Appeal details
Counselvise Citation
[2017] 127 COUNSELVISE.COM (IT) 0294 (ITAT-MUMBAI)
Assessee PAN
Bench
Appeal Number
Duration Of Justice
6 month(s) 28 day(s)
Appellant
Respondent
Appeal Type
Income Tax Appeal
Pronouncement Date
17-08-2017
Appeal Filed By
Department
Order Result
Dismissed
Bench Allotted
SMC
Next Hearing Date
28-06-2017
Assessment Year
2013-2014
Appeal Filed On
20-01-2017
Judgement Text
IN THE INCOME TAX APPELLATE TRIBUNAL SMC BENCH, MUMBAI BEFORE SHRI SHAMIM YAHYA , ACCOUNTANT MEMBER ITA N O. 481/MUM./2017 (ASSESSMENT YEAR: 2013 - 14 ) ITO 29(1)(1) R.NO.101, 1 ST FLOOR, C - 10, BUILDING PRATYAKSHAKR BHAVAN, BKC, BANDRA (E) MUMBAI 400 051 . APPELLANT V/S M/S. AHIRWAD CO - OPERATIVE CREDIT SOCIETY LTD., ASHIRWAD CO - OP CREDIT SOCIETY, B - 07, GROUND FLOOR, UDYOG KSHETRA, MULUND GOREGAON LINK ROAD, MULUND (W) MUMBAI 400 080 PAN NO: AAAAA9720A . RESPONDENT ASSESSEE BY : SHRI. V. JANARDHANAN REVENUE BY : SHRI. BHUPENDRA SHAH DATE OF HEARING 28/06/2017 DATE OF ORDER - 17 .0 8 .2017 O R D E R PER: SHAMIM YAHYA T HIS APPEAL BY THE REVENUE IS DIRECTED AGAINST ORDER OF LEARNED CIT - A D ATED 7/11/2016 AND PERTAINS TO A SSESSMENT Y EAR 2013 - 14. 2. THE ISSUE RAISED IS THAT LEARNED CIT - A ERRED IN DELETING THE ADDITION OF RS. 30,39,897 / - MADE BY THE A SSESSING O FFICER, WHEREIN HE HAS DENIED THE ASSEESSEE'S CLAIM OF DEDUCTION UNDER SECTION 80 P. 3. THE ASSESS EE IN THIS CASE IS A COOPERATIVE CREDIT SOCIETY, CARRYING ON THE BUSINESS OF PROVIDING CREDIT FACILITIES TO ITS MEMBERS. DURING T HE COURSE OF ITA NO. 481/MUM/2017 M/S. ASHIRWAD CO - OPERATIVE CREDIT SOCIETY LTD., 2 ASSESSMENT PROCEEDINGS , THE A SSESSING O FFICER HELD THAT ASS ESSEE CANNOT DERIVE BENEFIT OF D EDUCTION UNDE R SECTION 80 P ON INTEREST EARNED ON SHORT - TERM DEPOSITS AS THE SAME WAS NOT ATTRIBUTABLE TO THE ACTIVITIES OF THE SOCIETY. IN THIS REGARD HE ALSO REFERRED TO THE DECISION OF H ONOURABLE A PEX C OURT IN THE CASE OF TATGO ARS CORPORATIVE CREDIT SOCIETY. IT WAS FURTHER HELD THAT ASSESSEE WAS ALSO NOT ELIGIBLE FOR DEDUCTION BY INVOKING PROVISIONS OF SECTION 80 P (4). 4. UPON ASSESSEE'S APPEAL LEARNED CIT - A DECIDED THE ISSUE IN FAVOUR OF ASSESSEE BY HOLDING AS UNDER : - 6.2 I HAVE CAREFULLY CONSIDERED THE REASONING OF THE LD. A.O FOR MAKING DISALLOWANCE OF DEDUCTION U/.S.80P AS WELL AS SUBMISSION OF THE APPELLANT. I HAVE GONE THROUGH THE CASE LAWS RELIED UPON BY THE LD. A.O. & THE APPELLANT. THE FACTS ARE THAT THE APPELLANT IS A COOP, CREDIT SOCIETY ENGAGED IN THE A CTIVITIES OF PROVIDING CREDIT FACILITIES TO IT'S MEMBERS. IT ACCEPTS DEPOSITS FROM MEMBERS & PROVIDES CREDIT FACILITIES TO IT'S MEMBERS. THE ACTIVITIES OF THE APPELLANT ARE LIMITED TO IT'S MEMBERS. IT HAS KEPT SOME DEPOSITS WITH OTHER COOP, BANK AND RECEIV ED INTEREST DURING THE YEAR. THE LD. A.O. WAS OF THE VIEW THAT INTEREST RECEIVED FROM OTHER COOP, BANKS IS NOT ELIGIBLE FOR DEDUCTION U/S.80P(2)(A)(I) OF THE ACT. THE LD. A.O. DID NOT CONSIDER THE PROVISIONS OF 80(P)(2)(D). THE SAID CLAUSE PROVIDES FOR DED UCTION TO A CO OP. CREDIT SOCIETY FOR THE AMOUNT OF DIVIDEND/INTEREST RECEIVED FROM OTHER COOP. CREDIT SOCIETIES INCLUDING CO - OP, BANKS AS THE CO - OP BANKS ARE ALSO CO - OP. SOCIETIES. THEREFORE IN MY OPINION THE INTEREST RECEIVED BY THE APPELLANT FROM OTHER COOP, BANKS IS ELIGIBLE FOR DEDUCTION U/S. 80P(2)(D) OF THE ACT. THE LD. A.O. HAS CONSIDERED THE APPELLANT AS A COOP, BANK WITHIN THE MEANING OF SECTION 80 (P)(4) OF THE ACT, BUT HAS NOT GIVEN ANY JUSTIFICATION FOR THE SAME. I FIND NO MERIT IN THE ARGUMENT OF THE LD. AO THAT THE APPELLANT IS A COOPERATIVE BANK. THE DETAILED DISCUSSION IN EARLIER PARAS WOULD SHOW THAT APPELLANT CANNOT BE CONSIDERED AS A COOP, BANK BUT IT IS A COOP, CREDIT SOCIETY ONLY. IT HAS BEEN SUBMITTED BY THE APPELLANT THAT IN EXACTLY S AME FACTS IN THE APPELLANTS OWN CASE FOR A.Y. 2010 - 11, MY PREDECESSOR HAS HELD THAT THE APPELLANT CANNOT BE HELD AS A COOPERATIVE BANK AND ALSO THE INTEREST INCOME EARNED ON DEPOSITS WITH THE OTHER COOPERATIVE BANKS, IS ENTITLED FOR DEDUCTION U/S.80P(2)(D) OF THE ACT. THE APPELLANT HAS FILED COPY OF THE ASSESSMENT ORDER FOR A.Y. 2010 - 11 FROM WHERE IT IS SEEN THAT THE FACTS IN THIS YEAR ARE ITA NO. 481/MUM/2017 M/S. ASHIRWAD CO - OPERATIVE CREDIT SOCIETY LTD., 3 IDENTICAL TO THE FACTS IN THAT YEAR AND THE REASONING FOR DISALLOWING DEDUCTION U/S.80P IN THIS YEAR ARE THE SAME AS IN THE A.Y. 2010 - 11. ON GOING THROUGH THE APPELLATE ORDER FOR A.Y. 2010 - 11 IN APPELLANTS OWN CASE IT IS SEEN THAT THAT MY PREDECESSOR HAS HELD THAT THE CASE LAWS RELIED ON BY THE A.O, ARE DISTINGUISHABLE & NOT APPLICABLE TO THE FACTS OF THE CASE OF APPELLANT , AND HE HAS FINALLY HELD IN PARA 15 OF THE ORDER THAT 1 5. IN VIEW OF THE FACTS AND CIRCUMSTANCES AS WELL AS THE JUDICIAL PRONOUNCEMENTS CITED ABOVE, IN MY CONSIDERED OPINION, THE APPELLANT CANNOT BE HELD AS A COOPERATIVE BANK AND ALSO THE INTEREST INCOME EARNED ON DEPOSITS WITH THE OTHER COOPERATIVE BANKS, IS ENTITLED FOR DEDUCTION U/S.80P(2)(D) OF THE ACT. THE A.O, IS ACCORDINGLY DIRECTED TO ALLOW THE DEDUCTION. THIS GROUND IS ALLOWED.' I FIND NO REASON TO DEVIATE FROM THE FINDING AND DECISION OF MY PRE DECESSOR AS THE FACTS ARE SAME IN THIS YEAR. IN VIEW OF THE SAME I AM OF THE CONSIDERED OPINION THAT THE APPELLANT IS NOT A COOP, BANK WITHIN THE MEANING OF SECTION 80P(4) OF THE ACT BUT IT IS A COOP, CREDIT SOCIETY ONLY. IT IS THEREFORE ENTITLED TO DEDUCT ION ON THE INTEREST RECEIVED FROM OTHER COOP, BANKS UNDER SECTION 80P(2)(D) OF THE ACT. SIMILARLY IT IS ENTITLED FOR DEDUCTION U/S. 80P(2)(A)(I) FOR THE INCOME COVERED BY IT FROM THE ACTIVITIES OF PROVIDING CREDIT FACILITIES TO IT'S MEMBERS. AT THE SAME TI ME IT IS NOT HIT BY SECTION 80P(4) OF THE ACT AS IT IS NOT A COOP, BANK. THE LD.A.O. WAS NOT JUSTIFIED IN DENYING THE DEDUCTION U/S.80P TO THE APPELLANT. 5. A GAINST ABOVE ORDER , REVENUE IS IN APPEAL BEFORE THE ITAT. 6. I HAVE HEARD BOTH THE COUNSEL AND PERUSED THE RECORDS . AS REGARDS THE ISSUE O F APPLICABILITY OF SECTION 80P( 4 ), I FIND THAT THE SAME IS NOW SQUARELY COVERED IN FAVOUR OF THE ASSESSEE BY THE DECISION OF HONOURABLE APEX COURT IN CIVIL APPEAL NUMBER 10245 OF 2017 IN THE CASE OF THE CITIZEN CO OPERATIVE SOCIETY LTD BY ACIT VIDE ORDER DATED 8 TH OF AUGUST 2017. THE HONOURABLE APEX COURT IN THIS CASE HAS EXPOUNDED THAT IF ONE HAS TO GO BY THE DEFINITION OF COOPERATIVE BANK THE ASSESSEE DOES NOT GET COVERED THEREBY. THAT IT IS ALSO A MATTER OF COMMON KNOWLEDGE THAT IN ORDER TO DO THE BUSINESS OF A COOPERATIVE BANK, IT IS IMPERATIVE TO HAVE A LICENCE FROM THE RESERVE BANK OF INDIA WHICH THE ASSESSEE ITA NO. 481/MUM/2017 M/S. ASHIRWAD CO - OPERATIVE CREDIT SOCIETY LTD., 4 DOES NOT POS S E S S. IN THE PRESENT CASE BEFORE ME ALSO THE ASSESSEE COOPERATIVE SOCIETY IS NOT LICENSED FROM THE RESERVE BANK OF INDIA TO ACT AS CO - OPERATIVE BANK. HENCE AS PER THE RATIO EMANATING FROM THE AFORESAID HONOURABLE APEX COURT JUDGEMENT THE ASSESSEE IS NOT AFFEC TED BY THE PROVISIONS OF SECTION 80P(4). 7. ACCORDINGLY IN THE BACKGROUND OF AFORESAID DISCUSSION AND PRECEDENT , I UPHOLD THE ORDER OF LEARNED CIT(A) AND HOLD THAT ASSESSEE IS ENTITLED TO DEDUCTION UNDER SECTION 80 P, AND THE SAME CANNOT BE DENIED BY INVOKING PROVISIONS OF SECTION 80P(4). 8. THE A SSESSING O FFICER HAS ALSO HELD WITHOUT PREJUDICE TO HIS ABOVE ORDER THAT ASSESSEE WAS NOT ENTITLED TO TREAT INTEREST INCOME RECEIVED FROM INVESTMENT AS BUSINESS INCOME BY REFERRING TO HONOURABLE APEX COURT DEC ISION IN THE CASE OF TOTGARS COOPERATIVE SOCIETY LTD. 9. I F IND THAT THIS REASONING OF THE A SSESSING O FFICER HAS RIGHTLY BEEN SET ASIDED BY THE LEARNED CIT - A. THE DECISION OF HONOURABLE APEX COURT I N THE DECISION REFERRED BY THE A SSESSING O FFICER IS NOT AT ALL APPLICABLE ON THE FACTS OF THE CASE. THE TOTGARS SOCIETY WAS NOT ENGAGED INTO THE BUSINESS OF ACCEPTING DEPOSIT AND GRANTING CREDIT. RATHER IT WAS ENGAGED IN THE ACTIVITY FOR MARKETING OF AGRICULTURAL PRODUCE OF ITS MEMBERS. HENCE THIS CASE LAWS IS NOT AT ALL APPLICABLE ON THE FACTS OF THE PRESENT CASE 10. IN THE PRESENT CASE ASSESSEE IS ENGA GING IN TO THE BUSINESS OF ACCEPTING DEPOSITS AND GRANTING CREDIT TO ITS MEMBERS. THE ASSESSEE WAS UTILISING ITA NO. 481/MUM/2017 M/S. ASHIRWAD CO - OPERATIVE CREDIT SOCIETY LTD., 5 SURPLUS FUND IN INVESTMENTS TO EARN INCOME. THIS ACTIVITY HAS DIRECT & PROXIMATE CONNECTION OR NEXUS TO THE EARNING OF THE ASSESSEE SOCIETY. ON THIS REASON ING T HIS ACTIVITY OF THE ASSESSEE HAS BEEN HELD TO BE BUSINESS ACTIVITY AND THE RESULT ANT INCOME IS TREATED AS BUSINESS INCOME. THERE ARE SEVERAL DECISIONS IN SUPPORT OF THIS PROPOSITION INCLUDING THAT FROM ACIT VS. BULDHANA URBAN C OOPERATIVE CREDIT SOCIETY LTD 32 TAXMAN.COM 69. ACCORDINGLY IN THE BACKGROUND OF AFORESAID DISCUSSION AND PRECEDENT I HOLD THAT THE INTEREST INCOME IN THIS CASE IS TO BE TREATED AS BUSINESS INCOME. IN THE BACKGROUND OF AFORESAID DISCUSSION AND PRECEDENT, I DO NOT FIND ANY I NFIRMITY IN THE ORDER OF LEARNED CIT(A). 11. IN THE RESULT, THIS APPEAL FILED BY THE REVENUE STANDS DISMISSED. ORDER PRONOUNCED IN THE OPEN COURT ON 1 7 .0 8 .2017 S D / - SHAMIM YAHYA ACCOUNTANT MEMBER MUMBAI, DATED: 1 7 .0 8 .2017 COPY OF THE ORDER FORWARDED TO : (1) THE ASSESSEE; (2) THE REVENUE; (3) THE CIT(A); (4) THE CIT, MUMBAI CITY CONCERNED; (5) THE DR, ITAT, MUMBAI; (6) GUARD FILE. BY ORDER KARUNA SR. PRIVATE SECRETARY (DY./ASSTT.REGISTRAR) ITAT, MUMBAI
