Income Tax Appellate Tribunal - Mumbai
Punjab & Maharashtra C-Op Bank Ltd, ... vs Department Of Income Tax on 11 August, 2011
IN THE INCOME TAX APPELLATE TRIBUNAL
"C" Bench, Mumbai
Before Shri R.V. Easwar, President
and Shri B. Ramakotaiah, Accountant Member
ITA No. 1674/Mum/2010
(Assessment Year: 2005-06)
A C I T - 1(3) Punjab & Maharashtra Co-op. Bank Ltd.
Room No. 504/564, 5th Floor Vs. 240 Shankar Sadan, Sion (E)
Aayakar Bhavan, M.K. Road Mumbai 400022
Mumbai 400020 PAN - AAACP 8549 E
Appellant Respondent
Appellant by: Shri M.R. Kubel
Respondent by: None
Date of Hearing: 11.08.2011
Date of Pronouncement: 24.08.2011
ORDER
Per B. Ramakotaiah, A.M.
This appeal by the Revenue is against the order of the CIT(A) II, Mumbai dated 01.12.2009
2. Revenue has raised a solitary ground as under: -
"1. Whether on the facts and in the circumstances of the case and in law, the Ld. CIT(A) erred in directing the A.O. to allow deduction u/s. 80P(2)(a)(i) of the Act on income related to interest on deposits with banks, commission from BSES and ICICI and miscellaneous income without appreciating that the source of these income are not the specific activities referred to in section 80P(2)(a)(i)."
3. Briefly stated, assessee is a co-operative society engaged in the business of banking. For the year under consideration the A.O. has given a finding that the income as listed below are not from income specified in section 80P of the Income Tax Act and accordingly are required to be taxed. The incomes considered by the A.O. are as under: -
2 ITA No. 1674/Mum/2010Punjab & Maharashtra Co-op. Bank Ltd.
i) Interest received from nationalized banks `13,11,614/-
ii) Interest received from other banks ` 3,99,128/-
iii) BSES commission ` 7,76,345/-
iv) Commission from ICICI ` 3,84,325/-
v) Other income ` 9,183/-
Total `10,54,082/-
According to the A.O. there are broadly two kinds of income specified in section 80P. The first is income derived by carrying on the business of banking or providing credit facilities to members and, the second is income by way of interest and dividend derived from investment with other co-
operative societies. He has argued that the income as listed above do not fall in any of these categories. He has therefore considered all the above five incomes as income falling under the head "income from other sources" and has taxed the entire sum as referred above. In effect he has denied the benefit of section 80P to the assessee.
4. Before the CIT(A) it was contended that the interest and other incomes were earned in the course of business of banking and the CIT(A) in A.Y. 2004-05 on similar facts allowed the benefit of deduction under section 80P and that order was upheld by the ITAT in assessee's own case in ITA No. 5857/Mum/2007. Following the above and also his predecessor's order the CIT(A) held that interest earned by assessee from other banks, nationalised and other banks was held to be out of business activity. Likewise, following the Tribunal order in earlier year, the commission of BSES and ICICI are also considered as income attributable to banking business and accordingly qualified for deduction under section 80P. As far as miscellaneous incomes are concerned the CIT(A) gave a finding that the other income included in miscellaneous income is essentially emanating from the banking business of the assessee, therefore, on the facts of the present case miscellaneous income also qualify for deduction under section 80P. Revenue is aggrieved on the directions of the CIT(A) in allowing the deduction under section 80P.
5. Assessee was not represented by anybody when the case was posted, therefore, the case was decided exparte Respondent. The order of the ITAT in 3 ITA No. 1674/Mum/2010 Punjab & Maharashtra Co-op. Bank Ltd.
ITA No. 5857/Mum/2007, which was followed by the CIT(A), was placed onrecord. The learned D.R. reiterated the contentions of the A.O. and submitted that the interest received from nationalised banks cannot be allowed as deduction as section 80P(2)(d) allows only income from other co-operative banks as eligible for deduction and, therefore, to the extent of income received as interest from other nationalised banks and private banks not covered by the section 80P. With reference to rest of the income it is fairly admitted that the issues are covered by the order of the ITAT in earlier year.
6. We have considered the issue. The ITAT in earlier year has examined allowability of commission received from BSES and ICICI Prudential and miscellaneous incomes and following the Hon'ble jurisdictional High Court judgement in the case of CIT vs. Ahmednagar District Central Co-operative Bank Ltd. 264 ITR 38 held that incomes earned by way of commission was attributable to the business of banking and as such relief under section 80P(2)(a)(i) of the Act was allowable to assessee. Since the CIT(A) followed the Coordinate Bench decision in allowing the deduction under section 80P(2), we see no reason to interfere with the order of the CIT(A). Consequently we uphold the order.
7. The argument raised by the learned D.R. that interest earned from other nationalised banks and other banks is not eligible for deduction under section 80P(2)(d) is not correct as Section 80P(2)(a)(i) itself allows the entire income earned in the course of banking business by a co-operative bank involved in banking business. Since there is no doubt about the activity of the assessee being a co-operative bank and as incomes are earned in the course of banking business, we see no reason to consider section 80P(2)(d) when section 80P(2)(a)(i) allows the entire profits earned in the course of banking business as deduction. It is also noticed that CIT(A) followed his predecessor order on the same issue and allowed as in last year and Revenue did not prefer any appeal in that year as appeal was only on issues of commission allowed as can be seen from the order of ITAT(supra). Therefore, learned D.R.'s argument is rejected. The interest incomes earned on deposits with other banks in the course of banking business is also 4 ITA No. 1674/Mum/2010 Punjab & Maharashtra Co-op. Bank Ltd.
eligible for deduction in the impugned year as per the provisions of sec. 80P(2)(a)(i).
8. In the result, appeal of the Revenue is dismissed.
Order pronounced in the open court on 24th August 2011.
Sd/- Sd/-
(R.V. Easwar) (B. Ramakotaiah)
President Accountant Member
Mumbai, Dated: 24th August 2011
Copy to:
1. The Appellant
2. The Respondent
3. The CIT(A) - II, Mumbai
4. The CIT- I, Mumbai City
5. The DR, "C" Bench, ITAT, Mumbai
By Order
//True Copy//
Assistant Registrar
ITAT, Mumbai Benches, Mumbai
n.p.