The Dena Bank KKD & GSM, Kheda V. The Income Tax Officer, Ward-5, Nadiad

ITA 979/AHD/2017

• Counselvise Citation: [2018] 125 COUNSELVISE.COM (IT) 8041 (ITAT-AHMEDABAD)
• Duration Of Justice: 1 year(s) 2 month(s) 3 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 28-06-2018
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: SMC
• Assessment Year: 2013-2014
• Appeal Filed On: 24-04-2017
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Keywords: Business income; Principle of natural justice; Commercial expediency

Judgement Text

, LH LHLH LH IN THE INCOME TAX APPELLATE TRIBUNAL C BENCH, AHMEDABAD LOZJH LOZJH LOZJH LOZJH OLHE VGEN OLHE VGEN OLHE VGEN OLHE VGEN] YS[KK LNL; ,OA ] YS[KK LNL; ,OA ] YS[KK LNL; ,OA ] YS[KK LNL; ,OA EK/KQFERK JKW; EK/KQFERK JKW; EK/KQFERK JKW; EK/KQFERK JKW;] U;KF;D LNL; ] U;KF;D LNL; ] U;KF;D LNL; ] U;KF;D LNL; DS LE{KA DS LE{KA DS LE{KA DS LE{KA BEFORE SHRI WASEEM AHMED, ACCOUNTANT MEMBER AND SMT MADHUMITA ROY, JUDICIAL MEMBER ./ I.T.A. NO.979/AHD/2017 ( / ASSESSMENT YEAR : 2013-14) THE DENA BANK KKD & GSM C/O. DENA BANK, SANTA PIPLI, BHAVSAR WAD, NADIAD, DIST. KHEDA / VS. THE INCOME TAX OFFICER, WARD 5, NADIAD. ./ ./ PAN/GIR NO. : AABAT 3013 G ( / APPELLANT ) .. ( / RESPONDENT ) / APPELLANT BY : SHRI TUSHAR P. HEMANI, A.R. / RESPONDENT BY : SHRI PRASOON KABRA, SR. D.R. / DATE OF HEARING 26/06/2018 !'# / DATE OF PRONOUNCEMENT 28/06/2018 $% / O R D E R PER WASEEM AHMED, ACCOUNTANT MEMBER: THE CAPTIONED APPEAL HAS BEEN FILED AT THE INSTANCE OF THE ASSESSEE AGAINST THE APPELLATE ORDER OF THE COMMISSIONER OF INCOME TAX(APPEALS)-2, VADODARA [CIT(A) IN SHORT] VIDE APPEAL NO.CAB/(A)- 2/178/15-16 DATED 09.01.2017 ARISING IN THE ASSESSMENT ORDER PASSED UNDER S.143(3) OF THE INCOME TAX ACT, 1961 (HERE-IN -AFTER REFERRED TO AS 'THE ACT') DATED 28.08.2015 RELEVANT TO ASSESSMENT YEAR (AY) 2013-14. ITA NO.979/AHD/2017 THE DENA BANK KKD & GSM VS. ITO ASST.YEAR 2013-14 - 2 - 2. THE GROUNDS OF APPEAL RAISED BY THE ASSESSEE ARE AS UNDER:- 1. THE LEARNED CIT(A) HAS ERRED BOTH IN LAW AND ON THE FACTS OF THE CASE IN CONFIRMING THE ACTION OF AO IN CHANGING THE HEAD OF INCOME AND TREATING BUSINESS INCOME OF RS.8,18,01 7/- AS INCOME FROM OTHER SOURCES U/S.56 OF THE ACT. 2. THE LEARNED CIT(A) HAS ERRED BOTH IN LAW AND ON THE FACTS OF THE CASE IN CONFIRMING THE DISALLOWANCE OF DEDUCTION OF INTEREST INCOME OF RS.8,18,017/- U/S.80P(2)(A)(I) OF THE ACT . 3. LD. CIT(A) HAS ERRED IN LAW AND ON FACTS IN NOT APPRECIATING THAT THE DEPOSIT IN QUESTION WAS PLACED WITH DENA BANK O UT OF COMMERCIAL EXPEDIENCY, FOR MAINTAINING LIQUIDITY RA TIO AND IN CONNECTION WITH BUSINESS NEEDS OF THE APPELLANT. TH EREFORE, INTEREST INCOME OF RS.8,18,017/- EARNED ON SUCH DEP OSIT IS ENTITLED FOR DEDUCTION U/S 80P(2)(A)(I)OF THE ACT. 4. ALTERNATIVELY AND WITHOUT PREJUDICE, ONLY NET INTEREST INCOME CAN BE EXCLUDED FROM THE BUSINESS INCOME WHILE COMPUTIN G DEDUCTION U/S 80P(2)(A)(I) OF THE ACT AND NOT THE GROSS INTER EST RECEIPT. 5. BOTH THE LOWER AUTHORITIES HAVE PASSED THE ORDERS WITHOUT PROPERLY APPRECIATING THE FACTS AND THEY FURTHER ER RED IN GROSSLY IGNORING VARIOUS SUBMISSIONS, EXPLANATIONS AND INFO RMATION SUBMITTED BY THE APPELLANT FROM TIME TO TIME WHICH OUGHT TO HAVE BEEN CONSIDERED BEFORE PASSING THE IMPUGNED ORDER. THIS ACTION OF THE LOWER AUTHORITIES IS IN CLEAR BREACH OF LAW AND PRINCIPLES OF NATURAL JUSTICE AND THEREFORE DESERVES TO BE QUA SHED. 6. THE LEARNED CIT(A) HAS ERRED IN LAW AND ON FACTS OF THE CASE IN CONFIRMING ACTION OF THE ID. AO IN LEVYING INTEREST U/S.234A/B/C OF THE ACT. 7. THE LEARNED CIT(A) HAS ERRED IN LAW AND ON FAC TS OF THE CASE IN CONFIRMING ACTION OF THE ID. AO IN INITIATING PENAL TY U/S.271(1)(C) OF THE ACT. THE APPELLANT CRAVES LEAVE TO ADD, AMEND, ALTER, ED IT, DELETE, MODIFY OR CHANGE ALL OR ANY OF THE GROUNDS OF APPEAL AT THE T IME OF OR BEFORE THE HEARING OF THE APPEAL. ITA NO.979/AHD/2017 THE DENA BANK KKD & GSM VS. ITO ASST.YEAR 2013-14 - 3 - 3. THE SOLITARY ISSUE INVOLVED IN THE GROUNDS OF AP PEAL RELATES TO WHETHER INTEREST INCOME EARNED ON FIXED DEPOSITS WI TH THE NATIONALIZED BANK WOULD QUALIFY FOR DEDUCTION UNDER SECTION 80P( 2)(A)(I) OF THE INCOME TAX ACT. 4. AT THE OUTSET, THE LEARNED COUNSEL FOR THE ASSE SSEE FAIRLY CONCEDED THAT ISSUE IN DISPUTE IS SQUARELY COVERED AGAINST T HE ASSESSEE BY THE DECISION OF THE HON'BLE JURISDICTIONAL HIGH COURT I N THE CASE OF STATE BANK OF INDIA VS. CIT, 389 ITR 578 WHEREIN HON'BLE COURT HELD THAT INTEREST EARNED FROM THE INVESTMENT MADE IN ANY BAN K IS NOT DEDUCTIBLE UNDER SECTION 80P(2)(A)(I) OF THE ACT. IN THIS VIEW OF THE MATTER, WE DISMISS THE APPEAL OF THE ASSESSEE. HOWEVER, WE DIR ECT THE AO TO EXCLUDE THE AMOUNT OF NET INTEREST INCOME FROM THE DEDUCTIO N CLAIMED U/S 80P(2)(A)(I) OF THE ACT. THUS THE AO WILL ALLOW THE EXPENSES INCURRED BY THE ASSESSEE IN THE EARNING OF SUCH INTEREST INCOME NOT ELIGIBLE FOR DEDUCTION UNDER SECTION 80P(2)(A)(I) OF THE ACT. IN OTHER WORDS, THE LD.AO HAS TO DETERMINE THE NET INTEREST INCOME EARNED BY THE ASSESSEE ON SUCH INVESTMENT WITH THE BANK, A ND ONLY AFTER THAT NET INTEREST INCOME HAS TO BE EXCLUDED FROM THE ADMISSI BILITY OF DEDUCTION UNDER SECTION 80P(2) OF THE ACT. HENCE, GROUNDS OF APPEAL FILED BY THE ASSESSEE ARE ALLOWED FOR STATISTICAL PURPOSES. ITA NO.979/AHD/2017 THE DENA BANK KKD & GSM VS. ITO ASST.YEAR 2013-14 - 4 - 5. IN THE RESULT, THE APPEAL OF THE ASSESSEE IS PA RTLY ALLOWED FOR STATISTICAL PURPOSE. THIS ORDER PRONOUNCED IN OPEN COURT ON 28/06/2018 SD/- SD/- E/KQFERK JKW; E/KQFERK JKW; E/KQFERK JKW; E/KQFERK JKW; OLHE VGEN OLHE VGEN OLHE VGEN OLHE VGEN U;KF;D LNL; U;KF;D LNL; U;KF;D LNL; U;KF;D LNL; YKS[KK LN YKS[KK LN YKS[KK LN YKS[KK LN L; L; L; L; (MADHUMITA ROY) (WASEEM AHMED) JUDICIAL MEMBER ACCOUNTANT MEMBER AHMEDABAD; DATED 28/06/2018 PRITI YADAV, SR.PS !'# $#! / COPY OF THE ORDER FORWARDED TO : 1. / THE APPELLANT 2. / THE RESPONDENT. 3. & '( ) / CONCERNED CIT 4. ) () / THE CIT(A)-2, VADODARA. 5. ,-. //'( , '(# , 12$&$ / DR, ITAT, AHMEDABAD 6. .34 5 / GUARD FILE. % & / BY ORDER, , / //TRUE COPY// '/& () ( DY./ASSTT.REGISTRAR) , / ITAT, AHMEDABAD 1. DATE OF DICTATION 27/06/2018 . 2. DATE ON WHICH THE TYPED DRAFT IS PLACED BEFORE THE DICTATING MEMBER 27/06/2018. 3. OTHER MEMBER 4. DATE ON WHICH THE APPROVED DRAFT COMES TO THE SR.P. S./P.S 27/06/2018 5. DATE ON WHICH THE FAIR ORDER IS PLACED BEFORE THE D ICTATING MEMBER FOR PRONOUNCEMENT 6. DATE ON WHICH THE FAIR ORDER COMES BACK TO THE SR.P .S./P.S. 7. DATE ON WHICH THE FILE GOES TO THE BENCH CLERK 8. DATE ON WHICH THE FILE GOES TO THE HEAD CLERK ... 9. THE DATE ON WHICH THE FILE GOES TO THE ASSISTANT RE GISTRAR FOR SIGNATURE ON THE ORDER.. 10. DATE OF DESPATCH OF THE ORDER