Shri Chandraprabhu Urban Co-operative Credit Society Limited, Nipani V. ITO, Ward - 1, Nipani

ITA 62/PAN/2018

• Counselvise Citation: [2022] 105 COUNSELVISE.COM (IT) 2645 (ITAT-PANAJI)
• Duration Of Justice: 4 year(s) 3 month(s) 5 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 09-05-2022
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: WT(D)
• Assessment Year: 2013-2014
• Appeal Filed On: 04-02-2018
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Keywords: Business income; Co-operative Credit Society
• Section: 143(3); 40(a)(ia); 80P

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL PANAJI BENCH, PANAJI – VIRTUAL COURT BEFORE SHRI INTURI RAMA RAO, AM AND SHRI S. S. VISWANETHRA RAVI, JM आयकर अपील सं. / ITA Nos.61 & 62/PAN/2018 िनधाᭅरण वषᭅ / Assessment Years: 2012-13 & 2013-14 Shri Chandraprabhu Urban Co-operative Credit Society Ltd., C/o S. Parthasarathi, Advocate, 3/1, Pranava Complex, 5th Cross, Malleswaram, Bangalore- 560003. PAN : AAGFS7687F Vs. ITO, Ward- 1, Nipani. Appellant Respondent आदेश / ORDER PER INTURI RAMA RAO, AM : These are the appeals filed by the assessee against the different orders of ld. Commissioner of Income Tax (Appeals), Belagavi dated 17.11.2017 for assessment years 2012-13 and 2013-14. 2. Since the identical facts and issues are involved in both the appeals of the assessee, we proceed to dispose of the same by this common order. Assessee by : Smt. Pratibha R. Revenue by : Shri Sourabh Nayak Date of hearing : 04.04.2022 Date of pronouncement : 10.05.2022 2 ITA Nos.61 & 62/PAN/2018 3. For the sake of convenience and clarity, the facts relevant to the appeal in ITA No.61/PAN/2018 for the assessment year 2012-13 are stated herein. ITA No.61/PAN/2018, A.Y. 2012-13 : 4. The appellant through various grounds of appeal as well as the additional grounds of appeal raised the solitary issue in the present appeal is that the eligibility of exemption of income received from BDCC Bank and other banks under the provisions of section 80P(2)(d) of the Income Tax Act, 1961 (‘the Act’). 5. Briefly, the facts of the case are as under :- The appellant is a co-operative bank formed with the object of providing credit facilities to its members. The appellant filed the return of income for the assessment 2012-13 on 30.09.2012 declaring total income of Rs.Nil. Against the said return of income, the assessment was completed by the Income Tax Officer, Nipani (‘the Assessing Officer’) vide order dated 20.11.2014 passed u/s 143(3) of the Act at a total income of Rs.45,43,916/-. While doing so, the Assessing Officer had 3 ITA Nos.61 & 62/PAN/2018 denied the exemption u/s 80P(2)(a)(i) by holding that the appellant society is a co-operative bank rejecting the contention of the appellant that it is not a co-operative bank but merely a co-operative society as it does not enjoy any banking license nor granted any license to do the banking business by the Reserve Bank of India. It is only engaged in accepting the deposits from its members and lending to its members. The Assessing Officer also made addition of Rs.1,26,610/- under the provisions of section 40(a)(ia) of the Act. 6. Being aggrieved by the above assessment order, an appeal was filed before the ld. CIT(A), who vide impugned order held that the appellant is not a co-operative bank but a mere co-operative society carrying on the business of providing credit facilities to its members. The ld. CIT(A) also held that the appellant is eligible for deduction u/s 80P(2)(a)(i) of the Act. As regards to the interest received from other co-operative bank or schedule private bank, the ld. CIT(A) held that the appellant society is eligible for deduction u/s 80P(2)(d) in respect of interest received from co-operative societies on short term deposits, SB A/c, but not interest on 4 ITA Nos.61 & 62/PAN/2018 long term investment or deposits for period more than one year. The ld. CIT(A) also directed the Assessing Officer to delete the addition u/s 40(a)(ia) by holding that the appellant society is not liable to deduct tax at source. 7. Being aggrieved by the decision of the ld. CIT(A) that the interest earned on long term investments or deposits for period more than one year to be treated as income from other sources and not eligible for deduction u/s 80P(2)(a)(i) or section 80P(2)(d) of the Act, the appellant is in appeal before us. 8. It is submitted on behalf of the appellant that the provisions of income-tax does not provide for any distinction between long term and short term investments that any income received by the co-operative society from another co-operative society is eligible for deduction u/s 80P(2)(d) of the Act. 9. On the other hand, ld. Sr. DR placed reliance on the order of the ld. CIT(A). 5 ITA Nos.61 & 62/PAN/2018 10. We heard the rival submissions and perused the material on record. The solitary issue in the present appeal relates to the eligibility of exemption of income received from BDCC Bank and other banks under the provisions of section 80P(2)(d) of the Act. The ld. CIT(A) was of the opinion that the interest earned on long term investments i.e. deposits for period of more than one year received from BDCC Bank and other banks is not eligible for exemption u/s 80P(2)(d) of the Act. The ld. CIT(A) gave a specific finding vide sub-para (e) of para 11 of the impugned order that the appellant being a co-operative society is eligible for deduction u/s 80P(2)(d) on interest received from another co- operative society. Similarly, the interest received from SB accounts or other bank or schedule bank, the short term investments is treated as business income of the assessee held to be eligible for deduction u/s 80P(2)(a)(i) of the Act. The Department is not in appeal before us on the above findings of the ld. CIT(A). Whereas, the appellant is only challenging the finding given in sub-para (e) of para 11 of the impugned order that interest earned on 6 ITA Nos.61 & 62/PAN/2018 long term investments cannot be treated as business income. We find that the section 80P does not make a distinction between the long term investments and short term investments, the only requirement under the provisions of section 80P(2)(d) is that an interest income or dividend income should be earned by a co-operative society from another co- operative society. The provisions of section 80P does not provide for any distinction between income earned on long term and short term investments. Thus, the ld. CIT(A) clearly fell in error in drawing such distinction not supported by any statutory provisions in the Act. Therefore, the findings of the ld. CIT(A) contained in sub-para (e) of para 11 are set-aside. Therefore, the grounds of appeal filed by the assessee stands allowed. 11. In the result, the appeal filed by the assessee in ITA No.61/PAN/2018 for the assessment year 2012-13 stands allowed. ITA No.62/PAN/2018, A.Y. 2013-14 : 12. Since the facts and issues involved in both the above captioned appeals are identical, therefore, our decision in ITA No.61/PAN/2018 7 ITA Nos.61 & 62/PAN/2018 for the assessment year 2012-13 shall apply mutatis mutandis to the appeal of the assessee in ITA No.62/PAN/2018 for the assessment year 2013-14. Thus, the appeal of the assessee in ITA No.62/PAN/2018 for the assessment year 2013-14 stands allowed. 13. Resultantly, both the appeals of the assessee are allowed. Order pronounced on this 10 th day of May, 2022. Sd/- Sd/- (S. S. VISWANETHRA RAVI) (INTURI RAMA RAO) JUDICIAL MEMBER ACCOUNTANT MEMBER पुणे / Pune; ᳰदनांक / Dated : 10 th May, 2022. Sujeet आदेश कᳱ ᮧितिलिप अᮕेिषत / Copy of the Order forwarded to : 1. अपीलाथᱮ / The Appellant. 2. ᮧ᭜यथᱮ / The Respondent. 3. The CIT(A), Belagavi. 4. The Pr. CIT, Belagavi. 5. DR, ITAT, Panaji. 6. गाडᭅ फ़ाइल / Guard File. आदेशानुसार / BY ORDER, // True Copy // Senior Private Secretary आयकर अपीलीय अिधकरण, पुणे / ITAT, Pune.