ACIT 23(1), MUMBAI V. SHIVKRUPA SAHAKAR PATPEDHI LTD, MUMBAI

ITA 5690/MUM/2012

• Counselvise Citation: 569019914 RSA 2012
• Duration Of Justice: 1 year(s) 8 month(s) 10 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 20-05-2014
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: E
• Next Hearing Date: 20-05-2014
• Assessment Year: 2009-2010
• Appeal Filed On: 10-09-2012
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: MOURYA PRATAP
• Assessee Lawyers: MEHUL R SHAH
• Keywords: Business income
• Section: 143(3)

Judgement Text

, IN THE INCOME TAX APPELLATE TRIBUNAL E BENCH, MUMBAI , , BEFORE SHRI SANJAY ARORA, ACCOUNTANT MEMBER AND SHRI AMIT SHUKLA , JUDICIAL MEM BER . / ITA NO. 5690 / MUM./201 2 ( / ASSESSMENT YEAR : 20 0 9 10 ) ASSTT. COMMISSIONER OF INCOME TAX RANGE 2 3 ( 1 ), C 10 , PRATYAKSHA KAR BHAVAN , BANDRA KURLA COMPLEX BANDRA (E), MUMBAI 400 051 .. / APPEL LANT V/S SHIVKRUPA SHAHAKAR PATPEDHI LTD. LATE NAMDEORAO PATNE SMRUTI BHAVAN GOMES WADI, STATION ROAD VIKHROLI (E), MUMBAI 400 078 .... / RESPONDENT ./ PERMANENT ACCOUNT NUMBER AAAS3870K / RE VENUE BY : MR. MOURYA PRATAP / ASSESSEE BY : MR. MEHUL R. SHAH / DATE OF HEARING 20 .05.2014 / DATE OF ORDE R 20.05.2014 / ORDER , / PER AMIT SHUKLA , J.M. THE AFORESAID APPEAL HA S BEEN PREFERRED BY THE REVENUE CHALLENGING THE IMPUGNED ORDER DATED 22 ND JUNE 2012 , PASSED BY T HE LEARNED COMMISSIONER (APPEALS) XXX III , MUMBAI, FOR THE SHIVKRUPA SHAHAKAR PATPEDHI LTD. 2 QUANTUM OF ASSESSMENT PASSED UNDER SECTION 143(3) OF THE INCOME TAX AC T, 1961 (FOR SHORT 'THE ACT' ) FOR THE ASSESSMENT YEAR 20 0 9 10, ON THE FOLLOWING GROUNDS: 1. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE AND IN LAW THE LEARNED CIT(A) ERRED IN ALLOWING EXEMPTION ON RECOVERY CHARGES OF ` 20,35,828 AND SERVICE CHARGE S OF ` 70,36,564 WITHOUT APPRECIATING THE FACT THAT THE MAIN ACTIVITY OF THE ASSESSEE IS PROVIDING CREDIT FACILITY TO ITS MEMBERS AND THE INCOME EARNED ON ACCOUNT OF SERVICE CHARGES AND RECOVERY CHARGES IS NOT EARNED IN NORMAL COURSE OF ACTIVITY OF THE CO OPERATIVE HOUSING SOCIETY. 2. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE AND IN LAW THE LEARNED CIT(A) ERRED IN ALLOWING EXEMPTION ON RECOVERY CHARGES OF ` 20,35,828 AND SERVICES CHARGES OF ` 70,36,564 WITHOUT APPRECIATING THE FACT THAT SUCH EXCESS CHARGES RECOVERED FROM THE MEMBERS CANNOT BE ATTRIBUTED TO ITS MAIN ACTIVITY OF THE ASSESSEE IN AS MUCH AS IT CAN BE ONLY BE ATTRIBUTABLE TO PROFITEERING DONE BY THE ASSESSEE BY RECOVERING EXCESS CHARGES. 2 . THE ASSESSEE IS A CO OPERATIVE SOCIETY ENGAGED I N THE BUSINESS OF BORROWING AND LENDING OF MONEY AMO NGST THE MEMBERS OF THE SOCIETY. IT HAS FILED ITS RETURN OF INCOME DECLARING NIL INCOME AFTER CLAIMING DEDUCTION UNDER SECTION 80P(2). THE ASSESSING OFFICER, ON A VERIFICATION OF INCOME AND EXPENDITURE ACCOUNT, NOTED THAT THE ASSESSEE HAD SHOWN INCOME FROM SERVICE CHARGES, RECOVERY CHARGES AND INTEREST FROM BANK & MUTUAL FUNDS. THE ASSESSEE, IN RESPONSE TO THE SHOW CAUSE NOTICE ISSUED BY THE ASSESSING OFFICER, SUBMITTED BEFORE THE ASSESSING OFFICER AS UN DER: IN THIS REGARD, THE ASSESSEE AOP SUBMITTED THAT THE RECOVERY CHARGES REPRESENT AGAINST THE CHARGES RECOVERED BY SOCIETY FROM THE BORROWERS WHO HAS TAKEN LOAN FROM THE SOCIETY. THIS AMOUNT WAS RECOVERED DUE TO NON PAYMENT OF INSTALLMENT WITHIN THE P ERIOD GIVEN FOR REPAYMENT. THE SOCIETY HAS INCURRED THE EXPENSES FOR LEGAL EXPENSES LIKE ACTION U/S 101 AND PAID THE SHIVKRUPA SHAHAKAR PATPEDHI LTD. 3 STAMP DUTY & OTHER EXPENSES AND DEBITED THESE EXPENSES AS EXPENSES OF THE SOCIETY AND WHEN THE RECOVERY IS MADE THEN THIS CHARGES WERE CRED ITED TO THE PROFIT & LOSS ACCOUNT. AS FAR AS SERVICE CHARGES, THE ASSESSEE SUBMITTED THAT THE SOCIETY COLLECTED THE SERVICE CHARGES FROM THE BORROWER TO WHOM LOAN WAS GIVEN FOR THE PURPOSE OF THIS AMOUNT HAS MADE SCRUTINY OF THE DOCUMENT AND VISITED THE BU SINESS PLACE AND RESIDENTIAL PLACE OF THE BORROWER AND CHARGE THE SERVICE CHARGES. THIS IS ALSO PART & PARCEL OF BUSINESS INCOME AND THE INCOME IS EXEMPT U/S 80P OF THE ACT. 3 . THE ASSESSING OFFICER, HOWEVER, REJECTED THE ASSESSEES CONTENTION AND HELD THAT INSOFAR AS THE INTEREST INCOME IS CONCERNED, THE SAME IS NOT ELIGIBLE FOR DEDUCTION UNDER SECTION 80P AS THESE ARE EARNED OUT OF FUNDS KEPT WITH THE BANKS OTHER THAN CO OPERATIVE HOUSING SOCIETIES AND IN MUTUAL FUNDS. AS REGARDS RECOVERY CHARGES AND SERVI CES CHARGES, HE NOTED THAT THE ASSESSEE HAS RECOVERED EXCESS AMOUNT FROM ITS MEMBERS AND, THEREFORE, SUCH EXCESS CHARGES RECOVERY CANNOT BE ATTRIBUTED TO ITS MAIN ACTIVITY AND, HENCE, THE SAME IS NOT ELIGIBLE FOR DEDUCTION UNDER SECTION 80P. 4 . THE LEARNED C OMMISSIONER (APPEALS), AFTER CONSIDERING THE ASSESSEES DETAIL SUBMISSIONS, FOLLOWED THE APPELLATE ORDER FOR THE ASSESSMENT YEAR 2008 09 AND DECIDED THIS ISSUE IN FAVOUR OF THE ASSESSEE. 5 . BEFORE US, THE LEARNED COUNSEL FOR THE ASSESSEE SUBMITTED THAT THIS ISSUE HAS BEEN DECIDED BY THE TRIBUNAL IN ASSESSEES OWN CASE FOR THE ASSESSMENT YEAR 2008 09 IN ITA NO.922/MUM./2012, ORDER DATED 30 TH SEPTEMBER 2013. 6 . THE LEARNED DEPARTMENTAL REPRESENTATIVE, ON THE OTHER HAND, STRONGLY RELIED UPON THE ORDER OF THE ASSES SING OFFICER. SHIVKRUPA SHAHAKAR PATPEDHI LTD. 4 7 . AFTER CAREFULLY CONSIDERING THE RIVAL CONTENTIONS AND ON A PERUSAL OF THE FINDINGS OF THE TRIBUNAL GIVEN IN ASSESSEES OWN CASE IN THE ASSESSMENT YEAR 2008 09 CITED SUPRA, WE FIND THAT THE PRESENT ISSUE IS SQUARELY COVERED BY THE SAID DECIS ION OF THE TRIBUNAL RENDERED IN ASSESSEES OWN CASE, WHEREIN THE TRIBUNAL HELD AS UNDER: 5. WE HAVE CONSIDERED THE RIVAL SUBMISSION AND ALSO PERUSED THE RELEVANT MATERIAL AVAILABLE ON RECORD. THE ASSESSEE IN THE PRESENT CASE IS CO - OPERATIVE CREDIT SOCIE TY AND THE INCOME EARNED BY IT FROM THE BUSINESS OF PROVIDING CREDIT FACILITIES TO ITS MEMBERS IS ENTITLED FOR DEDUCTION U/S 80 - P(2)(A)(I) OF THE ACT. EVEN THE A.O. ALLOWED SUCH DEDUCTION CLAIMED BY THE ASSESSEE IN RESPECT OF ITS INCOME FROM BUSINESS OF PR OVIDING CREDIT FACILITIES TO ITS MEMBERS EXCEPT THE INCOME FROM SERVICE CHARGES AND RECOVERY CHARGES. ACCORDING TO HIM, THE INCOME EARNED BY THE ASSESSEE IN THE FORM OF RECOVERY AND SERVICE CHARGES WAS NOT FROM THE BUSINESS OF PROVIDING CREDIT FACILITIES T O ITS MEMBERS AND THE SAME, THEREFORE, WAS NOT ENTITLED FOR DEDUCTION U/S 80 - P OF THE ACT. HOWEVER, AS CONTENDED ON BEHALF OF THE ASSESSEE BEFORE THE LD. CIT(A) AS WELL AS BEFORE US, THE ACTIVITY RESULTING IN SERVICE AND RECOVERY CHARGES WAS AN INTEGRAL PA RT OF THE MAIN ACTIVITY OF THE ASSESSEE OF PROVIDING CREDIT FACILITIES TO ITS MEMBERS AND SINCE THE INCOME FROM SERVICE CHARGES AND RECOVERY CHARGES WAS VERY MUCH INCIDENTAL TO THE INCOME OF THE ASSESSEE FROM THE BUSINESS OF PROVIDING CREDIT FACILITIES TO ITS MEMBERS, THE SAME IN OUR OPINION WAS ENTITLED TO DEDUCTION U/S 80 - P(2)(A)(I) OF THE ACT AS RIGHTLY HELD BY THE LD. CIT(A). WE THEREFORE FIND NO INFIRMITY IN THE IMPUGNED ORDER OF THE LD. CIT(A) GIVING RELIEF TO THE ASSESSEE ON THIS ISSUE AND UPHOLDING THE SAME, WE DISMISS THE APPEAL FILED BY THE REVENUE. 8 . IN VIEW OF THE AFORESAID FINDINGS OF THE TRIBUNAL AND CONSISTENT WITH THE VIEW TAKEN THEREIN, WE DO NOT FIND ANY INFIRMITY IN THE ORDER PASSED BY THE LEARNED COMMISSIONER (APPEALS) AND DECLINE TO IN TERFERE IN THE MATTER AS SUCH. ACCORDINGLY, THE GROUNDS RAISED BY THE REVENUE ARE DISMISSED. SHIVKRUPA SHAHAKAR PATPEDHI LTD. 5 9 . 9. IN THE RESULT, REVENUES APPEAL IS DISMISSED. 2 0 TH MAY 201 4 ORDER PRONOUNCED IN THE OPEN COURT ON 2 0 TH MAY 201 4 SD/ - SANJAY ARO RA ACCOUNTANT MEMBER SD/ - AMIT SHUKLA JUDICIAL MEMBER MUMBAI, DATED : 2 0 TH MAY 2014 / 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 . / TRUE COPY / BY ORDER . / PRADEEP J. CHOWDHURY / SR. PRIVATE SECRETARY / / (DY./ASSTT. REGISTRAR) , / ITAT , MUMBAI / / 19997 98 2000 01 / / / / / / / / /