Income Tax Appellate Tribunal - Ahmedabad
The Sarvoday Credit Cum Consumers ... vs The Acit,B K.Circle,, Palanpur on 11 July, 2018
आयकर अपील य अ धकरण, अहमदाबाद यायपीठ 'एस. एम. सी', अहमदाबाद ।
IN THE INCOME TAX APPELLATE TRIBUNAL "SMC" BENCH, AHMEDABAD सम ी वसीम अहमद, लेखा सद य एवं स ु ी मध ु मता रॉय, या यक सद य ।
BEFORE SHRI WASEEM AHMED, ACCOUNTANT MEMBER &
Ms. MADHUMITA ROY, JUDICIAL MEMBER
आयकर अपील सं./I.T.A. No.1875/Ahd/2015
( नधा रण वष / Assessment Year : 2011-12)
The Sarvoday Credit cum बनाम/ The ACIT
Consumers Co-operative Society Vs. B.K. Circle, Palanpur
Ltd.
Opp. Naya Mandir
At: Deesa
Dist: Banaskanatha 385 535
थायी ले खा सं . /जीआइआर सं . / PAN/GIR No. : AAAAT 1649 R
(अपीलाथ% /Appellant) .. (&'यथ% / Respondent)
अपीलाथ% ओर से /Appellant by : Shri Tej Shah, AR
&'यथ% क) ओर से/Respondent by : Shri V.K. Singh, Sr.DR
ु वाई क) तार,ख /
सन Date of Hearing 21/06/2018
घोषणा क) तार,ख /Date of Pronouncement 11 / 07 /2018
आदे श / O R D E R
PER Ms. MADHUMITA ROY - JM:
The instant appeal has been filed before us by the assessee against the order dated 23.04.2015 passed by the Commissioner of Income Tax(Appeals)-4, Ahmedabad [Ld.CIT(A) in short] for Assessment Year (AY) 2011-12 arising out of the order dated 30.01.2014 passed by the ACIT, B.K. Circle, Palanpur with the following grounds:-
1. The learned CIT(A) erred in law and on the facts of the case in confirming the order u/s.143(3) the Act of the A.O. who has computed the income at Rs.23,23,030/- as against NIL income of the assessee.
2. The learned CIT(A) has without considering the merit of the case dismissed the appeal of the appellant and has not given relief on account of addition made by the A.O. in respect -2- ITA No.1875Ahd/2015 The Sarvoday Credit cum Consumers Co-operative Society Ltd. vs. ACIT Asst.Year - 2011-12 of the deduction of Rs.22,52,868/- and Rs.4,44,200/- being interest and dividend income respectively received from Banas co.operative bank and which was claimed the appellant up to Gross Total Income i.e. Rs.22,51,000/- under section 80P(2)(a)(d) of the Income-tax Act, 1961.
3. The learned CIT(A) erred in law and on the facts of the case in confirming interest charged U/s.234A/B/C of the Act.
2. The issues raised in the grounds are inter-related and therefore are taken together for the sake of brevity.
3. The brief facts of the case is that the assessee is a Credit Co-operative Society registered under Gujarat Co-operative Societies Act, 1961 carrying on business of providing credit facilities to its members. The assessee filed its return on 29.11.2011 declaring total income of Rs.NIL. The assessee further claimed deduction of Rs.22,51,000/- u/s.80P(2)(a)(i) & 80P(2)(d) of the Income Tax Act, 1961 (hereinafter referred to as "the Act") on account of interest income from the Banaskantha Dist.Central Co-operative Bank Ltd. and dividend income of Rs.4,44,200/- aggregating to Rs.26,97,068/-. A show-cause notice was issued on 17.01.2014 upon the assessee during the assessment proceedings asking for reply as to why deduction claimed u/s.80P(2)(a)(i) & 80P(2)(d) of the Act should not be withdrawn as per the amendment inserted w.e.f. 01.04.2007. The assessee replied that the assessee is a Co-operative Society and the Banas Co-operative Bank (in short Banas) is also a Co-operative Society engaged in banking business, therefore interest income and dividend income received from it is totally exempt from tax. The said Banas is registered with the Gujarat Co-operative Society Act, 1961 copy whereof was also submitted before the Ld. AO along with the submission made by the assessee. The assessee further submitted before the AO that the payer i.e. Banas Co-operative Bank and the payee being the assessee, both are Co-operative Societies, hence, the deduction of interest and dividend of Rs.26,97,068/- is deductible u/s.80P(2)(d) of the Act even after the amendment of the provision on 01.04.2007. However, the -3- ITA No.1875Ahd/2015 The Sarvoday Credit cum Consumers Co-operative Society Ltd. vs. ACIT Asst.Year - 2011-12 Assessing Officer was not satisfied with the contention made by the assessee in its reply dated 27.01.2014. Since the Banaskantha Dist.Central Co-operative Bank Ltd. is a Co-
operative Bank, the assessee, according to the AO is not entitled to deduction u/s.80P(2)(a)(i) & 80P(2)(d) and added Rs.23,23,034/- to the total income of the assessee.
4. In appeal, the Ld.CIT(A) confirmed the order passed by the Ld. AO and hence the appeal before us.
5. At the time of hearing of the appeal, the Ld. Representative for the assessee submitted before us that the assessee is a Co-operative Credit Society which is distinct from the Co-operative Bank. It is a credit-cum-consumer Co-operative Society providing credit facilities to its members. Therefore, profit of such activity of providing credit facilities to the members is allowable deduction u/s.80P(2)(a)(i) & Section 80P(2)(d) of the Act. He further submits that the definition of income u/s.2(24) of the Act after insertion of sub-clause (vii(a) w.e.f. 01.04.2007 has become as follows:
"the profit and gain of any business of banking (including providing credit facilities) carried on by a co-operative society with its members".
Further that insertion of sub-section (4) of section 80P w.e.f. 1.04.2007 implies that the provision of this section shall not apply in relation to any co-operative bank other than a primary agricultural credit society or a primary co-operative agricultural and rural development bank. The Ld.AR contended that the AO has come to an erroneous finding to this effect that the Banaskantha Dist.Central Co-operative Bank Ltd. from whom the assessee has earned interest and dividend income from its deposits is not a Co-operative Society but a bank and thus the assessee is not entitled to deduction as claimed for which was further confirmed by the Ld. CIT(A) without application of mind. In support of his argument, that the Banaskantha Dist.Central Co-operative Bank Ltd. is a Co-operative Society, the Ld. AR has submitted the Certificate of Registration dated 20.08.1959 before -4- ITA No.1875Ahd/2015 The Sarvoday Credit cum Consumers Co-operative Society Ltd. vs. ACIT Asst.Year - 2011-12 us which is claimed to have been submitted before the Ld. CIT(A). He further added that the case of the assessee is covered by a common decision dated 23.03.2018 passed by the Coordinate Bench of this Tribunal in ITA Nos.1891/Ahd/2014, 2987/Ahd/2015, 1090/Ahd/2015 & 1582/Ahd/2015 where the assessee's interest income derived from the said Banaskantha Dist.Central Co-operative Bank Ltd. has been made eligible for deduction even after the insertion of sub-section 4 in Section 80P upon amendment w.e.f. 01.04.2007.
6. On the other hand, the Ld. DR relies upon the orders of the authorities below.
7. We have heard the Ld. Representatives of the respective parties and perused the relevant materials available on record. We find that the issue raised by the assessee as to whether the assessee is entitled to the claim u/s.80P(2)(a)(i) & 80P(2)(d) of the Act on the interest and dividend income received from the Banaskantha Dist.Central Co-operative Bank Ltd. is identical to the issue involved in those above appeals decided by the Coordinate Bench of this Tribunal. The Coordinate Bench while deciding the issue has observed as follows:
"4. We now advert to the lead issue of Section 80(P)(2) disallowance of Rs.27,97,019/- in respect of assessee's interest income derived from its deposits with the Banas Co-operative Bank. Both the lower authorities quote the legislative amendment vide Finance Act, 2006 w.e.f. 01.04.2007 inserting subsection 4 in Section 80P as well as CBDT's explanatory notes to the above Finance Act dated 28.122006 in holding that the impugned interest income derived from co-operative bank is not eligible for deduction. Learned Departmental Representative vehemently contends that hon'ble Karnataka high court's recent decision in (2017) 83 taxmann.com 140 (Karnataka) PCIT vs. Totagars Co-operative Sale Society has settled the law that such an income is not allowable as Section 80P deduction in view of the legislative amendment hereinabove. Mr. Kabra thereafter files hon'ble apex court's judgment in (2017) 397 ITR 1 (SC). The Citizen Co-operative Society Ltd. vs. ACIT settling Section 80P deduction issue in respect of ordinary and nominal members. We however find that the above former decision goes contrary to hon'ble jurisdictional high -5- ITA No.1875Ahd/2015 The Sarvoday Credit cum Consumers Co-operative Society Ltd. vs. ACIT Asst.Year - 2011-12 court's judgment in Tax Appeal No. 473 of 2014 CIT vs. Sabarkantha District Cooperative Milk Producers Union Ltd. declining Revenue's identical question of law challenging tribunal's decision allowing Section 80P deduction in respect of interest earned on fixed deposits with a cooperative bank in assessment year 2009-10 i.e. post Section 80P(4) amendment w.e.f. 01.04.2007. Their lordships' reasoning to this effect reads as under:
"4.0. Now, so far as proposed question no. B i.e. whether the Appellate Tribunal has substantially erred in upholding the order of the CIT(A) in deleting the disallowances of Rs.1,42,19,5157- under Section 80(P)(2)(d) of the Act is concerned, it is required to be noted that the assessee claimed deduction under Section 80(P)(2)(d) of the Act on the interest earned on the fixed deposit with Cooperative Bank and the Societies and it has been found that as such the income was received from the investment in Cooperative Societies and Cooperative Bank. Considering Section 80(P)(2)(d) of the Act when the only requirement was that the income should be received from investment in Cooperative Societies and the Cooperative Bank which in the present case has been fulfilled, it cannot be said that the learned Tribunal has committed any error in deleting disallowance of Rs.1,42,19,515/- under section 80(P)(2)(d) of the Act. We are in complete agreement with the view taken by the learned Tribunal. Under the circumstances, proposed question B is also answered against the revenue."
We therefore follow hon'ble jurisdictional high court's judgment than hon'ble Karnataka high court's decision. Coming to hon'ble apex court's decision in the Citizen Co-operative Society Ltd. (supra), we find that there is no dispute about the category of members as it was before their lordships. We thus conclude in view of all these facts and circumstances that hon'ble jurisdictional high court's judgment is binding on us. We accordingly delete the impugned disallowance of Rs.27,97,019/- in question. This lead appeal ITA No. 1891/Ahd/2014 is partly accepted......"
8. Thus it is a fact in the aforesaid matter that the Co-ordinate Bench has been pleased to allow the claim of the assessee for deduction of interest income derived from the deposits with the Banaskantha Dist. Central Co-operative Bank Ltd.
9. Taking into consideration the entire facts of the matter and the decision cited by the Ld. AR, we are of the considered view that the assessee is entitled to deduction u/s.80(2)(a)(i) & 80P(2)(d) of Rs.22,52,868/- & Rs.4,44,200/- being interest and dividend -6- ITA No.1875Ahd/2015 The Sarvoday Credit cum Consumers Co-operative Society Ltd. vs. ACIT Asst.Year - 2011-12 income respectively derived from the deposits with the Banaskantha Dist.Central Co- operative Bank Ltd. and thus accordingly delete the impugned disallowance of Rs.22,51,000/-.
10. The ground of appeal preferred by the assessee is allowed. Consequently, we observe that the assessee is entitled to the interest u/s.234/A/B/C of the Act. We therefore, direct the Ld. AO to compute the interest u/s.234/A/B/C of the Act and to proceed in benefit of the same to the assessee.
11. In the result, the appeal preferred by the assessee is allowed partly for statistical purposes.
This Order pronounced in Open Court on 11/ 07 /2018
Sd/- Sd/-
(वसीम अहमद) (स
ु ी मध ु मता रॉय)
लेखा सद य या यक सद य
( WASEEM AHMED ) ( Ms. MADHUMITA ROY )
ACCOUNTANT MEMBER JUDICIAL MEMBER
Ahmedabad; Dated 11/ 07 /2018
ट,.सी.नायर, व. न.स./T.C. NAIR, Sr. PS
आदे श क त!ल"प अ#े"षत/Copy of the Order forwarded to :
1. अपीलाथ% / The Appellant
2. &'यथ% / The Respondent.
3. संबं4धत आयकर आयु5त / Concerned CIT
4. आयकर आयु5त(अपील) / The CIT(A)-4, Ahmedabad
5. 8वभागीय & त न4ध, आयकर अपील,य अ4धकरण, अहमदाबाद / DR, ITAT, Ahmedabad
6. गाड< फाईल / Guard file.
आदे शानुसार/ BY ORDER, स'या8पत & त //True Copy// उप/सहायक पंजीकार (Dy./Asstt.Registrar) आयकर अपील य अ धकरण, अहमदाबाद / ITAT, Ahmedabad