Appeal details
Counselvise Citation
[2020] 111 COUNSELVISE.COM (IT) 7166 (ITAT-AHMEDABAD)
Assessee PAN
Bench
Appeal Number
Duration Of Justice
2 year(s) 1 month(s) 3 day(s)
Appellant
Respondent
Appeal Type
Income Tax Appeal
Pronouncement Date
04-02-2020
Appeal Filed By
Assessee
Order Result
Partly Allowed
Bench Allotted
SMC
Assessment Year
2014-2015
Appeal Filed On
01-01-2018
Judgement Text
, - IN THE INCOME TAX APPELLATE TRIBUNAL AHMEDABAD BENCH SMC BEFORE SHRI RAJPAL YADAV, VICE-PRESIDENT ./ ITA NO. 08/AHD/2018 / ASSESSMENT YEAR: 2014-15 BALASINOR VIKAS CO-P. CREDIT SOCIETY LTD. RAJPURI DARWAJA BALASINOR 388 255 DIST. MAHISAGAR. PAN : AAAAB 4748 H VS DCIT, PANCHMAHAL CIRCLE GODHRA DIST. PANCHMAHAL. / (APPELLANT) / (RESPONDENT) ASSESSEE BY : SHRI SUNIL TALATI, AR REVENUE BY : SHRI DILIPKUMAR S.DR ./ ITA NO. 2906/AHD/2017 / ASSESSMENT YEAR: 2014-15 SHRI JALARAM MAHILA CO-OP CREDIT SOCIETY LTD. JALARAM EYE HOSPITAL COMPOUND ALIPURA, BODELI 391 135 DIST. CHHOTAUDEPUR PAN : AABAS 5194 D VS DCIT, CIR.3(1) BARODA. ./ ITA NO. 285/AHD/2018 / ASSESSMENT YEAR: 2014-15 ANAND CATHOLIC CO-OP. CREDIT SOCIETY LTD. NR.D-CABIN, GAMDI TAL. & DIST. ANAND 388 001. PAN : AAAAA 5138 Q VS ITO, WARD-2 ANAND. / (APPELLANT) / (RESPONDENT) ASSESSEE BY : NONE REVENUE BY : SHRI DILIPKUMAR S.DR ITA NO.8/AHD/2018 (2 OTHERS) - 2 - / DATE OF HEARING : 03/02/2020 /DATE OF PRONOUNCEMENT : 04/02/2020 O R D E R PRESENT THREE APPEALS ARE DIRECTED AGAINST SEPARATE ORDERS OF THE LD.CIT(A) PASSED IN THE CASES OF RESPECTIVE ASSESSE E FOR THE ASSTT.YEAR 2014-15. COMMON ISSUE INVOLVED IN ALL THESE THREE APPEALS RELATES TO QUANTIFICATION OF DEDUCTION ADMISSION UNDER SECTION 80P(2)(A)(I) AND 80P(2)(D) OF THE INCOME TAX ACT, 1961, THEREFORE, I PROCEED TO DISPOSE OF ALL THESE APPEALS BY THIS CONSOLIDATED ORDER. 2. AS FAR AS ITA NO.285/AHD/2018 AND 2906/AHD/2017 ARE CONCERNED, IN RESPONSE TO THE NOTICE OF HEARING, NO NE HAS COME PRESENT ON BEHALF OF THE ASSESSEE. THEREFORE, THESE APPEAL S ARE HEARD EX PARTE . IN THE CASE OF BALASINOR VIKAS CO-OP CREDIT SOCIETY LT D., SHRI S.N. TALATI HAS ADVANCED ARGUMENTS ON BEHALF O THE ASSESSEE. FIRS T, I TAKE ITA NO.8/AHD/2018. 3. BRIEF FACTS OF THE CASE ARE THAT THE ASSESSEE IS A COOPERATIVE SOCIETY ENGAGED IN THE BUSINESS OF PROVIDING CREDIT FACILIT IES TO ITS MEMBERS AS PER BYELAWS OF THE SOCIETY. ON SCRUTINY OF THE ACC OUNTS, IT REVEALED TO THE AO THAT THE ASSESSEE HAS SHOWN INTEREST INCOME ON FDR KEPT WITH SCHEDULED AND COOPERATIVE BANK. THE ASSESSEE HAS C LAIMED DEDUCTION UNDER SECTION 80P OF THE ACT AND SHOWN NET INCOME A T RS.NIL IN THE RETURN FILED ELECTRONICALLY ON 26.9.2014. THE BREA K-UP OF THE INTEREST INCOME SHOWN BY THE ASSESSEE HAS BEEN NOTICED IN PA RA-4 OF THE ASSESSMENT ORDER, WHICH READS AS UNDER: ITA NO.8/AHD/2018 (2 OTHERS) - 3 - STATE BANK OF INDIA RS.1010526/- BANK OF BARODA RS.2088349/- TOTAL RS.3098875/- K.D.C.C. BANK LTD RS. 877059/- AXIS BANK RS. 84S69/- MGVCL RS. 23001 /- TOTAL RS. 984629/- TOTAL (2098875+984629 = 4083504) 4. THE LD.AO DID NOT ALLOW DEDUCTION TO THE ASSESSE E AFTER FOLLOWING THE DECISION OF HONBLE GUJARAT HIGH COURT IN THE C ASE OF STATE BANK OF INDIA VS. CIT, 72 TAXMANN.COM 64 (GUJ). HE MADE AN ADDITION OF RS.40,83,504/-. APPEAL TO THE CIT(A) DID NOT BRING ANY RELIEF TO THE ASSESSEE. 5. THE LD.COUNSEL FOR THE ASSESSEE SUBMITTED THAT T HERE ARE TWO COMPONENTS WHICH HAVE BEEN CONSIDERED BY THE AO. T HE FIRST COMPONENT IS THE INTEREST INCOME EARNED BY THE ASSE SSEE ON THE DEPOSIT MADE WITH SCHEDULED BANK. AS FAR AS ALLOWABILITY O F SUCH INTEREST INCOME FOR DEDUCTION UNDER SECTION 80P(2)(A)(I) OF THE ACT IS CONCERNED, THAT ISSUE HAS BEEN RESOLVED BY THE HONBLE JURISDI CTIONAL HIGH COURT IN THE CASE OF STATE BANK OF INDIA (SUPRA), WHEREIN IT HAS BEEN HELD THAT SUCH INTEREST INCOME WILL NOT QUALIFY FOR DEDUCTION UNDER SECTION 80P(2)(A)(I) OF THE ACT. IN THIS CONNECTION HE SUB MITTED THAT ONLY NET INTEREST INCOME BE EXCLUDED FROM THE ELIGIBILITY AM OUNT FOR GRANT OF DEDUCTION. WITH REGARD TO SECOND COMPONENT, HE SUB MITTED THAT AS FAR INTEREST INCOME EARNED FROM COOPERATIVE BANK IS CON CERNED, THIS HAS BEEN HELD AS ELIGIBLE FOR GRANT OF DEDUCTION UNDER SECTION 80P(2)(D) OF THE ACT. IN THIS CONNECTION HE MADE REFERENCE TO E ARLIER ORDERS OF THE TRIBUNAL ON SIMILAR ISSUE IN THE CASE OF VIR TRANSP ORT OPERATOR CO-OP ITA NO.8/AHD/2018 (2 OTHERS) - 4 - CREDIT & SERVICES SOCIETY LTD. AND ANOTHER IN ITA N O.2018/AHD/2017. IT READS AS UNDER: 4. WITH THE ASSISTANCE OF LD.REPRESENTATIVES, WE H AVE GONE THROUGH THE RECORD CAREFULLY. IT EMERGES OUT FROM THE RECORD T HAT BOTH THE ASSESSEES ARE CREDIT COOPERATIVE SOCIETIES, WHICH HAS BEEN EN TERTAINING DEPOSITS FROM THEIR MEMBERS, AND PROVIDING CREDIT FACILITIES . THE ASSESSEES HAVE EARNED TWO TYPES OF INTEREST INCOME VIZ. (A) INTERE ST INCOME FROM NATIONALISED BANKS, AND (B) INTEREST INCOME FROM CO OPERATIVE SOCIETIES/COOPERATIVE BANKS. THE LD.COUNSEL FOR TH E ASSESSEE SUBMITTED THAT COMPUTATION OF DEDUCTION MADE UNDER SECTION 80 P(2)(A)(I) AS WELL AS UNDER SECTION 80P(2)(D). SHE CONTENDED THAT AS FAR AS INTEREST INCOME FROM SCHEDULED BANK IS CONCERNED, THE ASSESSEE IS N OT ENTITLED FOR DEDUCTION UNDER SECTION 80P(2)(A)(I) IN VIEW OF JUD GMENT OF HONBLE JURISDICTIONAL HIGH COURT IN THE CASE OF STATE BANK OF INDIA VS.CIT, 72 TAXMANN.COM 64 (GUJ). SHE PLEADED THAT WHILE WORKI NG OUT THE AMOUNT OUT OF INTEREST INCOME FROM SCHEDULED BANK, ITS NET INTEREST INCOME OUGHT TO BE DISALLOWED. IF ANY EXPENDITURE RELATABLE TO EARNING OF SUCH INTEREST INCOME, DESERVES TO BE SET OFF AGAINST THE INTEREST INCOME, AND THEREAFTER, NET IS TO BE EXCLUDED FROM THE DEDUCTION. AS FAR A S INTEREST INCOME FROM COOPERATIVE BANK/SOCIETY IS CONCERNED, THIS ISSUE I S COVERED IN FAVOUR OF THE ASSESSEE BY VARIOUS DECISIONS. SHE RELIED UPON LATEST ORDER OF THE TRIBUNAL PASSED IN ITA NO.1132/AHD/2018 IN THE CASE OF SAHYOG CO-OP. CREDIT SOCIETY LTD. THE TRIBUNAL HAS DECIDED THIS APPEAL ON 29.11.2019. WHILE DEALING WITH THIS ISSUE, THE TRIBUNAL HAS DEC IDED AS UNDER: 6. AS REGARDS GROUND NO.3, IT CONCERNS ELIGIBILITY OF DEDUCTION CLAIMED UNDER S.80P(2)(D) OF THE ACT ON ACCOUNT OF INTEREST INCOME RECEIVED FROM INVESTMENT MADE WITH CO-OPERATIVE BANKS. IT WAS SUB MITTED ON BEHALF OF THE ASSESSEE THAT THE ISSUE IS SQUARELY COVERED IN FAVOUR OF THE ASSESSEE IN THE CASE OF BANASKANTHA DISTRICT CO-OPERATIVE MILK PRODUCERS UNION LTD. VS. AC1T ITA NO.L090/AHD/2015 WHEREIN THE CO-O RDINATE BENCH HAS HELD IN FAVOUR OF ASSESSEE BY MAKING REFERENCE TO T HE DECISION OF THE HON'BLE GUJARAT HIGH COURT IN THE CASE OF CIT VS. S ABARKANTHA DISTRICT COOPERATIVE MILK PRODUCERS UNION LTD. TAX APPEAL NO . 473 OF 2014. IT WAS POINTED OUT ON BEHALF OF THE ASSESSEE THAT K.D. C.C. BANK IS A CO- OPERATIVE BANK REGISTERED UNDER CO-OPERATIVE SOCIET Y ACT AND INVESTMENT MADE IN THIS BANK AND INTEREST EARNED. THIS INVESTM ENT IS ELIGIBLE FOR DEDUCTION UNDER S.80P(2)(D) OF THE ACT. 7. IN THE GIVEN FACTS AS NOTED ABOVE, THE CLAIM OF THE ASSESSEE UNDER S.80P(2)(D) OF THE ACT APPEARS TO BE IN CONSONANCE WITH THE PLAIN LANGUAGE OF THE ACT. WE THUS FIND MERIT IN THE CLAI M OF THE ASSESSEE ITA NO.8/AHD/2018 (2 OTHERS) - 5 - FOR DEDUCTION UNDER S.80P(2)(D) OF THE ACT IN RESPE CT OF INCOME EARNED FROM K.D.C.C. BANK. 5. ON THE STRENGTH OF THE ABOVE, SHE CONTENDED THAT INTEREST INCOME FROM ANY COOPERATIVE BANK/CREDIT SOCIETIES BE ALLOW ED AS DEDUCTION UNDER SECTION 80P(2)(D) OF THE ACT. SHE DREW OUR ATTENTI ON TOWARDS COMPUTATION AND SUBMITTED THAT IN THE CASE OF THE L UNAWADA TALUKA PRIMARY SCHOOL TEACHERS COOPERATIVE CREDIT SOCIETY LTD. FOR THE ASSTT.YEAR 2014-15, THIS INTEREST INCOME FROM COOPE RATIVE BANK IS RS.36,08,164/-. SIMILARLY, FOR THE ASSTT.YEAR 2013 -14 IN THE ACCOUNT OF THE SOCIETY, THE INTEREST INCOME UNDER SECTION 80P( 2)(D) FROM THE COOPERATIVE BANK IS OF RS.35,71,014/-. SHE PRAYED THAT THESE INCOME BE ALLOWED AS DEDUCTION UNDER SECTION 80P(2)(D) OF THE ACT. IN THE CASE OF VIR TRANSPORT OPERATORS CO-OP CREDIT SOCIETY, SUCH AMOUNT HAS BEEN QUANTIFIED AT RS.2,91,959/-. 6. THE LD.DR ON THE OTHER HAND, RELIED UPON ORDERS OF THE REVENUE AUTHORITIES, AND SUBMITTED THAT THE ASSESSEE IS NOT ENTITLED FOR DEDUCTION ON INTEREST INCOME FROM SCHEDULED BANK AS WELL AS COOPERATIVE BANK UNDER SECTION 80P(2)(A)(I) AS WELL AS UNDER SECTION 80P(2)(D) OF THE ACT. 7. ON DUE CONSIDERATION OF THE ABOVE FACTS AND CIRC UMSTANCES, WE ARE OF THE VIEW THAT AS FAR AS THE ISSUE REGARDING ADMI SSIBILITY OF DEDUCTION OF INTEREST INCOME FROM SCHEDULED BANK UNDER SECTION 8 0P(2)(A)(I) IS CONCERNED THIS HAS BEEN SETTLED BY THE HONBLE JURI SDICTIONAL HIGH COURT IN THE CASE OF STATE BANK OF INDIA (SUPRA), AND THE ASSESSEE IS NOT ENTITLED FOR SUCH DEDUCTION. THIS PROPOSITION WAS NOT EVEN DISPUTED BY THE LD.COUNSEL FOR THE ASSESSEE. ONLY THING WHICH REQU IRES TO BE DONE IS RE- DETERMINATION OR QUANTIFICATION OF AMOUNT WHICH IS TO BE DISALLOWED OUT OF INTEREST INCOME FROM THE SCHEDULED BANK. THE LD .AO SHALL WORK OUT THE NET INTEREST INCOME FROM THE DEPOSITS WITH SCHEDULE D BANK, AND THEREAFTER EXCLUDE THAT AMOUNT FROM THE COMPUTATION OF DEDUCTI ON CLAIMED UNDER SECTION 80P(2)(A)(I) OF THE ACT. AS FAR AS INTERES T INCOME FROM COOPERATIVE BANK/SOCIETY IS CONCERNED IN VIEW OF TH E DECISION OF CO- ORDINATE BENCH, SUCH INCOME WILL QUALIFY FOR GRANT OF DEDUCTION UNDER SECTION 80P(2)(D) OF THE ACT. THE LD.AO SHALL WORK OUT NET AMOUNT OF SUCH INTEREST INCOME, AND THEREAFTER GRANT DEDUCTIO N UNDER SECTION 80(2)(D) OF THE ACT. 7. IN VIEW OF THE ABOVE DECISION OF THE COORDINATE BENCH OF THE TRIBUNAL ON SIMILAR ISSUE, I DIRECT THE AO TO ALLOW THE CLAIM OF THE ITA NO.8/AHD/2018 (2 OTHERS) - 6 - ASSESSEE IN ACCORDANCE WITH THE DECISION OF THE TRI BUNAL CITED (SUPRA), PARTICULARLY PARA-7 OF THE ORDER BE FOLLOWED. 8. NOW I TAKE ITA NO.2906/AHD/2017. 9. BRIEF FACTS OF THE CASE ARE THAT ASSESSEE HAS FI LED ITS RETURN OF INCOME AT NIL AFTER CLAIMING DEDUCTION UNDER SECTIO N 80P(2)(A)(I) OF THE ACT AT RS.27,54,301/-. THE LD.AO MADE AN ADDITION OF RS.2,98,907/-. THIS ADDITION HAS BEEN MADE ON THE GROUND THAT THE ASSESSEE HAS CLAIMED DEDUCTION WITH RESPECT TO INCOME EARNED FRO M DEPOSITS MADE WITH SCHEDULED BANK. 10. WITH THE ASSISTANCE OF THE LD.DR, I HAVE GONE T HROUGH THE RECORD CAREFULLY. A PERUSAL OF THE RECORD WOULD INDICATE THAT THE LD.AO HAS NOT SPECIFIED THE EXACT AMOUNT. HE HAS DEVOTED MUCH EN ERGY FOR ADDRESSING DISCUSSION ON LAW POINT. A PERUSAL OF PAGE NO.6 WO ULD REVEAL THAT THE ASSESSEE HAS GIVEN BREAK OF THE INTEREST INCOME AS UNDER: SR. NO. NAME OF INSTITUTION AMOUNT OF DEPOSIT INTEREST RECEIVED 1 PRIME CO OP BANK LTD- EXEMPTED UNDER SECTION 80P(2)(D) 1,06,92,519 190263 2 UNION BANK OF INDIA 12,33,422 107954 3 BANK OF BARODA 30,00,000 690 TOTAL 298907 11. IT APPEARS THAT SOME OF THE INTEREST IS RELATAB LE TO DEPOSITS WITH COOPERATIVE BANK AND WILL QUALIFY FOR EXEMPTION UND ER SECTION 80P(2)(D). THEREFORE, FOLLOWING OF MY OBSERVATION WHILE DEALIN G WITH THE CASE OF ITA NO.8/AHD/2018 (2 OTHERS) - 7 - BALASINOR VIKAS COOP. CREDIT SOCIETY LTD. (ITA NO.8 /AHD/2018) (SUPRA), I DIRECT THE AO TO RE-ADJUDICATE THE ISSUE AND ONLY EXCLUDE NET INTEREST INCOME FROM NATIONALISED BANK FROM COMPUTA TION OF INCOME ADMISSIBLE UNDER SECTION 80P(2) OF THE ACT. THE AO SHALL ADJUDICATE THIS ISSUE AFTER PROVIDING DUE OPPORTUNITY OF HEARING TO THE ASSESSEE. ITA NO.285/AHD/2018 12. AS THE FACTS EMERGE OUT FROM THE RECORD, IN THI S CASE ALSO ASSESSEE IS A COOPERATIVE SOCIETY EARNING INCOME FROM PROVID ING CREDIT FACILITIES TO ITS MEMBERS. IT HAS FILED RETURN ON 9.9.2014 DEC LARING NIL INCOME. IN THE SCRUTINY ASSESSMENT THE LD.AO NOTICED THAT HE A SSESSEE HAS RECEIVED INTEREST INCOME OF RS.50,47,835/-. THE LD.AO SHOW CAUSED AS TO WHY INTEREST INCOME OF RS.50,47,835/- AND OTHER INCOME OF RS.26,055/- SHOULD NOT BE TREATED AS INCOME FROM OTHER SOURCE AND TAX ACCORDINGLY IN VIEW OF JUDGMENT OF HONBLE JURISDICTIONAL HIGH COURT IN THE CASE OF STATE BANK OF INDIA EMPLOYEES CO-OP CREDIT SOCIETY VS. CI T, 72 TAXMANN.COM 64. ASSESSEE EXPLAINED THAT SINCE IT HAS SURPLUS F UNDS, AS A PRUDENT PRACTICE IT DEPOSITED THE SAME WITH SCHEDULED BANKS SO THAT ASSESSEE- SOCIETY WOULD NOT FACE ANY LIQUIDITY PROBLEM WHILE CARRYING OUT ITS DAY- TO-DAY ACTIVITIES. THE ASSESSEE, HOWEVER, SUBMITTE D THAT IN CASE ITS CLAIM DID NOT FALL WITHIN THE PROVISIONS OF SECTION 80P(2 )(A)(I) OF THE ACT, THEN DEDUCTION CLAIM BE REDUCED PROPORTIONATELY IN THE R ATIO OF NATIONALIZED BANK INTEREST TO TOTAL INCOME. IN SHORT, ASSESSEE AGREED TO PROPORTIONATE DISALLOWANCE, AS UNDER: SL PARTICULARS AMOUNT I. INTEREST EARNED FROM NATIONALIZED BANK 50,47,835 II. TOTAL INTEREST EARNED BY THE SOCIETY 87,79,837 ITA NO.8/AHD/2018 (2 OTHERS) - 8 - III PROPORTION OF[I)/(II) 57.49% IV DEDUCTION CLAIMED U/S.80P 10,90,906 V PROPORTIONATE DEDUCTION TO BE DISALLOWED 6,27,200 ASSESSEE FURTHER CLAIMED AN AMOUNT OF RS.338/- BEIN G THE INTEREST EARNED FROM DEPOSITS OF THE COOPERATIVE BANK, AND S TATUTORY STANDARD DEDUCTION OF RS.50,000/- UNDER SECTION 80(2)(C)(II) OF THE ACT. THE LD.AO CONSIDERED SUBMISSIONS OF THE ASSESSEE AND MADE A D ISALLOWANCE OF RS.6,53,250/- [RS.6,27,200/- PLUS RS.10,600/- BEING FORM FEE INCOME PLUS RS.15,455/- BEING ROOM RENT INCOME]. THIS DISALLOW ANCE WAS CONFIRMED BY THE LD.CIT(A). AGAINST THIS ADDITION, ASSESSEE IS BEFORE THE TRIBUNAL. 13. ON DUE CONSIDERATION OF THE ABOVE FACTS AND CIR CUMSTANCES, I FIND THAT THE ASSESSEE IS COVERED BY THE DECISION OF HON BLE JURISDICTIONAL HIGH COURT IN THE CASE OF STATE BANK OF INDIA EMPLO YEES COOP CREDIT LTD. (SUPRA) WHEREIN IT HAS BEEN HELD BY THAT COOPE RATIVE SOCIETY WOULD NOT BE ELIGIBLE UNDER SECTION 80P(2) OF THE ACT FOR DEDUCTION OF INTEREST INCOME EARNED FROM SCHEDULED BANK. FURTHER, ASSESS EE HAS AGREED TO PROPORTIONATE DISALLOWANCE TO THE EXTENT OF BANK IN TEREST TO TOTAL INCOME. THEREFORE, DISALLOWANCE OF RS.6,27,200/- IS UPHELD. 14. SO FAR AS THE DISALLOWANCE OF RS.10,600/- WHICH THE ASSESSEE HAS RECEIVED FROM ITS MEMBERS TOWARDS FORM FEE, CANNOT DOUBTED TO BE NOT ATTRIBUTABLE TO AND/OR ARISING FROM ASSESSEES DAY- TO-DAY ACTIVITIES OF THE ASSESSEE. THEREFORE, I ALLOW THIS CLAIM OF THE ASSE SSEE AND DELETE DISALLOWANCE. ITA NO.8/AHD/2018 (2 OTHERS) - 9 - 15. AS REGARDS ALLOWANCE OF STANDARD DEDUCTION OF R S.50,000/- CLAIMED BY THE ASSESSEE UNDER SECTION 80P(2)(C) OF THE ACT, THE SAME BEING STATUTORY DEDUCTION, THE ASSESSEE WILL BE ENT ITLED FOR THE SAME. THE LD.AO IS DIRECTED TO ALLOW SUCH CLAIM IN ACCORD ANCE WITH THE LAW. 16. IN THE RESULT, ALL THREE APPEALS ARE PARTLY ALL OWED FOR STATISTICAL PURPOSE. PRONOUNCED IN THE OPEN COURT ON 4 TH FEBRUARY, 2020. SD/- (RAJPAL YADAV) VICE-PRESIDENT AHMEDABAD; DATED, 04/02/2020
