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Income Tax Appellate Tribunal, HYDERABAD BENCHES “A” : HYDERABAD
Before: SHRI S.S.GODARA & SHRI LAXMI PRASAD SAHU
IN THE INCOME TAX APPELLATE TRIBUNAL HYDERABAD BENCHES “A” : HYDERABAD (THROUGH VIDEO CONFERENCE)
BEFORE SHRI S.S.GODARA, JUDICIAL MEMBER AND SHRI LAXMI PRASAD SAHU, ACCOUNTANT MEMBER
I.T.A. No. 2069/HYD/2017 Assessment Year: 2012-13 M/s.Andhra Pradesh State Dy. Commissioner of Vs Financial Corporation, Income Tax, HYDERABAD Circle-1(1), [PAN: AABCA9106B] HYDERABAD (Appellant) (Respondent)
For Revenue : Shri Sunil Kumar Pandey, DR For Assessee : NONE
Date of Hearing : 21-01-2021 Date of Pronouncement : 08-02-2021
O R D E R PER BENCH : This Revenue’s appeal for AY.2012-13 arises from the CIT(A)-8, Hyderabad’s order dated 27-09-2017 passed in case No.0081/CIT(A)-8/Hyd/2016-17 involving proceedings u/s.143(3) of the Income Tax Act, 1961 [in short, ‘the Act’].
The Revenue has raised the following substantive grounds in the instant appeal:
ii. The Ld.CIT(A) erred in allowing other income of Rs.2715.19 lakhs out of Rs.3768.80 lakhs without giving any finding that the receipts are from eligible business for computing deduction u/s.36(1)(viii).
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iii. The Ld.CIT(A) erred in accepting the working of the assessee without giving any finding that receipts included in other income were from eligible business for the purpose of deduction u/s.36(1)(viii).
Mr.Pandey at the outset took us to the CIT(A)’s detailed discussion qua the instant sole issue of Section 36(1)(viii) deduction reading as under:
“5. The appellant claimed deduction u/s.36(1)(viii) of Rs.18,24,11,223/-· The AO noted that the deduction under such section shall be restricted to 20% of the profits derived from eligible business only on the operating banking/finance business excluding any income on account of investment from other income. He therefore, concluded that "other income" of Rs.37,68,80,800/- has to be reduced while calculating the deduction. He accordingly arrived excess claim of deduction which is shown as under:-
Operating profit of assessee 112,12,40,000 Less: other income 37,68,80,000 Eligible income 74,43,60,000 Actual deduction should be (20% of 14,88,72,000 eligible income) Excess claim of deduction 3,35,39,223 (18,24,11,223 – 14,88,72,000)
5.1 The above action of the AO was contested in Ground No.4 of appeal. Before me, the AR submitted a letter dated 25.2.2015 giving the working of deduction claimed u/s.36(1)(viii) which was filed before the AO. The working filed before the AO is as under:-
Operating profit 11212.40 Less: Incentive claimed on payment basis 300.00 Add: Depreciation adjustment 14.00 Less: Profit on sale of investments, assets and dividend received 7.69 Less: Interest on staff advances 99.63 Less: Interest on bank deposits 191.39 Less: Rents received 178.99 Other income 289.91 1053.61 Business from normal activities 10158.79 Ratio of Long term and other than long 89.78/10.22 term business Profit attributable to Long term loans 9120.56
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5.2 The AR further submitted that the above mentioned working is on the same lines as in earlier years and the AO did not alter the working in the earlier years and enclosed copies of assessment orders for the AYs 2010-11, 2011-12 and 2013-14 in support of the claim. It was submitted that "other income" which has no relevance to the business has been excluded and the deduction has been calculated accordingly.
5.3 I have carefully considered the issue and the submissions made by AR. Section 36(1)(viii) is a deduction allowed in respect of special reserve created and maintained by a specified entity as per the explanation, which includes a State Finance Corporation, of an amount not exceeding 20% of profits derived from the eligible business, computed from the profits of the business carried to such relevant account. Eligible business has been defined as the business to provide long term loans for industrialists and entrepreneurs or for agricultural development etc. Schedule K to the P&L Ale gives details of other income totaling to Rs.3768.80 lakhs. The appellant has reduced interest on bank deposits, interest on staff advances, rents received and other income of Rs.289.91 lakhs totaling to Rs.1053.61 lakhs from the said "other income" for computing the deduction. Thus, working given by the appellant for arriving at the profit derived from eligible business is in accordance with provisions of 5ection 36(1)(Viii). It appears that the AO has simply reduced the entire amount of Rs.3768.80 lakhs shown as "other income" in Schedule-K, without going to individual items. In View of the above, the disallowance made by the AO is deleted and the ground of appeal is allowed”.
It is vehemently contended at the Revenue’s behest that the Assessing Officer had rightly found discrepancies in assessee’s details in the above extracted chart (supra) that its other income had been wrongly taken as eligible for deduction. Mr.Pandey therefore argued in favour of the assessment findings that the same had rightly been added in the assessee’s hands being in violation of Section 36(1)(viii) of the Act. We find no substance in Revenue’s foregoing arguments since it has been made clear in the CIT(A)’s order that the assessee had not only filed details in support of its income from the eligible business but also that forming the other
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income including interest from bank deposits and staff advances etc. These clinching factual findings have gone un- rebutted from the Revenue’s side during the course of hearing. We respectfully follow the same to affirm the CIT(A)’s order deleting the impugned disallowance. We also deem it proper to quote Hon'ble apex court’s decision in CIT Vs. K.Y.Pilliah (1967) [63 ITR 411] (SC) that the tribunal need not dig deeper and give its own findings once it has expressed complete agreement with the lower appellate conclusion.
This Revenue’s appeal is dismissed.
Order pronounced in the open court on 8th February, 2021
Sd/- Sd/- (LAXMI PRASAD SAHU) (S.S.GODARA) ACCOUNTANT MEMBER JUDICIAL MEMBER Hyderabad, Dated: 08-02-2021 TNMM
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Copy to : 1.The Deputy Commissioner of Income Tax, Circle-1(1), Hyderabad. 2.M/s.Andhra Pradesh State Financial Corporation, 5-9-194, Chirag Ali Lane, Hyderabad. 3.CIT(Appeals)-8, Hyderabad. 4.Pr.CIT-1, Hyderabad. 5.D.R. ITAT, Hyderabad. 6.Guard File.