Sureshdada Jain Nagari Sahakari Patsanstha Maryadit, Jalgaon V. Principal Commissioner of Income-tax : 2,

ITA 713/PUN/2016

• Counselvise Citation: [2019] 117 COUNSELVISE.COM (IT) 8680 (ITAT-PUNE)
• Duration Of Justice: 2 year(s) 11 month(s) 24 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 09-04-2019
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: B
• Next Hearing Date: 28-05-2018
• Assessment Year: 2011-2012
• Appeal Filed On: 15-04-2016
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Section: 80P

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL PUNE BENCH B, PUNE BEFORE SHRI R.S. SYAL, VICE PRESIDENT AND SHRI VIKAS AWASTHY, JUDICIAL MEMBER . / ITA NO.713/PUN/16 / ASSESSMENT YEAR : 2011-12 SURESHDADA JAIN NAGARI SAHAKARI PATSANSTHA MARYADIT, 7, NAGARPALIKA SHOPPING COMPLEX, JAMNER 424 206 DIST. JALGAON PAN : AAAAS9364C VS. THE PR. CIT-2, NASHIK (APPELLANT) (RESPONDENT) / ORDER PER R.S.SYAL, VP : THIS APPEAL BY THE ASSESSEE IS DIRECTED AGAINST THE ORDER DATED 16-03-2016 PASSED BY THE PR.CIT-2, NASHIK U/S.263 OF THE INCOME-TAX ACT, 1961 (HEREINAFTER ALSO CALLED THE ACT) IN RELATION TO THE ASSESSMENT YEAR 2011-12. 2. BRIEFLY STATED, THE FACTS OF THE CASE ARE THAT THE ASSESSE E IS A CO-OPERATIVE SOCIETY ENGAGED IN PROVIDING CREDIT FACILITIES TO ITS MEMBERS. RETURN OF INCOME WAS FILED DECLARING TOTAL INCOM E APPELLANT BY SHRI SUNIL GANOO RESPONDENT BY MS. NANDITA KANCHAN DATE OF HEARING 08-04-2019 DATE OF PRONOUNCEMENT 09-04-2019 ITA NO. 713/PUN/2016 SURESHDADA JAIN NAGARI SAHAKARI PATSANSTHA MARYADIT 2 AT NIL. THE ASSESSMENT WAS COMPLETED U/S.143(3) ON 28-01-2014 COMPUTING TOTAL INCOME AT RS.2,21,570/-. SUCH TOTAL INCOME WAS COMPUTED BY REDUCING THE INTEREST PAID TO MEMBERS ON THE MONEY INVESTED IN FDRS AMOUNTING TO RS.67,36,500/- AND INTEREST PAID AT FDR-OVERDRAFT ACCOUNT AMOUNTING TO RS.7,10,762/- FROM THE AMOUNT OF INTEREST RECEIVED FROM SBI ON FDRS AT RS.76,93,470/-. THIS RESU LTED INTO POSITIVE INCOME ON ACCOUNT OF INTEREST AT RS.2,46,208/-. THE ASSESSING OFFICER ADDED COMMISSION PLUS SAVING INTERES T AT RS.25,364/- TO THE ABOVE INCOME OF RS.2,46,208/-. AF TER ALLOWING DEDUCTION U/S.80P(2)(C) AT RS.50,000/- HE COMPUTED TOTAL INCOME AT RS.2,21,570/-. THE LD. CIT INVOKED HIS REVISIONAL POWER AND HELD THE ASSESSMENT ORDER TO BE ERRON EOUS AND PREJUDICIAL TO THE INTEREST OF THE REVENUE ON THE GROUND THAT INTEREST RECEIVED FROM SBI AT RS.76.93 LAKH SHOULD HAVE BEE N SHOWN AS INCOME CHARGEABLE TO TAX WITHOUT ANY REDUCTION OF INTEREST PAID TO MEMBERS ON THE MONEY INVESTED IN FDS AND INTEREST PAID ON FD-OD ACCOUNT. THE ASSESSEE IS AGGRIEVED BY THE IMPUGNED ORDER. 3. WE HAVE HEARD BOTH THE SIDES AND PERUSED THE RELEVANT MATERIAL ON RECORD. IT IS OBSERVED THAT THE LD. CITS ENTIRE ORDER ITA NO. 713/PUN/2016 SURESHDADA JAIN NAGARI SAHAKARI PATSANSTHA MARYADIT 3 IS PREMISED ON THE PROPOSITION THAT THE ASSESSEE IS NOT ELIGIBLE FOR DEDUCTION U/S.80P ON THE AMOUNT OF INTEREST ON FDRS EAR NED FROM NATIONALIZED BANKS. THE DECISION THAT A HIGHER AMOUNT OUGHT TO HAVE BEEN TAXED BY THE AO IS A CONSEQUENCE OF THE ABOVE VIEW. THE LD. AR PLACED ON RECORD A COPY OF AN ORDER OF THE PUNE BENCH DATED 28-11-2018 IN THE CASE OF ITO VS. SURESHDADA JAIN NAGRI SAHAKARI PATSANSTHA (ITA NO.589/PN/2016) WHEREIN THE DECISION OF LD. CIT(A) ALLOWING DEDUCTION U/S.80P WAS APPROVED BY THE PUNE TRIBUNAL. IT IS FURTHER NOTICED THAT THE PUNE BENCH OF THE TRIBUNAL IN THE CAS E OF SHRI LAXMI NARAYAN NAGARI SAHAKARI PAT SANSTHA MARYADIT VS. ITO (ITA NO.604/PN/2014) HAS ALLOWED SIMILAR DEDUCTION. IN THE SAID CASE, THE TRIBUNAL DISCUSSED THE CONTRARY VIEWS EXPRESSED BY THE HONBLE KARNATAKA HIGH COURT IN TUMKUR MERCHANTS SOUHARDA CREDIT COOPERATIVE LTD. VS. ITO (2015) 230 TAXMANN 309 (KAR.) ALLOWING THE DEDUCTION U/S. 80P ON INTEREST INCOME AND THAT OF THE HONBLE DELHI HIGH COURT IN MANTOLA COOPERATIVE THRIFT CREDIT SOCIETY LTD. VS. CIT (2014) 110 DTR 89 (DELHI) NOT ALLOWING DEDUCTION U/S.80P ON INTEREST INCOME, EARNED FROM BANKS UNDER SIMILAR CIRCUMSTANCES. BOTH THE HONBLE HIGH COURTS HAVE TAKEN INTO CONSIDERATION THE RATIO ITA NO. 713/PUN/2016 SURESHDADA JAIN NAGARI SAHAKARI PATSANSTHA MARYADIT 4 LAID DOWN IN THE CASE OF TOTGARS COOPERATIVE SALE SOCIETY LTD. 322 ITR 283 (SC) . THERE BEING NO DIRECT JUDGMENT FROM THE HONBLE JURISDICTIONAL HIGH COURT ON THE POINT, THE TRIBUNAL IN SHRI LAXMI NARAYAN NAGARI SAHAKARI PAT SANSTHA MARYADIT ( SUPRA ) PREFERRED TO GO WITH THE VIEW IN FAVOUR OF THE ASSESSE E BY THE HONBLE KARNATAKA HIGH COURT IN THE CASE OF TUMKUR MERCHANTS SOUHARDA CREDIT COOPERATIVE LTD. (SUPRA). IN THE ABSENCE OF THERE BEING ANY CHANGE IN THE LEGAL POSITION PREVAILING ON THIS ISSUE AND RESPECTFULLY FOLLOWING THE VIEW TAKEN BY THE PUNE BENCH OF THE TRIBUNAL IN ITO VS. SURESHDADA JAIN NAGRI SAHAKARI PATSANSTHA ( SUPRA ) AND HOST OF OTHER ORDERS REITERATING THE SIMILAR VIEW, WE HOLD, IN PRINCIPLE, THAT INTEREST INCOME EARNED ON FIXED DEPOSITS KEPT WITH NATIONALIZED BANKS QUALIFIES FOR DEDUCTION U/S.80P OF THE ACT. 4. ADVERTING TO THE FACTS OF THE INSTANT CASE, IT IS SEEN THAT TH E ASSESSEE REQUESTED THE AO TO FINALIZE THE ASSESSMENT EVEN BY INCLUDING NET INTEREST INCOME OF RS.2,46,208/- EARNED FROM BANK FDRS AFTER REDUCTION OF OD INTEREST AND INTEREST PAID ON MEMBERS DEPOSITS, WHICH THE AO EVENTUALLY DID. THIS EMERGES FROM PAGE 30 OF THE PAPER BOOK, WHICH IS A LETTER WRITTEN B Y THE ASSESSEE TO THE AO URGING TO: PLEASE ACCEPT THE ABOVE ITA NO. 713/PUN/2016 SURESHDADA JAIN NAGARI SAHAKARI PATSANSTHA MARYADIT 5 CALCULATION AND CO-OP. FOR FINALIZATION OF THE CASE. IT IS THE ABOVE NET FIGURE OF RS.2,46,208/- WHICH HAS BEEN CONSID ERED BY THE LD. CIT FOR TREATING THE ASSESSMENT ORDER AS ERRONEOU S AND PREJUDICIAL TO THE INTEREST OF THE REVENUE BY HOLDING THAT THE GROSS AMOUNT OF INTEREST OF RS.76,93,470/- SHOULD HAVE BEEN CHARGED TO TAX AND NOT NET INTEREST OF RS.2,46,208/-. IN OUR CONSIDERED OPINION, WHEN THE INTEREST ITSELF IS ELIGIBLE FOR DEDUCTION U/S.80P OF THE ACT, THE COMPULSION OF THE ASSESSEE TO OFFER CERTAIN AMOUNT IN ORDER TO ENABLE THE COMPLETION OF THE ASSESSMENT, CANNOT BE STRETCHED SO FAR SO AS TO BRING THE ENTIRE AMOUNT OF INTEREST RECEIVED FROM BANK TO TAX WHICH IS OTHERWIS E DEDUCTIBLE IN VIEW OF VARIOUS DECISIONS DISCUSSED IN THE PRECEDING PARA. ONCE WE HOLD THAT THE ENTIRE AMOUNT OF INTE REST IS ELIGIBLE FOR DEDUCTION U/S.80P OF THE ACT, THE ORDER OF THE LD. CIT DIRECTING THE AO TO CHARGE TO TAX THE FULL AMOUNT OF INTERES T AND NOT ITS PART, BECOMES AUTOMATICALLY UNSUSTAINABLE. WE, THEREFORE, VACATE THE IMPUGNED ORDER. 5. THE CONTENTION OF THE LD. AR FOR IMPOSING COST ON THE REVENUE, IN OUR CONSIDERED OPINION AND IN THE PECULIAR CIRCUMSTANCES OF THE CASE, CANNOT BE ACCEPTED. ITA NO. 713/PUN/2016 SURESHDADA JAIN NAGARI SAHAKARI PATSANSTHA MARYADIT 6 6. IN THE RESULT, THE APPEAL IS ALLOWED ON MERITS. ORDER PRONOUNCED IN THE OPEN COURT ON 09 TH APRIL 2019. SD/- SD/- (VIKAS AWASTHY) (R.S.SYAL) JUDICIAL MEMBER VICE PRESID ENT PUNE; DATED : 09 TH APRIL, 2019 / COPY OF THE ORDER IS FORWARDED TO : 1. / THE APPELLANT; 2. / THE RESPONDENT; 3. , , B / DR B, ITAT, PUNE; 4. / GUARD FILE. // TRUE COPY // / BY ORDER, // TRUE COPY // SENIOR PRIVATE SECRETARY , / ITAT, PUNE ITA NO. 713/PUN/2016 SURESHDADA JAIN NAGARI SAHAKARI PATSANSTHA MARYADIT 7 DATE 1. DRAFT DICTATED ON 08-04-2019 SR.PS 2. DRAFT PLACED BEFORE AUTHOR 08-04-2019 SR.PS 3. DRAFT PROPOSED & PLACED BEFORE THE SECOND MEMBER JM 4. DRAFT DISCUSSED/APPROVED BY SECOND MEMBER. JM 5. APPROVED DRAFT COMES TO THE SR.PS/PS SR.PS 6. KEPT FOR PRONOUNCEMENT ON SR.PS 7. DATE OF UPLOADING ORDER SR.PS 8. FILE SENT TO THE BENCH CLERK SR.PS 9. DATE ON WHICH FILE GOES TO THE HEAD CLERK 10. DATE ON WHICH FILE GOES TO THE A.R. 11. DATE OF DISPATCH OF ORDER. *