Income Tax Appellate Tribunal - Ahmedabad
Srp Group -Ii Sahakari Mandali Ltd.,, ... vs The Assistant Commissioner Of Income ... on 31 July, 2018
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IN THE INCOME TAX APPELLATE TRIBUNAL
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BEFORE SHRI WASEEM AHMED, ACCOUNTANT MEMBER
And SMT MADHUMITA ROY, JUDICIAL MEMBER
आयकर अपील सं./I.T.A.No. 1069/Ahd/2017
( नधा रण वष / Assessment Year : 2014-15)
SRP Group - II Sarafi बनाम/ ACIT,
Sahakari Mandali Ltd., Vs. Circle - 7(2),
SRP Campus Saijpur Bogha, Ahmedabad.
Naroda,
Ahmedabad - 382 346
थायी ले खा सं . /जीआइआर सं . / PAN/GIR No. : AABAS 6542 H
(अपीलाथ /Appellant) .. ( यथ / Respondent)
अपीलाथ ओर से / Appellant by : Shri Pritesh Shah, A.R.
यथ क ओर से/Respondent by : Shri Prasoon Kabra, Sr. D.R.
ु वाई क तार ख /
सन Date of Hearing 26/06/2018
घोषणा क तार ख /Date of Pronounce ment 31/07/2018
आदे श / O R D E R
PER WASEEM AHMED, ACCOUNTANT MEMBER:
The captioned appeal has been filed at the instance of the Assessee against the order of the Commissioner of Income Tax(Appeals)-7, Ahmedabad [CIT(A) in short] vide appeal no.CIT(A)-7/81/16-17 dated 29.03.2017 arising in the matter of assessment order passed under s.143(3) of the Income Tax Act, 1961 (hereinafter referred to as "the Act") dated 05.08.2016 relevant to Assessment Year (AY) 2014-15.
ITA No.1069/Ahd/2017SRP Group - II, Sarafi Sahakari Mandali Ltd. Vs. ACIT Asst.Year -2014-15 -2-
2. The grounds of appeal raised by the assessee are as under:-
"1. The learned CIT(A) erred in law and on facts in confirming the disallowance of deduction of Rs.6,88,172/- under section 80P of the Income Tax Act, 1961, such deduction is requested be allowed.
2. The learned CIT(A) erred in confirming the allocation all the common expenses towards interest income only and reduction of deduction under section 80P by the AO, such expenses are requested to be allotted to all the incomes.
3. The learned CIT(A) erred in confirming the non granting exemption under section 80P(2)(c) of the Income Tax Act, 1961, of Rs.1,00,000/- from the Income of the assessee society, such exemption is requested to be granted."
3. Ground no. 3 was not pressed by the assessee therefore same is dismissed as not pressed.
4. The only issue raised by the assessee in ground no.1 & 2 is that ld. CIT(A) erred in confirming the disallowance made by the AO u/s 80P(2)(a)(i) of the Act for Rs.6,88,172/- only.
5. Briefly stated facts are that the assessee is a Cooperative Credit Society and engaged in providing credit facility to the members as well as in the trading/business activities including LPG bottle refilling, the sale of poultry items like chicken/eggs, Bakery items, Milk-Ice Cream, Provision/Grain and pulses, Sweet Shop, etc. The assessee society is also run STD/PCO booth. Other than these the assessee society was also authorized by Torrent Power Limited for the collection of electricity bills on behalf of the company and getting a commission for that.
ITA No.1069/Ahd/2017SRP Group - II, Sarafi Sahakari Mandali Ltd. Vs. ACIT Asst.Year -2014-15 -3- The assessee from all the activities as stated above has shown a net profit of Rs. 26,60,050/- only including interest income on loan given to the members. The entire amount of that profit was claimed as exempted u/s 80P of the Act. On a question by the AO about the deduction claimed by the assessee u/s 80P of the Act, the assessee submitted that its activities are limited to the Government staff and carried out at its campus only. Accordingly, the assessee claimed that its income is exempted u/s 80P(2)(a)(i) / 80P(2)(a)(iv) and 80P(2)(a)(vi) of the Act.
The assessee also claimed that it had prepared separate profit and loss account for each of its activities. The assessee in its profit and loss account has shown following income:
Sr. Business Activities Net Profit in
No. Rs.
1. Net Interest Income (Balance of returned income 1871878
less net income earned from other business activating mentioned below from Sr. No.2 to 9)
2. ATM Rent 60000
3. Torrent Bill commission 60731
4. Mineral Water Sale 95100
5. Gas distribution 419797 6. Provision / Grain Store 752
7. Bakery 45000
8. Consumer Rent 36000
9. Torrent Power Deposit Interest 17440
10. SBI interest 53067 11. ICICI Bank interest 285 Total 788172 The assessee also claimed that it is also eligible for exemption of Rs.1,00,000/- u/s 80P(2)(c) of the Act.
ITA No.1069/Ahd/2017SRP Group - II, Sarafi Sahakari Mandali Ltd. Vs. ACIT Asst.Year -2014-15 -4- However, the ld. AO disregarded the contention of the assessee and held that the assessee is eligible for deduction u/s 80P(2)(a)(i) of the Act only for the amount earned from the financing activities with the members. Accordingly, the AO disallowed the deduction claimed by the assessee for Rs.6,88,172/- (7,88,172 - 1,00,000, i.e. deduction u/s 80P(2)(c) ) and added to the total income of the assessee.
6. Aggrieved, assessee preferred an appeal to ld. CIT(A) who confirmed the order of AO.
Being aggrieved by order of ld. CIT(A) assessee is in appeal before us.
The ld. AR before us fairly conceded that it is not eligible for deduction u/s 80P(2)(a)(i) of the Act other than the income earned from the financing activities with the members. However, the Counsel for the assessee before us claimed that before disallowing the deduction u/s 80P of the Act in respect of other income as discussed above, the AO should have allowed the claimed of the expenses incurred by the assessee in relation to such other income not eligible for deduction u/s 80P of the Act. In support of his contention, ld. AR submitted that in the identical facts and circumstances, the Hon'ble ITAT in the A.Y. 2012-13 in the own case of the assessee has directed to allow the expenses incurred in relation to concern income. Accordingly, the ld. AR prayed before us to give the direction to the lower authorities for allowing the expenses ITA No.1069/Ahd/2017 SRP Group - II, Sarafi Sahakari Mandali Ltd. Vs. ACIT Asst.Year -2014-15 -5- incurred by it in relation to other income not eligible for deduction u/s 80P of the Act.
On the other hand, ld. DR did not object if the matter restore back to the file of the AO for allocating the expenses among all the heads of incomes as discussed above and for fresh adjudication in accordance with the law.
7. We have heard the rival contentions and perused the materials available on record. At the outset, we find identical facts and circumstances in the own case of the assessee pertaining to the A.Y. 2012-13 in ITA No.3284/Ahd/2015; the ITAT has given the direction to allocate the expenses among different heads of income. The relevant extract of the order is reproduced below:
"11. Before us, the ld. counsel for the assessee reiterated the claim of exemption. There is no dispute that the assessee society is registered as "Credit Co-operative Society" and not as "Labour Co-operative Society" which are meant for providing the labour force in bulk as per requirement of the vendors. Therefore, we do not find any merit in the claim of the assessee because Section 80P(2)(a)(vi) provides for "the collective disposal of labour of its members".
12. In our considered opinion, the assessee society do not fit into this category and hence not eligible for exemption. We decline to interfere with the findings of the First Appellate Authority. However, the Id. counsel has also taken an alternative plea that the A.O. has allocated all the expenses to the income under head "interest", In our considered opinion, the general expenses should have been allocated proportionately to interest income and income from other activities. To this extent, we find the finding of the ld. CIT(A) is erroneous and we accordingly modify the same with the direction to the A.O. to allocate expenses proportionately between the interest income and income from ITA No.1069/Ahd/2017 SRP Group - II, Sarafi Sahakari Mandali Ltd. Vs. ACIT Asst.Year -2014-15 -6- other activities. With these directions, ground no. 1 is treated as allowed for statistical purpose in part."
Respectfully following the same, we direct the AO to disallow the deduction claimed u/s 80P(2)(a)(i) of the Act in respect of other income not eligible for deduction u/s 80P(2)(a)(i) of the Act. However, we direct the AO to exclude the amount of net income from the deduction claimed u/s 80P(2)(a)(i) of the Act. Thus the AO will allow the expenses incurred by the assessee in the earning of such income not eligible for deduction under section 80P(2)(a)(i) of the Act. Hence, grounds of appeal filed by the assessee are allowed for statistical purposes.
8. In the result, the appeal of the assessee is allowed for statistical purpose.
This Order pronounced in Open Court on 31/07/2018
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(MADHUMITA ROY) (WASEEM AHMED)
JUDICIAL MEMBER ACCOUNTANT MEMBER
Ahmedabad; Dated 31/07/2018
Priti Yadav, Sr.PS
ITA No.1069/Ahd/2017
SRP Group - II, Sarafi Sahakari Mandali Ltd. Vs. ACIT Asst.Year -2014-15 -7- आदे श क त"ल#प अ$े#षत/Copy of the Order forwarded to :
1. अपीलाथ / The Appellant
2. यथ / The Respondent.
3. संबं'धत आयकर आयु)त / Concerned CIT
4. आयकर आय) ु त(अपील) / The CIT(A)-7, Ahmedabad.
5. ,वभागीय /त/न'ध, आयकर अपील य अ'धकरण, अहमदाबाद / DR, ITAT, Ahmedabad
6. गाड4 फाईल / Guard file.
आदे शानुसार/ BY ORDER, स या,पत /त //True Copy// उप/सहायक पंजीकार (Dy./Asstt.Registrar) आयकर अपील य अ धकरण, अहमदाबाद / ITAT, Ahmedabad