I.T.O. WARD -5, AMRAVATI V. M/S UTKRANTI NAGRI SAHAKARI PAT SANSTHA,

ITA 474/NAG/2016

• Counselvise Citation: [2016] 121 COUNSELVISE.COM (IT) 4512 (ITAT-NAGPUR)
• Duration Of Justice: 1 month(s) 2 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 22-09-2016
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: SMC
• Assessment Year: 2012-2013
• Appeal Filed On: 19-08-2016
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: AGNES P THOMAS
• Keywords: Business income
• Section: 56

Judgement Text

1 ITA NO. 474/NAG/2016. IN THE INCOME TAX APPELLATE TRIBUNAL, NAGPUR BENCH, NAGPUR BEFORE SHRI SHAMIM YAHYA, ACCOUNTANT MEMBER. (S.M.C.) I.T.A. NO . 474/NAG/2016. ASSESSMENT YEAR : 2012 - 13. THE INCOME - TAX OFFICER, M/S UTKRANTI NAGARI SAHAKARI WARD - 5, AMRAVATI. VS. PAT SANSTHA, JARUD, TQ. WARUD, DIST. AMRAVATI. PAN AAAAU 3885G. APPELLANT. RESPONDENT. APPELLANT BY : S MT. AGNES P. THOMAS. RESPONDENT BY : NONE. DATE OF HEARING : 21 - 09 - 2016 DATE OF PRONOUNCEMENT : 22 N D SEPT., 2016 O R D E R THIS APPEAL BY THE REVENUE IS DIRECTED AGAINST THE ORDER OF LEARNED CIT(APPEALS) - I, NAGPUR DATED 21 - 06 - 2016 AND PERTAINS TO ASSESSMENT YEAR 201 2 - 13 . THE GROUNDS OF APPEAL READ AS UNDER : 1. ON THE FACTS AND CIRCUMSTANCES OF THE CASE, THE LD. CIT(APPEALS) HAS ERRED IN TREATING THE INTEREST INCOME OF RS.40,54,925/ - AS A BUSINESS INCOME SINCE THE SAME IS NOT ATTRIBUTABLE TO THE ASSESSEES BUSINESS OF PROVIDING CREDIT FACILITY TO ITS MEMBERS. 2. ON THE FACTS AND CIRCUMSTANCES OF THE CAS E, THE LD. CIT(APPEALS) HAS ERRED IN NOT APPRECIATING THE ASSESSING OFFICERS DECISION THAT INTEREST INCOME OF RS.40,54,925/ - WAS CORRECTLY TAXABLE AS INCOME FROM OTHER SOURCES AS THE SAME WAS EARNED BY THE ASSESSEE ON INVESTMENTS MADE IN BANK DEPOSITS A ND MUTUAL FUNDS OUT OF ITS SURPLUS FUNDS SNOT REQUIRED IMMEDIATELY FOR BUSINESS PURPOSE. 3. ON THE FACTS AND CIRCUMSTANCES OF THE CASE, THE LD. CIT(APPEALS) HAS ERRED IN LAW IN NOT FOLLOWING THE DECISION OF THE HONBLE SUPREME COURT IN THE TOTGARS CO - OP. SAL ES SOCIETY LTD. VS. INCOME TAX 2 ITA NO. 474/NAG/2016. OFFICER, (2010) 322 ITR 283 WHICH IS SQUARELY APPLICABLE TO THE FACTS IN ASSESSEES CASE. 2. AT THE OUTSET IT IS NOTED THAT NONE APPEARED ON BEHALF OF THE ASSESSEE. HOWEVER, I AM OF THE CONSIDERED OPINION THAT THE ISSUE CAN B E ADJUDICATED BY HEARING THE LEARNED D.R. AND PERUSING THE RECORDS . 3. UPON CAREFUL CONSIDERATION I FIND THAT THE LEARNED CIT(APPEALS) HAS ALLOWED THE APPEAL IN ASSESSEES FAVOUR BY NOTING THAT SIMILAR ISSUE WAS DECIDED BY THE ITAT AND HONBLE JURISDICTION AL HIGH COURT IN FAVOUR OF THE ASSESSEE. I MAY GAINFULLY REFER TO THE LEARNED CIT(APPEALS) ORDER AS UNDER : 6.1 THE APPELLANT IS A COOPERATIVE SOCIETY ENGAGED IN THE BUSINESS OF PROVIDING CREDIT FACILITIES TO ITS MEMBERS. DURING THE COURSE OF ASSESSMENT PROCEEDINGS, THE AO FOUND THAT THE ASSESSEE HAS SHOWN INTEREST INCOME AMOUNTING TO RS.40,54,925/ - WHICH WAS RECEIVED FROM VARIOUS COOPERATIVE BANKS AND OTHER BANKS ON ACCOUNT OF FDR AND DEPOSITS. THE AO HAS HELD THAT THE ASSESSEE WAS NOT ELIGIBLE FOR DE DUCTION U/S 80P(2)(A)(I) ON THE INTEREST INCOME. THE SIMILAR ISSUE HAS COME UP BEFORE THE HONBLE ITAT NAGPUR BENCH, NAGPUR IN THE ASSESSEES OWN CASE IN ITA NO. 30/NAG/2015 FOR A.Y. 2010 - 11 WHEREIN THE HONBLE ITAT HAS DECIDED THE ISSUE IN FAVOUR OF THE A PPELLANT VIDE ITS ORDER DATED 2 ND JUNE 2016 BY HOLDING THAT UPON HEARIN G B OTH THE COUNSEL AND PERUSING THE RECORDS, WE FIND THAT THE ISSUE INVOLVED IS COVERED IN FAVOUR OF THE ASSESSEE BY A CATENA OF DECISIONS FROM ITAT AS WELL AS A DECISION OF JURISDICTIONAL HIGH COURT. IN THIS REGARD WE MAY GAINFULLY REFER THE HONBLE JURISDICTIONAL HIGH COURT DECISION IN THE CASE OF CIT VS. SOLAPUR NAGRI AUDYOGIC SAHAKARI BANK LTD. 182 TAXMAN 231. THE ABOVE CASE LAW FULLY SUPPORTS THE ASSESSEES CASE. HERE ALSO SURPLUS FUNDS NOT IMMEDIATELY REQUIRED FOR DAY TO DAY BANKING WERE KEPT IN BANK DEPOSITS. THE INCOME EARNED THERE FROM THUS WOULD BE INCOME FROM BANKING BUSINESS ELIGIBLE FOR DEDUCTION U/S 80P(2)(A)(I). 6.2 THE HONBLE ITAT HAS ALSO CONSIDERED ITS OW N DECISION ON THE SIMILAR ISSUE IN THE CASE OF MSEB ENGINEERS CO - OP. CREDIT SOCIETY LTD. VIDE ITS ORDER DATED 05.05.2016 WHEREIN THE HONBLE ITAT HAS HELD AS UNDER : 3 ITA NO. 474/NAG/2016. CONSIDERING THE ABOVE FACTS, WE FIND THAT THERE IS FORCE IN THE ARGUMENT OF THE ASSESSEE THAT THE ASSESSEE NOT A CO - OPERATIVE BANK, BUT ITS NATURE OF BUSINESS WAS COUPLED WITH BANKING WITH ITS MEMBERS AS IT ACCEPTS DEPOSITS FROM AND LENDS THE SAME TO ITS MEMBERS. TO MEET ANY EVENTUALITY, THE ASSESSEE WAS REQUIRED TO MAINTAIN SOME LIQUID FUNDS. THAT WAS WHY IT WAS SUBMITTED BY THE ASSESSEE THAT IT HAD INVESTED IN SHORT TERM DEPOSITS. FURTHERMORE, THE ASSESSEE HAD MAINTAINED OVERDRAFT FACILITY WITH DENA BANK AND THE BALANCE AS AT 31.03.2009 WAS RS. 13,69,955/ - . [SOURCE: BALANCE SHEET OF THE ASSES SEE AVAILABLE ON RECORD]. IN OVERALL CONSIDERATION OF ALL THE ASPECTS, WE ARE OF THE CONSIDERED VIEW THAT THE RATIO LAID DOWN BY THE HONBLE SUPREME COURT IN THE CASE OF TOTGARS CO - OP SALE SOCIETY LTD. (SUPRA) CANNOT IN ANY WAY COME TO THE RESCUE OF EITHER THE LD. CIT(A) OR THE REVENUE. IN VIEW OF THE ABOVE FACTS, WE ARE OF THE FIRM VIEW THAT THE LEARNED CIT(A) WAS NOT JUSTIFIED IN COMING TO A CONCLUSION THAT THE SUM OF RS.9,40,639/ - WAS TO BE TAXED U/S 56 OF T HE ACT. IT IS ORDER E D ACCORDINGLY. RESPECTFULLY FOLLOWING THE ABOVE DECISION OF THE CO - ORDINATE BENCH, WE HEREBY HOLD THAT THE BENEFIT OF DEDUCTION U/S 80P(2)(A)(I) WAS RIGHTLY GRANTED BY LD. CIT(A), HOWEVER, HE HAS WRONGLY HELD THAT THE INTEREST INCOME IS TAXABLE U/S 56 OF THE ACT SO DO NOT FALL UNDER THE CATEGORY OF EXEMPTED INCOME U/S 80P OF THE ACT. THE ADVERSE PORTION OF THE VIEW, WHICH IS AGAINST THE ASSESSEE OF LD. CIT(A) IS HEREBY REVERSED FOLLOWING THE DECISION OF THE TRIBUNAL CITED SUPRA, RESULTANTLY GROUND IS ALLOWED. WE FIND THAT THE RATIO OF ABOVE CASE ALSO APPLIES TO THE PRESENT CASE. AS OBSERVED IN THE ABOVE CASE LAW, IN THIS CASE ALSO THE SUBMISSIONS OF THE ASSESSEES COUNSEL IS THAT THE ASSESSEE SOCIETY IS MAINTAINING OPERATIONAL FUNDS AND TO MEET ANY EVENTUALITY TOWARDS REPAYMENT OF DE POSIT THE COOPERATIVE SOCIETY IS MAINTAINING SOME LIQUIDATED FUNDS AS SHORT TERM DEPOSITS WITH BANKS. HENCE ADHERING TO THE DOCTRIN STAIR DESISES, WE HOLD THAT THE ASSESSEE SHOULD BE GRANTED BENEFIT OF DEDUCTION UNDER SECTION 80P(2)(A)(I). ACCORDINGLY, TH E INTEREST ON DEPOSITS WOULD QUALIFY FOR DEDUCTION UNDER THE SAID SECTION. ACCORDINGLY, WE SET ASIDE THE BORDERS OF AUTHORITIES BELOW AND DECIDE THE ISSUE IN FAVOUR OF THE ASSESSEE. WE FURTHER FIND THAT BATCH OF SIMILAR APPEALS DECIDED BY THE ITAT IN FA VOUR OF THE ASSESSEE HAS ALSO BEEN CONSIDERED BY THE JURISDICTIONAL HIGH COURT. THE HONBLE JURISDICTIONAL HIGH COURT 4 ITA NO. 474/NAG/2016. HAS DULY AFFIRMED OF THIS TRIBUNAL. ACCORDINGLY, IN THE BACKGROUND AFORESAID DISCUSSION, WE DO NOT INFIRMITY IN THE ORDER OF LD. CIT(A). 7.0 THUS FOLLOWING THE ABOVE DECISIONS, THE HONBLE ITAT, NAGPUR BENCH, NAGPUR HAS ALLOWED THE APPEAL OF THE APPELLANT FOR A.Y. 2010 - 11 ON THE SAME ISSUE. THEREFORE, RESPECTFULLY FOLLOWING THE ORDER OF THE HONBLE JURISDICTIONAL ITAT AND THE ORDER OF THE H ONBLE JURISDICTIONAL HIGH COURT IN THE CASE OF CIT VS. SOLAPUR NAGRIK UDYOGIC SAHAKARI BANK LTD., I AM OF THE CONSIDERED OPINION THAT THE APPELLANT IS ELIGIBLE FOR DEDUCTION U/S 80P OF THE ACT IN RESPECT OF THE INTEREST INCOME RECEIVED ON BANK FDRS FROM T HE OTHER BANKS. ALL THESE GROUNDS ARE ALLOWED. 4. SINCE THE FACTS IN THIS CASE ARE IDENTICAL AND ON SIMILAR ISSUE THE ITAT, NAGPUR BENCH AND THE HONBLE JURISDICTIONAL HIGH COURT HAS DECIDED THE ISSUE IN FAVOUR OF THE ASSESSEE, I FIND THAT PRINCIPLE OF JUDICIAL PRECEDENCE MANDATE THAT THE APPELLATE ORDER IN THIS CASE BE UPHELD AND THE ISSUE BE DECIDED IN FAVOUR OF THE ASSESSEE. 5. I ALSO NOTE THAT THE LEARNED D.R. HAS REFERRED TO A DECISION OF HONBLE GUJARAT HIGH COURT IN THE CASE OF SBI VS. CIT IN TAX APPEAL NO. 486 & 487 OF 2015 VIDE ORDER DATED APRIL 25, 2016. LEARNED D.R. HAS SUBMITTED THAT ON THE SAME ISSUE HONBLE GUJARAT HIGH COURT HAS TAKEN A DIFFERENT VIEW AND DECIDE D THE ISSUE AGAINST THE ASSESSEE. HOWEVER, I FIND THAT SINCE THE JURISDICTIONAL HIGH COURT IS IN FAVOUR OF THE ASSESSEE AND NO APEX COURT DECISION IS AVAILABLE ON THIS ISSUE , I FIND THAT FOLLOWING THE JURISDICTIONAL HIGH COURT DECISION THE ISSUE NEEDS TO BE DECIDED IN FAVOUR OF THE ASSESSEE. 6. AS REGARDS THE DECISION OF HONBLE SUPRE ME COURT IN THE CASE OF TOTGARS CO - OP SALE SOCIETY LTD.322 ITR 283 IS CONCERNED, I FIND THAT THE ITAT IN ITS EARLIER DECISION HAS ALREADY HELD THAT THE SAME WAS RENDERED IN DIFFERENT CONTEXT AND IS NOT APPLICABLE ON THE FACTS SUCH AS THESE CASES. 5 ITA NO. 474/NAG/2016. 7. ACCOR DINGLY RESPECTFULLY FOLLOWING THE DECISION OF ITAT AND HONBLE JURISDICTIONAL HIGH COURT DECISION I AFFIRM THE ORDER OF LEARNED CIT(APPEALS). 8. IN THE RESULT, THIS APPEAL FILED BY THE REVENUE STANDS DISMISSED. ORDER PRONOUNCED IN THE OPEN COURT ON THIS 22 ND DAY OF SEPT., 2016. SD/ - ( SHAMIM YAHYA) ACCOUNTANT MEMBER. NAGPUR, DATED: 22 ND SEPT., 2016. COPY FORWARDED TO : 1. M/S UTKRANTI NAGARI SAHAKARI PAT SANSTHA, JARUD, TQ. WARUD, DIST. AMRAVATI. 2. I.T.O., WARD - 5, AMRAVATI. 3. C.I.T. - I , NAGPUR. 4. CIT(APPEALS), - I, NAGPUR. 5. D.R., ITAT, NAGPUR. 6. GUARD FILE TRUE COPY BY ORDER ASSISTANT REGISTRAR, INCOME TAX APPELLATE TRIBUNAL, NAGPUR BENCH, NAGPUR. WAKODE.