The ITO,Wd-2(4), Trivandrum V. M/s.Mylachel Service Co-op Bank Ltd, Trivandrum

MA 1/COCH/2021

• Counselvise Citation: [2024] 100 COUNSELVISE.COM (IT) 3499 (ITAT-COCHIN)
• Duration Of Justice: 4 year(s) 4 month(s) 11 day(s)
• Appeal Type: Miscellaneous Application
• Pronouncement Date: 06-03-2024
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: DB
• Assessment Year: 2014-2015
• Appeal Filed On: 24-10-2019
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Keywords: Retrospective amendment
• Section: 254(2)

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL COCHIN BENCH, COCHIN Before Shri Sanjay Arora, Accountant Member and Dr.S. Seethalakshmi, Judicial Member MA No.01/Coch/2021 : Asst.Year 2014-2015 (arising out of ITA No.397/Coch/2019) The Income Tax Officer Ward 2(4), Range-2 Trivandrum. vs. Mylachel Service Co-operative Bank Limited, Mylachal Ottasekaramangalam Trivandrum – 695 125. [PAN:AAAAM5703D] (Applicant) (Respondent) Applicant by: Smt.J.M.Jamuna Devi, Sr.DR Respondent by: Sri.Arun Raj S, Advocate Date of Hearing: 22.12.2023 Date of Pronouncement: 07.03.2024 O R D E R Per: Sanjay Arora, AM This is a Miscellaneous Application by the Revenue under section 254(2) of the Income Tax Act, 1961 [“the Act’ hereinafter] in respect of the adjudication by the Tribunal vide it’s order u/s. 254(1) of the Act dated 08.07.2019, disposing the Revenue’s appeal qua the assessee’s assessment for assessment year 2014-2015. 2. Per the impugned order, the Tribunal, taking note of the decision by the Hon'ble High Court in Pr. CIT v. Poonjar SCB Ltd. [2019] 414 ITR 67 (Ker)(FB), taking a view different from that by it earlier in Chirakkal Service Co-operative Bank Ltd. v. CIT [2016] 384 ITR 490 (Ker), which had been relied upon by the first appellate authority, remitted the matter back to the file of the Assessing Officer (AO) for fresh adjudication in the light of the activities of the assessee-society and the decision by the larger Bench of the Hon’ble Court. ITA No. 661/Coch/2022 (AY : 2016-17) Sterling Farm Research and Services Pvt. Ltd. v. Dy. Commissioner of Income Tax-1 2 3. A perusal of the assessment order dated 27/12/2016 reveals the AO to have, denying the assessee it’s claims for deduction u/ss.80P(2)(a)(i) and 80P(2)(d), assessed it’s income as under: Income under the head business or profession Rs.1,30,59,504 Income under the head other sources Rs.28,12,779 Gross total income Rs.1,58,72,283 Less : Deduction u/s.80P Nil Total Income Rs.1,58,72,283 The same was in modification of the classification returned by the assessee, as under: Income after adjustments of reserves Rs.1,58,72,283 Less : Income treated as income under the head other sources Nil Income under the head business or profession Rs.1,58,72,283 This was done by him on finding the assessee, in view of it’s lending profile – with only a fraction of it’s lending being for agricultural purposes, to be therefore not, as claimed, a primary agricultural credit society (PACS). And, further, of it’s interest income (Rs.28.13 lakh) being on investment of funds – in fixed deposit with Trivandrum District Co-operative Bank, surplus for the time being, assessable, following the decision in Totgar’s Co-operative Sale Society Ltd. v. ITO [2010] 322 ITR 283 (SC), as income from other sources. In first appeal, the ld. CIT(A), vide order dated 05/3/2019, allowed the assessee’s claim u/s. 80P(2)(a)(i) following the decision in Chirakkal Service Co-operative Bank Ltd. (supra). On interest income, i.e., on fixed deposit with Trivandrum District Co-operative Bank Ltd. (TDCBL), he, following the decision by the Tribunal in Kizhathadiyoor SCB Ltd. (ITA No.525/ Coch/2014, dated 20.07.2016) to the effect that interest income earned from investment in treasury and bank is a part of banking activity, assessed it as business income and, therefore, held it as eligible for deduction u/s.80P(2)(a)(i). This was challenged by the Revenue before the Tribunal on both counts, i.e., qua deduction u/s.80P(2)(a)(i) (Gd. 2) and 80P(2)(d) (Gd. 3). The Revenue has, consequent to the impugned order, now moved the Tribunal in respect of the non-adjudication of it’s ITA No. 661/Coch/2022 (AY : 2016-17) Sterling Farm Research and Services Pvt. Ltd. v. Dy. Commissioner of Income Tax-1 3 Gd. 3, i.e., qua sec.80P(2)(d), before it. In sum, it states that the Tribunal has not issued any finding in the matter even as the AO has issued a speaking order that the interest income from investment in TDCBL was out of surplus fund for the time being, assessable u/s.56. That is, non-adjudication of it’s Gd. 3 before it. 4. We have heard the parties, and perused the material on record. 4.1 There is, clearly, no adjudication by the Tribunal qua the Revenue’s Ground 3, so that the Revenue’s plea is both maintainable and valid. Without doubt, it is only where the income does not represent operational income, that, as is well-settled, even as explained in Totgar’s Co-operative Sale Society Ltd. (supra), it would stand to be assessed as income from other sources u/s.56. At this stage, Sri. Raj, the learned counsel for the assessee, would submit that, even so, the same would, in view of the decision in Pr. CIT v. Peroorkada SCB [2022] 442 ITR 141 (Ker), stand to be deductible in full u/s.80P(2)(d) inasmuch as the entire of it’s interest income is from deposit with TDCBL. In other words, no prejudice stands to be caused to the Revenue on account of the said non-adjudication of it’s Gd. 3 in view of the said binding decision by the Hon'ble Court. Smt. Devi, the ld. Sr. DR, did not fairly raise any objection to the said argument, which is unexceptional. 4.2 Even as, therefore, we are in principle in agreement with the Revenue that there has been an omission on the part of the Tribunal in adjudicating it’s Gd.3 before it, which thus qualifies to be a mistake within the meaning thereof u/s. 254(2) of the Act, in view of the decision in Peroorkada SCB Ltd. (supra), binding on this Tribunal, no prejudice can be said to be caused to the Revenue, rendering a recall of the order for adjudication of it’s Revenue’s Gd. 3 academic. The said decision, though rendered subsequent to the impugned order, would have a retrospective effect. No case for any interference is thus made out. We decide accordingly. ITA No. 661/Coch/2022 (AY : 2016-17) Sterling Farm Research and Services Pvt. Ltd. v. Dy. Commissioner of Income Tax-1 4 5. In the result, the Revenue’s MA is dismissed as infructuous. Order pronounced on March 07, 2024 under Rule 34 of The Income Tax (Appellate Tribunal) Rules, 1963 Sd/- Sd/- (Dr.S.Seethalakshmi) Judicial Member (Sanjay Arora) Accountant Member Cochin, Dated: March 07, 2024 Devadas* Copy to: 1. The Applicant 2. The Respondent 3. The Pr. CIT concerned 4. The Sr. DR, ITAT, Cochin 5. Guard File By Order Assistant Registrar ITAT, Cochin