TELCO CO-OPERATIVE SOCIETY LTD , JAMSHEDPUR V. AYKAR ADHIKARI WARD-3(2), JAMSHEDPUR

ITA 345/RAN/2017

• Counselvise Citation: [2022] 106 COUNSELVISE.COM (IT) 8264 (ITAT-RANCHI)
• Duration Of Justice: 4 year(s) 6 month(s) 21 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 11-07-2022
• Appeal Filed By: Assessee
• Order Result: PartlyAllowed
• Bench Allotted: DB
• Assessment Year: 2014-2015
• Appeal Filed On: 20-12-2017
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Section: 250

Judgement Text

आयकर अपीलीय अिधकरण, “रांची“ ᭠यायपीठ रांची IN THE INCOME TAX APPELLATE TRIBUNAL “RANCHI” BENCH, RANCHI (Heard from Kolkata Benches through web-based video conferencing platform) ] ] BEFORE SHRI RAJPAL YADAV, VICE PRESIDENT AND SHRI MANISH BORAD, ACCOUNTANT MEMBER I.T.A. No. 345/Ran/2017 Assessment Year: 2014-15 Telco Co-operative Society Ltd. Telco Works, Telco Jamshedpur - 831001 PAN: AAAAT9667K Vs Income Tax Officer, Ward-3(2), Jamshedpur अपीलाथᱮ/ (Appellant) ᮧ᭜ यथᱮ/ (Respondent) Assessee by : Shri Deepak Kumar Sharma, C.A. Revenue by : Shri N.K. Khalkho, Sr. D/R सुनवाई कᳱ तारीख/Date of Hearing : 10/05/2022 घोषणा कᳱ तारीख /Date of Pronouncement : 12/07/2022 आदेश/O R D E R PER RAJPAL YADAV, VICE PRESIDENT : The present appeal is directed at the instance of the assessee against the order of the learned Commissioner of Income Tax (Appeals) – Jamshedpur, dated 12/09/2017, passed under Section 250 of the Income Tax Act, 1961 (in short “the Act”), for Assessment Year 2014-15. 2. The assessee has taken five grounds of appeal out of which Ground Nos. 1, 4 & 5 are general in nature on which no arguments were advanced. Therefore, these grounds are rejected as such. 3. In Ground No. 2, the assessee has pleaded that the ld. CIT(A) has erred in confirming the addition of Rs.3,75,972/-. Brief facts of the case are that the assessee is a co-operative society. It filed its return of income on 06/11/2014 declaring total income of Rs.1,39,520/-. As per the bye-laws of the society, only the employees of M/s. Tata Motors Ltd. (erstwhile M/s. Telco Ltd.) can be member of the society and are eligible for the loan/credit I.T.A. No. 345/Ran/2017 Assessment Year: 2014-15 Telco Co-operative Society Ltd. 2 facility. During the year, the assessee society received a contract from M/s. Tata Motors Ltd. of Rs.64,43,654/-, for maintaining the horticulture of the compound. The assessee has outsourced this job and shown profit at 2.94% in the accounts. The Assessing Officer was not satisfied with the calculation of this profit at Rs.1,89,518/-. He was of the view that the assessee should have shown profit at least @ 8% of the total receipt. The Assessing Officer confronted the assessee with regard to the above and ultimately recorded a finding in paragraph nos. 3.5. & 3.6. of the assessment order that, the assessee failed to give any evidence for low profit. The Assessing Officer estimated the profit @ 8 % which comes to Rs.5.15.492/-. After debiting the profit declared by the assessee, he made the addition of the balance. This addition has been upheld by the ld. First Appellate Authority and, therefore, impugned before us in Ground No. 2 of the grounds of appeal. 4. With the assistance of the ld. Representatives, we have gone through the record carefully. We find that the Assessing Officer as well the ld. CIT(A) have recorded a categorical finding that the assessee failed to submit complete details about this work contract. It failed to demonstrate as to how this contract has generated 2.94% of the profit only. The Assessing Officer after going through all the details rejected the claim of the assessee and estimated the profit at 8%. He accordingly worked out an addition of Rs.3,75,972/-. After going through the well-reasoned finding of both the lower authorities, we do not find any reason to interfere with the same, because according to the finding of the Assessing Officer, no details were submitted by the assessee. Accordingly, this ground of the assessee’s appeal is dismissed. 5. Ground No. 3:- In this ground of appeal, the grievance of the assessee is that the ld. CIT(A) has erred in disallowing the deduction of interest income amounting to Rs.50,99,394/-. I.T.A. No. 345/Ran/2017 Assessment Year: 2014-15 Telco Co-operative Society Ltd. 3 6. With the assistance of the ld. Representatives, we have gone through the record carefully. Lot of debate has been noticed by the ld. Revenue Authorities below on this point. The stand of the ld. CIT(A) was that interest income earned by the assessee would be eligible for deduction which is earned on statutory deposits. In other words, the ld. First Appellate Authority was of the view that if some Fixed Deposits were made by the assessee for statutory compliance to run the society then, the interest income, though incidental one, be allowed as a deduction. Rest the ld. CIT(A) did not allow. 7. The simple issue before the Tribunal is that investment made out of the surplus funds with Jharkhand State Co-operative Bank. Whether interest income earned from that investment is eligible for deduction or not. This claim has been made by the assessee u/s 80P(2)(d) of the Act. We deem it appropriate to take note of these provisions which read as under:- “80P. (1) Where, in the case of an assessee being a co-operative society, the gross total income includes any income referred to in sub-section (2), there shall be deducted, in accordance with and subject to the provisions of this section, the sums specified in sub-section (2), in computing the total income of the assessee. ********** ********** ********* ********* (d) in respect of any income by way of interest or dividends derived by the co- operative society from its investments with any other co-operative society, the whole of such income; **************** 8. A perusal of sub-Section (d) would indicate that in respect of any income by way of interest or dividend derives by the co-operative society from its investment with any other co-operative society, the whole of such income shall be eligible for deduction. The whole of income earned from co- operative society by an assessee by way of the interest or dividend shall be eligible for deduction u/s 80P(2)(d) of the Act. The Jharkhand State Co- operative Bank, happens to be a society first and thereafter a bank. I.T.A. No. 345/Ran/2017 Assessment Year: 2014-15 Telco Co-operative Society Ltd. 4 Therefore, interest income earned from this bank on investment of surplus fund will qualify for grant of deduction u/s 80P(2)(d) of the Act. We accordingly, delete this disallowance and allow this ground of the appeal. 9. In the result, appeal of the assessee is partly allowed. Order pronounced in the Court on 12 th July, 2022 at Kolkata. Sd/- Sd/- (MANISH BORAD) (RAJPAL YADAV) ACCOUNTANT MEMBER VICE-PRESIDENT Kolkata, Dated 12/07/2022 *SC SrPs आदेश कᳱ ᮧितिलिप अᮕेिषत/Copy of the Order forwarded to : 1. अपीलाथᱮ / The Appellant 2. ᮧ᭜यथᱮ / The Respondent. 3. संबंिधत आयकर आयुᲦ / Concerned Pr. CIT 4. आयकर आयुᲦ)अपील (/ The CIT(A)- 5. िवभागीय ᮧितिनिध आयकर अपीलीय अिधकरण,Ranchi/DR,ITAT, Ranchi 6. गाडᭅ फाईल /Guard file. आदेशानुसार/ BY ORDER, TRUE COPY Assistant Registrar आयकर अपीलीय अिधकरण ITAT, Ranchi