Income Tax Appellate Tribunal - Ahmedabad
The Bhildi Mercantile Credit ... vs The Acit.,B.K Circle,, Palanpur on 19 March, 2018
SMC-ITA No. 208/ Ahd/2015
Bhiladi Mercantile Cre. coop Soc Ltd vs. ACIT
AY : 2011-12
Page 1 of 3
IN THE INCOME TAX APPELLATE TRIBUNAL
"SMC" BENCH, AHMEDABAD
[ Before Shri Pramod Kumar, Accountant Member ]
ITA No. 2086/Ahd/2015
Assessment Year : 2011-12
The Bhiladi Mercantile Credit Co-op Society Ltd ........................Appellant
Ganj Bazar Road,
At : Bhiladi, Dist. Banaskantha-385 310
[PAN : AABAT 9726 A]
Vs.
The ACIT .......................Respondent
Banaskantha Circle, Palanpur
Appearances by:
None for the appellant (Written submission on record)
Keyur Patel for the respondent
Date of concluding the hearing : 22.12.2017
Date of pronouncing the order : 19.03.2018
O R D E R
1. By way of this appeal, the assessee appellant challenges correctness of order dated 14.05.2015 passed by the CIT(A)-4, Ahmedabad in the matter of assessment under Section 143(3) of the Income-tax Act, 1961, for the assessment year 2011-12.
2. Grievances raised by the appellant are as follows:-
"1. Both the Ld. CIT (A) and Ld, A.O. have erred in law and on facts in denying the deduction admissible to the appellant Co-operative Society under section 80P of the Income tax Act, 1961 on the ground that deposit of excess money was part and parcel of the banking business, the interest there from is eligible for the deduction u/s 80P of I.T. Act, 1961.
2. Both the Ld. CIT(A) and Ld. A.O. have erred in law and on facts in holding that our Cooperative Society have deposited own funds in the schedule co-operative banks in the normal course of business and as per our co-operative societies rules and regulation also caring on the business of banking or providing credit facilities to our members only and not doing any selling activities during the year. Therefore our own funds investment and earning interest on that are eligible to deduction u/s. 80P(2)(a)(i) of Income tax Act, 1961.
SMC-ITA No. 208/ Ahd/2015 Bhiladi Mercantile Cre. coop Soc Ltd vs. ACIT AY : 2011-12 Page 2 of 3
3. The order of the Ld. A.O. and Ld. CIT(A) may, therefore, be reversed and the A.O. may be directed to grant ins deduction u/s. 80P(2) of the act, 1961."
3. None appeared for the assessee. However, I have perused the written submission filed by the assessee as also material on record. I have heard the learned Departmental Representative and have duly considered facts of the case in the light of the applicable legal position.
4. Learned representatives agree that the issue is covered by a Division Bench order dated 28.01.2016 in assessee's own case for the assessment years 2011-12 and 2012-13 whereby the Division Bench has remitted the matter to the file of the Assessing Officer by observing as follows :-
"7. The only issue needs to be decided is whether the appellant- assessee which is a Co-operative society and registered under the Co-operative Credit Societies Act is entitled to deduction under section 80P(2)(a)(i) of the Act for the interest income at Rs.1,15,213/- received from short-term deposit and Government Securities. From the perusal of the record, we find that the Assessing Officer while framing the assessment order under section 143(3) of the Act, completed the assessment by assessing the assessee co-operative society by treating as co-operative bank other than a primary agricultural credit society or a primary co-operative agricultural and rural development bank and accordingly denied the deduction to the assessee under section 80P(2)(a)(i) of the Act wherein deduction is available for the profits earned by a co-operative society engaged in carrying on the business of paying or providing credit facilities to its members. However, the Assessing Officer allowed deduction u/s 80P(2)(d) at Rs.1,77,980/- which refers to income earned by co- operative society from its investments with another co-operative society. Apart from this issue, nothing else has been observed and dealt with by the Assessing Officer. Thereafter rectification order was passed by the Assessing Officer on 16.6.2014 giving effect to the order of ld. CIT(A)-XX, Ahmedabad, who partly allowed the appeal of the assessee and deleted the addition made by the Assessing Officer made on account of disallowance claimed of deduction u/s 80P(2)(a)(i) of the Act. However, through this rectification order on one hand, Assessing Officer allowed the claim under section 80P(20(a)(i) of the Act at Rs.12,44,440/- out of the total income assessed by him as per his order u/s 143(3) of the Act on 7.12.2012 and on the other hand made addition of Rs.1,15,213/- on account of interest received from short-term deposit and Govt. Securities. This addition of Rs.1,15,213/- has neither been discussed by the Assessing Officer in his assessment order u/s 143(3) nor has it been dealt in by the ld. CIT(A). Ld. CIT(A) has only decided that assessee society is not a co-operative bank as contemplated u/s 80P(4) of the Act as well as in guidance notes to the amendment in section 2(24)(7A) and accordingly decided that assessee was eligible for deduction u/s 80P(2)(a)(i) of the Act.
8. As the addition of Rs.1,15,213/- has not been dealt on merit either at the level of Assessing Officer or at the level of ld. CIT(A), we are unable to SMC-ITA No. 208/ Ahd/2015 Bhiladi Mercantile Cre. coop Soc Ltd vs. ACIT AY : 2011-12 Page 3 of 3 adjudicate the issue because the details of income on account of interest received from short-term deposits and Govt. securities are not available as to whether they have been received from nationalized bank or co-operative banks as well as whether there were extra idle funds available with the assessee which may not have been utilized for earning interest income. Also none appeared on behalf of the assessee to provide these details and in these circumstances we have no other option but except to remit back the issue to the file of Assessing Officer with the direction to re- assess the assessee-co-operative-society by treating it as credit co- operative society and not a bank and eligible for deduction under section 80P(2)(a)(i) of the Act after giving reasonable opportunity to the assessee of being heard and to furnish all financial records to examine any detail, the income from interest received from short-term deposits and Govt. securities. Accordingly, the appeal of the assessee is allowed for statistical purposes."
5. Respectfully following the views so expressed by the Division Bench, which bind this bench, I remit the matter to the file of the Assessing Officer for fresh adjudication in the light of the above observations, which apply mutatis mutandis in this assessment year as well, by way of a speaking order, in accordance with the law and after giving a fair reasonable opportunity to the assessee.
6. As the matter is being remitted to the file of the Assessing Officer for fresh adjudication, I see no need to specifically deal with the peripheral issues raised by the appellant.
7. In the result, the appeal is allowed for statistical purposes. Order pronounced in the open Court on this 19th day of March, 2018.
Sd/-
Pramod Kumar
(Accountant Member)
Ahmedabad, the 19th day of March, 2018
**bt
Copies to: (1) The appellant
(2) The respondent
(3) Commissioner
(4) CIT(A)
(5) Departmental Representative
(6) Guard File
By order
TRUE COPY
Assistant Registrar
Income Tax Appellate Tribunal
Ahmedabad benches, Ahmedabad