ACIT, Rewari V. M/s The Sangwari Primary Agri. Co-op. Society Ltd., Rewari

ITA 334/DEL/2013

• Counselvise Citation: [2013] 120 COUNSELVISE.COM (IT) 2698 (ITAT-DELHI)
• Duration Of Justice: 3 month(s) 12 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 30-04-2013
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: H
• Assessment Year: 2009-2010
• Appeal Filed On: 18-01-2013
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: TARUN SEEM
• Keywords: Source of fund

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL (DELHI BENCH H: NEW DELHI) BEFORE SHRI G. D. AGRAWAL, VICE PRESIDENT AND SHRI I. C. SUDHIR, JUDICIAL MEMBER ITA NO.334/DEL/ 2013 (ASSESSMENT YEAR: 2009-10) ACIT VS. THE SANGWARI PRIMARY AGRI. CIRCLE REWARI CO-OP. SOCIETY LTD . REWARI VPO. SANGWARI. DIST. REWARI REWARI PAN: AABAT7812K (APPELLANT) (RESPONDENT) ASSESSEE BY :NONE PRESE NT AS. REVENUE BY : SHRI TARUN SEEM, SR. D.R ORDER PER I. C. SUDHIR, JUDICIAL MEMBER: THE REVENUE HAS IMPUGNED FIRST APPELLATE ORDER ON THE FOLLOWING GROUNDS:- (I) ON THE FACTS AND CIRCUMSTANCES OF THE CASE, THE LD. CIT(A) ERRED IN LAW AND IN FACTS IN ALLOWING THE DEDUCTION U/S 80P( 2) (A) (I) & 80P(2) (A)(IV) OF THE IT ACT WITHOUT APPRECIATING T HE FACT THAT THE ASSESSEE SOCIETY WAS UNABLE TO BIFURCATE THE DETAIL S OF INCOME & EXPENDITURE FROM ITS MEMBERS AND NON-MEMBERS AS THE SE DEDUCTIONS ARE ONLY AVAILABLE TO SOCIETIES WHO ARE ENGAGED IN PROVIDING FACILITIES TO ITS MEMBERS ONLY AND THEREF ORE, WAS NOT ELIGIBLE FOR DEDUCTION UNDER THE SAID PROVISIONS. ITA NO- 334/DEL/2013 A.Y 2009-10 2 (II) ON THE FACTS AND CIRCUMSTANCES OF THE CASE, TH E LD. CIT(A) HAS ERRED IN LAW AND IN FACTS IN ALLOWING THE APPEA L OF THE ASSESSEE WHEN THE ASSESSEE SOCIETY IS ACCEPTING DEP OSITS FROM THE NON MEMBERS WHEREBY THE MONEY FROM THESE DEPOSITS GOT CIRCULATED THROUGH ADVANCES TO ITS MEM BERS WHO IN TURN PAID INTEREST ON ADVANCES AND INCOME WA S GENERATED TO THE SOCIETY THUS MAKING ITSELF INELIGI BLE FOR THE CLAIM OF DEDUCTIONS U/S 80P(2)(A) OF THE ACT. 2. IN SUPPORT OF THE GROUNDS THE LD. D.R FAIRLY POI NTED OUT THAT THE LD. CIT (A) HAS DECIDED THE ISSUE INVOLVE IN THE GR OUNDS FOLLOWING ORDER OF THE TRIBUNAL IN THE CASE OF PALHAWAS PRIMARY AGR ICULTURE CO-OPERATIVE SOCIETY ETC. ITA NOS. 2362 & 2363/DEL/2012 ORDER D ATED 31/7/2012 ON AN IDENTICAL ISSUE. HE, HOWEVER, PLACED RELIANCE O N THE ASSESSMENT ORDER. IT APPEARS FROM THE RECORD THAT ON 23 RD MARCH 2013 A RETURN SUBMISSION HAS BEEN FILED ON BEHALF OF THE RESPONDENT ASSESSEE MENTIONING THEREIN THAT UNDER SIMILAR FACTS ON AN IDENTICAL ISSUE IN T HE CASE OF ASSESSEE ITSELF FOR THE ASSESSMENT YEAR 2008-09, THE TRIBUNAL HAS D ECIDED IT IN FAVOUR OF THE ASSESSEE VIDE ITS ORDER DATED 14/12/2012 IN ITA NO- 40/DEL/2012 IN ACIT VS. M/S. SANGHWARI PRIMARY AGRICULTURE CO-OPER ATIVE SOCIETY LTD. A COPY OF THE SAID ORDER DATED 14/12/2012 HAS BEEN FILED. 3. HAVING GONE THROUGH THE ORDER DATED 14/12/2012 O F THE TRIBUNAL IN THE CASE OF ASSESSEE ITSELF FOR THE ASSESSMENT YEAR 2008-09 (SUPRA) ON THE ISSUE, WE FIND THAT UNDER SIMILAR FACTS AND CIRCUMS TANCES THE TRIBUNAL ITA NO- 334/DEL/2013 A.Y 2009-10 3 HAS DECIDED THE ISSUE IN FAVOUR OF THE ASSESSEE. T HE RELEVANT PARA NO-8 OF THE SAID ORDER IS BEING REPRODUCED HEREUNDER:- 8. WE HAVE CONSIDERED THE SUBMISSION OF THE BOTH THE P ARTIES AND HAVE PERUSED THESE RECORD OF THE CASE. IN THE PRE SENT CASE, IT IS NOT IN DISPUTE THAT CREDIT FACILITIES AND SEEDS & UREA ETC. WERE GIVEN ONLY TO THE MEMBERS AND ONLY DEPOSITS WERE AC CEPTED FROM NON-MEMBERS. TRIBUNAL IN THE CASE OF PALHAWAS PRIM ARY AGRICULTURE CO-OP. VS ACIT FOR AYS 2008-09 & 2009-1 0, HAS OBSERVED THAT DEPOSITS FROM NON-MEMBERS DID NOT GEN ERATE ANY INCOME TO THE ASSESSEE. THE AOS ONLY CONTENTION I S THAT THE DEPOSITS RECEIVED FROM NON-MEMBERS GOT CIRCULATED T HROUGH MEMBERS WHO IN RETURN PAID INTEREST ON THE ADVANCES AND INCOME HAD BEEN GENERATED TO THE SOCIETY. THUS, THE AO AC CEPTED THAT THERE WAS NO DIRECT INCOME GENERATED FROM THE DEPOS ITS BUT ONLY BY UTILIZING THAT MONEY FOR MAKING ADVANCES TO ITS MEM BERS. THE INCOME CONTEMPLATED U/S80P(2)(A)(I) & (IV) IS THE I NCOME FROM CARRYING ON THE BUSINESS OF BANKING OR PROVIDING CR EDIT FACILITIES TO ITS MEMBERS OR INCOME EARNED BY THE PURCHASE OF AGR ICULTURAL IMPLEMENTS, SEES, LIVESTOCK OR OTHER ARTICLES INTEN DED FOR AGRICULTURE FOR THE PURPOSE OF SUPPLYING THEM TO IT S MEMBERS. THE SOURCE OF FUNDS UTILIZED FOR EARNING THESE INCOMES CANNOT BE A BASIS FOR MAKING DISALLOWANCE UNDER THESE PROVISION S. THE BUSINESS OF BANKING CANNOT BE RESTRICTED TO CARRYIN G ON ACTIVITIES WITH MEMBERS ONLY BECAUSE THERE IS NO SUCH IMPEDIME NT IMPOSED U/S 80P (2)(A)(I). THE DIRECT SOURCE OF INCOME IS ULTIMATELY FROM THE CREDIT FACILITIES PROVIDED TO ITS MEMBERS OR FR OM SALE OF SEEDS, AGRICULTURAL IMPLEMENTS TO MEMBERS ONLY ETC CONTEMP LATED UNDER SECTION 80(2)(A)(IV). WE, THEREFORE, RESPECTIVELY FOLLOWING THE DECISIONS OF TRIBUNAL IN THE CASE OF PALHAWAS PRIMA RY AGRICULTURE CO-OP. VS ACIT (SUPRA), CONFIRM THE ORDER OF LD. CI T(A). 4. DURING THE YEAR ALSO THE ASSESSEE HAD DECLAR ED NET PROFIT OF RS.16,74,478/- AND THE WHOLE PROFIT WAS CLAIMED FOR DEDUCTION U/S 80P(2)(A)(I) AND 80(P)(2)(A)(IV) OF THE ACT. THE A O DENIED THE CLAIMED DEDUCTION ON THE BASIS THAT ONLY THOSE SOCIETIES AR E ALLOWED 100% ITA NO- 334/DEL/2013 A.Y 2009-10 4 DEDUCTION OF THEIR PROFIT U/S 80P WHICH ARE ENGAGED IN PROVIDING FACILITIES ONLY TO OTHER MEMBERS. IT WAS POINTED O UT THAT THE SOCIETY IS ACCEPTING DEPOSITS FROM NON-MEMBERS AND THAT MONEY GETS CIRCULATED THROUGH ADVANCES TO ITS MEMBERS, WHO IN TURN PAID I NTEREST ON THE ADVANCES AND INCOME HAS BEEN GENERATED BY THE SOCIE TY. THE LD. CIT (A) FOLLOWING THE DECISION OF THE TRIBUNAL IN THE C ASE OF PALHAWAS PRIMARY AGRICULTURE CO-OPERATIVE SOCIETY (SUPRA) HA S ALLOWED THE CLAIMED DEDUCTION. THE DECISION OF HONBLE SUPREME COURT IN THE CASE OF CIT VS. KARNATAKA STATE CO-OPERATIVE APEX BANK ( 2001) TO 51 ITR 194 (SC) WAS ALSO RELIED UPON WHEREIN IT HAS BEEN H ELD THAT INTEREST INCOME ASSESSING FROM INVESTMENT OF FUNDS WITH STAT E BANK OR WITH RESERVE BANK OF INDIA IS BANKING INCOME AND IS EXEM PT U/S 80P(2)(A)(I) OF THE ACT. THE TRIBUNAL WHILE DECIDING THE ISSUE IN THE CASE OF ASSESSEE FOR THE ASSESSMENT YEAR 2008-09 (SUPRA) HA S ALSO FOLLOWED THE DECISION OF CO-ORDINATE BENCH IN THE CASE OF AC IT VS. THE PALWAHAS PRIMARY AGRICULTURE CO-OPERATIVE (SUPRA) BESIDES O THER DECISIONS. WE THUS, RESPECTFULLY FOLLOWING THE DECISION OF THE CO -ORDINATE BENCH OF THE TRIBUNAL IN THE CASE OF ASSESSEE ITSELF FOR THE ASS ESSMENT YEAR 2008-09 (SUPRA) ON AN IDENTICAL ISSUE, HOLD THAT THE LD. CI T(A) HAS RIGHTLY DECIDED THE ISSUES IN FAVOUR OF THE ASSESSE WHILE D ELETING THE ITA NO- 334/DEL/2013 A.Y 2009-10 5 DISALLOWANCE OF DEDUCTION MADE U/S 80P OF THE ACT B Y THE AO. THE SAME IS UPHELD. 5. THE GROUNDS ARE ACCORDINGLY REJECTED. 6. CONSEQUENTLY, APPEAL IS DISMISSED. THE ORDER IS PRONOUNCED IN THE OPEN COURT ON 30 TH APRIL/ 2013. SD/- SD/- (G. D. AGRAWAL) (I. C. SUDHIR) VICE PRESIDENT JUDICIAL MEMBER DATED THE 30 DAY OF APRIL, 2013 R. NAHEED COPY FORWARDED TO 1. APPELLANT 2. RESPONDENT 3. CIT 4. CIT (A) 5. CIT (ITAT), NEW DELHI. AR,ITAT NEW DELHI .