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Income Tax Appellate Tribunal, AHMEDABAD - BENCH ‘C’
Before: SHRI RAJPAL YADAV & SHRI AMARJIT SINGH
आयकर अपील�य अ�धकरण, अहमदाबाद �यायपीठ - अहमदाबाद । IN THE INCOME TAX APPELLATE TRIBUNAL AHMEDABAD - BENCH ‘C’
BEFORE SHRI RAJPAL YADAV, JUDICIAL MEMBER AND SHRI AMARJIT SINGH, ACCOUNTANT MEMBER आयकर अपील सं./ ITA No.1636/Ahd/2017 �नधा�रण वष�/Asstt. Year: 2014-15
The Agriculture Development Vs. ITO, Patan Ward-4 Unjha. Co-op. Credit Society Ltd. Zapali Pole Sidhpur 384 141. PAN : AAAAA 1055 C
अपीलाथ�/ (Appellant) �त् यथ�/ (Respondent)
Assessee by : Shri H.V. Doshi, AR Revenue by : Shri Ranjankumar Singh, Sr.DR
सुनवाई क� तार�ख/Date of Hearing : 06/12/2018 घोषणा क� तार�ख /Date of Pronouncement: 16/01/2019 आदेश/O R D E R PER AMARJIT SINGH, ACCOUNTANT MEMBER:
This is assessee’s appeal order of ld.CIT(A), Gandhinagar, Ahmedabad dated 8.5.2017 passed for the assessment year 2014-15.
Assessee has raised solitary ground in its appeal on the issue that the ld.CIT(A) has erred in confirming the addition made by the AO of Rs.10,04,064/- which was claimed by the assessee as deduction under section 80P(2)(a)(i) of the Income Tax Act, 1961.
Brief facts of the case are that the assessee is a cooperative society engaged in providing credit facilities to its members by
ITA No.1636/Ahd/2017
accepting deposits, saving etc. and providing loans and advances for agricultural purposes to its members. It has filed its return of income on 18.1.2014 declaring total income at Rs.14,820/-. In scrutiny assessment the ld.AO noticed that the assessee has earned interest income of Rs.1,32,34,056/- out of which an amount of Rs.39,34,892/- was earned by the assessee from non-cooperative/nationalized banks. In other words, out of total interest income of Rs.1,32,34,056/-, an amount of Rs.32,46,699/- was earned from DCB Bank towards FDR deposits and an amount of Rs.6,88,193/- from Sardar Sarovar Nigam Ltd., as interest income. The AO was of view that this amount of Rs.39,34,892/- since earned from non-cooperative bank/nationalized banks, the same has to be treated as income chargeable under the tax “Income from other sources”, accordingly, the ld.AO by issuing show cause notice, proposed addition of this amount under the provisions of section 56 of the Act. The assessee in its reply submitted that the assessee a primary agriculture credit society providing credit facilities to its members for agriculture purpose. The assessee further pleaded that it has required to maintain liquid funds, therefore, a portion of fund has to be invested even if it is required for giving loan to its members. The funds invested with banks was not surplus funds, rather it was working capital to meet immediate requirement. The assessee also relied upon, amongst other, decision of the ITAT in the case of Jafari Momin Vikas Co-op. Credit Society, in ITA No.1491Ahd/2012 to support its case. However, the ld.AO did not accept these submissions of the assessee and relying on earlier decisions of the ld.CIT(A) in the assessee’s own case, made addition of Rs.10,04,064/- after considering proportionate expenses allowable to the assessee for earning such income. Aggrieved assessee preferred first appeal before the ld.CIT(A), who after considering the submissions of the assessee confirmed by the order of
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the ld.AO. The assessee is now before the Tribunal against confirmation of addition.
Before us, the ld.counsel for the assessee has filed written submissions, which is more or less on similar line as pleaded before the ld.Revenue authorities. The ld.counsel prayed for setting aside impugned orders of the Revenue authorities and allowance of deduction under section 80P(2)(a)(i) of the Act.
On the other hand, the ld.DR submitted that issue is covered in favour of the Revenue by judgment of the Hon’ble jurisdictional High Court in the case of State Bank of India Co-operative Society Vs. CIT, 72 taxmann.com 64 (Guj) wherein it has been held that cooperative society engaged in the business of providing credit facilities to its members which earns interest income on the surplus funds parked with the nationalised banks, is not eligible for deduction under section 80P(2)(a)(i) of the Act. Since impugned orders of Revenue authorities are in consonance with judgment of the Hon’ble High Court cited supra, no interference thereof is required and the appeal of the assessee may be dismissed.
Having heard both the parties and on perusal of the record, we find that Assessee is a cooperative society registered under Gujarat Co- operative Societies Act, 1961 and engaged in providing credit facilities to its members. We find that Hon’ble jurisdictional High Court in the case of State of India (supra) has held that interest earned from investment made in scheduled bank by a cooperative society engaged in providing credit facilities to its members, is not eligible for deduction under section 80P(2). The Tribunal in earlier occasions on similar issue has taken a consistent view by following above judgment of the Hon’ble jurisdictional High Court. Since orders of the Revenue authorities are in
ITA No.1636/Ahd/2017
accordance with judgment of the Hon’ble jurisdictional High Court cited supra, no interfere is called for in the impugned orders, which we confirm. However, any expenditure incurred by the assessee for earning such income could be allowed to it, if not already allowed. In other words, the AO has to allow prorata expenses in respect of interest income earned from deposits held with nationalized bank for computing deduction under section 80P(2) of the Act.
In the result, appeal of the assessee is partly allowed for statistical purpose.
Order pronounced in the Court on 16th January, 2019 at Ahmedabad.
Sd/- Sd/- (RAJPAL YADAV) (AMARJIT SINGH) JUDICIAL MEMBER ACCOUNTANT MEMBER