Kevdabaug Navapura Sahakari Mandli Limited, Baroda V. The Income Tax Officer, Ward-3(1)(3), Baroda

ITA 62/AHD/2017

• Counselvise Citation: [2018] 125 COUNSELVISE.COM (IT) 8126 (ITAT-AHMEDABAD)
• Duration Of Justice: 1 year(s) 4 month(s) 26 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 04-06-2018
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: SMC
• Assessment Year: 2012-2013
• Appeal Filed On: 09-01-2017
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: SAURABH SINGH

Judgement Text

, , IN THE INCOME TAX APPELLATE TRIBUNAL INCOME TAX APPELLATE TRIBUNAL AHMEDABAD BENCH C BEFORE SHRI RAJPAL YADAV, JUDICIAL MEMBER AND SHRI WASEEM AHMED, ACCOUNTANT MEMBER ./ ITA.NO.62/AHD/2017 / ASSTT. YEAR: 2012-2013 KEVDABAUG NAVAPURA SAHAKRI MANDLI LIMITED SAHARA, NAVAPURA MUSLIM MOHALLA BARODA 390001. PAN : AADFK 7671 G VS ITO, WARD-3(1)(3) BARODA. ! / (APPELLANT) '# ! / (RESPONDENT) ASSESSEE BY : SHRI SAKAR SHARMA REVENUE BY : SHRI SAURABH SINGH, SR.DR / DATE OF HEARING : 29/05/2018 / DATE OF PRONOUNCEMENT: 04 /06/2018 $%/ O R D E R PER RAJPAL YADAV, JUDICIAL MEMBER : ASSESSEE IS IN APPEAL BEFORE THE TRIBUNAL AGAINST ORDER OF LD.CIT(A)-3, V ADODARA DATED 21.11.2016 PASSED FOR THE ASSTT.YEAR 2012-13. 2. SOLITARY GRIEVANCE OF THE ASSESSEE RELATES TO DE NIAL OF DEDUCTION UNDER SECTION 80P(2)(A)(I) OF THE INCOME TAX ACT, 1961 IN RESPECT OF INTEREST INCOME EARNED FROM THE BANKS AND MISC. INCOME OF RS.24,02, 845/-. 3. BRIEF FACTS EMERGING FROM THE RECORD ARE THAT AS SESSEE IS CO-OPERATIVE CREDIT SOCIETY REGISTERED UNDER THE GUJARAT CO-OPER ATIVE SOCIETIES ACT. IT IS ENGAGED IN PROVIDING CREDIT FACILITIES TO ITS MEMBE RS. ASSESSEE HAS FILED ITS ITA NO.62/AHD/2017 2 RETURN OF INCOME ON 24.9.2012 DECLARING NIL INCOME AFTER CLAIMING DEDUCTION UNDER SECTION 80P(2)(A)(I) OF THE INCOME TAX ACT. R ETURN OF THE INCOME WAS PROCESSED UNDER SECTION 143(1) OF THE ACT. SUBSEQU ENTLY, THE CASE OF THE ASSESSEE WAS SELECTED FOR SCRUTINY AND NOTICE UNDER SECTION 143(2) WAS ISSUED AND SERVED UPON THE ASSESSEE. DURING THE SCRUTINY ASSESSMENT, IT WAS NOTICED BY THE AO THAT THE ASSESSEE HAS EARNED INTEREST INC OME FROM NON-COOPERATIVE SECTORS AND ALSO SOME MISC. INCOME, WHICH WAS CLAIM ED BY THE ASSESSEE AS ALLOWABLE DEDUCTION UNDER SECTION 80P(2)(A)(I) OF T HE ACT. THE DETAILS OF SUCH INTEREST INCOME AND OTHER MISC. INCOME NOTICED BY T HE AO ARE AS UNDER: SR. NO. NAME OF THE BANK FROM WHOM INTEREST RECEIVED AMOUNT OF INTEREST RECEIVED. 1. BANK OF BARODA FDR INTEREST 10,47,336/- 2. BOB, OBC, CBI AND NABARD BOND ACCRUED INTEREST AS SHOWN 8,75,599/- 3. TOTAL OF OTHER MISC. INCOME AS ABOVE 5,29,910/- TOTAL 24,52,845/- ACCORDING TO THE AO, SINCE THESE ARE INCOME EARNED FROM NON-OPERATIVE SECTORS AND NOT ATTRIBUTABLE TO THE ACTIVITIES OF T HE ASSESSEE, THEREFORE, HE ISSUED A SHOW CAUSE NOTICE TO THE ASSESSEE TO EXPLA IN ADMISSIBILITY OF THE DEDUCTION UNDER SECTION 80P(2)(A)(I) IN RESPECT OF THESE INCOMES. ASSESSEE SUBMITTED THAT SURPLUS FUND AVAILABLE WITH THE ASSE SSEE WAS INVESTED IN FIXED DEPOSITS WITH THE BANKS TO ACHIEVE OBJECTS OF PROVI DING CREDIT FACILITIES TO THE MEMBERS OF THE SOCIETY, AND THEREFORE, WHATEVER INC OME GENERATED OUT OF SURPLUS FUND OF THE MEMBERS ARE TO BE EXEMPT UNDER SECTION 80P(2)(A)(I) OF THE ACT. THE LD.AO DID NOT ACCEPT THIS SUBMISSIONS OF THE ASSESSEE AND HELD THAT SINCE ASSESSEE-SOCIETY HAS INVESTED ITS SURPLU S FUND OUTSIDE CO-OPERATIVE SECTORS, THE SAME ARE NOT ELIGIBLE FOR DEDUCTION AN D NOT COVERED UNDER SECTION ITA NO.62/AHD/2017 3 80P(2)(A)(I) OF THE ACT. ACCORDINGLY, THE LD.AO DI SALLOWED THE IMPUGNED DEDUCTION AND ADDED THE SAME TO THE TOTAL INCOME OF THE ASSESSEE. AGGRIEVED ASSESSEE WENT IN APPEAL BEFORE THE LD.FIRST APPELLA TE AUTHORITY, WHO BY FOLLOWING JUDGMENT OF THE HONBLE JURISDICTIONAL HI GH COURT IN THE CASE OF STATE BANK OF INDIA VS. CIT, (2016) 72 TAXMANN.COM 64 CONFIRMED THE ACTION OF THE AO. STILL AGGRIEVED, ASSESSEE IS IN FURTHER APPEAL BEFORE THE TRIBUNAL. 4. BEFORE US, THE LD.COUNSEL FOR THE ASSESSEE ASSAI LED ORDERS OF THE REVENUE AUTHORITIES BY REITERATING SUBMISSIONS MADE BEFORE THEM. HE FURTHER SUBMITTED THAT THE INCOME EARNED BY THE SOCIETY HAS DIRECT AND PROXIMATE CONNECTION WITH ACTIVITIES OF ASSESSEE, AND THEREFO RE, CLAIM OF THE ASSESSEE FALLS WITHIN THE AMBIT OF SECTION 80P(2)(A)(I) OF T HE INCOME TAX ACT. ON THE OTHER HAND, THE LD.DR SUPPORTED THE ORDERS OF THE R EVENUE AUTHORITIES. 5. WE HAVE CONSIDERED RIVAL CONTENTIONS AND GONE TH ROUGH THE RECORD CAREFULLY. THE UNDISPUTED FACTS ARE THAT THE ASSES SEE IS A COOPERATIVE SOCIETY PROVIDING FACILITIES TO ITS MEMBERS. IT HAS EARNED INTEREST INCOME OF RS.19,22,935/- FROM DEPOSITS MADE IN NATIONALIZED B ANKS. IT ALSO EARNED MISC. INCOME OF RS.5,29,910/- CONSISTING OF DIVIDEND INCO ME FROM GNFC, COMMISSION INCOME AND TDS INTEREST. BOTH THE REVEN UE AUTHORITIES BELOW DENIED THE CLAIM OF THE ASSESSEE UNDER SECTION 80P( 2)(1)(A) ON THE GROUND THAT SUCH INCOMES ARE NOT ATTRIBUTABLE TO THE ACTIVITIES OF THE ASSESSEE. FOR BASING THEIR DECISION, THE REVENUE AUTHORITIES HAVE RELIED UPON THE JUDGMENT OF HONBLE HIGH COURT IN THE CASE OF STATE BANK OF IND IA (SUPRA). WE FIND THAT HONBLE JURISDICTIONAL HIGH COURT HAS HELD THAT INT EREST EARNED FROM INVESTMENT MADE IN NATIONALIZED BANK BY A COOPERATI VE SOCIETY ENGAGED IN PROVIDING CREDIT FACILITIES TO ITS MEMBERS, IS NOT DEDUCTIBLE UNDER SECTION 80P(2). IN RECENT PAST THE TRIBUNAL IN NUMBER OF D ECISIONS HAS TAKEN A CONSISTENT VIEW ON THIS ISSUE BY FOLLOWING ABOVE JU DGMENT OF THE HONBLE ITA NO.62/AHD/2017 4 JURISDICTIONAL HIGH COURT. IN THIS VIEW OF THE MATT ER, SINCE THE ORDERS OF THE REVENUE AUTHORITIES ARE IN CONSONANCE WITH JUDGMENT OF THE HONBLE GUJARAT HIGH COURT CITED SUPRA, NO INTERFERENCE IS CALLED F OR ON THIS ISSUE AND WE UPHOLD THE IMPUGNED ORDERS. HOWEVER, THE LD.AO IS DIRECTED TO GIVE CREDIT TO ANY EXPENDITURE INCURRED BY THE ASSESSEE FOR EARNIN G SUCH INCOME AND CALCULATE NET INCOME FOR EXCLUSION OF THE SAME FROM 80P(2)(A) DEDUCTION. IN OTHER WORDS, THE LD.AO HAS TO DETERMINE THE NET INT EREST AS WELL AS MISCELLANEOUS INCOME EARNED BY THE ASSESSEE, AND ON LY THEREAFTER THAT INCOME HAS TO BE EXCLUDED FROM THE ADMISSIBILITY OF DEDUCT ION UNDER SECTION 80P(2)(A) OF THE ACT. 6. IN THE RESULT, APPEAL OF THE ASSESSEE IS TREATED TO BE PARTLY ALLOWED FOR STATISTICAL PURPOSE. ORDER PRONOUNCED IN THE COURT ON 4 TH JUNE, 2018 AT AHMEDABAD. SD/- SD/- (WASEEM AHMED) ACCOUNTANT MEMBER (RAJPAL YADAV) JUDICIAL MEMBER