ITO,Ward 6(2), Pune V. Rupee Co 0p Bank Ltd., Pune

ITA 955/PUN/2009

• Counselvise Citation: [2010] 135 COUNSELVISE.COM (IT) 3156 (ITAT-PUNE)
• Duration Of Justice: 1 year(s) 3 month(s) 9 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 19-11-2010
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: A
• Assessment Year: 2005-2006
• Appeal Filed On: 10-08-2009
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: ABHAY DAMLE
• Keywords: Business income; TDS
• Section: 244A; 80HHC

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL PUNE BENCH A , PUNE BEFORE SHRI I.C. SUDHIR AND SHRI D. KARUNAKARA RAO ITA NO. 955/PN/09 (ASSTT. YEAR 2005-06) ITO, WARD 6(2), PUNE .... APPELLANT VS. RUPEE CO OP BANK LTD., 2062 SADASHIV PETH, VIJAYNAGAR COLONY, PUNE 411030 PAN NO. AAAAR1080J . RESPONDENT APPELLANT BY : SHRI ABHAY DAMLE RESPONDENT BY : SHRI SUNIL GANOO ORDER PER D. KARUNAKARA RAO AM THIS IS AN APPEAL FILED BY THE REVENUE AGAINST THE ORDER OF THE CIT(A)-II, PUNE DATED 27-05-2009 FOR THE A.Y 2005-06 . GROUNDS RA ISED IN THE APPEAL ARE AS UNDER:- 1) THE ORDER OF THE LEARNED CIT(APPEALS) IS CONTRA RY TO LAW AND TO THE FACTS AND CIRCUMSTANCES OF THE CASE. 2) THE LEARNED CIT(APPEALS) GROSSLY ERRED IN TREATI NG THE SUM OF RS. 42,75,532/- RECEIVED BY THE ASSESSEE ON ACCOUNT OF INTEREST U/S. 244A AS BUSINESS INCOME INSTEAD OF CONFIRMING THE STAND TAKEN IN THE ASSESSMENT THAT THE SAME WAS IN THE NATURE O F INCOME FROM OTHER SOURCES. 3) THE ORDER OF THE LEARNED CIT(APPEALS) IN TREADIN G THE INTEREST U/S. 244A AS INCOME FROM BUSINESS AND NOT AS INCOME FROM OTHER SOURCES IS CONTRARY TO THE DECISION OF THE HONBLE OF THE HONBLE KERALA HIGH COURT IN THE CASE OF CIT VS. ABAD ENTER PRISES, 253 ITR 319. 4) FOR THESE AND SUCH OTHER GROUNDS AS MAY BE URGE D AT THE TIME OF THE HEARING. THE ORDER OF THE LEARNED CIT (APPEALS) MAY BE VACATED AND THAT OF THE ASSESSING OFFICER BE RESTOR ED. 2. DURING THE PROCEEDINGS LD. AR FOR THE ASSESSEE REFE RRED TO THE ITAT, PUNE ORDER IN ASSESSEES OWN CASE BEARING ITA NO. 1528/PN/0 8 FOR A.Y 2004-05, ITA NO. 955/PN/09 A.Y: 2005-06 PAGE 2 OF 4 ORDER DATED 22-04-2008 AND STATED THAT THE ISSUE IS C OVERED IN HIS FAVOUR BY VIRTUE OF THE SAID ORDER OF THE TRIBUNAL VIDE THE PARA 3 , 3.1 AND 4 OF WHICH ARE REPRODUCED AS UNDER:- 3. THE ASSESSEE HAD RECEIVED INTEREST OF RS. 49,9 43 AS INCOME TAX REFUND, WHICH WAS ASSESSED BY THE A.O AS INCOME FRO M OTHER SOURCES. THE ASSESSEE HAS RELIED UPON PUNJAB STATE CO-OPERAT IVE BANK 1 SOT 69 FOR THE PROPOSITION THAT THE INVESTMENT IN SECURITI ES WAS UNDER A STATUTORY OBLIGATION WHICH WERE SUBJECT TO TDS. THE REVENUE DEPARTMENT HAS GRANTED REFUND OF EXCESS TDS AND ALSO PAID INTEREST THEREUPON. THE FIRST APPELLATE AUTHORITY HAS ACCEPTED THE PLEA AND ALLOW ED THE GROUND IN FAVOUR OF THE ASSESSEE. 3.1 AFTER HEARING THE SUBMISSIONS THE ISSUE NOW STO OD COVERED BY A DECISION OF ITAT B BENCH PUNE IN THE CASE OF PUNE DISTRICT CENTRAL CO- OP BANK LTD., PUNE IN ITA NO. 1310/PN/2007 A.Y 200 4-05 DATED 30.11.2007 WHEREIN VIDE PARAGRAPHS 11 TO 14 IT WAS HELD AS UNDER: 11. THE MODIFIED GROUND NO. 5 IS DIRECTED AGAINS T THE CIT(A)S ORDER IN HOLDING THAT THE INTEREST RECEIVED BY THE ASSESSEE BANK ON INCOME TAX REFUND DOES NOT QUALIFY FOR DEDUCTION U/S 80P(2)(A) (I) OF THE ACT. 12. WE HAVE HEARD BOTH THE PARTIES AND HAVE GONE T HROUGH THE ORDERS OF THE AUTHORITIES BELOW. 13. THE LD. COUNSEL FOR THE ASSESSEE POINTED OUT T HAT IDENTICAL ISSUE HAS BEEN DECIDED BY I.T.A.T. CHANDIGARH BENCH A I N THE CASE OF DY. CIT VS. PUNJAB STATE CO-OP. BANK LTD. (2004) 1 SOT 69 ( CHD) WHERE THE BENCH HAD TAKEN A VIEW AS UNDER: THE TRIBUNAL FOR EARLIER YEARS AFTER TAKING INTO ACCOUNT THE DECISION OF THE PUNJAB & HARYANA H IGH COURT IN THE CASE OF R.B. JODHAMAL KUTHIALA VS. CIT (1972) 83 ITR 464 AND THAT OF SUPREME COURT IN THE CASE OF S.G. MERCANTILE CORPN. (P) LTD. VS. CIT (1972) 83 ITR 70 0, HAD ACCEPTED THE CLAIM OF THE ASSESSEE, OBSERVING THAT THE ASSESSEE BECAME ENTITLED TO INTEREST ON REFUND IN R ESPECT OF TAX DEDUCTED AT SOURCE BECAUSE OF UTILIZATION OF ITS BUSINESS ASSETS FOR PURPOSES OF ITS BUSINESS AND, THEREFORE, INTEREST EARNED FROM THE INCOME-TAX DEPA RTMENT FORMED NECESSARY AND INTEGRAL PART OF ITS BUSINESS INCOME, AND, THEREFORE, QUALIFIED FOR DEDUCTION U/S 80P(2)( A)(I). 14. RESPECTFULLY FOLLOWING THE AFORESAID DECISION OF I.T.A.T. CHANDIGARH BENCH, WE DIRECT THE A.O TO ALLOW THE AS SESSEES CLAIM OF DEDUCTION U/S 80P(2)(A)(I) OF THE ACT IN RESPECT OF INTEREST INCOME-TAX REFUND ARISING FROM TDS. WE DIRECT ACCORDINGLY. 4. RESPECTFULLY FOLLOWING THIS DECISION WE HEREBY D ISMISS THIS GROUND OF THE REVENUE. AS FAR AS THE DECISION OF THE KERA LA HIGH COURT IN THE CASE OF ABAD ENTERPRISES V. CIT [2002] 253 ITR 319 (KER. ) IS CONCERNED, THE HONBLE KERALA HIGH COURT HAS HELD THAT INTEREST RE CEIVED ON REFUND OF TAX, INTEREST RECEIVED ON BANK DEPOSIT AND INTEREST RECE IVED ON CAR DEPOSIT WERE NOT INCOMES DERIVED FROM THE EXPORT BUSINESS. THUS, THE ASSESSEE WAS NOT ENTITLED TO DEDUCTION UNDER SECTION 80HHC O F THE ACT IN RESPECT OF THESE SUMS. ON CAREFUL PERUSAL OF THIS DECISION OF THE HONBLE HIGH COURT, IT IS EVIDENT THAT THE ISSUE WAS EARNING OF INTEREST VIS-A-VIS EXPORT ACTIVITY AND NOT IN RESPECT OF BANKING ACTIVITY . ON THE OTHER HAND IN THE PRESENT APPEAL, WE ARE CONCERNED ABOUT THE BANK ING ACTIVITY OF THE ASSESSEE, HENCE A PRECEDENT HAS TO BE SEEN IN THE C ONTEXT IT WAS PRONOUNCED AND THE QUESTION REFERRED TO THE HONBLE COURT. SINCE THE ITA NO. 955/PN/09 A.Y: 2005-06 PAGE 3 OF 4 ISSUE BEFORE THE HONBLE KERALA HIGH COURT WAS DIFF ERENT. THEREFORE, THIS CITATION CAN BE SAID TO BE A MISPLACED CITATION FRO M THE SIDE OF THE REVENUE. WE HOLD ACCORDINGLY. 3. FROM THE ABOVE IT IS EVIDENT THAT THE ASSESSEE I S ENGAGED IN BANKING ACTIVITIES AS ITS NAME SUGGESTS. FACTS OF THE JUDGM ENT OF THE KERALA HIGH COURT IN THE CASE OF ABAD ENTERPRISES V. CIT [SUPRA] ARE ENT IRELY DIFFERENT FROM THAT OF THE INSTANT CASE AND THEREFORE, ITS R ATIO DECIDENDI IS INAPPLICABLE TO THE FACTS OF THIS CASE. FURTHER LD. AR ALSO SUBMITTED AND RELIED UPON THE MUM BAI SPECIAL BENCH DECISION IN THE CASE OF THE MAHARASHTRA STATE CO-OPERA TIVE BANK LTD. VS. ACIT (2010) 2 ITR 543 FOR AN IDENTICAL PROPOSITION. 4. WE HAVE HEARD BOTH THE SIDES AND PERUSED THE MATERI AL PLACED ON RECORD AND THE PRECEDENT CITED ABOVE. WE FIND THAT THE ISSU E INVOLVED IN THIS CASE STOOD COVERED IN FAVOUR OF THE ASSESSEE BY THE ITATS DECIS ION IN ASESSEES OWN CASE RUPEE CO-OP BANK LTD., PUNE (SUPRA) AND THE MUMBAI S PECIAL BENCH DECISION IN THE CASE OF THE MAHARASHTRA STATE CO-OPERATIVE BANK L TD., (SUPRA). FOR THE SAKE OF COMPLETENESS OF THE ORDER, WE FIND IT RELEVANT TO RE PRODUCE THE SAID CONCLUSION OF THE DECISION OF THE SPECIAL BENCH CITED ABOVE. CONCLUSION: INTEREST UNDER S. 244A RECEIVED BY ASSESSEE, A CO- OPERATIVE BANK, ON REFUND OF INCOME-TAX PAID BY IT IN RELATION TO THE BANKING BUSINESS CARRIED ON BY IT IS COVERED WITHIN THE EXPRESSION PROFITS AN GAINS OF BUSINESS OCCURRING IN S. 80P(2)(A) NOT WITHSTANDING THE FACT THAT IT IS ASSESSABLE UNDER THE HEAD INCOME FROM O THER SOURCES, AND THE SAME IS ATTRIBUTABLE TO THE BANKING BUSINESS AND, T HEREFORE, THE ASSESSEE IS ENTITLED TO DEDUCTION UNDER S. 80(P)(A)(I) ON TH E AMOUNT OF INTEREST RECEIVED UNDER S. 244A ON THE REFUND OF TAX. 5. ON CONSIDERING THE FACTS OF THE INSTANT CASE AND THE CATEGORICAL FINDING OF THE SPECIAL BENCH CITED ABOVE, WE ARE OF THE CONSIDE RED OPINION THAT THE ORDER THE CIT(A) DOES NOT CALL FOR ANY INTERFERENCE FOR THE ABOVE REASONS. ACCORDINGLY, GROUNDS RAISED BY THE REVENUE IN THE APP EAL ARE DISMISSED. 6. IN THE RESULT, APPEAL FILED BY THE REVENUE IS DISMISSED. ORDER PRONOUNCED ON 19 TH NOVEMBER, 2010. SD/- SD/- (I.C. SUDHIR) (D.KARUNAKARA RAO) JUDICIAL MEMBER ACCOUNTANT MEMBE R PUNE DATED THE 19 TH NOVEMBER, 2010 R ITA NO. 955/PN/09 A.Y: 2005-06 PAGE 4 OF 4 COPY OF THE ORDER IS FORWARDED TO : 1. ITO, WARD 6(2), PUNE 2. ASSESSEE 3. CIT(A)-II, PUNE 4. CIT-III, PUNE 5. D.R. ITAT A BENCH BY ORDER ASSISTANT REGISTRAR I.T.A.T PUNE