Income Tax Appellate Tribunal - Delhi
M/S. Ispat Employes Corporative Thrift ... vs Ito, New Delhi on 31 July, 2017
IN THE INCOME TAX APPELLATE TRIBUNAL
DELHI BENCH : SMC-1 : NEW DELHI
(Through Virtual Hearing)
BEFORE SHRI R.K. PANDA, ACCOUNTANT MEMBER
ITA No.460/Del/2017
Assessment Year: 2013-14
Ispat Employees Cooperative Vs ITO,
Thrift and Credit Society Ltd., Ward-54(3),
Ispat Bhawan, New Delhi.
Lodhi Road,
New Delhi.
PAN: AAABI0135L
(Appellant) (Respondent)
Assessee by : Shri Ashok Kumar Jain, CA
Revenue by : Shri R.K. Gupta, Sr. DR
Date of Hearing : 16.06.2021
Date of Pronouncement : 15.07.2021
ORDER
PER R.K. PANDA, AM:
This appeal filed by the assessee is directed against the order dated 04.11.2016 of the CIT(A)-18, New Delhi relating to assessment year 2013-14.
2. This appeal was earlier decided by the Tribunal, vide order dated 31st July, 2017. Subsequently, vide M.A. No.520/Del/2017, order dated 05.08.2019, the Tribunal recalled its order, hence, this is a recalled matter. ITA No.460/Del/2017 2.1 Although, a number of grounds have been raised by the assessee in the grounds of appeal, however, they all relate to the denial of deduction u/s 80P of Rs.1,93,297/- on account of interest on FD, savings accounts & interest on I.T. refunds, the details of which are as under:-
Bank interest Rs. 34,430/-
FD interest Rs.1,58,579/-
Interest on IT refund Rs. 304/-
3. Facts of the case, in brief, are that the assessee is a thrift and credit society registered under Cooperative Society Act and providing credit facilities to its members only who are employees of ISPAT. It filed its return of income on 04-10- 2013 declaring NIL income, after claiming deduction of Rs.22,05,781/- u/s 80P which includes income from savings bank interest of Rs.39,414/-, interest on FD of Rs.1,58,579/- & interest on I.T. refund Rs.304/-. The Assessing Officer asked the assessee to explain the allowability of the above interest u/s 80P of the I.T. Act. It was explained by the assessee that the society is engaged in the activity of providing loans and advances to its members out of thrift money collected/mobilized from its members during the course of its business activity and as a prudent commercial business practice of treasury management, the society parks its surplus/idle funds lying with it with various commercial and cooperative banks that provide the best returns on these funds. Since the assessee is not registered under the Banking Regulation Act or under any other Banking Statute, 2 ITA No.460/Del/2017 the Assessing Officer, following the decision of the Hon'ble Supreme Court in the case of Totgar's Co-operative Sale Society vs. ITO reported in [2010] 188 taxman 282 (SC) rejected the claim of deduction u/s 80P of the above interest income and added the same to the total income of the assessee.
4. In appeal, it was argued that as per provision of section 53 of Delhi Co- operative Society Act, the assessee society is bound to save 1/4 th of profits to be carried to reserve funds. It was contended that such interest income will have to be treated as business income. Relying on various decisions, it was argued that such interest income has to be allowed as deduction u/s 80P.
5. However, the Ld.CIT(A) also was not convinced with the arguments advanced by the assessee. Relying on the decision of the Hon'ble Delhi High Court in the case of Mantola Co-operative Thrift & Credit Society Ltd. vs CIT reported in [2014] 50 taxmann.com 278 (Delhi) he held that such interest income has to be treated as "income from other sources" and the assessee is not entitled to deduction u/s 80P.
6. Aggrieved with such order of the Ld.CIT(A), the assessee is in appeal before the Tribunal.
7. The Ld. Counsel for the assessee referring to the various decisions filed in the paper book submitted that the issue has been decided in favour of the assessee. He submitted that although the ld.CIT(A) has followed the decision of Hon'ble Delhi 3 ITA No.460/Del/2017 High Court in the case of Mantola Co-operative Thrift & Credit Society Ltd. vs. CIT (2014) 50 taxmann.com 278 (Del), however, in view of the decision of the Hon'ble Supreme Court in the case of CIT vs. Karnataka State Cooperative Apex Bank reported in 251 ITR 194 and the decision of the Hon'ble Supreme Court in the case of CIT vs. Nawanshahar Central Cooperative Bank Ltd. (2007) 281 ITR 6 (SC), the issue stands decided in favour of the assessee and, therefore, the grounds raised by the assessee should be allowed.
8. He further submitted that assessee is entitled to deduction u/s 80P on interest earned on FD and saving bank accounts. Referring to the assessment order for A.Y. 2009-10, he submitted that the AO in the order passed u/s 143(3) had accepted the claim of deduction u/s 80P and there is no disallowance u/s 80P. He accordingly submitted that this being a covered matter in favour of the assessee, the order of Ld.CIT(A) has to be set aside and the ground raised by the assessee should be allowed.
9. The ld. DR on the other hand heavily relied on the order of CIT(A).
10. I have considered the rival arguments made by both the sides, perused the orders of the AO and Ld.CIT(A) and the Paper Book filed on behalf of the assessee. I have also considered the various decisions cited before me. The only issue to be decided in the impugned appeal is regarding the eligibility of deduction u/s 80P of the Act on the interest received on fixed deposits; savings accounts and 4 ITA No.460/Del/2017 interest on I.T. refund. I find the assessee in the instant case is a Cooperative Thrift and Credit Society. It has earned interest on fixed deposits, saving accounts and interest on I.T. refund. I find the Ld. Counsel for the assessee has relied on various decisions to the proposition that such interest income is eligible for deduction u/s 80P. However, the Hon'ble Delhi High Court in the case of Mantola Co-operative Thrift & Credit Society Ltd. (supra) has already decided the identical issue and has held that such interest income is not eligible for deduction u/s 80P(2). Although the various decisions relied on by the Ld. Counsel for the assessee supported its case, however, the decision of the Hon'ble Delhi High Court which is the Jurisdictional High Court is binding on the Tribunal. Since the Ld.CIT(A) has followed the decision of the Hon'ble Delhi High Court and has rejected the claim of deduction u/s 80P(2) of the Act on the interest income, therefore, in absence of any decision against the decision of the Hon'ble Jurisdictional High Court, I do not find any infirmity in the order of CIT(A) upholding the action of the AO. Ld. Counsel for the assessee also could not bring any material so as to take a contrary view than the view taken by the Hon'ble Delhi High Court.
11. So far as the two decisions relied on by the ld. Counsel are concerned, these decisions, in my opinion, are not applicable to the facts of the present case. In the case of CIT vs. Karnataka State Cooperative Apex Bank (supra), the issue was interest arising from investment made in compliance with statutory provisions to enable it to carry on banking business, out of reserve funds by a cooperative 5 ITA No.460/Del/2017 society engaged in banking business. However, in the instant case, the assessee is not a co-operative bank and the assessee is a thrift and credit society registered under the Co-operative Societies Act and providing credit facilities to its members only who were employees of ISPAT. Therefore, the decision of the Hon'ble Supreme Court in the case of Karnataka State Cooperative Apex Bank (supra) is not applicable to the facts of the present case.
11.1 Similarly, in the case of Nawanshahar Central Cooperative Bank Ltd. (supra) the issue was: "whether a cooperative bank carrying on the business of banking is statutorily required to place a part of its funds in approved securities, the income attributable thereto is deductible u/s 80P(2)(a)(i) of the Income-tax Act?"
However, the facts of the present case are totally different as mentioned above. Therefore, the above decision is also not applicable to the facts of the present case. 11.2 Since the ld.CIT(A) has already decided the issue by relying on the decision of the Hon'ble Delhi High Court in the case of Mantola Co-operative Thrift & Credit Society Ltd. (supra), therefore, in absence of any contrary material brought to my notice, I do not find any infirmity in the order of the CIT(A) on this issue. Accordingly, the order of the CIT(A) is upheld. So far as the argument of the ld. Counsel for the assessee that in the subsequent year the AO has accepted the claim of deduction u/s 80P of the Act in the order passed u/s 143(3) and, therefore, the rule of consistency should be followed is concerned, the same also is not applicable especially in view of the decision of the jurisdictional High Court which 6 ITA No.460/Del/2017 the ld.CIT(A) has followed and which is binding on the Tribunal. In this view of the matter, I do not find any infirmity in the order of the CIT(A) rejecting the claim of deduction u/s 80P(2)(a)(i) of the Act. The grounds raised by the assessee are accordingly dismissed.
12. In the result, the appeal filed by the assessee is dismissed.
Pronounced in the open court on 15.07.2021.
Sd/-
(R.K. PANDA) ACCOUNTANT MEMBER Dated: 15th July, 2021 dk Copy forwarded to
1. Appellant
2. Respondent
3. CIT
4. CIT(A)
5. DR Asstt. Registrar, ITAT, New Delhi 7