The Jeevan Sanchay Cooperative Urban Thrift and Credit Society Ltd, New Delhi V. ITO, Ward-53(1), New Delhi

ITA 8070/DEL/2018

• Counselvise Citation: [2020] 111 COUNSELVISE.COM (IT) 7316 (ITAT-DELHI)
• Duration Of Justice: 1 year(s) 1 month(s) 15 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 03-02-2020
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: SMC
• Assessment Year: 2015-2016
• Appeal Filed On: 19-12-2018
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Assessee Lawyers: PRANSHU
• Keywords: Opportunity of being heard; Principle of natural justice
• Section: 143(3); 80P; 274; 2(19)

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL DELHI BENCH: SMC NEW DELHI BEFORE SHRI H. S. SIDHU, JUDICIAL MEMBER I.T.A. NO. 8070/DEL/2018 ASSESSMENT YEAR: 2015-16 THE JEEVAN SANCHAY COOPERATIVE VS. INCOME TAX OFFICER, URBAN THRIFT AND CREDIT SOCIETY LTD., WARD-53(1), NEW DELHI B-66, BK DUTT COLONY, NEW DELHI (PAN:AADAT6757F) (ASSESSEE) (RESPONDENT) ASSESSEE BY : MS. RANO JAIN, ADV, SH. PRANSHU SINGHAL, CA & MS. MANSI JAIN, CA REVENUE BY : SH. PRADEEP SINGH GAUTAM, SR. DR. ORDER THIS APPEAL IS FILED BY THE ASSESSEE AGAINST THE OR DER DATED 25.10.2018 PASSED BY THE LD. CIT(A)-18, GURGAON REL ATING TO ASSESSMENT YEAR 2015-16 ON THE FOLLOWING REVISED GROUNDS:- 1. THAT THE ORDER PASSED BY THE HONOURABLE COMMISSI ONER OF INCOME TAX IS NOT IN SYNC WITH THE JUDGEMENTS OF THE SIMILAR FACT S BASED ADJUDGED CASE LAWS. 2. THAT THE ORDER PASSED BY THE HONOURABLE COMMISSI ONER OF INCOME TAX IS NOT BASED ON FACTS AND CIRCUMSTANCES OF THE CASE. 3. THAT THE ORDER PASSED IS AGAINST THE PRINCIPLE O F NATURAL JUSTICE AND THUS PROPER OPPORTUNITY OF BEING HEARD WAS NOT PROVIDED. 4. THAT ON FACTS AND CIRCUMSTANCES OF THE CASE THE LEARNED ASSESSING OFFICER WAS NOT JUSTIFIED IN ADDITION OF RS 12,28,965/- ON ACCOUNT OF POINTS MENTIONED IN THE ASSESSMENT ORDER. 4. THAT ADDITION OF RS 12,28,965/- ON ACCOUNT OF DI SALLOWANCE OF DEDUCTION U/S 80P OF THE INCOME TAX ACT 1961 IS NOT CORRECT A ND THE SOURCE AGAINST WHICH THE SAME HAS BEEN ADDED IS EXEMPT AS PER DEFI NITION U/S 80P (2) (I) OF THE INCOME TAX ACT AS IS CLAIMED U/S 80P (2) (D) IN THE INCOME TAX RETURN DULY FILED. 2 5. THAT ON THE FACTS AND THE CIRCUMSTANCES OF THE C ASE THE LEARNED ASSESSING OFFICER HAS ERRED IN INITIATING PENALTY P ROCEEDINGS U/S 271 (1) (C) READ WITH SECTION 274 OF THE INCOME TAX ACT 1961. 6. THAT THE ASSESSEE IS A COOPERATIVE SOCIETY PROVI DING CREDIT FACILITY TO ITS MEMBERS. IT IS NOT CARRYING ON ANY OTHER BUSINESS. THE SOCIETY HAS MORE FIXED DEPOSITS FROM THE MEMBERS THAN IT HAS AMOUNT PARKED WITH BANKS, THUS PROVING THAT PARKING FUNDS WITH BANKS IS NOT T HE SOURCE OF INCOME BUT MAINTAINING LIQUIDITY OF FUNDS FOR THE SOCIETY IN C ASE OF ANY EMERGENT NEED BY THE MEMBERS. THE OBJECT OF KEEPING OR INVESTING THE SURPLUS FUNDS OF COOPERATIVE SOCIETY IS INTENDED TO MEET ANY UNFORES EEN LOSSES. 7. THAT THE ASSESSEE IS CARRYING ON THE BUSINESS BY PROVIDING CREDIT FACILITIES TO ITS MEMBERS, EARNS PROFIT AND GAINS OF BUSINESS BY PROVIDING CREDIT FACILITIES TO ITS MEMBERS. THE INTEREST INCOME SO D ERIVED OR THE CAPITAL, IF NOT IMMEDIATELY REQUIRED TO BE LENT TO THE MEMBERS, THE SOCIETY CANNOT KEEP THE SAID AMOUNT IDLE. IF THEY DEPOSIT THIS AMOUNT I N BANK SO AS TO EARN INTEREST, THE SAID INTEREST INCOME IS ATTRIBUTABLE TO THE PROFITS AND GAINS OF THE BUSINESS ATTRIBUTABLE TO THE ACTIVITY OF CARRYI NG ON THE BUSINESS OF BANKING OR PROVIDING CREDIT FACILITIES TO ITS MEMBE RS AND IS LIABLE TO BE DEDUCTED FROM THE GROSS TOTAL INCOME UNDER SECTION 80P OF THE ACT. 8. THAT THE ASSESSEE DEPOSITS IN BANK ARE FROM OWN FUNDS OF SOCIETY SO THE INTEREST ON SAME IS ELIGIBLE FOR DEDUCTION U/S 80P( 1) AND IF THESE DEPOSITS WOULD HAVE BEEN IN BANK OUT OF THE FUNDS AVAILABLE WITH SOCIETY IN THE FORM OF LIABILITY THEN THE SAME WOULD NOT HAVE BEEN ELIG IBLE FOR DEDUCTION U/S 80P (2) OF IT ACT. 9. THAT THE RELIANCE ON THE CASE OF MANTOLA CO-OPER ATIVE THRIFT & CREDIT SOCIETY LIMITED AS TAKEN BY THE HONOURABLE COMMISSIO NER OF INCOME TAX IS JUSTIFIED AS PER PARA NUMBER 7 OF THE ITA 128/2017,129/2017,130/2017,132/2017,133/2017 & 134/ 2017 ORDER DATED 07/03/2017 THE HONOURABLE HIGH COURT HAS STATED ' W E NOTICE AT THE OUTSET THAT THE ITAT HAD IN THE COURSE OF :S IMPUGNED ORDE R - IN THE IMMEDIATELY PRECEDING PARAGRAPH I.E. PARA 7 APPLYING THE RATIO IN ITA 'JO.839/2009 (CIT VS. NATIONAL AGRICULTURAL CO-OPERATIVE MARKETING FE DERATION OF INDIA LTD DECIDED ON 03.05.2011) HELD THAT THE ASSESSEE WAS E LIGIBLE TO DEDUCTION UNDER 80P(2)(D) IN RESPECT OF THE INTEREST EARNED F ROM INVESTMENT MADE BY THE SOCIETY IN OTHER CO-OPERATIVE BANKS. 10. THAT DEDUCTION UNDER SECTION 80 (P) SHALL BE LO OKED INTO BROADER SENSE WITH VARIOUS SUPPORTING CASE LAWS SO THAT DIRECT RE LATION WITH THE DEDUCTIONS CAN BE PROVED AS IT IS ESTABLISHED IN OUR CASE. 11. THAT CERTIFICATE OF SOCIETY REGISTRATION OF VAI SH CO-OPERATIVE ADARSH BANK LTD. IS ENCLOSED FOR READY REFERENCE TO ESTABLISH T HE FACT THAT THE AFORESAID 3 BANK IS REGISTERED AS A CO-OPERATIVE SOCIETY AS PER DEFINITION U/S 2(19) OF THE INCOME TAX ACT 1960. 12. FACTS OF SUCH CASE ARE SIMILAR WITH ADJUDGED CA SE ITA'S 2787 & 2788/DEL/2018, THE VEER COOPERATIVE GROUP HOUSING SO CIETY LTD. RECENTLY DECIDED ON 4 TH SEPTEMBER 2018 WHERE THE APPEAL OF ASSESSEE WAS ALL OWED. 13. FACTS OF SUCH CASE ARE SIMILAR WITH ADJUDGED CA SE ITA'S 2900 & 2901/DEL/2015, M/S JAWALA COOPERATIVE URBAN THRIFT & CREDIT SOCIETY LTD. RECENTLY DECIDED ON 26 TH APRIL 2018 WHERE THE APPEAL OF ASSESSEE WAS ALLOWED. 14. FACTS OF SUCH CASE ARE SIMILAR WITH ADJUDGED CA SE ITA'S 786 TO 788/BANG/2016, M/S MALNADU CREDIT COOPERATIVE SOCIET Y LTD. DECIDED ON 3 RD MARCH 2017 WHERE THE APPEAL OF REVENUE WAS DISMISSE D. 15. FACTS OF SUCH CASE ARE SIMILAR WITH ADJUDGED CA SE ITA'S 59/PAN/2016, M/S AKSHAYA COOPERATIVE CREDIT SOCIETY LTD. DECIDED ON 21 ST NOVEMBER 2016 WHERE THE APPEAL OF REVENUE WAS DISMISSED. 16. FACTS OF SUCH CASE ARE SIMILAR WITH ADJUDGED CA SE ITA'S 29/2015, M/S GUTTIGEDARARA CREDIT COOPERATIVE SOCIETY LTD. DECID ED ON 19 TH SEPTEMBER 2014 WHERE THE APPEAL OF ASSESSEE WAS ALLOWED BY HO NOURABLE HIGH COURT OF KARNATAKA. 17. FACTS OF SUCH CASE ARE SIMILAR WITH ADJUDGED CA SE ITA'S 307/2014, M/S TUMKUR MERCHANTS SOUHARDHA CREDIT COOPERATIVE SOCIE TY LTD. DECIDED ON 28 TH OCTOBER 2014 WHERE THE APPEAL OF ASSESSEE WAS ALLO WED BY HONOURABLE HIGH COURT OF KARNATAKA. 2. AT THE TIME OF HEARING, LEARNED COUNSEL FOR THE ASSESSEE STATED THAT THE ISSUE IN DISPUTE I.E. EXEMPTION / DEDUCTION UND ER SECTION 80P(2)(I) OF THE INCOME TAX ACT, 1961 CLAIMED BY THE ASSESSEE HA S ALREADY BEEN ALLOWED BY THE ASSESSING OFFICER FOR THE A.Y. 2009- 10 AND 2013-14 UNDER SECTION 143(3) OF THE I.T. ACT VIDE ORDER DATED 24 TH OCTOBER, 2011 AND 30 TH NOVEMBER, 2015 RESPECTIVELY. SHE FURTHER STATED THA T THIS ISSUE HAS ALREADY BEEN ADJUDICATED AND DECIDED BY THE ITAT DELHI BENC H SMC NEW DELHI IN ITA NO. 680/DEL/2019 ASSESSMENT YEAR 2015-16 MAA JH ANDEWALI COOPERATIVE URBAN THRIFT & CREDIT SOCIETY LTD., VS. ITO, WARD-63(5), NEW 4 DELHI AND IN ITA NO. 1255/DEL/2019 ASSESSMENT YEAR 2013-14 MAMURPUR COOPERATIVE THRIFT AND CREDIT SOCIETY LTD., VS. ACI T, CIRCLE 38(1), NEW DELHI. SHE FURTHER STATED THAT HONBLE KARNATAKA HI GH COURT HAS ALSO DECIDED SIMILAR ISSUE IN DISPUTE IN FAVOUR OF THE A SSESSEE IN THE CASE OF THE PR. COMMISSIONER OF INCOME TAX VS. THE TOTAGARS COO PERATIVE SALE SOCIETY. SHE REQUESTED THAT RESPECTFULLY FOLLOWING THE SAID ORDERS, THE ADDITION IN DISPUTE MAY BE DELETED AND THE APPEAL FILED BY THE ASSESSEE MAY BE ALLOWED. 3. THE LEARNED DR RELIED UPON THE ORDER PASSED BY T HE REVENUE AUTHORITIES. 4. I HAVE HEARD BOTH THE PARTIES AND PERUSED THE RE CORDS, THE IMPUGNED ORDER AS WELL AS THE CASE LAWS RELIED BY THE LD. CO UNSEL FOR THE ASSESSEE. I FIND THAT THE ITAT, 'D' BENCH, NEW DELHI VIDE ITS O RDER DATED 19.12.2014 PASSED IN THE CASE OF ACIT, CIRCLE 38(1), NEW DELHI VS. M/S JAWALA COOPERATIVE THRIFT & CREDIT SOCIETY LTD., NEW DELHI HAS ADJUDICATED THE SIMILAR AND IDENTICAL ISSUE AND DECIDED THE SAME IN FAVOUR OF THE ASSESSEE BY HOLDING AS UNDER:- 9. WE HAVE HEARD RIVAL PARTIES AND HAVE GONE THROUG H THE MATERIAL PLACED ON RECORD. WE FIND THAT TOTAL INCOME EARNED BY THE ASSESSEE INCLUDED INCOME ON FIXED DEPOSITS PLACED WITH BOMBAY MERCANT ILE BANK, INTEREST INCOME FROM A SCHEDULED BANK AND DIVIDEND INCOME FR OM DELHI COOPERATIVE BANK. FROM THE CERTIFICATE AS PLACED AT PAGE BOOK P AGE 30, WE FIND THAT BOMBAY MERCANTILE COOPERATIVE BANK IS A COOPERATIVE SOCIETY REGISTERED UNDER MAHARASTARA COOPERATIVE SOCIETIES LTD. AND WE FURTHER FIND THAT THE SAID SOCIETY HAS BEEN ASSESSED U/S. 143(3) AS A COO PERATIVE SOCIETY AND ITS INCOME WAS ALLOWED TO THE EXEMPT U/S. 80P(2)(I) AS HELD BY MUMBAI TRIBUNAL IN ITA NO. 4128 AND 4129 VIDE ITS ORDER DA TED 30.11.2005, FOR ASSESSMENT YEAR 1990-91 AND 1991-92 AND FURTHER BY MUMBAI TRIBUNAL VIDE ORDER DATED 07.9.2011 IN ITA NO. 5292 FOR ASSESSMEN T YEAR 1997-98. 5 THEREFORE, IT IS HELD THAT FIXED DEPOSITS PLACED WI TH BOMBAY MERCANTILE BANK FALLS WITHIN THE EXEMPTION GRANTED BY SECTION 80O(2) (D) OF THE ACT. THE ASSESSEE WAS ALSO ELIGIBLE UNDER THE PROVISIONS OF SECTION 80O(2)A(I) AS THE FUNDS PLACED BY ASSESSEE IN THE FORM OF FIXED DEPOS ITS CAN BE SAID TO BE KEPT FOR THE PURPOSE OF BUSINESS OF THE ASSESSEE AS THE ASSESSEE HAD AVAILED CREDIT FACILITIES ALSO AGAINST SUCH FIXED DEPOSITS WHICH WERE AGAIN USED FOR THE PURPOSE OF BUSINESS OF ASSESSEE. MOREOVER, UNDE R SIMILAR CIRCUMSTANCES, CHANDIGARH BENCH IN ITA NO. 996/2009 AS NOTED BY LD . CIT(A) HAS DECIDED IN FAVOUR OF ASSESSEE. THE DIVIDEND INCOME IS EXEMP T FOR ALL PERSONS INCLUDING ASSESSEE. THE INTEREST INCOME FROM BANK A MOUNTING TO RS. 18,190/- IS THOUGH NOT EXEMPT U/S. 80(P)(2)(D) BUT IS EXEMPT U/S. 80P(2)(I) OF THE ACT. THE CASE LAW OF TOTGAR'S COOPERATIVE SOC IETY WAS RIGHTLY DISTINGUISHED BY LD. CIT(A). THEREFORE, KEEPING IN VIEW ALL FACTS AND CIRCUMSTANCES, WE DO NOT FIND ANY INFIRMITY IN THE ORDER OF THE LD. CIT(A). 10. IN VIEW OF ABOVE, APPEAL FILED BY THE REVENUE I S DISMISSED.' 4.1 AFTER PERUSING THE AFORESAID FINDING OF THE TRI BUNAL, I AM OF THE CONSIDERED VIEW THAT THE ISSUES IN DISPUTE ARE SQUA RELY COVERED BY THE AFORESAID DECISION. THEREFORE, RESPECTFULLY FOLLOWI NG THE AFORESAID PRECEDENT, THE ADDITION IN DISPUTE IS HEREBY DELETED AND THE A PPEAL FILED BY THE ASSESSEE IS ALLOWED. 5. IN THE RESULT, THE APPEAL FILED BY THE ASSESSEE STANDS ALLOWED. ORDER PRONOUNCED ON 03/02/2020. SD/- [H.S. S IDHU] JUDICIAL MEMBER DATE: 03/02/2020 SH COPY FORWARDED TO: - 1. APPELLANT - 2. RESPONDENT - 3. CIT 4. CIT (A) 5. DR, ITAT TRUE COPY BY ORDER, ASSISTANT REGISTRAR, ITAT, DELHI BENCHES