ITO 27(3)(5), NAVI MUMBAI V. YASHOWANDIR SAHAKARI PATPEDHI LTD,

ITA 3939/MUM/2017

• Counselvise Citation: [2017] 127 COUNSELVISE.COM (IT) 0176 (ITAT-MUMBAI)
• Duration Of Justice: 3 month(s) 4 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 04-09-2017
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: G
• Assessment Year: 2010-2011
• Appeal Filed On: 30-05-2017
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: V VIDHYADHAR
• Assessee Lawyers: V G GINDE
• Keywords: Business income
• Section: 143(3); 14A; 260A

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL 'G' BENCH, MUMBAI BEFORE SHRI P K BANSAL, VICE PRESIDENT AND SHRI PAWAN SINGH, JUDICIAL MEMBER ITA NO.3939 /MUM/2017 (ASSESSMENT YEAR: 2010-11) INCOME TAX OFFICER - 27(3)(5) VS. M/S. YASHOMANDIR SAHAKARI 4 TH FLOOR, TOWER NO. 6 ROOM NO. 428, VASHI RAILWAY STATION COMPLEX VASHI, NAVI MUMBAI 400703 PATPEDHI LIMITED 307, MAHAVIR APARTMENTS PANT NAGAR MARG, DEONAR MUMBAI 400088 PAN AAAAY0015A APPELLANT RESPONDENT APPELLANT BY: SHRI V. VIDHYADHAR RESPONDENT BY: SHRI V.G. GINDE DATE OF HEARING: 04.09.2017 DATE OF PRONOUNCEMENT: 04.09.2017 O R D E R PER BENCH THIS APPEAL HAS BEEN FILED BY THE REVENUE AGAINST T HE ORDER OF THE CIT(A)-25, MUMBAI DATED 06.03.2017 FOR A.Y. 2010-11 ON THE FOLLOWING EFFECTIVE GROUNDS OF APPEAL: - 1) ON THE FACTS AND CIRCUMSTANCES OF THE CASE AND IN LAW, THE LD. CIT(A) ERRED IN DIRECTING TO ALLOW DEDUCTION U/S 80 P ON THE ENHANCED PROFIT WITHOUT APPRECIATING THE FACT THAT IN VIEW OF THE QUESTIONS OF LAW TAKEN BY THE DEPARTMENT IN ITS APP EAL U/S 260A FILED IN THE HONBLE HIGH COURT OF MUMBAI ON 1 2.09.2016. THE ASSESSEE WAS NOT AT ALL ENTITLED FOR DEDUCTION U/S 80P ON ITS ENHANCED PROFIT. 2. THE APPELLANT PRAYS THAT THE ORDER OF THE CIT(A) ON THE ABOVE GROUND BE REVERSED AND THAT OF THE ASSESSING OFFICE R BE RESTORED. 2. THE BRIEF FACTS OF THE CASE ARE THAT THE ASSESSEE I S A COOPERATIVE CREDIT SOCIETY REGISTERED UNDER THE MAHARASHTRA CO- OPERATIVE ACT, 1960 AND IS ENGAGED IN THE BUSINESS OF PROVIDING CREDIT FACILITIES TO ITS MEMBERS. ITA NO. 3939/MUM/2017 YASHOMANDIR SAHAKARI PATPEDHI LTD. 2 IN THIS CASE THE RETURN OF INCOME WAS FILED ON 13.0 8.2010 DECLARING NIL INCOME. THE AO VIDE ORDER DATED 28.03.2013 UNDER SE CTION 143(3) DETERMINED THE TOTAL INCOME AT RS.1,52,65,030/- DEN YING DEDUCTION UNDER SECTION 80P AND ALSO MAKING DISALLOWANCES TO THE EX TENT OF RS.1 CRORE BEING THE PROVISION MADE BAD LOANS AND INTEREST THE REON AND RS.4,813/- UNDER SECTION 14A OF THE INCOME TAX ACT. ASSESSEE W ENT IN APPEAL BEFORE THE CIT(A). THE CIT(A) ALLOWED THE DEDUCTION UNDER SECTION 80P(2) VIDE ORDER DATED 31.03.2014 IN APPEAL NO. CIT(A)-33/IT/ 322/2013-14. THE MATTER TRAVELLED TO THE TRIBUNAL. THE TRIBUNAL ALLO WED ASSESSEES APPEAL AND REVERSED THE CIT(A)S ORDER WHEREBY HE HAD HELD CERTAIN RECEIPTS AS INCOME FROM OTHER SOURCES NOT ELIGIBLE FOR DEDUCTIO N UNDER SECTION 80P(2). WHILE GIVING EFFECT TO THE CIT(A)S APPEAL ORDER UN DER SECTION 143 R.W.S. 250 OF THE INCOME TAX ACT THE AO ALLOWED THE DEDUCTION UNDER SECTION 80P WITH REFERENCE TO BUSINESS INCOME AS PER THE RETURN OF INCOME FILED IN ACCORDANCE WITH ASSESSEES BUSINESS INCOME. HENCE T HE INCOME WAS DETERMINED AFTER TAKING THE DISALLOWANCE AT RS.1,08 ,93,180/- AND THE ASSESSEE WENT IN APPEAL CLAIMING THE DEDUCTION UNDE R SECTION 80P IN RESPECT OF THE DISALLOWANCES/DEDUCTION MADE UNDER T HE HEAD INCOME FROM BUSINESS. THE CIT(A) ALLOWED THE APPEAL OF THE ASS ESSEE AND DIRECTED THE AO TO ALLOW DEDUCTION TO THE ASSESSEE UNDER SECTION 80P ON THE ENHANCED BUSINESS INCOME AND NOT THE BUSINESS INCOME SHOWN I N THE RETURN OF INCOME FILED FOR THE YEAR UNDER CONSIDERATION. 3. WE HAVE HEARD THE RIVAL SUBMISSIONS AND CAREFULLY C ONSIDERED THE SAME ALONG WITH THE ORDERS OF THE TAX AUTHORITIES B ELOW. WE HAVE ALSO GONE THROUGH THE PROVISIONS OF SECTION 80P. SECTION 80P( 1) ALLOW THE DEDUCTION TO ASSESSEE FROM THE GROSS TOTAL INCOME. THE EXPRESSIO N GROSS TOTAL INCOME HAS BEEN DEFINED UNDER SECTION 80B(5) TO MEAN THE T OTAL INCOME COMPUTED IN ACCORDANCE WITH THE PROVISIONS OF THE INCOME TAX ACT, BEFORE MAKING ANY DEDUCTION UNDER CHAPTER VI-A. THE EXPRESSION TOTAL INCOME HAS BEEN DEFINED IN SECTION 2(45) OF THE ACT AS THE TOTAL IN COME REFERRED TO IN SECTION 5, COMPUTED IN THE MANNER LAID DOWN IN THIS ACT. MO REOVER, AS PER SECTION 29 OF THE ACT, INCOME UNDER THE HEAD PROFITS AND G AINS OF BUSINESS OR ITA NO. 3939/MUM/2017 YASHOMANDIR SAHAKARI PATPEDHI LTD. 3 PROFESSION ARE TO BE COMPUTED IN ACCORDANCE WITH T HE PROVISIONS OF SECTIONS 30 TO 43D OF THE INCOME TAX ACT. SINCE THE DEDUCTION UNDER SECTION 80P IS TO BE ALLOWED FROM THE GROSS TOTAL I NCOME, THE DEDUCTIBLE AMOUNT OUGHT TO BE COMPUTED WITH REFERENCE TO THE P ROFIT DETERMINED IN ACCORDANCE WITH THE P0ROVISOINS OF THE ACT. SECTION 80P FALLS UNDER CHAPTER VI-A UNDER THE HEADING C- DEDUCTIONS IN RESPECT OF CERTAIN INCOMES, AND THEREFORE FOR THE PURPOSE OF MAKING DEDUCTION UNDER SECTION 80P, THE PROFITS AS COMPUTED UNDER THE PROVISIONS OF THE ACT SHALL A LONE BE DEEMED TO BE THE INCOME RECEIVED FROM THE ACTIVITY SPECIFIED IN SECT ION 80P(2)(A)(I) AND INCLUDED IN THE GROSS TOTAL INCOME FROM WHICH THE D EDUCTION UNDER SECTION 80P(1) IS TO BE ALLOWED. THUS, IT IS ONLY THE FINAL LY ASSESSED BUSINESS INCOME HAD TO BE CONSIDERED FOR THE PURPOSE OF ALLOWING DE DUCTION UNDER SECTION 80P(2)(A)(I), NOTWITHSTANDING THE AMOUNT OF BUSINES S PROFIT DECLARED IN THE RETURN OF INCOME. THEREFORE, IN OUR VIEW THE INCOME WHICH HAS BEEN COMPUTED BY THE AO AFTER MAKING CERTAIN ADDITIONS/D ISALLOWANCES HAS TO BE TAKEN AS ELIGIBLE FOR DEDUCTION UNDER SECTION 80P(2 )(A)(I) IF IT COMPLIES THE CONDITIONS STIPULATED THEREIN. SOMEWHAT SIMILAR ISS UE HAS BEEN DECIDED BY THE E BENCH OF THIS TRIBUNAL IN ITA NO. 1245/MUM/ 2009 VIDE ORDER DATED 14.05.2010 IN THE CASE OF M/S. S.B. BUILDERS & DEVE LOPERS VS. INCOME TAX OFFICER. IN THIS CASE THE HONBLE MUMBAI BENCH HAD DECIDED SIMILAR ISSUE IN THE CONTEXT OF DEDUCTION UNDER SECTION 80IB(10) IN RESPECT OF PROFITS DERIVED FROM THE UNDERTAKING DEVELOPING AND BUILDING HOUSIN G PROJECT. IN THE ASSESSMENT ORDER, THE AO MADE DISALLOWANCES UNDER S ECTION 40(A)(IA) AND ENHANCED THE PROFIT OF THE SAID UNDERTAKING; BUT HE ALLOWED DEDUCTION UNDER SECTION 80IB(10) ONLY WITH REFERENCE TO THE P ROFIT SHOWN IN THE RETURN OF INCOME. THE TRIBUNAL, AFTER CONSIDERING THE SUPR EME COURTS JUDGEMENT IN CAMBAY ELECTRIC SUPPLY INDUSTRIAL CO. LTD. VS. C IT (113 ITR 84) (SC) AND THE JURISDICTIONAL HONBLE BOMBAY HIGH COURTS RULI NG IN CIT VS. ALBRIGHT MORARJI & PANDIT LTD. (236 ITR 914), GRASIM INDUSTR IES LTD. VS. ACIT (245 ITR 677) AND PLASTIBLENDS INDIA LTD. VS. ADDL. CIT & ORS (318 ITR 352) (BOM) (FB) HAS HELD THAT PROFIT DERIVED FOR THE P URPOSES OF SECTION 80- IB(10) WOULD MEAN PROFIT AS COMPUTED IN THE MANNER LAID DOWN IN THE ACT, I.E. AS PER THE PROVISIONS OF SECTION 30 TO 43D. ITA NO. 3939/MUM/2017 YASHOMANDIR SAHAKARI PATPEDHI LTD. 4 4. THE LEARNED D.R., EVEN THOUGH, VEHEMENTLY RELIED ON THE ORDER OF THE AO BUT COULD NOT ADDUCE ANY DECISION WHICH MAY HAVE TAKEN AN INTERPRETATION AS HAS BEEN GIVEN IN THE PREVIOUS PA RAGRAPHS. WE, THEREFORE, DO NOT FIND ANY ILLEGALITY OR INFIRMITY IN THE ORDE R OF THE CIT(A). 5. IN THE RESULT, THE APPEAL FILED BY THE REVENUE STAN DS DISMISSED. ORDER PRONOUNCED IN THE OPEN COURT ON 4 TH SEPTEMBER, 2017. SD/ - SD/ - (PAWAN SINGH) (P.K. BANSAL) JUDICIAL MEMBER VICE PRESIDENT MUMBAI, DATED: 4 TH SEPTEMBER, 2017 COPY TO: 1. THE APPELLANT 2. THE RESPONDENT 3. THE CIT(A) -25, MUMBAI 4. THE PR. CIT - 27, MUMBAI 5. THE DR, G BENCH, ITAT, MUMBAI BY ORDER //TRUE COPY// ASSISTANT REGISTRAR ITAT, MUMBAI BENCHES, MUMBAI N.P.