Income-tax Officer, V. Shri Bhairavnath Nagari Sahakari Patsanstha Ltd., Nashik

ITA 350/PUN/2014

• Counselvise Citation: [2015] 134 COUNSELVISE.COM (IT) 1184 (ITAT-PUNE)
• Duration Of Justice: 1 year(s) 6 month(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 26-08-2015
• Appeal Filed By: Department
• Order Result: Partly Allowed
• Bench Allotted: A
• Next Hearing Date: 15-07-2015
• Assessment Year: 2009-2010
• Appeal Filed On: 25-02-2014
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: S K JADHAV

Judgement Text

IN THE INCOME T AX APPELLATE TR IBUNAL PUNE BENCH A, P UNE , . . , BEFORE MS. SUSH MA CHOWLA, JM AND SHRI R.K. PAN DA, AM . / ITA NO.350/PN/2 014 / ASSESSMENT YEAR : 2009-10 ITO, WARD-1(3), NAS HIK . / APPELLANT V/S SHRI BHAIRAVNATH NA GARI SAHAKARI PATSANSTHA LTD., KRISHNAI COMPLEX, G ANESH PETH, SINNAR, DIST : NASHIK 422 103 PAN NO. AAAAS6679 L . / RESPONDENT / APPELLANT BY : SHRI S.K. JADHAV / RESPONDENT BY : NONE SINGH / ORDER PER R.K. PANDA, A M : THIS APPEAL FILED BY T HE REVENUE IS DIRECTE D AGAINST THE ORDER DATED 18-12-2013 O F THE CIT(A)-I, NASHI K RELATING TO ASSESS MENT YEAR 2009-10. 2. DESPITE SERVIC E OF NOTICE NONE AP PEARED ON BEHALF OF THE ASSESSEE. THEREFORE , THIS MATTER IS BEIN G DECIDED ON THE BA SIS OF MATERIAL AVAILABLE ON RECORD AND A FTER HEARING THE LD. DEPARTMENTAL REPRES ENTATIVE. / DATE OF HEARING : 15 .07.2015 / DATE OF PRONOUNCEM ENT:26.08.2015 2 ITA NO.350/PN/2014 3. FACTS OF THE C ASE IN BRIEF ARE THA T THE ASSESSEE IS A CREDIT COOPERATIVE SOCIETY E NGAGED IN THE ACTIVIT Y OF PROVIDING FINANC E TO ITS MEMBERS. THE SOCIETY IS REGISTERED UNDER THE MAHARA SHTRA SOCIETIES ACT AND IS HOLDING LICENSE TO C ARRY ON ACTIVITY OF C REDIT COOPERATIVE SOCIETY. IT FILED ITS RETURN O F INCOME ON 10-09-2 009 DECLARING NIL INCO ME. DURING THE COURSE OF ASSESSM ENT PROCEEDINGS THE AO NOTED THAT THE ASSES SEE INTERALIA RECEIVED THE FOLLOWING INCOME : INTEREST ON DEPOS IT WITH MSEB RS.70,684/ COMMISSION ON M SEB WITH BILL CONNECTION RS.2,34,276/ PRINTING AND STAT IONERY RS.1,60,800/ INTEREST ON DEPO SITS WITH SBI AND ICICI B ANK RS.12,14,523/ LOCKER RENT RS.6,407/ MSEB COLLECTION CHARGES RS.32,790/ BSNL BILL COMMI SSION RS.10,229/ ACCORDING TO THE AO THE INCOME SHOWN UNDER THE HEAD PRIN TING AND STATIONERY IS TH E FEES/CHARGES COLLE CTED FROM MEMBERS FOR ISSUING NO OBJECT ION CERTIFICATES AN D OTHER MISCELLAN EOUS CERTIFICATES. HE THE REFORE ASKED THE ASS ESSEE TO CLARIFY AS TO WHY THE ADDITION SHOULD N OT BE TREATED AS INCOM E FROM OTHER SOURCES AS THE SOCIETY IS FORMED FOR PROVIDING CREDIT F ACILITY TO ITS MEMBERS AND THEREFORE ONLY THE INTEREST EARNED FROM PROVIDING CREDIT TO ITS MEMBERS IS ITS BUSIN ESS INCOME. 4. THE AO FURTHE R ASKED THE ASSESSE E AS TO HOW AND WH Y THE INTEREST ON DEPOS IT WITH SBI AND ICICI AMOUNTING TO RS.12,14,523/- CAN BE CLAIMED AS D EDUCTION U/S.80P(2 )(A)(I). REJECTING THE VARIOU S EXPLANATIONS GIVE N BY THE ASSESSEE AND FOLLOWING THE DECISIO N OF THE HONBLE SUP REME COURT IN THE CA SE OF TOTGARS COOPERATIVE SALE SOCIETY LTD. REP ORTED IN 229 CTR 20 9 THE 3 ITA NO.350/PN/2014 AO HELD THAT DEDU CTION U/S.80P(2)(A)(I ) IS NOT AVAILABLE T O THE ASSESSEE ON ACCOUNT OF SUCH BANK INTER EST. THE AO ACCORD INGLY BROUGHT TO TAX THE F OLLOWING AMOUNTS AN D DETERMINED THE TA XABLE INCOME OF RS.17,29,7 10/-, THE DETAILS OF W HICH ARE AS UNDER : INTEREST ON DEPOSIT WITH MSEB RS.70,684/ COMMISSION ON M SEB WITH BILL CONNECTION RS.2,34,276/ PRINTING AND STAT IONERY RS.1,60,800/ INTEREST ON DEPO SITS WITH SBI AND ICICI B ANK RS.12,14,523/ LOCKER RENT RS.6,407/ MSEB COLLECTION CHARGES RS.32,790/ BSNL BILL COMMI SSION RS.10,229/ TOTAL TAXABLE INC OME RS.17,29,710/ 5. IN APPEAL THE L D.CIT(A) WHILE CONFIRM ING PART OF THE ADDITI ONS MADE BY THE AO, H OWEVER, DIRECTED THE AO TO DELETE DEDU CTION U/S.80P(2)(A)(I) AMOU NTING TO RS.13,75,32 3/-, THE DETAILS OF W HICH ARE AS UNDER : SR.NO. PARTICULARS AMOUNT (RS.) I) PRINTING & STATIONERY 1,60,800 II) INTEREST ON DEPOSITS WIT H SBI AND ICICI BANK 12,14,523/ 13,75,323 6. SO FAR AS THE A MOUNT OF RS.1,68,80 0/- ON ACCOUNT OF PRI NTING AND STATIONERY RECE IPT IS CONCERNED, TH E LD.CIT(A) DIRECTED THE ASSESSING OFFICER TO DELETE THE SAME O N THE GROUND THAT THE ASSESSEE HAS INFACT NOT EARNED ANY INCO ME ON ACCOUNT OF PR INTING AND STATIONERY AND H AS RECOUPED THE SAM E UNDER THE HEAD PRI NTING AND STATIONERY CHAR GES. HE FURTHER NO TED THAT THE EXPEND ITURE INCURRED ON THIS H EAD IS RS.1,69,114 /- WHEREAS THE INC OME RECOUPED IS RS.1,60 ,800/- AND THUS TH ERE IS NET EXPENDITU RE OF RS.8,314/-. 4 ITA NO.350/PN/2014 7. SO FAR AS THE I NTEREST ON DEPOSITS W ITH SBI AND ICICI BA NKS AMOUNTING TO RS.12, 14,523/- IS CONCERNE D, THE LD.CIT(A) FOLLO WING VARIOUS DECISIONS OF THE TRIBUNAL INCLU DING THE DECISION O F THE TRIBUNAL IN THE CASE OF NIPHAD NAGARI S AHAKARI PATSANSTHA LTD. VIDE ITA NO.1336/PN /2011 ORDER DATED 3 1-07-2013 FOR A.Y. 2 008- 09 HELD THAT THE SA ID INTEREST IS ITS BU SINESS INCOME ELIGIB LE FOR DEDUCTION U/S.80P(2 )(A)(I) OF THE ACT. 8. AGGRIEVED WITH SUCH ORDER OF THE CIT(A) THE REVENUE IS IN APPEAL BEFORE US WITH THE FOLLOWING GROUND S : 1) WHETHER ON THE FAC TS AND IN THE CIRCUMSTAN CES OF THE CASE, THE LD. CIT(A)I, NASHIK WAS JUSTIFIED IN ALLOWING THE DEDUCTION U/S 80P(2)(A)(I) AMOUNTING TO RS 1,60,800/ IN R ESPECT OF PRINTING & STATIONARY. 2) WHETHER ON THE FACT S AND IN THE CIRCUMSTAN CES OF THE CASE, THE LD. CIT (A)I, NASHIK WA S JUSTIFIED IN ALLOWIN G THE DEDUCTION U/S 80P(2)(A)(I) AMOUNTING TO RS 12,14,523/ IN R ESPECT OF INTEREST ON DEPOSITS WITH SBI AND IC ICI BANK. 3) WHETHER ON THE FACTS AND IN THE CIRCUMSTANC ES OF THE CASE, THE LD. CIT (A)I, NASHIK WAS JU STIFIED IN RELYING ON THE HON'BLE ITAT, PUNE 'B' BENCH IN THE CASE OF ITO , WARD 1(4), NASHIK VS N IPHAD NAGARI SAHAKARI PATSANSTHA LTD. VIDE IT A NO. 1336/PN/2011 A.Y. 200809 DATED 31/07/2013 EVEN THOU GH THE SAID DECISION IS B EING CONTESTED FURTHER IN THE HON. HIGH COURT. 4) THE APPELLANT PRAYS THAT THE ORDER OF THE LD . CIT(A)I, NASHIK MAY BE PLEASE BE CANCELLED AND THE ORDER OF ASSESS ING OFFICER MAY PLEASE BE RESTORED. 5) THE APPELLANT PRAY S LEAVE TO ADD, ALTER, CLARIFY, AMEND AND OR WITHDRAW ANY GROUNDS O F APPEAL AS AND WHEN TH E OCCASION DEMANDS. 9. WE HAVE HEAR D THE LD. DEPARTME NTAL REPRESENTATIVE AND PERUSED THE MATERIA L AVAILABLE ON RECORD . SO FAR AS THE GROU ND OF APPEAL NO.1 IS CONC ERNED, I.E. ALLOWING DEDUCTION U/S.80P(2 )(A)(I) AMOUNTING TO RS.1,6 8,800/- IN RESPECT O F PRINTING AND STATIO NERY, WE FIND THE LD.CIT(A ) HAS ALREADY GIVEN A FINDING THAT THE ASS ESSEE HAS INCURRED NET E XPENDITURE OF RS.8, 314/-, SINCE AS AG AINST 5 ITA NO.350/PN/2014 INCURRING EXPENSES OF RS.1,69,114/- ON ACCOUNT OF PRINTING AND STATIONERY, THE ASSES SEE HAS RECOUPED RS .1,60,800/- ONLY FROM ITS CUSTOMERS AND THER E IS NET EXPENDITURE ON THIS HEAD. THE LD. DEPARTMENTAL REPRE SENTATIVE COULD NO T CONTROVERT THE A BOVE FACTUAL FINDING GIVEN BY THE LD.CIT(A). W E, THEREFORE, DO NOT FIND ANY INFIRMITY IN THE ORDER OF THE CIT(A ) DIRECTING THE ASSE SSING OFFICER TO DELETE THE ADDITION. THE GROUN D RAISED BY THE REVE NUE ON THE FIRST ISSUE IS A CCORDINGLY DISMISSED . 10. SO FAR AS O THER GROUNDS ARE CONCERNED, I.E. ALLO WING DEDUCTION U/S.80P(2 )(A)(I) AMOUNTING TO R S.12,14,523/- IN RES PECT OF INTEREST ON DEPO SIT WITH SBI AND IC ICI BANKS, WE FIND THE ASSESSING OFFICER FO LLOWING THE DECISION OF THE HONBLE SUP REME COURT IN THE CASE OF TOTGARS COOPERATIVE SALE SOCIETY LTD. (SU PRA) HELD THAT NO DEDUC TION U/S. 80P(2)(A)(I) IS ALLOWABLE IN RESP ECT OF SUCH INTEREST INCOME . WE FIND THE LD.CIT (A) FOLLOWING THE DECI SION OF THE TRIBUNAL IN TH E CASE OF NIPHAD NA GARI SAHAKARI PATSAN STHA (SUPRA) HAS ALLOWED THE CLAIM U/S.80P(2) (A)(I) OF THE I.T. ACT. IT IS THE CASE OF THE RE VENUE THAT SUCH IN TEREST INCOME HAS TO BE TREATED AS INCOME FROM OTHER SOURCES AND HAS TO BE T AXED ACCORDINGLY IN VIEW OF VAROIUS DECISIONS WHICH WERE NOT PROP ERLY CONSIDERED BY THE CI T(A). IN OUR OPINION , THE MATTER REQUIRES DEEP ENQUIRY AS TO THE NA TURE AND PURPOSE OF SUCH DEPOSITS WITH B ANKS BEFORE COMING TO A C ONCLUSION. SINCE TH E ASSESSEE IS NOT PRE SENT DESPITE SERVICE OF NOT ICE, FACTS COULD NOT B E ASCERTAINED. THERE FORE, CONSIDERING THE TOTAL ITY OF THE FACTS OF THE CASE AND IN THE INTE REST OF JUSTICE, WE DEEM IT PROPER TO RESTORE T HE ISSUE TO THE FILE O F THE AO WITH A DIRECTION TO DECIDE THE ISSUE A FRESH AND IN ACCORDA NCE WITH LAW AFTER GIVING DUE OPPORTUNITY TO TH E ASSESSEE. WE HOLD AND 6 ITA NO.350/PN/2014 DIRECT ACCORDINGLY. THE SECOND ISSUE RA ISED BY THE REVENU E IS ACCORDINGLY ALLOWED F OR STATISTICAL PURPOSE S. 12. IN THE RESULT, THE APPEAL FILED B Y THE REVENUE IS P ARTLY ALLOWED FOR STATISTICA L PURPOSES. ORDER PRONOUNCED IN THE OPEN COURT ON 26 -08-2015. SD/- SD/- ( SUSHMA CHOWLA ) ( R.K. PANDA ) JUDICIAL MEMBER ACCOUNTANT MEM BER PUNE ; DATED : 26 TH AUGUST, 2015. / COPY OF THE ORDER FORWARDED TO : 1. / THE APPELLANT 2. / THE RESPONDENT 3. ( ) / THE CIT(A)-I, NASHIK 4. , / THE CIT-I, NASHIK 5. , , / DR, ITAT, A PUNE; 6. / GUARD FILE. / BY ORDER , //TRUE COPY// / SR. PRIVATE SECRETA RY , / ITAT, PUNE