Shree Dhansobhavak Co.-operative Credit Society Ltd., Anand V. The Income Tax Officer, Ward-5, Anand

ITA 3375/AHD/2016

• Counselvise Citation: [2018] 125 COUNSELVISE.COM (IT) 3084 (ITAT-AHMEDABAD)
• Duration Of Justice: 1 year(s) 8 month(s) 14 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 28-08-2018
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: SMC
• Assessment Year: 2012-2013
• Appeal Filed On: 14-12-2016
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: VIKRAM C S SHARMA
• Assessee Lawyers: PIYUSH AGARWAL

Judgement Text

, - IN THE INCOME TAX APPELLATE TRIBUNAL AHMEDABAD BENCH D BEFORE SHRI RAJPAL YADAV, JUDICIAL MEMBER AND SHRI WASEEM AHMED, ACCOUNTANT MEMBER ./ ITA NO. 3375/AHD/2016 / ASSESSMENT YEAR: 2012-13 SHREE DHANSOBHAVAK CO-OPERATIVE CREDIT SOCIETY LTD. BALIYAKAKA ROAD AT & POST. : ANAND PIN : 388001, GUJARAT. PAN : AAAJS 1101 Q VS ITO, WARD-5 ANAND. / (APPELLANT) / (RESPONDENT) ASSESSEE BY : SHRI PIYUSH AGARWAL, AR REVENUE BY : SHRI VIKRAM C.S. SHARMA, SR.DR / DATE OF HEARING : 27/08/2018 /DATE OF PRONOUNCEMENT : 28 /08/2018 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)-4, VADODARA DATED 28.7.2016 PASSED FOR THE ASSESSMENT YEAR 2012-13. BY THIS APPEAL, THE ASSESSEE HAS CHALLENGED NON-ALLOWA NCE OF DEDUCTION UNDER SECTION 80P(2)(A)(I) OF THE INCOME TAX ACT, 1 961. 2. AT THE OUTSET, THE LD.DR SUBMITTED THAT ISSUE IS COVERED IN FAVOUR OF THE REVENUE BY THE JUDGMENT OF THE HONBLE JURIS DICTIONAL HIGH COURT IN THE CASE OF STATE BANK OF INDIA CO-OPERATIVE SOC IETY VS. CIT, 72 ITA NO.3375/AHD/2016 - 2 - TAXMANN.COM 64 (GUJ) WHEREIN IT HAS BEEN HELD THAT COOPERATIVE SOCIETY ENGAGED IN THE BUSINESS OF PROVIDING CREDIT FACILIT IES TO ITS MEMBERS WHICH EARNS INTEREST INCOME ON THE SURPLUS FUNDS PA RKED WITH THE NATIONALISED BANKS, IS NOT ELIGIBLE FOR DEDUCTION U NDER SECTION 80P(2)(A)(I) OF THE ACT. SINCE IMPUGNED ORDERS OF REVENUE AUTHORITIES ARE IN TERMS OF JUDGMENT OF THE HONBLE HIGH COURT CITED SUPRA, NO INTERFERENCE THEREOF IS REQUIRED AND THE APPEAL OF THE ASSESSEE MAY BE DISMISSED. HOWEVER, THE LD.COUNSEL FOR THE ASSESSE E DOES NOT CONTEST JUDGMENT OF HONBLE GUJARAT HIGH COURT, BUT SUBMITT ED THAT IN CASE CLAIM OF THE ASSESSEE IS NOT FOUND TO BE ADMISSIBLE , THEN PROPORTIONATE ADMINISTRATIVE AND FINANCIAL EXPENSES INCURRED FOR EARNING SUCH INTEREST/INVESTMENT INCOME BE ALLOWED TO THE ASSESS EE. 3. HAVING HEARD BOTH THE PARTIES AND ON PERUSAL OF THE RECORD, WE FIND THAT ASSESSEE IS A COOPERATIVE SOCIETY REGISTE RED UNDER GUJARAT CO- OPERATIVE SOCIETIES ACT, 1961 AND ENGAGED IN PROVID ING CREDIT FACILITIES TO ITS MEMBERS. IN THE RETURN OF INCOME, THE ASSESSEE HAS CLAIMED DEDUCTION UNDER SECTION 80P(2)(A)(I) FOR THE INTERE ST INCOME EARNED ON FDRS. WITH THE FINANCIAL INSTITUTIONS. THIS CLAIM WAS DENIED BY THE AO ON THE GROUND THAT PROVISIONS OF SECTION 80P(2)(A)( I) DOES NOT COVER ASSESSEE-SOCIETY. THE LD.CIT(A) CONCURRED WITH THE ORDER OF THE AO BY RELYING UPON THE JUDGMENT OF HONBLE JURISDICTIONAL HIGH COURT IN THE CASE OF STATE BANK OF INDIA CO-OPERATIVE SOCIETY (S UPRA). WE FIND THAT HONBLE JURISDICTIONAL HIGH COURT HAS HELD THAT INT EREST EARNED FROM INVESTMENT MADE IN NATIONALIZED BANK BY A COOPERATI VE SOCIETY ENGAGED IN PROVIDING CREDIT FACILITIES TO ITS MEMBERS, IS N OT ELIGIBLE FOR DEDUCTION UNDER SECTION 80P. THE TRIBUNAL IN EARLIER OCCASIO NS ON SIMILAR ISSUE HAS TAKEN A CONSISTENT VIEW BY FOLLOWING ABOVE JUDGMENT OF THE HONBLE ITA NO.3375/AHD/2016 - 3 - JURISDICTIONAL HIGH COURT. SINCE ORDERS OF THE REVE NUE AUTHORITIES ARE IN ACCORDANCE WITH THE JUDGMENT OF THE HONBLE JURISDI CTIONAL HIGH COURT CITED SUPRA, NO INTERFERE IS CALLED FOR IN THE IMPU GNED ORDERS, WHICH WE CONFIRM. HOWEVER, ANY EXPENDITURE INCURRED BY THE A SSESSEE FOR EARNING SUCH INCOME COULD BE ALLOWED TO IT, IF NOT ALREADY ALLOWED. IN OTHER WORDS, THE LD.AO HAS TO DETERMINE THE NET INTEREST INCOME AS WELL AS MISC. INCOME EARNED BY THE ASSESSEE, AND ONLY THERE AFTER THAT INCOME HAS TO BE EXCLUDED FROM THE ADMISSIBILITY OF DEDUCTION UNDER SECTION 80P OF THE ACT. THE LD.AO IS ALSO DIRECTED TO EXAMINE WHE THER THE ASSESSEE IS ENTITLED FOR STATUTORY DEDUCTION UNDER SECTION 80P( 2)(C) OF THE ACT OR NOT. IF IT IS ENTITLED, THEN SUCH DEDUCTION SHALL BE GIV EN TO THE ASSESSEE WHILE CALCULATING ITS TAXABLE INCOME. 4. IN THE RESULT, APPEAL OF THE ASSESSEE IS PARTLY ALLOWED FOR STATISTICAL PURPOSE. PRONOUNCED IN THE OPEN COURT ON 28 TH AUGUST, 2018. SD/- SD/- (WASEEM AHMED) ACCOUNTANT MEMBER (RAJPAL YADAV) JUDICIAL MEMBER