Al - Fatah Urban Co.op. Credit Society Ltd., V. Income-tax Officer,

ITA 646/PUN/2014

• Counselvise Citation: [2015] 134 COUNSELVISE.COM (IT) 0932 (ITAT-PUNE)
• Duration Of Justice: 1 year(s) 6 month(s) 24 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 28-10-2015
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: B
• Next Hearing Date: 14-10-2015
• Assessment Year: 2010-2011
• Appeal Filed On: 03-04-2014
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: B C MALAKAR
• Section: 143(3); 56

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL PUNE BENCH B , PUNE , , BEFORE MS. SUSHMA CHOWLA, JM AND SHRI PRADIP KUMAR KEDIA , A M . / ITA NO. 646 /PN/201 4 / ASSESSMENT YEAR : 20 1 0 - 1 1 AL FATAH URBAN CO - OP. CREDIT SOCIETY LTD., LAXMI MARKET, MIRAJ, MIRAJ 416410 . / APPELLANT PAN: AAA AA7148J VS. THE INCOME TAX OFFICER, WARD 1(1), SANGLI . / RESPONDENT / APPELLANT BY : NONE / RESPONDENT BY : S HRI B.C. MALAKAR / DATE OF HEARING : 14 . 1 0.2015 / DATE OF PRONOUNCEMENT: 28 .1 0.2015 / ORDER PER SUSHMA CHOWLA, J M : TH IS APPEAL FILED BY THE ASSESSEE IS AGAINST THE ORDER OF CIT (A) , KOLHAPUR, DATED 1 9 . 12 .20 1 3 RELATING TO ASSESSMENT YEAR 20 1 0 - 1 1 AGAINST ORDER PASSED UNDER SECTION 143(3) OF THE INCOME - TAX ACT , 1961 (IN SHORT THE ACT) . 2. THE A SSESSEE HAS RAISED THE FOLLOWING GROUNDS OF APPEAL: - 1. LEARNED CIT HAS ERRED IN FACT & IN LAW IN CONFIRMING ADDITION OF RS . 3162825/ - U / S 56 WITHOUT APPRECIATING THE FACT PROPERLY. ITA NO. 646 /PN/20 1 4 AL FATAH URBAN CO - OP. CREDIT SOCIETY LTD . 2 2. LEARNED CIT HAS ERRED IN FACT & IN LAW IN CONFIRMING ADDITION WITHOU T CONSIDERING THE FACT THAT THE NET PROFIT OF THE SOCIETY FROM BANKING ACTIVITY IS RS . 1067941 / - AS PER PROFIT & LOSS ACCOUNT WHICH IS ASSESSABLE AS INCOME FROM BUSINESS & IF RS 3162825/ - WHICH IS INTEREST INCOME ON DEPOSIT WITH UNION BANK OF INDIA IS TO BE TAXED AS INCOME FROM OTHER SOURCES THEN THERE WILL BE NET LOSS O F RS . 2094884/ - & SOCIETY IS ENTITLED TO CLAIM TO SET OFF THE BUSINESS LOSS WITH INCOME FR OM OTHER SOURCES. 3. LEARNED CIT HAS ERRED IN FACT & IN LAW IN CONFIRMING ADDITION OF RS . 3162825 / - & CHARGING TO TAX RS . 3162825/ - SEPARATELY A ) WITHOUT CONSIDERING THE FACT THAT ONLY POSITIVE INCOME OF RS . 1067941 / - CAN BE TAXED. B ) THE DECISION OF TOTGARS CO - OP SALE SOCIETY LTD VS ITO 229 CTR 209 (SC): 332 ITR 283 (SC) (2010) IS NOT APPLICABLE TO THE APPELL ANT'S CASE, IN FACTS AS WELL AS IN LAW ALSO. C ) THE INTEREST INCOME EARNED BY THE APPELLANT SOCIETY IS NOT INCOME FROM OTHER SOURCE BUT IT IS INCOME ATTRIBUTABLE TO THE BUSINESS OF BANKING ELIGIBLE FOR DEDUCTION U / S 80P(2)(A)(I) 4. LEARNED CIT HAS ERRED IN FACT & IN LAW IN CONFIRMING ADDITION OF RS.3162825, WITHOUT CONSIDERING I APPRECIATING THAT APPELLANT SOCIETY DID CLAIM DEDUCTION U/S.80 P OF RS. 1 067941 ONLY & IN ANY EVENTUALITY ONLY DISALLOWANCE CAN BE MADE OF RS.1067941/ - . 5. APPELLANT CRAVES TO LEAV E, ADD / ALTER OR AMEND ANY OTHER GROUNDS OF APPEAL. 3. THE APPEAL WAS FIXED FOR HEARING ON 11.08.2015, ON WHICH DA TE NONE APPEARED ON BEHALF OF THE ASSESSEE. THEREAFTER, NOTICE OF HEARING WAS ISSUED TO THE ASSESSEE BY RPAD, THE ACKNOWLEDGEMENT FOR SERVI CE OF NOTICE UPON THE ASSESSEE IS AVAILABLE ON RECORD. DESPITE SERVICE OF NOTICE, NONE APPEARED ON BEHALF OF THE ASSESSEE, NOR ANY APPLICATION WAS MOVED FOR ADJOURNMENT, HENCE, WE PROCEED TO DECIDE THE PRESENT APPEAL AFTER HEARING THE LEARNED DEPARTMENTAL REPRESENTATIVE FOR THE REVENUE. 4. THE ISSUE RAISED IN THE PRESENT APPEAL IS AGAINST THE ADDITION MADE BY THE ASSESSING OFFICER IN HOLDING THAT THE BANK INTEREST RECEIVED BY THE ASSESSEE OF RS. 31,62,825/ - WAS ASSESSABLE IN THE HANDS OF ASSESSEE UNDER SEC TION 56 OF ITA NO. 646 /PN/20 1 4 AL FATAH URBAN CO - OP. CREDIT SOCIETY LTD . 3 THE ACT. THE ALTERNATE PLEA RAISED BY THE ASSESSEE WAS THAT THE NET PROFIT OF THE ASSESSEE SOCIETY FROM BANKING ACTIVITY WAS RS. 10,67,941/ - AS PER PROFIT & LOSS ACCOUNT, WHICH WAS DECLARED AS INCOME FROM BUSINESS AND IN CASE SUM OF RS.31,62,825 / - BEING THE INTEREST INCOME ON DEPOSIT WITH UNION BANK OF INDIA WAS TO BE TAXED AS INCOME FROM OTHER SOURCES, THEN THERE WOULD BE NET LOSS OF RS. 20,94,884/ - UNDER THE HEAD INCOME FROM BUSINESS, WHICH THE ASSESSEE IS ENTITLED TO CLAIM AS SET OFF WITH THE INCOME ASSESSED AS INCOME FROM OTHER SOURCES. 5. BRIEFLY, IN THE FACTS OF THE PRESENT CASE, THE ASSESSEE WA S A CO - OPERATIVE SOCIETY ENGAGED IN THE BUSINESS OF PROVIDING CREDIT FACILITY TO ITS MEMBERS. THE ASSESSEE CLAIMS THAT IT WAS ENGAGED IN THE BUSIN ESS OF BANKING AND CONSEQUENTLY, THE INCOME EARNED BY THE ASSESSEE FROM ITS ACTIVITIES INCLUDING THE INTEREST RECEIVED FROM UNION BANK OF INDIA AGAINST THE FDRS KEPT WITH THE SAID BANK, WAS INCOME FROM BUSINESS, WHICH WAS ELIGIBLE FOR DEDUCTION UNDER SAID BANK, WAS INCOME FROM BUSINESS, WHICH WAS ELIGIBLE FOR DEDUCTION UNDER SECT ION 80P(2)(A)(I) OF THE ACT. HOWEVER, THE ASSESSING OFFICER HELD THAT THE INTEREST INCOME OF RS. 31,62,825/ - WAS ASSESSABLE AS INCOME FROM OTHER SOURCES, IN VIEW OF THE RATIO LAID DOWN BY THE HONBLE SUPREME COURT IN TOTGARS CO - OP. SALE SOCIETY LTD. VS. IT O (2010) 332 ITR 283 (SC) . 6. THE CIT(A) UPHELD THE ORDER OF ASSESSING OFFICER IN HOLDING THAT SUM OF RS. 31,62,825/ - WAS ASSESSABLE AS INCOME FROM OTHER SOURCES . I N VIEW OF THE RATIO LAID DOWN BY THE HONBLE SUPREME COURT IN TOTGARS CO - OP. SALE SOCIETY L TD. VS. ITO ( SUPRA) , THE INTEREST INCOME FR OM SURPLUS FUND / SHORT DEPOSITS WITH THE BANK WAS ASSESSABLE AS INCOME FROM OTHER SOURCES, WHICH IN TURN, IS TAXABLE UNDER SECTION 56 OF THE ACT. THE SAID INCOME ASSESSED UNDER THE HEAD INCOME FROM OTHER SOURCE S IS NOT ELIGIBLE FOR DEDUCTION UNDER SECTION ITA NO. 646 /PN/20 1 4 AL FATAH URBAN CO - OP. CREDIT SOCIETY LTD . 4 80P(2)(A)(I) OF THE ACT. THE PLEA OF THE ASSESSEE THAT IT WAS REQUIRED TO KEEP THE FUNDS IN SPECIFIED SECURITIES WITH THE BANKS DOES NOT ENTITLE THE ASSESSEE TO CLAIM IT AS EXPENDITURE SINCE THE SAME BEING A S SESSED AS INCOME FROM BUSINESS BEING ELIGIBLE FOR DEDUCTION UNDER SECTION 80P(2)(A)(I) OF THE ACT. ACCORDINGLY, WE UPHOLD THE ORDER OF CIT(A) IN THIS REGARD. 7. NOW, COMING TO THE ALTERNATE PLEA RAISED BY THE ASSESSEE THAT AS PER THE PROFIT & LOSS ACCOUN T, THE NET P OSITIVE INCOME OF THE ASSESSEE IS RS. 10,67,941/ - AND IN CASE THE INCOME FROM INTEREST OF RS. 31,62,825/ - IS ASSESSED AS INCOME FROM OTHER SOURCES, THEN THERE WOULD BE NET LOSS OF RS.20,94,884/ - ASSESSABLE UNDER THE HEAD INCOME FROM BUSINESS. THE NEXT CLAIM OF THE ASSESSEE IN THIS REGARD WAS THAT THE SAID BUSINESS LOSS IS TO BE ADJUSTED AGAINST THE INCOME FROM OTHER SOURCES. SIMILAR PLEA WAS RAISED BEFORE THE CIT(A). HOWEVER, IN THE ABSENCE OF ANY DETAILS HAVING BEEN FURNISHED BY THE ASSESSEE , THE ASSESSING OFFICER WAS DIRECTED TO EXAMINE T HE FURNISHED BY THE ASSESSEE , THE ASSESSING OFFICER WAS DIRECTED TO EXAMINE T HE SAID CLAIM OF EXPENSES. THE ALTERNATE PLEA OF THE ASSESSEE IS THAT IT HAS ONLY POSITIVE INCOME OF RS. 10,67,941/ - , THE ASSESSING OFFICER HAD NOT DISALLOWED ANY OF THE EXPENSES IN THE HANDS OF ASSESSEE. I N VIEW THEREOF, WE FIND NO MERIT IN THE DIRECTIONS OF CIT(A) TO THE ASSESSING OFFICER TO EXAMINE THE CLAIM OF EXPENSES MADE BY THE ASSESSEE AND ALSO THE SAME AS IN ADMISSIBLE UNDER SECTION 56 OF THE ACT. ON THE OTHER HAND, IN CASE THE INTEREST INCOME OF RS . 31,62,825/ - IS ASSESSED UNDER SECTION 56 OF THE ACT AS INCOME FROM OTHER SOURCES AND THERE IS NET LOSS OF RS. 20,94,884/ - ASSE SSABLE IN THE HANDS OF ASSESSEE AS INCOME FROM BUSINESS, THEN IN VIEW OF THE PROVISIONS OF THE ACT, THE ASSESSEE IS ENTITLED TO TH E CLAIM THE BENEFIT OF SET OFF OF BUSINESS LOSS AGAINST THE INCOME FROM OTHER SOURCES OF THE INSTANT ASSESSMENT YEAR. ITA NO. 646 /PN/20 1 4 AL FATAH URBAN CO - OP. CREDIT SOCIETY LTD . 5 ACCORDINGLY, WE DIRECT THE ASSESSING OFFICER TO ALLOW THE CLAIM OF THE ASSESSEE AFTER DUE VERIFICATION AND IN ACCORDANCE WITH LAW. 8 . IN THE RESULT, THE APPEAL OF THE ASSESSEE IS PARTLY ALLOWED. ORDER PRONOUNCED ON THIS 28 TH DAY OF OCTOBER , 2015. SD/ - SD/ - (PRADIP KUMAR KEDIA) (SUSHMA CHOWLA) / ACCOUNTANT MEMBER / JUDICIAL MEMBER / PUNE ; DATED : 28 TH OCTOBER , 2015 . GCVSR / COPY OF THE ORDER IS FORWARDED TO : 1. / THE AP PELLANT ; 2. / THE RESPONDENT; 3. ( ) / THE CIT (A), KOLHAPUR ; 4. / THE CIT - I / II, KOLHAPUR / 4. / THE CIT - I / II, KOLHAPUR / CIT (CENTRAL), PUNE ; 5. , , / DR B , ITAT, PUNE; 6. / GUARD FIL E . / BY ORDER , // TRUE COPY // / SR. PRIVATE SECRETARY , / ITAT, PUNE