BEGUMPURA NAGRIK DHIRAN SAHAKARI MANDALI LTD , SURAT V. THE ASSISTANT COMMISSIONER OF INCOMETAX CIRCLE 2(2) ,SURAT , SURAT

ITA 35/SRT/2024

• Counselvise Citation: [2024] 101 COUNSELVISE.COM (IT) 7875 (ITAT-SURAT)
• Duration Of Justice: 2 month(s) 30 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 11-04-2024
• Appeal Filed By: Assessee
• Order Result: Dismissed
• Bench Allotted: SMC
• Next Hearing Date: 03-04-2024
• Assessment Year: 2017-2018
• Appeal Filed On: 12-01-2024
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Keywords: Business income; Rectification of order; Condonation of delay; Set aside
• Section: 37; 154; 73; 72

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL, SURAT BENCH, SURAT BEFORE SHRIPAWAN SINGH, JM &DR. A.L.SAINI, AM आयकरअपीलसं./ITA Nos.35 & 115/SRT/2024 Assessment Year: (2017-18) (Physical Hearing) Begumpura Nagrik Dhiran Sahakari Mandali Ltd., 4/3906, Sahakar, Bhula Modi, Chakla, Begumpura, Surat – 395003 Vs. The ACIT, Circle – 2(2), Surat èथायीलेखासं./जीआइआरसं./PAN/GIR No: AAAAB0808N (Appellant) (Respondent) Appellant by Shri Hiren Vepari, CA Respondent by Shri Vinod Kumar, Sr. DR Date of Hearing 04/04/2024 Date of Pronouncement 12/04/2024 आदेश / O R D E R PER DR. A. L. SAINI, AM: Captioned two appeals filed by the assessee, pertaining to Assessment Year (AY) 2017-18, are directed against the separate orders passed by the Learned Commissioner of Income Tax (Appeals),[in short “the ld. CIT(A)”], Surat, National Faceless Appeal Centre (in short ‘the NFAC’), dated 21.04.2023 and 10.11.2022 respectively, which in turn arise out of separate assessment/rectification orders passed by Assessing Officer u/s 154 and 143(3)of the Income Tax Act, 1961 (hereinafter referred to as “the Act”). 2. First, we shall take assessee`s appeal in ITA No.115/SRT/2024 for assessment year 2017-18. The grounds of appeal raised by the assessee in ITA No.115/SRT/2024, are as follows: 2 ITA.35 & 115/SRT/2024/AY.2017-18 Begumpura Nagrik Dhiran Sahakari Mandali Ltd. “(1) The learned CIT(A) was not justified in denying relief u/s 80P(2)(d), particularly when there was a binding precedent emerging from the facts. (2) Alternatively, the CIT(A) ought to have granted relief u/s 80P(2)(a)(i) of the Act. (3) The learned CIT(A) grossly erred by narrating the entire facts of AY.2018-19, in the appeal he was dealing for the AY.2017-18. (4) All of the above grounds are prejudice to one another. (5) The appellant craves leave to add, alter or vary any of the grounds of appeal.” 3. The appeal filed by the assessee in ITA No.115/SRT/2024, for AY.2017-18, is barred by limitation by 386 days. The assessee moved a petition for condonation of delay, requesting the Bench to condone the delay. The contents of the petition for condonation of delay are reproduced below: “I, JatinbhaiHasmukhbhaiTopiwala aged 73 years of 7, Ganeshkrupa Co. op. Housing Society, Ichhanath Road, Athwalines, Surat-395007 state on solemn affirmation as under: (1) I hold PAN of AARPT2526M with the Income Tax Department Surat. (2) I am the President of BegumpuraNagrikDhiranSahakariMandali Ltd (Co. op Society). (3) For A.Y. 2017-18, appeal of the Co. op Society before the Tribunal is delayed by 386 days as stated under: (4) Primarily, the delay occurred because the disposal of rectification application took longer time from the office of the CIT(A). (5) Details of delay is given in the Application for condonation of delay of Co. op Society made contemporaneously. (6) This affidavit is made to assert the above facts. 3 ITA.35 & 115/SRT/2024/AY.2017-18 Begumpura Nagrik Dhiran Sahakari Mandali Ltd. (7) For this affidavit, I have used e-stamp bearing e-certificate no. IN-QJ274938656468772” 4. Based on the contents mentioned in the petition for condonation of delay, Ld. Counsel argued that since the assessee was seeking alternative remedy under section 154 of the Act during the appellate proceedings before ld CIT(A) and that this has resulted in delay, hence such delay should be condoned in the interest of justice. 5. On the other hand, learned Senior Departmental Representative (ld. Sr. DR) for the Revenue submitted that delay should not be condoned because the assessee has not explained the sufficient cause, and reason for the delay. Moreover, the assessee has not filed the appeal against the order passed by the ld CIT(A) under section 154 of the Act, for which the alternative remedy is being sought by the assessee, therefore, delay should not be condoned and the appeal of the assessee may be dismissed. 6. We have heard both the parties on this preliminary issue. We note that the assessee was seeking alternative remedy during the appellate proceedings before ld. CIT(A) and therefore filed an application under section 154 of the Act for rectification of mistake. In this process, the assessee got delay in filing the appeal before the Tribunal. We note that the reasons given in the affidavit for condonation of delay were convincing and these reasons would constitute reasonable and sufficient cause for the delay in filing this appeal. We, therefore, condone the delay and admit the appeal for hearing on merit. 7. On merit, Ld. Counsel for the assessee, argued that assessee has claimed the deduction under section 80P(2)(d) of the Act in respect of 4 ITA.35 & 115/SRT/2024/AY.2017-18 Begumpura Nagrik Dhiran Sahakari Mandali Ltd. interest received from the Co-operative Bank. The Ld. Counsel also stated that this issue was raised before the ld. CIT(A) by way of alternatively ground that deduction claimed by the assessee under section 80P(2)(d) of the Act, in respect of interest received from Co- operative bank is allowable. The Ld. Counsel submitted that it is a covered case and this Tribunal has allowed in many cases the deduction under section 80P(2)(d) of the Act in respect of interest received from Co-operative Bank. Therefore, deduction claimed by the assessee u/s 80P(2) (d) of the Act, in respect of interest received from Co-operative Bank should be allowed. 8. On the other hand, learned Senior Departmental Representative (ld. Sr. DR) for the Revenue has primarily reiterated the stand taken by the Assessing Officer, which we have already noted in our earlier para and is not being repeated for the sake of brevity. 9. We have heard both the parties and carefully gone through the submissions put forth on behalf of the assessee along with the documents furnished and the case laws relied upon, and perused the facts of the case including the findings of the ld. CIT(A) and other material brought on record.We note that issue under consideration is no longer res judicata and the interest received from Co-operative Bank is allowable deduction under section 80P(2)(d) of the Act, for that reliance is placed on the decision of the Hon`ble Jurisdictional High Court of Gujarat in the case of Surat VankarSahakari Sangh Ltd, [2016] 72 taxmann.com 169 (Gujarat)/[2020] 421 ITR 134 (Guj), wherein it was held that assessee-co-operative society was eligible for deduction under section 80P(2)(d) of the Act, in respect of gross interest received from 5 ITA.35 & 115/SRT/2024/AY.2017-18 Begumpura Nagrik Dhiran Sahakari Mandali Ltd. co-operative bank without adjusting interest paid to said bank. The findings of the Hon`ble Court is reproduced below: “8. We have considered the decisions cited by learned advocate for the assessee as well as the revenue. We feel that the decisions cited by the learned advocate for the assessee shall be applicable on the facts of the present case. In the case of K. Nandakumar v. ITO [1993] 204 ITR 856/[1994] 72 Taxman 223 (Ker.), the Kerala High Court has held as under: '4. The effect of Section 80AB is that, for the purpose of computing the deduction under Section 80L, the amount of income of that nature as computed in accordance with the provisions of the Act shall alone be deemed to be the amount of income of that nature. What the section means is that the net income by way of interest computed in the manner provided by the provisions of the Act shall alone be taken into account for computing the benefit. But it must be noted that payment of interest under a loan transaction incurred for the purpose of deriving income from business is not an item which arises in the computation of interest income "in accordance with the provisions" of the Act. The said amount has to be paid irrespective of whether any interest income is otherwise received or not. Though the interest is payable to the same bank, the fact remains that the amount of income by- way of interest is not calculated under the provisions of the Act with reference to such outgoings which fall under different heads. The assessee is entitled to deduction under Section 37 of all expenditure incurred for the purpose of deriving the business income, and it is under that head that the interest paid on the loan taken from the bank is deducted. The net amount of interest contemplated by Section 80AB should take in the net amount arrived at after meeting the expenses deductible from that item under the provisions of the Act as explained above. That is not the case here. Therefore, Section 80AB has no application to the facts of these cases. The interest paid on the loan transactions has to be deducted from the business income, and not from the interest received from the bank on the fixed deposits. The assessees were therefore right in the submissions which they made before the Commissioner of Income-tax in the revision petitions which they filed. This aspect of the matter has been overlooked by the Commissioner in passing the order, exhibit P-5.' 8.1 Similarly, in the case of Doaba Co-operative Sugar Mills Ltd (supra), the Punjab & Haryana High Court has held as under: '5. The contention of Mr. Gupta, learned counsel appearing for the Revenue, is that the Tribunal was wrong in allowing deduction under Section 80P(2) (d) of the Act because it is not established that the assessee had derived the interest by investing all the amount of surplus funds. It is further contended by Mr. Gupta that the assessee has paid interest to Jalandhar Central Co- operative Bank and has also received interest from the said co- operative bank, thereby showing that the assessee has on the aggregate paid interest to 6 ITA.35 & 115/SRT/2024/AY.2017-18 Begumpura Nagrik Dhiran Sahakari Mandali Ltd. the bank and, therefore, no deduction under Section 80P(2)(d) can be allowed. To appreciate this argument, we have to look to the provisions of Section 80P(2)(d) of the Act, For facility of reference, it is reproduced as under : "80P. (2)(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." 6. So far as the principle of interpretation applicable to a taxing statute is concerned, we can do no better than to quote the by-now classic words of Rowlatt J., in Cape Brandy Syndicate v. IRC [1921] 1 KB 64, 71: "...In a taxing Act, one has to look merely at what is clearly said. There is no room for any intendment. There is no equity about a tax. There is no presumption as to a tax. Nothing is to be read in, nothing is to be implied. One can only look fairly at the language used," 7. The principle laid down by Rowlatt J., has also been time and again approved and applied by the Supreme Court in different cases including the one, Hansraj Gordhandas v. H. H. Dave, Assistant Collector of Central Excise and Customs, AIR 1970 SC 755, 759. 8. Section 80P(2)(d) of the Act allows whole deduction of an income by way of interest or dividends derived by the co-operative society from its investment with any other co-operative society. This provision does not make any distinction in regard to source of the investment because this Section envisages deduction in respect of any income derived by the co-operative society from any investment with a co-operative society. It is immaterial whether any interest paid to the co- operative society exceeds the interest received from the bank on investments. The Revenue is not required to look to the nature of the investment whether it was from its surplus funds or otherwise. The Act does not speak of any adjustment as sought to be made out by learned counsel for the Revenue. The provision does not indicate any such adjustment in regard to interest derived from the co-operative society from its investment in any other co-operative society. Therefore, we do not agree with the argument advanced by learned counsel for the Revenue. In our opinion, the learned Tribunal was right in law in allowing deduction under Section 80P(2)(d) of the Income- tax Act, 1961 in respect of interest of RS. 4,00,919 on account of interest received from Nawanshaln Central Co- operative Bank without adjusting the interest paid to the hank. Therefore, the reference is answered against the Revenue in the affirmative and in favour of the assessee.' 8.2 Moreover, the Bombay High Court in the case of Bai BhuribenLallubhai (supra) has held that the purpose for which the assessee borrowed money had no connection whether direct or indirect with the income which she earned from the fixed deposit and that she was not entitled to the deduction claimed under Section 12(2). The High Court held that if an assessee had no 7 ITA.35 & 115/SRT/2024/AY.2017-18 Begumpura Nagrik Dhiran Sahakari Mandali Ltd. option except to incur an expenditure in order to make the earning of an income possible, then undoubtedly the exercise of that option is compulsory and any expenditure incurred by reason of the exercise of that option would come within the ambit of section 12(2) of the Indian Income-Tax Act but where the option has no connection with the carrying on of the business or the earning of the income and the option depends upon personal considerations or upon motives of the assessee, that expenditure cannot possibly come within the ambit of Section 12(2). In the present case, the loan was taken for business purpose more particularly purchase of yarn and not for fixed deposits. 9. In view of the above, the questions raised in the present appeals are answered in favour of the assessee and against the revenue. The order passed by the Tribunal is accordingly quashed and set aside.” 10. We see no reasons to take any other view of the matter than the view so taken by the Hon`ble Jurisdictional High Court of Gujarat in the case of Surat Vankar Sahakari Sangh Ltd. (Supra). As the issue is squarely covered in favour of the assessee by the judgment Hon`ble Jurisdictional High Court of Gujarat in the case of Surat Vankar Sahakari Sangh Ltd. (Supra) and there is no change in facts and law and the Revenue is unable to produce any material to controvert the aforesaid findings of the Hon`ble Jurisdictional High Court of Gujarat. Therefore, respectfully following the binding judgment of the Hon`ble Jurisdictional High Court of Gujarat in the case of Surat Vankar Sahakari Sangh Ltd. (Supra), we allow the appeal filed by the assessee. 11. In the result, appeal of the assessee in ITA No.115/SRT/2024, is allowed. 12. Since, we have allowed the appeal of the assessee in ITA No. 115/SRT/2024, for assessment year 2017-18, therefore appeal filed by the assessee in ITA No.35/SRT/2024 (against the order u/s 154 of the Act) becomes infructuous and does not require adjudication, hence we dismiss the same. 8 ITA.35 & 115/SRT/2024/AY.2017-18 Begumpura Nagrik Dhiran Sahakari Mandali Ltd. 13. In the combined result, appeals filed by the assessee in ITA No. 115/SRT/2024, is allowed whereas appeal filed by the assessee in ITA No. 35/SRT/2024 is being rendered infructuous so dismissed Order is pronounced on 12/04/2024 in the open court. Sd/- Sd/- (PAWAN SINGH) (Dr. A.L. SAINI) JUDICIAL MEMBER ACCOUNTANT MEMBER lwjr /Surat Ǒदनांक/ Date: 12/04/2024 SAMANTA Copy of the Order forwarded to 1. The Assessee 2. The Respondent 3. The CIT(A) 4. CIT 5. DR/AR, ITAT, Surat 6. Guard File By Order // TRUE COPY // Assistant Registrar/Sr. PS/PS ITAT, Surat