Shri Jalaram Mahila Co. Op. Credit Society Ltd., V. The Income Tax Officer, Ward-3(1)(2), Baroda

ITA 3358/AHD/2016

• Counselvise Citation: [2018] 125 COUNSELVISE.COM (IT) 8327 (ITAT-AHMEDABAD)
• Duration Of Justice: 1 year(s) 5 month(s) 9 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 23-05-2018
• Appeal Filed By: Assessee
• Order Result: Dismissed
• Bench Allotted: SMC
• Assessment Year: 2013-2014
• Appeal Filed On: 14-12-2016
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Department Lawyers: PRASSON KABRA

Judgement Text

, - IN THE INCOME TAX APPELLATE TRIBUNAL AHMEDABAD BENCH A BEFORE SHRI RAJPAL YADAV, JUDICIAL MEMBER AND SHRI WASEEM AHMED, ACCOUNTANT MEMBER ./ ITA NO. 3358/AHD/2016 / ASSESSMENT YEAR: 2013-14 SHRI JALARAM MAHILA CO-OP. CREDIT SOCIETY LTD. JALARAM EYE HOSPITAL COMPUND ALIPURA, BODELI 391 135 DIST. CHHOTAUDEPUR PAN : AABAS 5194 D VS ITO, WARD 3(1)(2) BARODA. / (APPELLANT) / (RESPONDENT) ASSESSEE BY : SHRI SAMIR PARIKH, AR REVENUE BY : SHRI PRASSON KABRA, SR.DR / DATE OF HEARING : 23/05/2018 /DATE OF PRONOUNCEMENT : 23/05/2018 O R D E R PER RAJPAL YADAV, JUDICIAL MEMBER : PRESENT APPEAL IS DIRECTED AT THE INSTANCE OF THE ASSESSEE AGAINST OR DER OF LD.CIT(A)-3, BARODA DATED 19.8.2016 PASSED FOR THE ASSTT.YEAR 20 13-14. 2. IN THE GROUNDS OF APPEAL, SOLE ISSUE INVOLVED FO R ADJUDICATION RELATES TO DISALLOWANCE INTEREST INCOME EARNED ON F IXED DEPOSITS WITH BANKS WHICH WAS CLAIMED BY THE ASSESSEE AS DEDUCTIO N UNDER SECTION 80P(2)(A)(I) OF THE INCOME TAX ACT. 3. AT THE OUTSET, THE LD.DR POINTED OUT THAT ISSUE INVOLVED IN THIS APPEAL IS SQUARELY COVERED IN FAVOUR OF THE REVENUE BY THE DECISION OF HONBLE JURISDICTIONAL HIGH COURT IN THE CASE OF ST ATE BANK OF INDIA VS. ITA NO.3358/AHD/2016 - 2 - CIT, 389 ITR 578 FOR THE PROPOSITION THAT IN CASE O F CO-OP CREDIT SOCIETY, WHOSE ACTIVITY RELATES TO RECEIVING DEPOSITS AND LE NDING MONEY TO ITS MEMBERS, INTEREST DERIVED BY DEPOSITING SURPLUS FUN DS WITH THE NATIONALIZED BANKS, NOT BEING ATTRIBUTABLE TO THE B USINESS CARRIED ON BY THE ASSESSEE, CANNOT BE DEDUCTED UNDER SECTION 80P( 2)(A)(I) OF THE ACT. HOWEVER, THE LD.COUNSEL FOR THE ASSESSEE DID NOT CO NTEST THIS SUBMISSION OF THE LD.DR ON THE ISSUE AND REITERATED SUBMISSION S MADE BEFORE THE LD.REVENUE AUTHORITIES. 4. HAVING HEARD LD. REPRESENTATIVE AND GONE THROUGH THE RECORD, WE FIND THAT ASSESSEE IS A COOPERATIVE SOCIETY ENGAGED IN PROVIDING CREDIT FACILITIES TO ITS MEMBERS. THE ASSESSEE HAS FILED I TS RETURN OF INCOME ON 16.7.2013 DECLARING TOTAL INCOME AT RS.NIL BY CLAIM ING ENTIRE NET INCOME DEDUCTIBLE UNDER SECTION 80P(2)(A) OF THE INCOME TA X ACT. THIS CLAIM WAS DENIED BY THE AO ON THE GROUND THAT ASSESSEE BE ING A COOPERATIVE CREDIT SOCIETY ENGAGED IN PROVIDING CREDIT FACILITI ES TO ITS MEMBERS DEPOSITS ITS SURPLUS FUND IN FDRS/SB ACCOUNTS WITH NATIONALIZED BANK AND EARN INTEREST OUT OF SUCH DEPOSITS, THEN SUCH I NTEREST INCOME WOULD NOT QUALIFY FOR DEDUCTION UNDER THE RELEVANT PROVIS IONS APPENDED TO SECTION 80P OF THE ACT. THE AO ACCORDINGLY REJECTED THE CLAIM OF THE ASSESSEE. THE LD.CIT(A) UPHELD THE ORDER OF THE AO BY TAKING SUPPORT FROM THE DECISION OF THE HONBLE JURISDICTIONAL HIG H COURT IN THE CASE OF CIT VS. STATE BANK OF INDIA (SUPRA). WE FIND THAT HONBLE JURISDICTIONAL HIGH COURT HAS HELD THAT INTEREST EARNED FROM INVES TMENT MADE IN NATIONALIZED BANK BY A COOPERATIVE SOCIETY ENGAGED IN PROVIDING CREDIT FACILITIES TO ITS MEMBERS, IS NOT DEDUCTIBLE UNDER SECTION 80P(2)(D). IN RECENT PAST THE TRIBUNAL IN NUMBER OF CASES HAS TAK EN A CONSISTENT VIEW ON THIS ISSUE IN FAVOUR OF THE REVENUE BY FOLLOWING ABOVE JUDGMENT OF ITA NO.3358/AHD/2016 - 3 - THE HONBLE JURISDICTIONAL HIGH COURT. IN THIS VIEW OF THE MATTER, WE ARE NOT INCLINED TO INTERFERE IN THE ORDERS OF THE REVE NUE AUTHORITIES ON THIS ISSUE, WHICH WE UPHOLD. HOWEVER, ANY EXPENDITURE IN CURRED BY THE ASSESSEE FOR EARNING SUCH INCOME COULD BE ALLOWED T O IT. IN OTHER WORDS, THE LD.AO HAS TO DETERMINE THE NET INTEREST INCOME EARNED BY THE ASSESSEE ON SUCH INVESTMENT WITH BANK, AND ONLY THE REAFTER THAT INCOME HAS TO BE EXCLUDED FROM THE ADMISSIBILITY OF DEDUCT ION UNDER SECTION 80P(2) OF THE ACT. 5. IN THE RESULT, APPEAL OF THE ASSESSEE IS TREATED TO BE DISMISSED. PRONOUNCED IN THE OPEN COURT ON 23 RD MAY, 2018. SD/- SD/- (WASEEM AHMED) ACCOUNTANT MEMBER (RAJPAL YADAV) JUDICIAL MEMBER