M/s. Ispat Employes Corporative Thrift and Credit Society Ltd., New Delhi V. ITO, New Delhi

ITA 460/DEL/2017

• Counselvise Citation: [2017] 128 COUNSELVISE.COM (IT) 2696 (ITAT-DELHI)
• Duration Of Justice: 6 month(s) 3 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 31-07-2017
• Appeal Filed By: Assessee
• Order Result: Dismissed
• Bench Allotted: SMC
• Next Hearing Date: 11-05-2017
• Assessment Year: 2013-2014
• Appeal Filed On: 27-01-2017
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Department Lawyers: BEDOBANI
• Assessee Lawyers: K R MANJANI
• Keywords: Business income
• Section: 143(3)

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL DELHI BENCH SMC NEW DELHI BEFORE SHRI R.K.PANDA, ACCOUNTANT MEMBER ITA NO. 460/DEL/2017 (ASSESSMENT YEAR: 2013 -14) ISPAT EMPLOYEE S CORPORATIVE THRIFT & CREDIT SOCIETY LTD., ISPAT BHAWAN, LODHI ROAD, NEW DELHI-110003. PAN-AAABI0135L VS ITO, WARD-54(3), NEW DELHI. (APPELLANT) (RESPONDENT) APPELLANT BY SH.K.R.MANJANI, ADV. RESPONDENT BY MS. BEDOBANI, SR.DR DATE OF HEARING 11.05.2017 DATE OF PRONOUNCEMENT 31.07.2017 ORDER PER R.K.PANDA, ACCOUNTANT MEMBER THIS APPEAL FILED BY THE ASSESSEE IS DIRECTED AGAI NST THE ORDER DATED 04.11.2016 OF THE CIT(A)-18, NEW DELHI RELATI NG TO ASSESSMENT YEAR 2013-14. 2. ALTHOUGH, A NUMBER OF GROUNDS HAVE BEEN RAISED B Y THE ASSESSEE IN THE GROUNDS OF APPEAL, HOWEVER, THEY AL L RELATE TO THE DENIAL OF DEDUCTION U/S 80P OF RS.1,93,297/- ON ACC OUNT OF INTEREST ON FD, SAVINGS ACCOUNTS & INTEREST ON I.T. REFUNDS, THE DETAILS OF WHICH ARE AS UNDER:- BANK INTEREST RS. 34,430/- FD INTEREST RS.1,58,579/- INTEREST ON IT REFUND RS. 304/- PAGE 2 OF 7 ITA NO. 460/DEL/2017 ISPAT EMPLOYEE CORPORATIVE THRIFT & CREDIT SOCIETY LTD. VS ITO 3. FACTS OF THE CASE, IN BRIEF, ARE THAT THE ASSESS EE IS A THRIFT AND CREDIT SOCIETY REGISTERED UNDER COOPERATIVE SOCIETY ACT AND PROVIDING CREDIT FACILITIES TO ITS MEMBERS ONLY WHO ARE EMPLOYEES OF ISPAT. IT FILED ITS RETURN OF INCOME ON 04-10-2013 DECLARING NIL INCOME, AFTER CLAIMING DEDUCTION OF RS.22,05,781/- U/S 80P WHICH INCLUDES INCOME FROM SAVINGS BANK INTEREST OF RS.39 ,414/-, INTEREST ON FD OF RS.1,58,579/- & INTEREST ON I.T. REFUND RS .304/-. THE ASSESSING OFFICER ASKED THE ASSESSEE TO EXPLAIN THE ALLOWABILITY OF THE ABOVE INTEREST U/S 80P OF THE I.T.ACT. IT WAS EXPLAINED BY THE ASSESSEE THAT THE SOCIETY IS ENGAGED IN THE ACTIVIT Y OF PROVIDING LOANS AND ADVANCES TO ITS MEMBERS OUT OF THRIFT MON EY COLLECTED/MOBILIZED FROM ITS MEMBERS DURING THE CO URSE OF ITS BUSINESS ACTIVITY AND AS A PRUDENT COMMERCIAL BUSIN ESS PRACTICE OF TREASURY MANAGEMENT, THE SOCIETY PARKS ITS SURPLUS /IDLE FUNDS LYING WITH IT WITH VARIOUS COMMERCIAL AND COOPERATI VE BANKS THAT PROVIDE THE BEST RETURNS ON THESE FUNDS. SINCE TH E ASSESSEE IS NOT REGISTERED UNDER THE BANKING REGULATION ACT OR UND ER ANY OTHER BANKING STATUTE, THE ASSESSING OFFICER, FOLLOWING T HE DECISION OF THE HONBLE SUPREME COURT IN THE CASE OF TOTGARS CO-OPERATIVE SALE SOCIETY VS. ITO REPORTED IN [2010] 188 TAXMAN 282 ( SC) REJECTED THE PAGE 3 OF 7 ITA NO. 460/DEL/2017 ISPAT EMPLOYEE CORPORATIVE THRIFT & CREDIT SOCIETY LTD. VS ITO CLAIM OF DEDUCTION U/S 80P OF THE ABOVE INTEREST IN COME AND ADDED THE SAME TO THE TOTAL INCOME OF THE ASSESSEE. 4. IN APPEAL, IT WAS ARGUED THAT AS PER PROVISION O F SECTION 53 OF DELHI CO-OPERATIVE SOCIETY ACT, THE ASSESSEE SOCIET Y IS BOUND TO SAVE 1/4 TH OF PROFITS TO BE CARRIED TO RESERVE FUNDS. IT WAS CONTENDED THAT SUCH INTEREST INCOME WILL HAVE TO BE TREATED AS BUSINESS INCOME. RELYING ON VARIOUS DECISIONS, IT WAS ARGUED THAT SUCH INTEREST INCOME HAS TO BE ALLOWED AS DEDUCTION U/S 80P. 5. HOWEVER, THE LD.CIT(A) ALSO WAS NOT CONVINCED WI TH THE ARGUMENTS ADVANCED BY THE ASSESSEE. RELYING ON TH E DECISION OF THE HONBLE DELHI HIGH COURT IN THE CASE OF MANTOLA CO-OPERATIVE THRIFT & CREDIT SOCIETY LTD. VS CIT REPORTED IN [20 14] 50 TAXMANN.COM 278 (DELHI) HE HELD THAT SUCH INTEREST INCOME HAS TO BE TREATED AS INCOME FROM OTHER SOURCES AND THE ASSESSEE IS NOT ENTITLED TO DEDUCTION U/S 80P. 6. AGGRIEVED WITH SUCH ORDER OF THE LD.CIT(A), THE ASSESSEE IS IN APPEAL BEFORE THE TRIBUNAL. 7. LD. COUNSEL FOR THE ASSESSEE REFERRED TO THE FOL LOWING DECISIONS AND SUBMITTED THAT THE ISSUE HAS BEEN DECIDED IN FA VOUR OF THE ASSESSEE :- (I) CIT VS INDO AQUATICS LTD. 369 ITR 589 (T & AP) PAGE 4 OF 7 ITA NO. 460/DEL/2017 ISPAT EMPLOYEE CORPORATIVE THRIFT & CREDIT SOCIETY LTD. VS ITO (II) RIVIERA HOME FURNISHING VS ADDITIONAL CIT 237 TAX (1) (III) TUMKUR MERCHANTS SOUHARDA CREDIT CO-OPERATIVE LTD. VS ITO 230 TAX 309 (KAR) (IV) CIT VS GULSHAN MERCANTILE URBAN CO-OPERATIVE B ANK LTD. 214 TAX 510 (ALL.) (V) CIT VS HIMACHAL GRAMIN BANK 217 TAX 94 (VI) CIT VS KANGRA CENTRAL CO-OPERATIVE BANK LTD. 2 54 CTR 306 (HP) (VII) CIT VS MUZAFFARNAGAR KSHETRIYA GRAMIN BANK LT D. 256 CTR 322 (ALL.) 8. HE FURTHER SUBMITTED THAT ASSESSEE IS ENTITLED T O DEDUCTION U/S 80P ON INTEREST EARNED ON FD AND SAVING BANK AC COUNTS. REFERRING TO THE ASSESSMENT ORDER FOR A.Y. 2009-10, HE SUBMITTED THAT THE AO IN THE ORDER PASSED U/S 143(3) HAD ACCE PTED THE CLAIM OF DEDUCTION U/S 80P AND THERE IS NO DISALLOWANCE U /S 80P. HE ACCORDINGLY SUBMITTED THAT THIS BEING A COVERED MAT TER IN FAVOUR OF THE ASSESSEE, THE ORDER OF LD.CIT(A) HAS TO BE SET ASIDE AND THE GROUND RAISED BY THE ASSESSEE SHOULD BE ALLOWED. 9. THE LD. DR ON THE OTHER HAND HEAVILY RELIED ON T HE ORDER OF CIT(A). 10. I HAVE CONSIDERED THE RIVAL ARGUMENTS MADE BY B OTH THE SIDES, PERUSED THE ORDERS OF THE AO AND LD.CIT(A) AND THE PAPER BOOK FILED ON BEHALF OF THE ASSESSEE. I HAVE ALSO CONSI DERED THE VARIOUS DECISIONS CITED BEFORE ME. THE ONLY ISSUE TO BE DE CIDED IN THE IMPUGNED APPEAL IS REGARDING THE ELIGIBILITY OF DED UCTION U/S 80P OF PAGE 5 OF 7 ITA NO. 460/DEL/2017 ISPAT EMPLOYEE CORPORATIVE THRIFT & CREDIT SOCIETY LTD. VS ITO THE ACT ON THE INTEREST RECEIVED ON FIXED DEPOSITS; SAVINGS ACCOUNTS AND INTEREST ON I.T. REFUND. I FIND THE ASSESSEE I N THE INSTANT CASE IS A COOPERATIVE THRIFT AND CREDIT SOCIETY. IT HAS EA RNED INTEREST ON FIXED DEPOSITS, SAVING ACCOUNTS AND INTEREST ON I.T . REFUND. I FIND THE LD. COUNSEL FOR THE ASSESSEE HAS RELIED ON VARI OUS DECISION TO THE PROPOSITION THAT SUCH INTEREST INCOME IS ELIGIB LE FOR DEDUCTION U/S 80P. HOWEVER, THE HONBLE DELHI HIGH COURT IN THE CASE OF MANTOLA CO-OPERATIVE THRIFT & CREDIT SOCIETY LTD. ( SUPRA) HAS ALREADY DECIDED THE IDENTICAL ISSUE AND HAS HELD TH AT SUCH INTEREST INCOME IS NOT ELIGIBLE FOR DEDUCTION U/S 80P(2). A LTHOUGH THE VARIOUS DECISIONS RELIED ON BY THE LD. COUNSEL FOR THE ASSESSEE SUPPORTED ITS CASE, HOWEVER, THE DECISION OF THE HO NBLE DELHI HIGH COURT WHICH IS THE JURISDICTIONAL HIGH COURT IS BIN DING ON THE ASSESSEE. SINCE THE LD.CIT(A) HAS FOLLOWED THE DEC ISION OF THE HONBLE DELHI HIGH COURT AND HAS REJECTED THE CLAI M OF DEDUCTION U/S 80P(2) OF THE ACT ON THE INTEREST INCOME, THERE FORE, IN ABSENCE OF ANY DECISION AGAINST THE DECISION OF THE HONBLE JURISDICTIONAL HIGH COURT, I DO NOT FIND ANY INFIRMITY IN THE ORDE R OF CIT(A). LD. COUNSEL FOR THE ASSESSEE COULD NOT BRING ANY MATERI AL SO AS TO TAKE A CONTRARY VIEW THAN THE VIEW TAKEN BY THE HONBLE DELHI HIGH PAGE 6 OF 7 ITA NO. 460/DEL/2017 ISPAT EMPLOYEE CORPORATIVE THRIFT & CREDIT SOCIETY LTD. VS ITO COURT. THE GROUNDS RAISED BY THE ASSESSEE ARE ACCO RDINGLY DISMISSED. 11. IN THE RESULT, THE APPEAL FILED BY THE ASSESSEE IS DISMISSED. PRONOUNCED IN THE OPEN COURT ON 31.07.2017. SD/- (R.K.PANDA) ACCOUNTANT MEMB ER DATE:- 31 ST JULY, 2017 *AMIT KUMAR*/SUJEET COPY FORWARDED TO: 1. APPELLANT 2. RESPONDENT 3. CIT 4. CIT(APPEALS) 5. DR: ITAT //TRUE COPY// ASSISTANT REGISTRAR ITAT NEW DELHI PAGE 7 OF 7 ITA NO. 460/DEL/2017 ISPAT EMPLOYEE CORPORATIVE THRIFT & CREDIT SOCIETY LTD. VS ITO