The Sardar Credit Co. Op. Credit Society Ltd., Mahisagar V. The Income Tax Officer, Vadodara

ITA 4/AHD/2017

• Counselvise Citation: [2018] 125 COUNSELVISE.COM (IT) 8163 (ITAT-AHMEDABAD)
• Duration Of Justice: 1 year(s) 4 month(s) 27 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 29-05-2018
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: SMC
• Assessment Year: 2013-2014
• Appeal Filed On: 02-01-2017
• Result in Favour of: Assessee
• Court: TRIBUNAL

Judgement Text

, ,LK ,LK,LK ,LK- -- -,E ,E,E ,E- -- -LH LHLH LH IN THE INCOME TAX APPELLATE TRIBUNAL SMC BENCH, AHMEDABAD OLHE VGEN] OLHE VGEN] OLHE VGEN] OLHE VGEN] YS[KK LNL; YS[KK LNL; YS[KK LNL; YS[KK LNL; , BEFORE SHRI RAJPAL YADAV, JUDICIAL MEMBER AND SHRI WASEEM AHMED, ACCOUNTANT MEMBER ./ I.T.A. NO.04/AHD/2017 ( / ASSESSMENT YEAR : 2013-14) THE SARDAR CO.OP CREDIT SOCIETY LTD., BORIYAWAL SHOPPING CENTRE, AT & POST LUNAWADA, DIST. MAHISAGAR. / VS. ITO, LUNAWADA. ./ ./ PAN/GIR NO. : AABAS 5732 K ( / APPELLANT ) .. ( !' / RESPONDENT ) # / APPELLANT BY : SHRI PARIN SHAH, A.R. !' $ # / RESPONDENT BY : SHRI PRASOON KABRA, SR. D.R. % &' $ () / DATE OF HEARING 21/05/2018 *+,- $ () / DATE OF PRONOUNCEMENT 29/05/2018 . / O R D E R PER WASEEM AHMED, ACCOUNTANT MEMBER: THE CAPTIONED APPEAL HAS BEEN FILED AT THE INSTANCE OF THE ASSESSEE AGAINST THE APPELLATE ORDER OF THE COMMISSIONER OF INCOME TAX(APPEALS)-4, VADODARA [CIT(A) IN SHORT] VIDE APPEAL NO.CAB/4- 495/2015-16 DATED 30/09/2016 ARISING IN THE ASSESSMENT ORDER PASSED UNDER S.143(3) OF THE INCOME TAX ACT, 1961 (HEREINA FTER REFERRED TO AS 'THE ACT') DATED 13/01/2016 RELEVANT TO ASSESSMENT YEAR (AY) 2013-14. ITA NO.04/AHD/2017 THE SARDAR CO.OP CREDIT SOCIETY LTD. VS. ITO ASST.YEAR 2013-14 - 2 - 2. THE ASSESSEE HAS RAISED FOLLOWING GROUNDS OF APP EAL: 1. LD. CIT (A) ERRED IN LAW AND ON FACTS IN CONFIR MING DISALLOWANCE MADE BY AO OF RS.89,84,599/- DEDUCTION CLAIMED U/S 80P(2)(A)(I) OF THE ACT. LD. CIT (A) OUGHT TO HAVE ALLOWED DEDUC TION CLAIMED OF INTEREST RECEIVED FROM NATIONALIZED/CO OPERATIVE BANKS ON OPERATIONAL FUNDS BY APPELLANT. 2. LD.CIT(A) ERRED IN LAW AND ON THE FACTS CONFI RMING DISALLOWANCE BY AO TREATING INTEREST EARNED AS INCOME FROM OTHER SOURCES. LD. CIT(A) OUGHT TO HAVE HELD INTEREST EARNED AS PROFIT S & GAINS OF BUSINESS. 3. LD.CIT(A) ERRED IN LAW AND ON FACTS HOLDING THAT INTEREST DERIVED BY DEPOSITING SURPLUS FUNDS WITH NATIONALIZED/ CO O PERATIVE BANKS IS NOT ATTRIBUTABLE TO THE BUSINESS CARRIED O N BY THE APPELLANT CREDIT SOCIETY AND HENCE NOT DEDUCTIBLE U /S 80P(2)(A)(I) OF THE ACT. 4. LD.CIT (A) ERRED IN LAW AND ON FACTS IN NOT ADJ UDICATING GROUND # 3 OF THE APPEAL CHALLENGING ACTION OF AO NOT ALLO WING PROPORTIONATE EXPENSES INCURRED FOR EARNING OF SUCH INCOME BY THE APPELLANT. 5. LD.CIT (A) ERRED IN LAW AND ON FACTS CONFIRMIN G DISALLOWANCE OF THE CLAIM OF DEDUCTION RELYING ON JUDGMENT RENDERED IN REVISIONARY PROCEEDINGS NOT APPLICABLE TO THE FACTS OF THE CASE. LD.CIT(A) OUGHT TO HAVE APPRECIATED RATIO OF THE JU DICIAL CITATIONS DIRECTLY ON THE ISSUE & ALLOWED DEDUCTION . 6. LEVY OF INTEREST U/S 234A/234B/234C & 234D OF THE ACT IS NOT JUSTIFIED. 7. INITIATION OF PENALTY U/S 271(1)(C) OF THE ACT IS NOT JUSTIFIED. THE INTERCONNECTED ISSUE RAISED BY THE ASSESSEE IN ITS ALL GROUNDS OF APPEAL IS THAT LD. CIT(A) ERRED IN CONFIRMING THE O RDER OF AO BY DISALLOWING THE DEDUCTION U/S 80P(2)(A)(I) OF THE A CT FOR RS. 89,84,599/- ONLY. ITA NO.04/AHD/2017 THE SARDAR CO.OP CREDIT SOCIETY LTD. VS. ITO ASST.YEAR 2013-14 - 3 - 3. BRIEFLY STATED FACTS ARE THAT THE ASSESSEE IN TH E PRESENT CASE IS A COOPERATIVE CREDIT SOCIETY AND ENGAGED IN THE PROVI DING CREDIT FACILITIES TO ITS MEMBERS. THE ASSESSEE DURING THE YEAR HAS SH OWN INTEREST INCOME FROM NON-MEMBERS AS DETAILED UNDER: STATE BANK OF INDIA RS.2469563/- DENA BANK RS.2063967/- BANK OF BARODA RS.2854501/- B. G. G. BANK RS.100524/- CENTRAL BANK OF INDIA RS.246402/- TOTAL RS.7761957/- & PEOPLES CO. OP BANK RS.665928/- P.D.C. BANK RS.556714/- TOTAL RS.1222642/- TOTAL (7762957 + 1222642 = 8984599) THE ASSESSEE IN ITS INCOME TAX RETURN HAS CLAIMED T HE DEDUCTION U/S 80P(2)(A)(I) OF THE ACT, IN RESPECT OF ALL THE AFOR ESAID INCOME. HOWEVER, THE AO WAS OF THE VIEW THAT THE DEDUCTION U/S 80P(2 )(A)(I) OF THE ACT IS LIMITED ONLY, IN RESPECT OF INTEREST INCOME EARNED BY THE ASSESSEE FROM THE ADVANCES GIVEN TO THE MEMBERS. THEREFORE, THE A O TREATED THE INTEREST INCOME EARNED AS MENTIONED ABOVE AS INCOME FROM OTH ER SOURCES AND HELD THAT THE SAME WAS NOT ALLOWABLE FOR DEDUCTION U/S 80P(2)(A)(I) OF THE ACT. ACCORDINGLY, THE AO DISALLOWED THE DEDUCTION C LAIMED BY THE ASSESSEE U/S 80P(2)(A)(I) OF THE ACT AND ADDED THE SAME OF RS.89,84,599/- OF THE TOTAL INCOME OF THE ASSESSEE. ITA NO.04/AHD/2017 THE SARDAR CO.OP CREDIT SOCIETY LTD. VS. ITO ASST.YEAR 2013-14 - 4 - 4. AGGRIEVED ASSESSEE PREFERRED AN APPEAL TO LD. CI T(A) WHO CONFIRMED THE ORDER OF THE AO. BEING AGGRIEVED BY THE ORDER OF LD. CIT(A) ASSESSEE IS IN SECOND APPEAL BEFORE US. THE LD. AR BEFORE US SUBMITTED THAT THE ASSESSEE IS ELIGIGBLE FOR DEDUCTION UNDER SECTION 80P(2)(A)(I) OF THE ACT IN RESPECT TO THE AFORESAID INTEREST INCOME. THE LD. DR BEFORE US VEH EMENTLY SUPPORTED THE ORDER OF AUTHORITIES BELOW. 5. WE HAVE HEARD THE LD DR AND PERUSED THE MATERIAL S AVAILABLE ON RECORD. THE FACTS OF THE CASE ARE NOT IN DISPUTE TH EREFORE WE ARE NOT INCLINED TO REPEAT THE SAME FOR THE SAKE OF BREVITY . 6. THE INTEREST INCOME EARNED BY THE ASSESSEE ON TH E DEPOSITS MADE WITH THE BANKS AS DISCUSSED ABOVE IS NOT ELIGIBLE F OR DEDUCTION U/S 80P(2)(A)(I) OF THE ACT, IN VIEW OF THE JUDGMENT OF THE GUJARAT HIGH COURT IN THE CASE OF STATE BANK OF INDIA VS. CIT RE PORTED IN 389 ITR 578. THEREFORE, WE HOLD THAT THE ASSESSEE CANNOT CLAIM T HE DEDUCTION U/S 80P(2)(A)(I) OF THE ACT IN RESPECT OF INTEREST INCO ME EARNED ON THE MADE WITH THE BANK. HOWEVER, THE ASSESSEE IS ENTITLED TO CLAIM THE DEDUCTION OF THE EXPENDITURE INCURRED BY IT IN CONNECTION WITH S UCH INTEREST INCOME. THEREFORE, WE DIRECT THE AO TO TAKE THE NET INTERES T INCOME FOR DISALLOWANCE THE DEDUCTION U/S 80P(2)(A)(I) OF THE ACT. ITA NO.04/AHD/2017 THE SARDAR CO.OP CREDIT SOCIETY LTD. VS. ITO ASST.YEAR 2013-14 - 5 - 7. NOW COMING TO THE INTEREST INCOME EARNED BY THE ASSESSEE ON THE DEPOSITS MADE WITH OTHER COOPERATIVE BANKS FOR RS. 12,22,642.00 ONLY, IN THIS REGARD WE NOTE THAT THE ASSESSEE IS ALLOWABLE FOR DEDUCTION IN RESPECT OF SUCH INCOME UNDER CLAUSE (D) TO SUB SECTION 2 OF SECTION 80P OF THE ACT. THEREFORE, WE DIRECT THE AO TO ALLOW THE DEDUC TION OF RS. 12,22,642.00/- TO ASSESSEE AS DISCUSSED ABOVE. 8. IN VIEW OF ABOVE, WE DIRECT THE AO TO ADJUDICATE THE ISSUE AFRESH IN ACCORDANCE WITH THE PROVISIONS OF LAW AND IN THE LI GHT OF THE ABOVE STATED DISCUSSION. HENCE, GROUND OF APPEAL OF THE ASSESSEE IS ALLOWED FOR STATISTICAL PURPOSES. 9. IN THE RESULT, APPEAL FILED BY THE ASSESSEE IS A LLOWED FOR STATISTICAL PURPOSE. THIS ORDER PRONOUNCED IN OPEN COURT ON 29/05/2018 SD/- SD/- JKTIKY ;KNO JKTIKY ;KNO JKTIKY ;KNO JKTIKY ;KNO OLHE VGEN OLHE VGEN OLHE VGEN OLHE VGEN U;KF;D LNL; U;KF;D LNL; U;KF;D LNL; U;KF;D LNL; YKS[KK LN YKS[KK LN YKS[KK LN YKS[KK LN L; L; L; L; (RAJPAL YADAV) (WASEEM AHMED) JUDICIAL MEMBER ACCOUNTANT MEMBER AHMEDABAD; DATED 29/05/2018 PRITI YADAV, SR.PS ITA NO.04/AHD/2017 THE SARDAR CO.OP CREDIT SOCIETY LTD. VS. ITO ASST.YEAR 2013-14 - 6 - !'# $#! / COPY OF THE ORDER FORWARDED TO : 1. / THE APPELLANT 2. !' / THE RESPONDENT. 3. /01( % 2( / CONCERNED CIT 4. % 2( ( ) / THE CIT(A)-4, VADODARA. 5. 567 !(&01 , ) 01- , 8 / / DR, ITAT, AHMEDABAD 6. 79 :' / GUARD FILE. % & / BY ORDER, ' 5( !( //TRUE COPY// '/& () ( DY./ASSTT.REGISTRAR) , / ITAT, AHMEDABAD 1. DATE OF DICTATION 24/05/2018. 2. DATE ON WHICH THE TYPED DRAFT IS PLACED BEFORE THE DICTATING MEMBER 25/05/2018. 3. OTHER MEMBER 4. DATE ON WHICH THE APPROVED DRAFT COMES TO THE SR.P. S./P.S 29/05/2018 5. DATE ON WHICH THE FAIR ORDER IS PLACED BEFORE THE D ICTATING MEMBER FOR PRONOUNCEMENT 6. DATE ON WHICH THE FAIR ORDER COMES BACK TO THE SR.P .S./P.S. 7. DATE ON WHICH THE FILE GOES TO THE BENCH CLERK 8. DATE ON WHICH THE FILE GOES TO THE HEAD CLERK ... 9. THE DATE ON WHICH THE FILE GOES TO THE ASSISTANT RE GISTRAR FOR SIGNATURE ON THE ORDER.. 10. DATE OF DESPATCH OF THE ORDER