M/S GRAMIN SEVA SAHAKARI SAMITI MARYADIT, RAIPUR (CG) V. THE INCOME TAX OFFICER 1(3), RAIPUR (CG)

ITA 87/BIL/2016

• Counselvise Citation: [2018] 119 COUNSELVISE.COM (IT) 4460 (ITAT-RAIPUR)
• Duration Of Justice: 2 year(s) 6 month(s) 2 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 24-10-2018
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: SMC
• Assessment Year: 2011-2012
• Appeal Filed On: 22-04-2016
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Assessee Lawyers: G S AGRAWAL
• Keywords: Business income; Opportunity of being heard; Additional evidence

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL RAIPUR BENCH : RAIPUR BEFORE SHRI R.K. PANDA, ACCOUNTANT MEMBER AND MS SUCHITRA KAMBLE, JUDICIAL MEMBER ITA NO.87/RPR/2016 ASSESSMENT YEAR: 2011-12 GRAMIN SEVA SAHAKARI SAMITI MARYADIT, VILL. CHHURA, DISTT. RAIPUR, RAIPUR (CG). PAN: AABAA7989E INCOME TAX OFFICER 1(3), AAYKAR BHAVAN, CIVIL LINES, RAIPUR, RAIPUR (CG). (APPELLANT) (RESPONDENT) ASSESSEE BY : SHRI G.S. AGRAWAL, CA REVENUE BY : SHRI SANJAY KUMAR, DR DATE OF HEARING : 17.08.2018 DATE OF PRONOUNCEMENT: 24.10.2018 ORDER PER R.K. PANDA, AM: THIS APPEAL BY THE ASSESSEE IS DIRECTED AGAINST THE ORDER DATED 18 TH JANUARY, 2016 OF THE CIT(A)-I, RAIPUR RELATING TO ASSESSMENT YEAR 2011-12. 2. THE GROUND OF APPEAL NO.1 RAISED READS AS UNDE R:- 1. BANKING BUSINESS: 1.1. THAT UNDER THE FACTS & THE LAW THE LD. CIT (APPEALS ) ERRED IN REJECTING THE DEDUCT CLAIMED BY THE APPELLANT U/S 8 0 P(2)(A)(I) PERTAINING TO ITS BANKING BUSINESS AMOUNTING TO RS. 17,980/- ITA NO.87/RPR/2016 2 (INCORRECTLY TAKEN OUT BY CIT (APPEALS) INSTEAD 49, 599/-) AS REJECTED BY THE LD AO. PRAYED THAT RS. 17,980/- IS INCOME FROM BANKING BU SINESS & DEDUCTION BE ALLOWED. 1.2. WITHOUT PREJUDICE TO ABOVE THE LD CIT(APPEALS) FURT HER ERRED IN NOT DEDUCTING THE INTEREST PAID AMOUNTED TO RS.40,2 49/- FROM THE AFORESAID SUM OF RS. 17,980/-. PRAYED, WITHOUT PREJUDICE TO GROUND NO. 1 , INTERES T PAID TO ITS MEMBERS ON THEIR DEPOSIT AT RS 40,249/- BE DEDUCTED FROM RS. 17,980/-. 1.3. THAT UNDER THE FACTS & LAWS THE LD CIT(APPEALS) FUR THER ERRED IN CONFIRMING THE ADDITION OF RS 4,406/- BEING OVERDUE INTEREST RECEIVED FROM THE MEMBERS, MADE BY THE LD. AO. PRAYED THAT RS. 4,406/- IS DEDUCTIBLE U/S 80P(2)(A) (I) & BE DELETED. 3. AFTER HEARING BOTH THE SIDES, WE FIND THE ABOVE GRO UND IS IDENTICAL TO GROUND NO.1 OF ITA NO.31/RPR/2016 IN THE CASE OF GRAMIN S EVA SAHAKARI SAMITI MARYADIT, VILL. MOHDA TILDA, RAIPUR. WE HAVE ALREADY DECIDED THE ISSUE VIDE OUR ORDER DATED 22.10.2018 AND THE GROUND RAISED BY THE ASSESSEE HA S BEEN RESTORED TO THE FILE OF THE ASSESSING OFFICER WITH CERTAIN DIRECTIONS, THE RELE VANT PORTION OF WHICH IS REPRODUCED HEREUNDER:- 12. WE HAVE CONSIDERED THE RIVAL ARGUMENTS MADE BY BOTH THE SIDES AND PERUSED THE RELEVANT MATERIAL AVAILABLE ON RECORD. WE HAVE ALSO CONSIDERED THE VARIOUS DECISIONS CITED BEFORE US. W E FIND THE ASSESSEE IN THE INSTANT CASE IS A PRIMARY AGRICULTURAL COOPERAT IVE SOCIETY ENGAGED IN CARRYING OUT BUSINESS OF BANKING APART FROM OTHER B USINESSES WHICH HAVE ALREADY BEEN MENTIONED IN THE PRECEDING PARAGRAPHS. WHILE DOING THE ACTIVITY OF BANKING BUSINESS, THE ASSESSEE HAS EARN ED INTEREST ON LOANS AND ADVANCES FROM MEMBERS OF RS.16,63,105/-, INTEREST O N DEPOSIT WITH THE BANKS & RS.23,74,716/- AND EXCESS INTEREST RECEIVE D FROM DISTRICT ITA NO.87/RPR/2016 3 COOPERATIVE BANK AT RS.2,66,499/-. SIMILARLY, THE ASSESSEE IN ITS P&L ACCOUNT HAS DEBITED INTEREST PAID ON LOANS AT RS.8, 68,505/-, INTEREST ON DEPOSITS RS.13,06,258/- AND INTEREST ON RAKSHIT NID HI RS.11,768/-. WE FIND THE ASSESSING OFFICER REJECTING THE VARIOUS EX PLANATIONS GIVEN BY THE ASSESSEE BROUGHT TO TAX THE INTEREST ON DEPOSITS RE CEIVED FROM JILLA SAHAKARI KENDRIYA BANK AT RS.23,74,716/- AND EXCESS INTEREST FROM BANKS RS.2,66,499/- ON THE GROUND THAT THE SAME ARE INCO ME FROM OTHER SOURCES SINCE IT WAS EARNED FROM THIRD PARTIES/CUS TOMERS OF COOPERATIVE BANK AND NOT FROM THE ACTIVITIES WITH THE MEMBERS O F THE ASSESSEE SOCIETY AND, THEREFORE, NOT ELIGIBLE FOR DEDUCTION U/S 80P OF THE ACT. WE FIND THE LD.CIT(A) UPHELD THE ACTION OF THE ASSESSING OFFICE R THE REASONS OF WHICH HAVE ALREADY BEEN REPRODUCED IN THE PRECEDING PARAG RAPHS. IT IS THE SUBMISSION OF THE LD. COUNSEL FOR THE ASSESSEE THAT NETTING SHOULD HAVE BEEN ALLOWED TO THE ASSESSEE. IN HIS ALTERNATIVE CO NTENTION, IT IS ALSO HIS ARGUMENT THAT THE CENTRAL COOPERATIVE BANK IS ALSO A COOPERATIVE SOCIETY. THE DEFINITION OF DISTRICT CENTRAL COOPERATIVE BANK WAS NOT GIVEN IN THE INCOME-TAX ACT, BUT, IT HAS BEEN GIVEN IN THE NABAR D ACT. WE FIND THE ASSESSEE HAS NOT ARGUED THIS ASPECT BEFORE THE LOWE R AUTHORITIES FOR WHICH THEY DID NOT HAVE THE BENEFIT OF DISCUSSING THIS IS SUE ELABORATELY. FURTHER, ALTHOUGH THE ASSESSEE HAS ARGUED FOR NETTING OF INT EREST INCOME, HOWEVER, THIS ASPECT WAS ALSO NOT THOROUGHLY EXAMINED BY THE LOWER AUTHORITIES SINCE THE ASSESSEE HAS NOT GIVEN THE NEXUS BETWEEN EARNING OF THE INTEREST FROM DEPOSIT WITH THE BANKS AND PAYMENT OF INTEREST TO MEMBERS ON DEPOSITS. ALTHOUGH THE ASSESSING OFFICER HAD GIVEN THE ITEMS APPEARING IN THE RECEIPT SIDE AND EXPENDITURE SIDE, HOWEVER, THE NEXUS HAS NEITHER BEEN PROVED BY THE ASSESSEE NOR ADJUDICATED BY THE ASSESSING OFFICER. CONSIDERING THE TOTALITY OF THE FACTS OF THE CASE A ND IN THE INTEREST OF JUSTICE, WE DEEM IT PROPER TO RESTORE THIS ISSUE TO THE FILE OF THE ASSESSING OFFICER WITH A DIRECTION TO ADJUDICATE THE ISSUE AF RESH BY GIVING AN OPPORTUNITY TO THE ASSESSEE TO SUBSTANTIATE THE NEX US BETWEEN EARNING OF SUCH INCOME AND THE INCURRING OF EXPENDITURE. THE GROUND OF APPEAL NO.1 OF THE ASSESSEES APPEAL IS, ACCORDINGLY, ALLOWED F OR STATISTICAL PURPOSES. 4. FOLLOWING SIMILAR REASONING, THE ISSUE RAISED BY TH E ASSESSEE IS RESTORED TO THE FILE OF THE ASSESSING OFFICER FOR FRESH ADJUDICATIO N. THE GROUND RAISED BY THE ASSESSEE IS ACCORDINGLY ALLOWED FOR STATISTICAL PURPOSE. 5. THE GROUND NO.2 RAISED READS AS UNDER:- ITA NO.87/RPR/2016 4 2. PADDY PROCUREMENT BUSINESS: UNDER THE FACTS & LAWS THE LD. CIT (APPEALS) FURTHE R ERRED IN CONFIRMING THE DISALLOWANCE @ 35% OUT OF INCOME IN PADDY PROCU REMENT BUSINESS MADE BY THE LD. AO CLAIMED BY THE APPELLANT U/S 80P (2)(A)(III) OUT OF RS. 7,80,160/- OBSERVING THAT PADDY IS ALSO PROCURE D FROM OTHER THAN THE MEMBERS. PRAYED THAT PADDY HAS BEEN PROCURED FROM MEMBERS OF APPELLANT SOCIETY & THEREFORE PROVISION OF SEC. 80P(2)(A)(III) IS APP LICABLE, DISALLOWANCE OF RS. 2,73,195/- BEING 35% OF RS 7,80,160/- BE DELETE D. 6. AFTER HEARING BOTH THE SIDES, WE FIND THE ABOVE GRO UND IS IDENTICAL TO GROUND NO.2 OF ITA NO.31/RPR/2016. WE HAVE ALREADY DECIDE D THE ISSUE AND THE GROUND RAISED BY THE ASSESSEE HAS BEEN RESTORED TO THE FIL E OF THE ASSESSING OFFICER WITH CERTAIN DIRECTIONS, THE RELEVANT PORTION OF WHICH IS REPROD UCED HEREUNDER:- 17. AFTER CONSIDERING THE TOTALITY OF THE FACTS OF THE CASE, WE ADMIT THE ADDITIONAL EVIDENCE FILED BY THE ASSESSEE UNDER RUL E 29 OF THE ITAT RULES. SINCE THESE EVIDENCES WERE NOT EXAMINED BY THE ASSESSING OFFICER, THEREFORE, CONSIDERING THE TOTALITY OF THE FACTS OF THE CASE AND IN THE INTEREST OF JUSTICE, WE DEEM IT APPROPRIATE TO RESTORE THE ABOVE ISSUE TO THE FILE OF THE ASSESSING OFFICER WITH A DIRECTI ON TO ADJUDICATE THE ISSUE AFRESH. NEEDLESS TO SAY, THE ASSESSING OFFIC ER SHALL GIVE DUE OPPORTUNITY OF BEING HEARD TO THE ASSESSEE AND DECI DE THE ISSUE AS PER FACTS AND LAW. WE HOLD AND DIRECT ACCORDINGLY. TH E GROUND RAISED BY THE ASSESSEE IS ACCORDINGLY ALLOWED FOR STATISTICAL PURPOSES. 7. FOLLOWING SIMILAR REASONING, THE ISSUE RAISED BY TH E ASSESSEE IS RESTORED TO THE FILE OF THE ASSESSING OFFICER FOR FRESH ADJUDICATIO N. THE GROUND RAISED BY THE ASSESSEE IS ACCORDINGLY ALLOWED FOR STATISTICAL PURPOSE. ITA NO.87/RPR/2016 5 8. THE GROUND NO.3 RAISED READS AS UNDER:- 3. PDS BUSINESS THAT THE LD. CIT (APPEALS) FURTHER ERRED IN CONFIRM ING THE ADDITION OF RS. 1,72,695/- (INCORRECTLY TAKEN OUT BY CIT (APPE ALS) INSTEAD 1,50,443) WHICH IS GROSS PROFIT IN PDS A/C MADE BY THE LD. AO . PRAYED THAT IN PDS ACCOUNT, AFTER CONSIDERING PROPO RTIONATE EXPENSE OF RS. 3,56,837/-, THERE IS LOSS OF RS. 2,06,394/-. PR AYED THAT ADDITION OF RS. 1,72,695/- IS UNJUSTIFIED & BE DELETED. 9. AFTER HEARING BOTH THE SIDES, WE FIND THE ABOVE GRO UND IS IDENTICAL TO GROUND NO.3 OF ITA NO.31/RPR/2016. WE HAVE ALREADY DECIDE D THE ISSUE AND THE GROUND RAISED BY THE ASSESSEE HAS BEEN RESTORED TO THE FIL E OF THE ASSESSING OFFICER WITH CERTAIN DIRECTIONS, THE RELEVANT PORTION OF WHICH IS REPROD UCED HEREUNDER:- 21. AFTER HEARING BOTH THE SIDES, WE DO NOT FIND ANY IN FIRMITY IN THE ORDER OF THE CIT(A) ON THIS ISSUE. IT IS AN ADMITT ED FACT THAT PDS ACTIVITY IS NOT AN ACTIVITY BETWEEN THE ASSESSEE AND ITS MEM BERS, THEREFORE, THE PROVISIONS OF SECTION 80P WILL NOT BE APPLICABLE TO THIS BUSINESS. HOWEVER, THE LD. COUNSEL FOR THE ASSESSEE IN HIS AL TERNATE SUBMISSION ARGUED THAT THE EXPENSES ATTRIBUTABLE TO SUCH PDS B USINESS SHOULD BE ALLOWED AND ONLY PROFIT, IF ANY, HAS TO BE ADDED BA CK TO THE TOTAL INCOME OF THE ASSESSEE. SINCE THIS ASPECT HAS NOT BEEN CO NSIDERED BY THE LOWER AUTHORITIES, THEREFORE, WE DEEM IT APPROPRIATE TO R ESTORE THIS ISSUE TO THE FILE OF THE ASSESSING OFFICER WITH A DIRECTION TO V ERIFY THE PROPORTIONATE EXPENSES WHICH HAS GOT DIRECT NEXUS WITH EARNING OF SUCH PDS BUSINESS INCOME AND ALLOW THE SAME AS A DEDUCTION FROM SUCH BUSINESS ACTIVITY. THE ASSESSEE SHALL SUBSTANTIATE TO THE SATISFACTION OF THE ASSESSING OFFICER REGARDING THE NEXUS OF SUCH EXPENDITURE INCURRED FO R EARNING THE PDS BUSINESS INCOME. THE GROUND RAISED BY THE ASSESSEE IS ACCORDINGLY ALLOWED FOR STATISTICAL PURPOSES. ITA NO.87/RPR/2016 6 10. FOLLOWING SIMILAR REASONING, THE ISSUE RAISED BY TH E ASSESSEE IS RESTORED TO THE FILE OF THE ASSESSING OFFICER FOR FRESH ADJUDICATIO N. THE GROUND RAISED BY THE ASSESSEE IS ACCORDINGLY ALLOWED FOR STATISTICAL PURPOSE. 11. THE GROUND NO.4 RAISED READS AS UNDER:- 4. DIVIDEND INCOME: THAT THE LD CIT(APPEALS) FURTHER ERRED IN CONFIRMIN G THE REJECTION OF CLAIM OF EXEMPTION OF DIVIDEND RECEIVED FROM JILA S AHKARI KENDRIYA BANK LTD., RAIPUR AT RS. 1,28,108/- U/S 80P(2)(D). PRAYED THAT DIVIDEND IS EXEMPT AND THE ADDITION OF RS 1,28,108/- BE DELETED. 12. AFTER HEARING BOTH THE SIDES, WE FIND THE ABOVE GRO UND IS IDENTICAL TO GROUND NO.4 OF ITA NO.31/RPR/2016. WE HAVE ALREADY DECIDE D THE ISSUE AND THE GROUND RAISED BY THE ASSESSEE HAS BEEN RESTORED TO THE FIL E OF THE ASSESSING OFFICER WITH CERTAIN DIRECTIONS, THE RELEVANT PORTION OF WHICH IS REPROD UCED HEREUNDER:- 24. IN APPEAL, THE LD.CIT(A) UPHELD THE ACTION OF THE A SSESSING OFFICER ON THE GROUND THAT THE ASSESSEES FUNDS HAVE NOT BE EN KEPT WITH A COOPERATIVE SOCIETY. IT IS THE SUBMISSION OF THE L D. COUNSEL FOR THE ASSESSEE THAT COOPERATIVE BANK IS ALSO A COOPERATIV E SOCIETY. THEREFORE, THE DIVIDEND INCOME EARNED BY THE ASSESSEE SHOULD B E GIVEN THE BENEFIT OF SECTION 80P OF THE IT ACT. WE FIND THE ASSESSEE HAS NOT ARGUED BEFORE THE LOWER AUTHORITIES THAT THE COOPERATIVE BANK IS ALSO A COOPERATIVE SOCIETY. WE, THEREFORE, RESTORE THIS ISSUE TO THE FILE OF THE ASSESSING OFFICER WITH A DIRECTION TO THE ASSESSEE TO SUBSTAN TIATE BEFORE THE ASSESSING OFFICER THAT THE JILLA SAHAKARI BANK, FRO M WHERE THE ASSESSEE HAS RECEIVED OR EARNED DIVIDEND INCOME, IS A COOPER ATIVE SOCIETY. IF THE ASSESSEE IS ABLE TO SATISFY THE ASSESSING OFFICER W ITH EVIDENCE THAT THE JILLA SAHAKARI BANK FROM WHICH THE ASSESSEE HAS EAR NED DIVIDEND INCOME ITA NO.87/RPR/2016 7 FROM SHARES PURCHASED BY IT IS A COOPERATIVE SOCIET Y, THE ASSESSING OFFICER, SUBJECT TO HIS SATISFACTION, WILL ALLOW TH E CLAIM AS PER FACT AND LAW. THE GROUND RAISED BY THE ASSESSEE IS ACCORDIN GLY ALLOWED FOR STATISTICAL PURPOSES. 13. FOLLOWING SIMILAR REASONING, THE ISSUE RAISED BY TH E ASSESSEE IS RESTORED TO THE FILE OF THE ASSESSING OFFICER FOR FRESH ADJUDICATIO N. THE GROUND RAISED BY THE ASSESSEE IS ACCORDINGLY ALLOWED FOR STATISTICAL PURPOSE. 14. IN THE RESULT, THE APPEAL FILED BY THE AS SESSEE IS ALLOWED FOR STATISTICAL PURPOSES. THE DECISION WAS PRONOUNCED IN THE OPEN COURT ON 2 4.10.2018. SD/- SD/- (SUCHITRA KAMBLE) (R.K. PANDA) JUDICIAL MEMBER ACCOUNTAN T MEMFBER DATED: 24 TH OCTOBER, 2018 DK COPY FORWARDED TO 1. APPELLANT 2. RESPONDENT 3. CIT 4. CIT(A) 5. DR DY. REGISTRAR, ITAT, NEW DELHI