETED. IT IS THE SAY OF THE LD. COUNSEL THAT EVEN IF THE QUANTUM ADDITIONS HAVE BEEN FURNISHED BY THE HO NBLE JURISDICTIONAL HIGH COURT, THE LEVY OF PENALTY U/S. 271(1)(C) IS NOT JU STIFIED. 9. WE HAVE GIVEN A THOUGHTFUL CONSIDERATION TO THE ORD ERS OF THE AUTHORITIES BELOW. THERE IS NO DISPUTE INSOFAR AS THE CLAIM OF DEDUCTION U/S. 80P(2)(A)(I) OF THE ACT IS CONCERNED. INITIALLY THE TRIBUNAL HAS DE LETED THE DISALLOWANCES MADE BY THE A.O. AND THE MATTER TRAVELLED UP TO THE HON BLE HIGH COURT AND THE HONBLE HIGH COURT HAS REVERSED THE JUDGMENT OF THE TRIBUNAL AND CONFIRMED THE DISALLOWANCES AS REPORTED IN 389 ITR 578. 10. BE THAT AS IT MAY, THE CLAIM OF DEDUCTION MADE BY T HE ASSESSEE WAS SUPPORTED BY VARIOUS JUDICIAL DECISIONS WHICH WERE FOLLOWED B Y THE TRIBUNAL WHILE DELETING THE DISALLOWANCES MADE BY THE A.O. THEREFO RE, IT CAN BE FAIRLY STATED THAT THE CLAIM OF DEDUCTION WAS MADE BONA FIDE BACK ED BY VARIOUS JUDICIAL DECISIONS AND IT CANNOT BE SAID THAT THE ASSESSEE H AS DELIBERATELY MADE A FALSE CLAIM. NO DOUBT, THE HONBLE JURISDICTIONAL HIGH CO URT HAS CONFIRMED THE DISALLOWANCES. BUT, AT THE SAME TIME, IT CANNOT BE SAID THAT THE ASSESSEE HAS DELIBERATELY FILED INACCURATE PARTICULARS OF INCOME , NOR IT CAN BE SAID THAT THE ASSESSEE HAS CONCEALED PARTICULARS OF INCOME. THE R ATIO LAID DOWN BY THE HONBLE SUPREME COURT IN THE CASE OF RELIANCE PETRO PRODUCTS PVT. LTD. 322 ITR 158 SQUARELY APPLY ON THE FACTS OF THE CASE. RE SPECTFULLY FOLLOWING THE RATIO LAID DOWN BY THE HONBLE SUPREME COURT, WE DO NOT F IND THIS TO BE A FIT CASE FOR THE LEVY OF PENALTY U/S. 271(1)(C) OF THE ACT. THOUGH, THE FIRST APPELLATE AUTHORITY HAS DELETED THE PENALTY FOR A DIFFERENT R EASON BUT CONSIDERING THE ITA NOS. 3339/ AHD/16 & C.O. 22/AHD/16 . A.Y. 2011-1 2 7 FACTS OF THE CASE IN TOTALITY, AS MENTIONED ELSEWHE RE, THE PENALTY IS NOT LEVIABLE U/S. 271(1)(C) OF THE ACT. THE APPEAL BY THE REVENU E IS DISMISSED AND THE CROSS OBJECTION OF THE ASSESSEE IS ALLOWED. 11. BEFORE CLOSING, THE CROSS OBJECTION OF THE ASSESSEE IS BARRED BY LIMITATION BY 34 DAYS. WE HAVE CAREFULLY CONSIDERED THE FACTS NARRAT ED IN THE AFFIDAVIT FILED FOR CONDONING THE DELAY AND WE ARE CONVINCED WITH THE F ACT THAT THE ASSESSEE WAS PREVENTED BY REASONABLE AND SUFFICIENT CAUSE FOR NO T FILING IN CROSS OBJECTION WITHIN TIME. ORDER PRONOUNCED IN OPEN COURT ON 23 - 04- 2018 SD/- SD/- (RAJPAL YADAV) (N. K. BILLAIYA) JUDICIAL MEMBER TRUE COPY A CCOUNTANT MEMBER AHMEDABAD: DATED 23 /04/2018 RAJESH COPY OF THE ORDER FORWARDED TO: - 1. THE APPELLANT. 2. THE RESPONDENT. 3. THE CIT (APPEALS) 4. THE CIT CONCERNED. 5. THE DR., ITAT, AHMEDABAD. 6. GUARD FILE. BY ORDER DEPUTY/ASSTT.REGISTRAR ITAT,AHME DABAD