The Pariyaram Service Co-op Bank Ltd, Trichur V. The ACIT, Thrissur

ITA 586/COCH/2011

• Counselvise Citation: [2012] 140 COUNSELVISE.COM (IT) 64755 (ITAT-COCHIN)
• Duration Of Justice: 9 month(s) 17 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 22-08-2012
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: DB
• Next Hearing Date: 22-08-2012
• Assessment Year: 2008-2009
• Appeal Filed On: 04-11-2011
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: S PRAVEEN
• Assessee Lawyers: K R SUDHAKARAN PILLAI
• Keywords: Business income

Judgement Text

1 ITA NO.586/COCH/2011 IN THE INCOME TAX APPELLATE TRIBUNAL COCHIN BENCH, COCHIN BEFORE SHRI N.R.S. GANESAN (JM) AND SHRI B.R. BASKARA N(AM) I.T.A NO. 586/COCH/2011 (ASSESSMENT YEAR 2008-09) THE PARIYARAM SERVICE CO-OP BANK LTD VS THE A.C.I.T ., CIR.2(1) NO.593, HEAD OFFICE TRICHUR PARIYARAM 680 721 TRICHUR DIST PAN : AAABP0683J (APPELLANT) (RESPONDENT) APPELLANT BY : SHRI K.R. SUDHAKARAN PILLAI RESPONDENT BY : SHRI S PRAVEEN DATE OF HEARING : 22-08-2012 DATE OF PRONOUNCEMENT : 22-08-2012 O R D E R PER N.R.S. GANESAN (JM) THE TAXPAYER IS CHALLENGING THE ORDER OF THE FIRST APPELLATE AUTHORITY DATED 22-09-2011 FOR THE ASSESSMENT YEAR 2008-09. 2. SHRI SUDHAKARAN PILLAI, THE LD.COUNSEL FOR THE TA XPAYER SUBMITTED THAT THE TAXPAYER CLAIMED DEDUCTION U/S 80P(2)(A) OF THE ACT . HOWEVER, THE ASSESSING OFFICER DISALLOWED THE CLAIM OF THE TAXPAYER IN RES PECT OF INTEREST RECEIVED FROM SUB TREASURY U/S 80P(2)(A)(E) OF THE ACT. THE LD.R EPRESENTATIVE FURTHER SUBMITTED THAT THE TAXPAYER IS A CO-OPERATIVE SOCIETY ENGAGED IN THE BUSINESS OF BANKING. THEREFORE, THE DEPOSIT OF MONEY IN THE SUB TREASURY IS A BANKING ACTIVITY WITHIN 2 ITA NO.586/COCH/2011 THE MEANING OF BANKING REGULATION ACT. THEREFORE, T HE INTEREST ACCRUED ON SUCH INVESTMENT IN THE SUB TREASURY HAS TO BE CONSIDERED AS BUSINESS INCOME FROM BANKING AND IS ELIGIBLE FOR DEDUCTION U/S 80P(2)(A) OF THE ACT. THE LD.REPRESENTATIVE PLACED HIS RELIANCE ON THE JUDGME NT OF THE GUJARAT HIGH COURT IN COMMISSIONER OF INCOME-TAX VS BARODA PEOPLE CO-OP.BAN K LTD (2006) 280 ITR 282 (GUJ). REFERRING TO THE ORDER OF THE COMMISSIONER O F INCOME-TAX(A), THE LD.REPRESENTATIVE FOR THE TAXPAYER SUBMITTED THAT T HE COMMISSIONER OF INCOME- TAX(A) HAS CONFIRMED THE DISALLOWANCE U/S 80P(2)(D) OF THE ACT. ACCORDING TO THE LD.REPRESENTATIVE, THE TAXPAYER NEVER CLAIMED DEDUC TION U/S 80P(2)(D) OF THE ACT. WE HEARD SHRI S PRAVIN, THE LD.DR ALSO. 3. A CO-OPERATIVE SOCIETY ENGAGED IN THE BUSINESS OF BANKING IS ELIGIBLE FOR DEDUCTION U/S 80P(2)(A)(I) OF THE ACT FROM ITS BUSI NESS INCOME. THOUGH THE TAXPAYER CLAIMED DEDUCTION U/S 80P(2)(A)(I) OF THE ACT, THE DISALLOWANCE WAS MADE BY THE TAXING AUTHORITY U/S 80P(2)(E) OF THE A CT. HOWEVER, THE DISALLOWANCE WAS CONFIRMED BY THE COMMISSIONER OF INCOME-TAX(A) U /S 80P(2)(D) OF THE ACT. THEREFORE, THERE WAS A CONFUSION WHETHER THE TAXPAY ER IS REALLY CARRYING ON THE BANKING ACTIVITY AS ITS BUSINESS OR NOT. THEREFORE, THIS TRIBUNAL IS OF THE OPINION THAT THE MATTER NEEDS TO BE RECONSIDERED BY THE ASS ESSING AUTHORITY. WHEN THE TAXPAYER CLAIMS THAT IT IS DOING BUSINESS OF BANKING AND CLAIMED DEDUCTION U/S 80P(2)(A)(I) OF THE ACT, THE ASSESSING OFFICER HAS TO NECESSARILY EXAMINE THE ACTIVITY OF THE TAXPAYER AND FIND OUT WHETHER THE T AXPAYER IS REALLY ENGAGED IN THE BUSINESS OF BANKING. IF THE TAXPAYER IS ENGAGED IN THE BUSINESS OF BANKING, THE INVESTMENT IN THE SUB TREASURY WOULD BE IN THE COUR SE OF ITS BANKING ACTIVITY AND THEREFORE, THE INTEREST, IF ANY, ACCRUED ON SUCH IN VESTMENT SHALL BE TREATED AS BUSINESS INCOME FROM BANKING ACTIVITY AND AS SUCH IS ELIGIBLE FOR DEDUCTION U/S 80P(2)(A)(I) OF THE ACT. HOWEVER, THE FACTS NEED T O BE CLARIFIED AT THE ASSESSING 3 ITA NO.586/COCH/2011 OFFICERS LEVEL. ACCORDINGLY THE ORDERS OF THE LOW ER AUTHORITY ARE SET ASIDE AND THE ISSUE OF DEDUCTION U/S 80P(2)(A)(I) IS REMITTED BAC K TO THE FILE OF THE ASSESSING OFFICER. THE ASSESSING OFFICER SHALL EXAMINE THE S AME AFRESH IN THE LIGHT OF THE MATERIAL ON RECORD AND THEREAFTER DECIDE THE SAME I N ACCORDANCE WITH LAW AFTER GIVING REASONABLE OPPORTUNITY TO THE TAXPAYER. 4. IN THE RESULT, APPEAL OF THE TAXPAYER IS ALLOWED FOR STATISTICAL PURPOSE. ORDER PRONOUNCED IN THE OPEN COURT AT THE TIME OF HEARING ON THIS 22 ND AUGUST, 2012. SD/- SD/- (B.R. BASKARAN) (N.R.S. GANESAN) ACCOUNTANT MEMBER JUDICIAL MEMBER COCHIN, DT : 22 ND AUGUST, 2012 PK/- COPY TO: 1. THE APPELLANT 2. THE RESPONDENT 3. THE COMMISSIONER OF INCOME-TAX 4. THE COMMISSIONER OF INCOME-TAX(A) 5. THE DR (TRUE COPY) BY ORDER ASSTT. REGISTRAR, INCOME-TAX APPELLATE TRIBUNAL, COCHIN BENCH 4 ITA NO.586/COCH/2011 1. DATE OF DICTATION : 22-08 2. DATE OF PLACING THE DRAFT ORDER BEFORE THE MEMBER : 22-08 3. DATE ON WHICH THE APPROVED DRAFT COMES TO SR.PS : 4. DATE ON WHICH THE FAIR ORDER IS PLACED BEFORE THE D ICTATING MEMBER: 5. DATE OF RETURN OF THE ORDER TO PS AFTER APPROVAL : 6. DATE OF PRONOUNCEMENT : 7. DATE ON WHICH THE FILE ALONG WITH THE ORDER SENT TO BC : 8. NO. OF PAGES OF DICTATION PADS ATTACHED TO THE FILE : 06 9. NO. OF PAGES OF DRAFT COPY OF THE ORDER ATTACHED TO THE FILE :