The ITO, Ward-1(2), RAJKOT-GUJARAT V. Udhyog Bharti, GONDAL

ITA 566/RJT/2014

• Counselvise Citation: [2017] 127 COUNSELVISE.COM (IT) 9045 (ITAT-RAJKOT)
• Duration Of Justice: 2 year(s) 8 month(s) 4 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 05-06-2017
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: DB
• Next Hearing Date: 31-05-2017
• Assessment Year: 2010-2011
• Appeal Filed On: 01-10-2014
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: USHA N SHROTE
• Keywords: Business income

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL RAJKOT BENCH, RAJKOT [CONDUCTED THROUGH E-COURT AT AH MEDABAD] (BEFORE SHRI N.K. BILLAIYA, ACCOUNTANT MEMBER & SHRI MAHAVIR PRASAD, JUDICIAL MEMBER) ITA. NO: 566RJT/2014 & C.O. NO.23/RJT/2014 (ASSESSMENT YEAR: 2010-11) ITO, WARD-1(2), RAJKOT UDYOG BHARTI, NR. CHORDI DARWAJA, GONDAL, DIST: RAJKOT (GUJARAT). V/S V/S UDYOG BHARTI, NR. CHORDI DARWAJA, GONDAL, DIST: RAJKOT (GUJARAT). ITO, WARD-1(2), RAJKOT (APPELLANT) (RESPONDENT) PAN: AAATU0391A APPELLANT BY : MS. USHA N. SHROTE, SR. D. R. RESPONDENT BY : MS. DEVINA PATEL, A.R. ( )/ ORDER DATE OF HEARING : 31 -05-201 7 DATE OF PRONOUNCEMENT : 05 -06-2017 PER N.K. BILLAIYA, ACCOUNTANT MEMBER 1. THIS APPEAL BY THE REVENUE AND THE CROSS OBJECTION BY THE ASSESSEE ARE PREFERRED AGAINST THE ORDER OF THE LD. CIT(A)-I, RA JKOT DATED 14.07.2014 PERTAINING TO A.Y. 2010-11. ITA NO. 566/RJT/201 4 & C.O. NO. 23/RJT/14 . A.Y. 2010-11 2 2. THE ONLY GRIEVANCE OF THE REVENUE IS THAT THE LD. C IT(A) ERRED IN DELETING THE INTEREST RECEIVED ON INVESTMENT OF SURPLUS FUND IN BANK FIXED DEPOSIT AND BOND OF RS. 51.99 LACS. 3. AT THE VERY OUTSET, THE LD. COUNSEL FOR THE ASSESSE E STATED THAT THE IMPUGNED ISSUE IS SQUARELY COVERED IN FAVOUR OF THE ASSESSEE AND AGAINST THE REVENUE BY THE DECISION OF THE CO-ORDINATE BENC H IN ASSESSEES OWN CASE IN ITA NO. 473/RJT/2015 PERTAINING TO A.Y. 201 1-12. THE LD. D.R. COULD NOT BRING ANY DISTINGUISHING DECISION IN FAVOUR OF THE REVENUE. WE FIND FORCE IN THE CONTENTION OF THE LD. COUNSEL. THE TRI BUNAL IN ASSESSEES OWN CASE IN ITA NO. 473/RJT/2015 HAS DECIDED IDENTICAL ISSUE BY FOLLOWING THE FINDINGS OF THE CO-ORDINATE BENCH IN ITA NO. 100/RJ T/2008 FOR A.Y. 2004-05, THE RELEVANT FINDINGS OF THE SAME READ AS UNDER:- 8. WE HAVE DULY CONSIDERED THE CONTENTIONS OF THE A.O. AND OF THE CIT(A)-1, RAJKOT AND ALSO THE ARGUMENT OF THE LEARNED DR AND THE A.R. OF THE ASSESSEE AND THE PAPER BOOK FILED BY THE ASSESSEE. WE OBSERVE T HE FOLLOWING FACTS: THAT THE ASSESSEE IS SOLELY ENGAGED IN THE BUSINESS OF THE MANUFACTURING AND MARKETING OF KHADI AND ALLIED PRODUCTS IS NOT IN DI SPUTE; THAT THE ASSESSEE APPLIES/ACCUMULATES ITS INCOME FO R APPLICATION SOLELY FOR THE SAID PURPOSE IS ALSO NOT IN DISPUTE; THAT THE ASSESSEE IS ALSO APPROVED BY THE KHADI AND VILLAGE INDUSTRIES COMMISSION FOR THE SAID PURPOSE IS ALSO NOT IN DISP UTE. AS HAS BEEN SO OBSERVED BY THE CIT(A)-1, RAJKOT, AN D WHICH OBSERVATIONS HAS NOT BEEN CONTROVERTED BY THE LEARNED DR, ALL THE FUNDS OF THE ASSESSEE CONSTITUTE A COMMON POOL AND THE SOURCE AND THE DESTINATION OF T HE SAID FUNDS IS THE SOLE BUSINESS OF THE ASSESSEE WHICH IS MANUFACTURING AND MARKETING OF KHADI AND ALLIED PRODUCTS. THESE FACTS ARE NOT UNDER DISPUTE NOR WERE ANY ARGUMENT PUT ITA NO. 566/RJT/201 4 & C.O. NO. 23/RJT/14 . A.Y. 2010-11 3 FORWARD BY THE D.R. TO CONTROVERT THE SAEM. THE HO N.GUJARAT HIGH COURT IN THE CASE OF CIT V/S BARODA PEOPLES CO-OPERATIVE BANK L TD (280 ITR 282) WHILST DEALING WITH, AMONGST OTHER ISSUES, THE ISSUE OF AP PLICABILITY OF THE PROVISIONS OF SEC-80P TO THE INTEREST INCOME EARNED BY THE BANKS FROM INVESTMENTS IN VARIOUS SECURITIES HAS HELD THAT THE SAID INTEREST INCOME F ROM INVESTMENTS STOOD COVERED BY THE DEDUCTION U/S.80P (2)(A)(1) SINCE THE INVEST MENTS OF FUNDS WAS CONDUCIVE TO THE PROMOTION OR THE ADVANCEMENT OF BUSINESS OF BANKING. THE HON.BOMBAY HIGH COURT IN COMMISSIONER OF INCOME TAX V/S LOK HO LDINGS 308 ITR 356) HAS HELD THAT INTEREST INCOME RECEIVED BY THE ASSESSEE FROM THE DEPOSIT OF SURPLUS MONEY IN THE COURSE OF ITS BUSINESS WAS LIABLE TO BE TAXE D AS ITS BUSINESS INCOME. AS FAR AS THE ASSESSEE IS CONCERNED SINCE IT IS A PUBLIC C HARITABLE TRUST, IT IS ALSO EXPECTED TO COMPLY TO PROVISIONS OF SEC-35 OF THE BOMBAY PUB LIC TRUST ACT WHICH SPECIFICALLY REQUIRES THE TRUSTEES TO INVEST SURPLU S FUNDS IN PRESCRIBED SECURITIES. WE ARE ALSO OF THE OPINION THAT SEC-10(23B) HAVING BEEN BROUGHT INTO THE STATUTE TO ENCOURAGE THE KHADI AND RELATED ACTIVITIES OF TH E CONCERNED INSTITUTION AS SUCH (AS EXPLAINED BY THE BOARD IN ITS CIRCULAR CITED SU PRA) COUPLED WITH THE FACT THAT THE PHRASE ATTRIBUTABLE TO HAVING BEEN USED IN TH E AID SECTION, A WIDER INTERPRETATION IS CALLED FOR ESPECIALLY WHEN THE FU NDAMENTAL FACT THAT THE ASSESSEE IF APPLYING THE SAID INCOME SOLELY FOR THE PURPOSE SPECIFIED IN SEC- 10(23B) IS NOT UNDER DISPUTE. WE ALSO NOTE THAT TH E PROVISIONS UNDER WHICH RELIEF IS CLAIMED BY THE ASSESSEE IS PART OF EXEMPTION PRO VISIONS WHOSE PURPOSE IS ALSO TO ENCOURAGE PRESCRIBED ACTIVITIES OF SUCH INSTITUT IONS AND THEREFORE AS PER SETTLED JUDICIAL PRINCIPAL IN THIS REGARD SUCH PROVISIONS A RE ALWAYS TO BE GIVEN A BENEFICIAL INTERPRETATION WITH A VIEW TO ADVANCE THE LEGISLATI VE INTENT. FROM THE FACTS AND FINANCIAL FIGURES ON RECORD WE ALSO NOTE THAT THE I NCOME OF INTEREST IS ATTRIBUTABLE TO AND ARISES FROM WORKING FUNDS IN AN INTEGRATED M ANNER AND FOR THIS REASON ALSO WE FIND THAT INTEREST CANNOT BE SEPARATED FROM THE OVERALL INCOME AND ACTIVITIES OF THE TRUST. FOR THE REASONS ABOVE WE THEREFORE HOLD THAT THE INTEREST INCOME EARNED BY THE ASSESSEE IS ENTITLED TO THE EX EMPTION U/S.10(23B) OF THE ACT. THIS GROUND OF APPEAL OF THE DEPARTMENT IS TH EREFORE DISMISSED. 4. RESPECTFULLY FOLLOWING THE FINDINGS OF THE CO-ORDIN ATE BENCH (SUPRA), WE DECLINE TO INTERFERE. 5. APPEAL FILED BY THE REVENUE IS DISMISSED. ITA NO. 566/RJT/201 4 & C.O. NO. 23/RJT/14 . A.Y. 2010-11 4 C.O. NO. 23/RJT/2014 FOR A.Y. 2010-11 6. SINCE, WE HAVE DISMISSED THE APPEAL OF THE REVENUE, THE CROSS OBJECTION OF THE ASSESSEE BECOMES INFRUCTUOUS. ORDER PRONOUNCED IN OPEN COURT ON 05 - 06 - 2 017. SD/- SD/- (MAHAVIR PRASAD) (N. K. BILLAIYA) JUDICIAL MEMBER TRUE COPY ACCOUNTANT MEMBER AHMEDABAD: DATED: 05 /06/2017 RAJESH COPY OF THE ORDER FORWARDED TO: - 1. THE APPELLANT. 2. THE RESPONDENT. 3. THE CIT (APPEALS) 4. THE CIT CONCERNED. 5. THE DR., ITAT, AHMEDABAD. 6. GUARD FILE. BY ORDER DEPUTY/ASSTT.REGISTRAR ITAT, RAJKO T