Assistant Commissioner of Income Tax Circle-1(1), Hubballi V. Totgars Co-operative Sale Society Ltd , Sirsi

ITA 571/BANG/2017

• Counselvise Citation: [2019] 118 COUNSELVISE.COM (IT) 7885 (ITAT-BANGALORE)
• Duration Of Justice: 1 year(s) 9 month(s) 23 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 02-01-2019
• Appeal Filed By: Department
• Order Result: Allowed
• Bench Allotted: B
• Assessment Year: 2013-2014
• Appeal Filed On: 10-03-2017
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Department Lawyers: S V RAVISHANKAR
• Assessee Lawyers: M NARASIMHA RAJU JDIT

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL B BENCH : BANGALORE BEFORE SHRI JASON P BOAZ, ACCOUNTANT MEMBER AND SHRI PAVAN KUMAR GADALE, JUDICIAL MEMBER ITA NO. 571 /BANG/201 7 ASSESSMENT YEAR : 20 1 3 - 1 4 ASSISTANT COMMISSIONER OF INCOME TAX, CIRCLE 1(1), 1 ST FLOOR, C. R. BUILDING, NAVANAGAR, HUBBALLI 580 025. VS. M/S. TOTGARS CO-OPERATIVE SALE SOCIETY LTD., APMC YARD, SIRSI. PAN : AACAT 0251 D APPELLANT RESPONDENT ASSESSEE BY : SHRI. M. NARASIMHA RAJU, JDIT REVENUE BY : SHRI. S. V. RAVISHANKAR, ADVOCATE DATE OF HEARING : 1 0 . 12 .201 8 DATE OF PRONOUNCEMENT : 0 2 . 01 .201 9 O R D E R PER JASON P BOAZ, ACCOUNTANT MEMBER THIS APPEAL IS FILED BY THE REVENUE AGAINST THE ORDER DATED 11.04.2016 OF CIT(A), HUBBALLI RELATING TO ASSESSMENT YEAR 2013-14. 2. THE ASSESSEE IS A CO-OPERATIVE SOCIETY ENGAGED IN THE BUSINESS OF PROCESSING AND MARKETING OF AGRICULTURAL PRODUCE GROWN BY THE MEMBERS. THE ASSESSEE ALSO PROVIDES THE CREDIT FACILITY TO ITS MEMBERS BESIDES RUNNING A KIRANA STORE AND EARNING INTEREST ON DEPOSITS. THE ASSESSEE CLAIMED DEDUCTION U/S 80P(2)(D) OF THE ACT. THE ASSESSEE CLAIMED DEDUCTION ON A SUM OF RS.4,20,93,663/- WHICH WAS INTEREST AND DIVIDEND RECEIVED FROM CO-OPERATIVE SOCIETIES. THE AO DENIED THE BENEFIT OF ITA NO. 571/BANG/2017 PAGE 2 OF 7 DEDUCTION ON THE GROUND THAT THE INTEREST RECEIVED BY THE ASSESSEE FROM CO-OPERATIVE SOCIETIES WHICH ARE ENGAGED IN BUSINESS OF BANKING AND, THEREFORE, REGARDED AS CO- OPERATIVE BANKS. SINCE AS PER SECTION 80P(4) OF THE ACT TO PROVISION OF SECTION 80P(2)(D) ARE NOT APPLICABLE TO CO-OPERATIVE BANKS, HENCE THE AO DENIED THE BENEFIT OF DEDUCTION U/S 80P(2)(D) OF THE ACT. 3. ON APPEAL BY THE ASSESSEE, THE CIT(A) DELETED THE ADDITION MADE BY THE AO BY OBSERVING AS UNDER AT PARAS 8 TO 17 OF THE IMPUGNED ORDER: 8. I FIND THAT, DURING THE YEAR, THE ASSESSEE HAS EARNED A TOTAL INTEREST INCOME OF RS.4,20,70,913/- FROM CO-OPERATIVE BANKS, THE DETAILS ARE AS UNDER: 9. OUT OF THE TOTAL INTEREST EARNED FROM CO-OPERATIVE BANKS OF RS.4,20,70,913/-, A SUM OF RS.2,85,86,294/- WAS SHOWN AS INCOME IN THE INCOME & EXPENDITURE ACCOUNT OF THE APPELLANT SOCIETY AND THE BALANCE OF RS.1,34,84,619/- WHICH WAS EARNED ON THE RESERVE FUND AND STATUTORY FUNDS, WAS DIRECTLY CREDITED TO SUCH FUNDS. AS SUCH. THE APPELLANT SOCIETY CLAIMED DEDUCTION U/S.80P(2)(D) OF THE ACT TO THE EXTENT OF RS.2,86,09,044/- (INTEREST OF RS.2,85,86,294/- AND DIVIDEND OF RS.22,750/-). AS REGARDS THE INTEREST INCOME OF RS.1.34.84.619/-. THE APPELLANT SOCIETY DID NOT CLAIM DEDUCTION U/S.80P(2)(D) AS IT WAS NOT OFFERED AS INCOME. 10. THE ASSESSING OFFICER WAS OF THE VIEW THAT THE APPELLANT IS NOT ENTITLED TO DEDUCTION U/S.80P(2)(D) AS THE INTEREST WAS EARNED FROM CO-