ITO, Ward-3, Anand V. M/s. Charotar Co-operative Society Ltd., Anand

ITA 387/AHD/2016

• Counselvise Citation: [2018] 125 COUNSELVISE.COM (IT) 8389 (ITAT-AHMEDABAD)
• Duration Of Justice: 2 year(s) 1 month(s) 29 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 17-04-2018
• Appeal Filed By: Department
• Order Result: Allowed
• Bench Allotted: Not Allotted
• Assessment Year: 2012-2013
• Appeal Filed On: 18-02-2016
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Assessee Lawyers: D K PARIKH
• Keywords: Source of fund
• Section: 2

Judgement Text

, - IN THE INCOME TAX APPELLATE TRIBUNAL AHMEDABAD BENCH A BEFORE SHRI RAJPAL YADAV, JUDICIAL MEMBER AND SHRI N.K. BILLAIYA, ACCOUNTANT MEMBER ./ ITA NO.387/AHD/2016 / ASSTT. YEAR: 2012-2013 ITO, WARD-3 ANAND. VS. M/S.CHAROTAR CO-OP. SOCIETY VADA BAZAR UMRETH DIST. ANAND 388220. / (APPELLANT) / (RESPONDENT) REVENUE BY : SHRI RAJDEEP SINGH, SR.DR ASSESSEE BY : SHRI D.K. PARIKH, AR ! / DATE OF HEARING : 16/04/2018 '#$ ! / DATE OF PRONOUNCEMENT: /04/2018 %& / O R D E R PER RAJPAL YADAV, JUDICIAL MEMBER: ASSESSEE IS IN APPEAL BEFORE THE TRIBUNAL AGAINST O RDER OF LD.CIT(A)-4, VADODARA DATED 15.10.2015 PASSED FOR A SSTT.YEAR 2012-13. 2. GRIEVANCE OF THE ASSESSEE RELATES TO DENIAL OF D EDUCTION UNDER SECTION 80P(2)(A)(I) OF THE INCOME TAX ACT, 1 961. 3. BRIEF FACTS OF THE CASE ARE THAT THE ASSESSEE IS A COOPERATIVE SOCIETY PROVIDING CREDIT FACILITIES TO ITS MEMBERS. IT HAS FILED ITS RETURN OF INCOME ON 14.2.2013 DECLARING TOTAL INCOM E AT NIL. THE CASE WAS SELECTED FOR SCRUTINY ASSESSMENT AND NOTIC E UNDER ITA NO.387/AHD/2016 2 SECTION1 43(2) WAS ISSUED AND SERVED UPON THE ASSES SEE. THE LD.AO HAS DIRECTED THE ASSESSEE TO PROVIDE DETAILS OF SOURCE OF INCOME. THE ASSESSEE HAS SUBMITTED DETAILS OF TOTA L INCOME AT RS.49,47,836/- UNDER THREE HEADS VIS. INTEREST, COM MISSION INCOME AND DISCOUNT INCOME. INTEREST INCOME OF RS. 48,63,620/- WAS FURTHER BIFURCATED BY SHOWING THE SOURCE AND NA TURE OF INTEREST INCOME. THE AO THEREAFTER ISSUED A SHOW C AUSE NOTICE WHICH READS AS UNDER: 5.2 KEEPING IN VIEW OF PROVISION OF SECTION SO P, A SHOW CAUSE NOTICE IS ISSUED TO ASSESSEE OF DATED 27.01.2 015 AS UNDER: 'IN YOUR ABOVE SUBMISSION YOU HAVE BIFURCATE THE IN COME AS UNDER: NATURE OF INCOME AMOUNT SOURCES OF INCOME INTEREST 4863620 FROM MEMBER & OTHERS COMMISSION INCOME 51586 FROM MEMBERS ONLY DISCOUNT INCOME (VATAV) 32630 FROM MEMBERS ONLY FURTHER BIFURCATION OF INTEREST INCOME OF RS. 48636 20/- AS UNDER: SR NO. PARTICULAR AMOUNT SOURCES OF INCOME 1 INTEREST ON LOAN PROVIDED TO ITS MEMBERS 532372 FROM ITS MEMBERS 2 INTEREST ON HIRE PURCHASE FACILITIES TO ITS MEMBERS 102683 FROM ITS MEMBERS 3 CASH CREDIT FACILITIES TO ITS MEMBERS 76844 FROM ITS MEMBERS 4 HOUSING LOAN INTEREST PROVIDED TO ITS MEMBERS 110997 FROM ITS MEMBERS ITA NO.387/AHD/2016 3 5 INTEREST FROM DEPOSIT IN SARDAR SAROVAR NIGAM 295610 STATE CORPORATE DEPT. 6 FD IN STATE BANK OF INDIA 2344908 NATIONALIZED BANK 7 FD IN BANK OF BARODA 864011 NATIONALIZED BANK 8 INTEREST ON ADVANCES TO MISC 536195 OTHERS TOTAL 4863620 SECTION 80P (2)(A)(I) SAYS - 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 PRO VISIONS OF THIS SECTION, THE SUMS SPECIFIED IN SUB-SECTION (2) , IN COMPUTING THE TOTAL INCOME OF THE ASSESSEE. (2) THE SUMS REFERRED TO IN SUB-SECTION (1) SHALL B E THE FOLLOWING, NAMELY: (A) IN THE CASE OF A CO-OPERATIVE SOCIETY ENGAGED I N (N CARRYING ON THE BUSINESS OF BANKING OR PROVIDING CREDIT FACILITIES TO ITS MEMBERS, OR 3. ACCORDINGLY DEDUCTION U/S 8OP (2)(A)(I) IS APPLI CABLE ONLY FOR THE INCOME WHICH IS DERIVED BY WAY OF PROVIDING CREDIT FACILITIES TO ITS MEMBERS. CONSIDERING THE ABOVE FA CTS THE FOLLOWING INTEREST INCOME IS NOT ALLOWED FOR SUCH D EDUCTION. SR NO. PARTICULAR AMOUNT SOURCES OF INCOME 1 INTEREST FROM DEPOSIT IN SARDAR SAROVAR NIGAM 295610 STATE CORPORATE DEPT. 2 FD IN STATE BANK OF INDIA 2344908 NATIONALIZED BANK 3 FD IN BANK OF BARODA 864011 NATIONALIZED ITA NO.387/AHD/2016 4 BANK 4 INTEREST ON ADVANCES TO MISC 536195 OTHERS TOTAL 4040724 MORE OVER AS PER 26AS YOU HAVE ALSO RECEIVED INTERE ST FROM M/S WEIZMANN FOREX LTD. OF RS. 8360/- DURING FY 2011 - 12 WHICH YOU HAVE NOT OFFERED TO TAX IN YOUR RETURN OF INCOME FILED FOR RELEVANT PERIOD. 4. THEREFORE, A SHOW CAUSE NOTICE IS ISSUED TO YOU AS TO WHY THE ABOVE INTEREST INCOME (4040724+8360) = RS. 4049 084/- SHOULD NOT BE TREATED AS 'INCOME FROM OTHER SOURCES ' AND TAX IN THE STATUS OF AOP. 5. YOUR EXPLANATION IN THIS REGARD SHOULD REACH TO THIS OFFICE ON OR BEFORE 06.02.105. PLEASE NOTE THAT IN CASE OF FAILURE, YOUR ASSESSMENT WILL BE FINALIZED ACCORDINGLY: 6. HEARING IS FIXED IN YOUR CASE IS ON 06.02.2015 A T 11.00 AM EITHER IN PERSON OR BY A REPRESENTATIVE DULY AUT HORIZED ALONG WITH THE ABOVE REQUIRED DETAILS. ' 4. THE AO WAS OF THE VIEW THAT INTEREST INCOME RESU LTED TO THE ASSESSEE ON FDRS. WITH NATIONALIZED BANKS IS NOT EL IGIBLE FOR GRANT OF DEDUCTION UNDER SECTION 80P(2)(A)(I) OF THE ACT. ACCORDINGLY, HE DISALLOWED DEDUCTION UNDER SECTION 80P(2)(A)(I) OF RS.40,40,724/-. APPEAL TO THE LD.CIT(A) DID NOT BRI NG ANY RELIEF TO THE ASSESSEE. 5. WITH THE ASSISTANCE OF THE LD.REPRESENTATIVES, W E HAVE GONE THROUGH THE RECORD CAREFULLY. THE LD.COUNSEL FOR THE ASSESSEE DID NOT DISPUTE WITH REGARD TO THE PROPOSITION THAT AFT ER DECISION OF THE HONBLE JURISDICTIONAL HIGH COURT IN THE CASE OF ST ATE BANK OF INDIA VS. CIT, 389 ITR 578, INTEREST INCOME BY THE ASSESSEE FROM ITA NO.387/AHD/2016 5 FIXED DEPOSITS WITH NATIONALIZED BANKS WILL NOT QUA LIFY FOR GRANT OF DEDUCTION UNDER SECTION 80P(2)(A)(I) OF THE ACT. HE CONTENDED THAT IN THIS TOTAL COMPONENT OF RS.40,40,724/-, THE AO H AS INCLUDED DIFFERENT ITEMS OUT OF THAT CERTAIN AMOUNTS RELATE TO EARLIER YEARS OF ASSESSMENT. THEREFORE, HE PRAYED THAT THIS ISSU E BE SET ASIDE TO THE FILE OF THE AO FOR VERIFICATION AND RE-ADJUD ICATION. THE LD.DR HAS NO OBJECTION ON THIS PROPOSITION OF THE LD.COUS NEL FOR THE ASSESSEE. 6. ON DUE CONSIDERATION OF THE ABOVE FACTS, WE SET ASIDE THE ORDERS OF THE REVENUE AUTHORITIES. THE LD.AO SHALL RE-EXAMINE THE ISSUE REGARDING EXCLUSION OF INTEREST INCOME FROM E LIGIBLE AMOUNT FOR THE PURPOSE OF DEDUCTION UNDER SECTION 80P(2)(A )(I). THIS EXERCISE BE CARRIED OUT IN THE LIGHT OF HONBLE GUJ ARAT HIGH COURT DECISION IN THE CASE OF STATE BANK OF INDIA (SUPRA). THE LD.AO SHALL WORK OUT NET INTEREST INCOME FOR THE CURRENT YEAR FOR THE PURPOSE OF EXCLUSION FROM ELIGIBLE AMOUNT FOR GRANT OF DEDUCTION UNDER SECTION 80P(2)(A)(I) OF THE ACT. WITH THE AB OVE DIRECTION, THE APPEAL OF THE ASSESSEE IS ALLOWED FOR STATISTIC AL PURPOSE. 7. IN THE RESULT, APPEAL OF THE ASSESSEE IS ALLOWED FOR STATISTICAL PURPOSE. ORDER PRONOUNCED IN THE COURT ON 17 TH APRIL, 2018. SD/- SD/- (N.K. BILLAIYA) ACCOUNTANT MEMBER (RAJPAL YADAV) JUDICIAL MEMBER AHMEDABAD; DATED 17/04/2018