Income Tax Appellate Tribunal - Kolkata
Hooghly District Central Co-Op. Bank ... vs Department Of Income Tax on 21 April, 2009
आयकर अपीलीय अधीकरण, Ûयायपीठ " C " कोलकाता
IN THE INCOME TAX APPELLATE TRIBUNAL "C" BENCH : KOLKATA
Before Hon'ble Sri B.R. Mittal, JM & Hon'ble Sri S.V Mehrotra, AM
(सम¢) ौी बी. आर. िमƣल,् Ûयायीक सदःय एवं ौी एस. भी.मेहरोऽा, लेखा सदःय
आयकर अपील संÉया / I.T.A No. 1512/Kol/2009
िनधॉरण वषॅ/Assessment Year : 2006-07
Asstt. Commissioner of Income-tax Vs. M/s. Hooghly District Central
Circle-1, Hooghly Co-operative Bank Ltd
PAN: AACFH 9855Q
(अपीलाथȸ /Appellant) (ू×यथȸ/Respondent)
अपीलाथȸ/ For the Appellant : ौी़/ Shri Niraj Kumar, ld.CIT/DR
ू×यथȸ/ For the Respondent : ौी़/Shri S.M Surana, ld. AR
आदे श/ORDER
ौी एस. भी.मेहरोऽा, लेखा सदःय Shri S.V Mehrotra, Accountant Member :
This is an appeal filed by the department against the order of the learned Commissioner of Income-tax (A)-XXXVII, Kolkata dated 21-04-2009 for the assessment year 2006-07.
2. The appeal filed by the department is time barred by 54 days for which a condonation of petition by way of an affidavit has been filed by the revenue, wherein Shri Chandra Prakash Bhatia, Asstt. Commissioner of Income-tax, Circle-1, Hooghly, inter-alia, has stated as under :-
"4. That this is a mofussil office located about 4OKms. from Kolkata;
5. That the assessment records for this A.Y. were dispatched to Kolkata on 27/7/9 after giving appeal effect preparing Appeal Scrutiny Report and suggesting Second Appeal so that counter comments thereon are kindly offered by the Ld. Addl. Commissioner of Income Tax, Range-I. Hooghly.
6. That, these records were sent to the Ld. CIT. Kolkata-XX.
Kolkata on 27/7/09 after further processing and counter- comments of the Ld. AddI. Commissioner of Income Tax. Range-I. Hooghly
7. That the undersigned took over the additional charge of ACIT Circle-I. Hooghly on3/8/09.
I.T.A No. 1512/Kol/2009-C--SVM 1
8. That the decision of the Ld. Commissioner of Income-Tax.
Kolkaia-XX. Kolkata to file second appeal in the case was communicated to the undersigned on 26/8/09 alongwith the concerned assessment records.
3. After considering averments made in the affidavit, we are of the opinion that the department was prevented by reasonable cause from preferring the appeal within the stipulated period. We, accordingly, condone the delay in filing the appeal in view of the decision of the Hon'ble Supreme Court in the case of CIT Vs. West Bengal Infrastructural & Financial Corporation Ltd reported in 2011 [ 196 Taxman 321(SC) ] and proceed to decide the appeal on merit..
4. In this appeal the department has taken following grounds of appeal :-
1) In the facts and in the circumstances of the case, the observation or Id. CIT(A)--XXX VII, Kolkata is bad in law..
2) In the facts and in the circumstances o the case. the onus as on the assessee to prove that such income as exempt u/s 80P of the I Act1961.
3) That the tax effect in the above case eceeds the limit prescribed by Instruction Number 1979 for filing an appeal before ITAT
4) Any other ground to he raised ate time of hearing.
5. Brief facts of the case are that the assessee, a co-operative bank, filed its return of income on 31/10/06 declaring total income 'Nil' after claiming deduction u/s. 80P of the I.T Act. During the assessment proceedings u/s. 143(3) of the Act, the Assessing Officer noticed from the schedules of statement of a/cs filed along with the return that the assessee had earned the following incomes:-
1. Commission Exchange Brokerage Rs.22,12,033.79
2. Other receipts Rs.24,44,475.05 Rs.46,56,508.84 5.1 He further noticed that the assessee, inter alia, had incurred the following expenses [ vide Schedule-23]:-
1. Provision for overdue intt. Rs.91,71,016.00
2. Provision for NPA Rs.17,21,800.00
3. Reserve & other fund[Gratuity] Rs.28,00,000.00
4. Reserve & other fund[Incentive] Rs.13,75,000.00 I.T.A No. 1512/Kol/2009-C--SVM 2
5. Reserve & other fund[ Benefit] Rs. 6,030.00
6. Reserve & other fund[ PACs Dr. Fund) Rs. 34,373.00 Rs.1,51,08,219.00 5.2 The Assessing Officer has treated this income not being incidental to assessee's banking activities and denied the deduction u/s.80P(2)( c)(ii) of the Act. Thus, he made an addition of Rs.1,97,14,727.84 by allowing a deduction of Rs.50,000/-.
6. Before the learned Commissioner of Income-tax (Appeals), it was contended that Commission Exchange Brokerage and Other Receipts were earned in the course of carrying on banking business and were entitled for exemption u/s.80P. In regard to disallowance of expenses, it was contended that the Assessing Officer assessed the expenses without computing the total income by setting off the income and expenses.
7. After considering the above, the learned Commissioner of Income-tax (Appeals) has allowed the appeal of the assesee, inter-alia, observing that the AO has not given any reasons for this conclusion regarding not granting exemption u/s.80P for the other income and also for disallowing the expenditure shown in the schedule. He further observed that the Assessing Officer has not brought any material on record to prove that the assessee had earned income other than by way of banking business.
8. The learned Departmental Representative submitted that neither the learned Commissioner of Income-tax (Appeals) nor the Assessing Officer have examined the actual nature of receipts and, therefore, the matter may be restored to the file of the Assessing Officer for denovo consideration of the entire issue. He also relied on the decision of the Hon'ble Patna High Court in the case of Bihar Rajya Sahakari Bhoomi Vikas Co-operative Bank Ltd Vs. CIT reported in (2009) [ 313 ITR 247 (Pat), wherein it was held that rental income and income earned from investment of PF of employees was not eligible for deduction u/s. 80P(2)(a)(i) of the Act.
9. The learned counsel for the assessee has submitted that similar issue was examined by the Jurisdictional Tribunal in AY 2003-04 in assessee's own case[ ITA No.2004/Kol/2006 vide order dated 11th January 2007. He submitted that commission exchange brokerage was nothing, but the commission earned by the bank for issuing bank drafts telegraphic transfers etc. He further referred to page no.45 of the assessee's paper I.T.A No. 1512/Kol/2009-C--SVM 3 book containing to Schedule No.26 in regard to details of other receipts. The same is reproduced below :-
SCHEDULE NO.26 Other Receipts Account Code Particulars Position as on 31/03/2006 31/03/2004 (Current Year) (Previous Year) 33101 Income for Statutory 900.00 1,005.00 RF Admission Fee 33102 Income for Statutory RF 200,140.00 123,010.00 Nominal Membership 33202 Miscellaneous Income 1,402,044.00 1,066,234.00 Locker Rent 33203 Miscellaneous Income 88,458.00 49,490.50 Bank Guarantee Fee 33204 Miscellaneous Income 277,613.28 341,004.63 Service Charges 33209 Miscellaneous income 475,319.77 340,328.42 Others Grand Total 2,444,475.05 1,921,972.55 9.1 The learned counsel for the assessee further referred to the decision of the Hon'ble Patna High Court in the case of Bihar Rajya Sahakari Bhoomi Vikas Co-operative Bank Ltd (supra) and submitted that the said decision is not applicable because the impugned items therein were admittedly not incidental to business activity.
10. We have considered the rival submissions and have perused the record of the case. We find that the assessee had prepared its accounts in accordance with IIIrd Schedule to the Banking Regulations Act. Specific classification in regard to various items has been given in the schedule and the accounts have been duly certified by the auditors. The same cannot be disputed. Therefore, it cannot be disputed that the commission exchange brokerage was earned on account of banking business activity only.
10.1 As regards other receipts, we find that there cannot be any dispute regarding incomes earned as per statutory requirements. Therefore, income for statutory R.F Admission Fee and Statutory RF Nominal Membership was incidental to assessee's banking business activities.
I.T.A No. 1512/Kol/2009-C--SVM 4 10.2 As far as locker rent is concerned, the same is also covered by the decisions of the Hon'ble Supreme Court in the cases of Mehsna District Central Co-operative Bank Ltd Vs. ITO/Gujarat Co-operative Bank Ltd Vs. CIT reported in [ (2001) 251 ITR 522]. The Hon'ble Supreme Court has held that where the assessee, a co-operative bank, derived income as under the same quantify for deduction u/s.80P(2)(a)(i).
(i) Income from utilization of its funds for statutory reserves is eligible for deduction u/s. 80P(2(a)(i) ;
(ii) Income from hiring out of safe deposits vaults is eligible for deduction u/s.80P(2)(a)(i) ; and
(iii) Income from the investment of its voluntary reserves other than statutory reserves is exempt u/s.80P(2)(a)(i) provided that reserve was utilized in the course of ordinary banking business 10.3 As far as Misc. incomes from Bank Guarantee Fee and Service charges are concerned, there cannot be any dispute that the same springs from banking business activity of assessee.
As far as Misc. income (others) is concerned, learned counsel clarified that the same is also from banking business activity. Nothing has been brought on record on this count. Therefore, we restore the matter to the file of Assessing Officer only for the purpose of verifying the details of Rs. 475319.77 ( as per details given at P.45 of the paper book reproduced earlier) in regard to Misc. income others and if he finds that the same is derived from banking business activity then allow deduction u/s.80P(2)(a)(i).
10.4 As far as the learned Departmental Representative's reliance on the decision of the Hon'ble Patna High Court in the case of in the case of Bihar Rajya Sahakari Bhoomi Vikas Co-operative Bank Ltd (supra) is concerned, the same is not applicable to the facts of the case, because in this case the source of income as earned by the assessee had no connection with the business activity of the assessee.
10.5 As far as disallowance of expenses is concerned, the same could be made only if there was any income, which was not eligible for deduction u/s.80P. However, in the present case, we find that the entire receipts are eligible for deduction u/s.80P and, therefore, there was no question of making any addition/disallowance of expenses.
I.T.A No. 1512/Kol/2009-C--SVM 5
11. In the result, the revenue's appeal [ITA No.1512/Kol/2009] is partly allowed for statistical purposes.
यह आदे श खुले Ûयायालय मɅ सुनाया गया है तारȣख 28-07-2011 Order pronounced in the open court on 28-07-2011 Sd/- Sd/-
[बी. आर. िमƣल ् Ûयायीक सदःय ] [एस. भी.मेहरोऽा, लेखा सदःय] ( B.R.Mittal, Judicial Member) (S.V. Mehrotra, Accountant Member ) (तारȣख) Dated : 28-07-2011 /Sr.P.S. *PP वǐरƵ िनǔज सिचव आदे श कȧ ूितिलǒप अमेǒषतः- Copy of the order forwarded to:
1. अपीलाथȸ /Appellant- A.C.I.T, Cir-1, Roopmati Mahal, Khadina More, Chinsurah, Hooghly.
2 ू×यथȸ/ Respondent : M/s. Hooghly District Central Co-op Bank Ltd.
Netaji Subhas Road, P.O Chinsurah, Hooghly.
3. आयकर किमशनर/The CIT,
4. आयकर किमशनर (अपील)/The CIT(A), Kolkata.
5. वभािगय ूितनीधी/DR, Kolkata Benches, Kolkata स×याǒपत ूित/True Copy, आदे शानुसार/ By order, सहायक पंजीकार/Asstt. Registrar I.T.A No. 1512/Kol/2009-C--SVM 6