M/s. Kamal Mahila Nagari Sahakari Petpedhi Maryadit, Panvel V. The Income Tax Officer, NFAC

ITA 507/PUN/2023

AI Insights

The case involves M/s. Kamal Mahila Nagari Sahakari Patpedhi Maryadit, a cooperative society, which appealed against the order of the CIT(A) that led to the double taxation of interest income from nationalized banks. The society had initially offered the net interest income from these banks for taxation after deducting related expenses. However, the CIT(A) had disallowed the deduction of these expenses, leading to the taxation of the gross interest income instead. The Tribunal found that the CIT(A)'s decision was inconsistent with the treatment of similar income types and allowed the appeal, thereby reducing the taxable amount to what the assessee had originally computed.

• Counselvise Citation: [2023] 140 COUNSELVISE.COM (IT) 124148 (ITAT-PUNE)
• Duration Of Justice: 21 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 18-05-2023
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: SMC
• Next Hearing Date: 17-05-2023
• Assessment Year: 2018-2019
• Appeal Filed On: 27-04-2023
• Laws Referred To: Income-tax Act, 1961
• Result in Favour of: Assessee
• Court: TRIBUNAL

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL SMC BENCH, PUNE BEFORE SHRI R.S. SYAL, VICE PRESIDENT आयकर अपील सं. /ITA No.507/PUN/2023 नधा रण वष / Assessment Year : 2018-19 M/s. Kamal Mahila Nagari Sahakari Patpedhi Maryadit, Ground Floor, Shree Krishna Niwas, Tilak Road, Panvel 410206 Maharashtra PAN : AAATK8008L Vs. ITO, NFAC Appellant Respondent आदेश / ORDER PER R.S. SYAL, VP: This appeal by the assessee arises out of the order dated 16-11-2011 passed by the CIT(A) in National Faceless Appeal Centre, Delhi u/s.250 of the Income-tax Act, 1961 (hereinafter also called ‘the Act’) in relation to the assessment year 2018-19. 2. The appeal is time barred by 616 days. The assessee has filed an affidavit explaining the reasons for the delay. I am satisfied Assessee by : Shri Nikhil S. Pathak Revenue by : Shri Suresh Gaikwad Date of hearing 18-05-2023 Date of pronouncement 19-05-2023 ITA No.507/PUN/2023 M/s. Kamal Mahila Nagari Sahakari Patpedhi Maryadit 2 with the reasons. The delay is condoned and the appeal is admitted for disposal on merits. 3. Briefly stated, the facts of the case, are that the assessee is a cooperative society which furnished its return claiming deduction u/s.80P(2)(d). Interest income, inter alia, included interest from deposits with nationalized banks at a gross amount of Rs.2,51,149/-. After deducting expenses amounting to Rs.1,56,943/- therefrom, the assessee offered for taxation such interest income at Rs.94,206/- on net basis. The Assessing Officer made addition of Rs.2,51,149/- towards interest income. The ld. CIT(A) noted that the action of the AO led to the double taxation of Rs.94,206/-, firstly by suo motu offering to tax by the assessee and then the disallowance of the full amount on gross basis also including the net interest income. Aggrieved thereby, the assessee has approached the Tribunal. 4. I have heard both the sides and gone through the relevant material on record. It is seen from the assessee’s Profit and loss account, a copy placed at page 8 onwards of the paper book, that it earned interest on loans, interest from banks and interest on ITA No.507/PUN/2023 M/s. Kamal Mahila Nagari Sahakari Patpedhi Maryadit 3 investments all totalling to Rs.6,56,01,410/- on gross basis. Simultaneously, the assessee paid interest on various deposits all totalling to Rs.4,09,92,369/-, giving percentage of interest expense to the interest income at 62.49%. This percentage was applied across the board on all types of gross interest incomes for computing interest income eligible for deduction u/s 80P(2)(d). That was accepted by the AO and not controverted on behalf of the Revenue before the Tribunal as well. Naturally, when it came to the interest from nationalized banks, the assessee did not claim deduction u/s 80P(2)(d) on the same, but offered the income to tax on the same pattern by reducing the gross income by 62.49% towards interest expenses and offered net income of Rs.94,206/-. The action of the ld. CIT(A) has ultimately resulted into denying the deduction towards interest expenses from the gross interest received from Nationalised banks at Rs.2,51,149/- and charging the gross amount of interest to tax. Once the calculation of interest expense and interest income has been approved by the AO and also applied in computing the deduction u/s.80P(2)(d) on other eligible interest income, such a deduction towards expenses needs to be ITA No.507/PUN/2023 M/s. Kamal Mahila Nagari Sahakari Patpedhi Maryadit 4 allowed towards interest earned from banks as well for the purpose of inclusion in the total income. I, therefore, order to reduce the amount of proportionate interest expenses of Rs.1,56,943/- from the gross interest income from nationalized banks, which would eventually mean that net interest income earned from Nationalised banks would be taxed at Rs.94,206/-. It was this amount originally offered by the assessee in its computation of total income. 5. In the result, the appeal is allowed to this extent. Order pronounced in the Open Court on 19 th May, 2023. Sd/- ( R.S.SYAL) VICE PRESIDENT पुणे Pune; िदनांक Dated : 19 th May, 2023 सतीश आदेश की ितिलिप अ ेिषत/Copy of the Order is forwarded to : 1. अपीलाथ / The Appellant; 2. थ / The Respondent 3. 4. 5. The Pr.CIT concerned DR, ITAT, ‘SMC’ Bench, Pune गाड फाईल / Guard file. आदेशानुसार/ BY ORDER, // True Copy // Senior Private Secretary आयकर अपीलीय अिधकरण ,पुणे / ITAT, Pune ITA No.507/PUN/2023 M/s. Kamal Mahila Nagari Sahakari Patpedhi Maryadit 5 Date 1. Draft dictated on 18-05-2023 Sr.PS 2. Draft placed before author 19-05-2023 Sr.PS 3. Draft proposed & placed before the second member JM 4. Draft discussed/approved by Second Member. JM 5. Approved Draft comes to the Sr.PS/PS Sr.PS 6. Kept for pronouncement on Sr.PS 7. Date of uploading order Sr.PS 8. File sent to the Bench Clerk Sr.PS 9. Date on which file goes to the Head Clerk 10. Date on which file goes to the A.R. 11. Date of dispatch of Order. *