Income Tax Appellate Tribunal - Ahmedabad
Canra Bank Staff Co. Op. Society. Ltd, ... vs Ito, Ward-5(2)(2),, Ahmedabad on 4 December, 2019
IN THE INCOME TAX APPELLATE TRIBUNAL
AHMEDABAD "B" BENCH
(BEFORE SHRI MAHAVIR PRASAD, JUDICIAL MEMBER
& SHRI AMARJIT SINGH, ACCOUNTANT MEMBER)
ITA. No: 1771/AHD/2018
(Assessment Year: 2012-13)
Canara Bank Staff Co-op V/S Income Tax Officer, Ward-
Society Ltd., 906, Hemkoot 5 (2)(2), Ahmedabad
Building, Opp. Capital
Commercial Centre,
Ashram Road, Ellis bridge,
Ahmedabad
(Appellant) (Respondent)
PAN: AAAAC 7849N
Appellant by : Shri S. A. Sukhadia, AR
Respondent by : Shri Mudit Nagpal, Sr. D.R.
(आदे श)/ORDER
Date of hearing : 10 -09-2019
Date of Pronouncement : 04 -12-2019
PER MAHAVIR PRASAD, JUDICIAL MEMBER
1. This appeal filed by the Assessee is directed against the order of the Ld. CIT(A)-5, Ahmedabad dated 08.06.2018 pertaining to A.Y. 2012-13 and following grounds have been taken:
2 ITA No. 1771/Ahd/2018. A.Y. 2012-13
1. The Ld Commissioner of Income tax ( Appeals) erred in confirming the disallowance u/s 80P(2)(d) of the Income tax Act that of Rs. 114720/-being interest earned from Nationalised bank.
2. The Ld Commissioner of Income tax (Appeals) erred in not appreciating the fact that the an Overdraft facilities created on said FDR and the overdraft account used for routine day to day transaction of the assessee and an interest of Rs. 86478 paid for such overdraft facilities.
3. The Ld. Commissioner of Income tax (Appeals) erred in not consider net income for disallowance u/s 80P(2)(d) and disallowed Gross Interest received from Nationalised bank.
2. Facts of the case are that the appellant is a Staff Co-op. Credit Society carrying in an activity that of providing credit facilities to its members. The society apart from the operation fund has maintained liquid funds, as a short term deposit with the Canara Bank to meet any eventuality towards the repayment of the deposit. For that purpose, the society maintain Overdraft account against the FDR, which can be verified from the balance sheet of the Society, as well as over draft bank account statement which was filed on behalf of the assessee for day to day Banking Transactions are happened from the said account and OD interest charge is that of Rs. 86,478/-. And assessee has also made fixed deposit with the Canara Bank to maintain the liquidity to meet out the immediate liabilities arise. So far FDR with the Canara Bank is concerned FDR of Rs. 11,00,000/- is made and assessee has earned interest income of Rs. 1,14,721/- from Canara Bank. Ld. A.O. has disallowed the claim of the assessee of Rs. 1,14,721/- for the reason that said interest income has not been earned from members of the Society. On the contrary, this interest has been earned by the assessee from in its surplus fund in Canara Bank which is a nationalized Bank.
3. Thereafter, assessee preferred first statutory appeal before the ld. CIT(A) who confirmed the action of the ld. A.O. holding that similar disallowance were 3 ITA No. 1771/Ahd/2018 . A.Y. 2012-13 confirmed in assessee's own case in assessment year 2014-15 and on that basis, ld. CIT(A) confirmed the addition.
4. Now assessee has come before us and stated that addition should not be made in the hands of the assessee.
5. We have gone through the relevant record and impugned order. Assessee is a Staff Credit Co-op. Society and if society earns any interest income from providing loan/advances to its members that income is exempted u/s. 80P(2)(a)(i) for carrying on the business of banking or providing credit facilities to its member. In case before is that assessee has deposited surplus fund with the Canara Bank and earned interest income of Rs. 1,14,721/- and same cannot be exempted and same deduction cannot be allowed to the assessee. However, if any expenses have been incurred to earn the interest income that will be allowed to the appellant.
6. A similar view has been taken by the Co-ordinate Bench in the matter of ITO, Ward-3(4), Petlad (Baroda) vs. The Alarsa Nagrik Cooperative Bank Society Ltd. in ITA No. 2072/Ahd/2014 order dated 10.04.2017 wherein Co-ordinate Bench has held as under:
10. A perusal of this judgment would suggest that deduction under section 80P(2)1) is not available on the interest income earned on surplus money deposited with Nationalised Banks. But if assessee has incurred any expenditure, which is attributable to the earning of interest income, then, the AO shall examine that aspect and exclude the interest expenditure if any incurred by the assessee for earning this interest from bank. In other words, the only net interest income is to be excluded from the claim of deduction under section 80P(2) of the Act. Respectfully following the judgment of Hon'ble Gujarat Court we set aside by the orders of the Revenue authorities and restore this issue to the file of the AO for re-adjudication. The Id.AO shall work out net interest income earned by the 4 ITA No. 1771/Ahd/2018 . A.Y. 2012-13 assessee from the FDRs. with nationalized banks. He thereafter disallow that amount only from the exemption admissible to the assessee under section 80P(2).
11. We make it further clear that the assessee is a credit cooperative society. It is entitled for deduction under section 80P(2)(1) on the interest income earned by it from its members. The interest income earned on the investment of surplus fund with nationalized bank is only to be excluded from the claim of 80P(2)(a)(i) of the Act. The Id.AO shall carry out this exercise after providing due opportunity of hearing to the assessee.
12. In the result appeal of the assessee is allowed for statistical purpose.
7. Thus, in parity with the order of the Co-ordinate Bench, we set aside this matter to the file of the ld. A.O. with the direction that A.O. will examine if any expenditure has been incurred in order to earn interest income from the Nationalized Bank that should be excluded from the addition and thereafter will pass an order as per provisions of law.
8. In the result, appeal filed by the Assessee is allowed for statistical purposes.
Order pronounced in Open Court on 04- 12- 2019
Sd/- Sd/-
(AMARJIT SINGH) (MAHAVIR PRASAD)
ACCOUNTANT MEMBER True Copy JUDICIAL MEMBER
Ahmedabad: Dated 04/12/2019
Rajesh
Copy of the Order forwarded to:-
1. The Appellant.
2. The Respondent.
3. The CIT (Appeals) -
4. The CIT concerned.
5. The DR., ITAT, Ahmedabad.
6. Guard File.
By ORDER
Deputy/Asstt.Registrar
ITAT,Ahmedabad