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Income Tax Appellate Tribunal, [ DELHI BENCH “F”: NEW DELHI ]
Before: SHRI KUL BHARATSHRI PRASHANT MAHARISHI
PER PRASHANT MAHARISHI, A. M.
This appeal is filed by the assessee i.e. Punjab National Bank All cadre co. thrift and credit Society Ltd (assessee/appellant) against the order passed by the learned Commissioner of income tax (appeals) – 18, New Delhi dated 16th of February 2017 for assessment year 2013 – 14 wherein the appeal filed by the assessee against the order of the income tax officer Ward – 52 (4), New Delhi (the learned AO) passed u/s 143 (3) of the income tax act, Page | 1
1961 (the act) was dismissed. Therefore, the assessee is aggrieved and has preferred this appeal raising following grounds of appeal.
Grounds of appeal raised are as under:- “ 1. That the order of the Learned CIT (Appeal)-18, New Delhi in confirming the total addition of Rs. 6,14,379/- is totally wrong, bad in law and needs to be quashed. 2. That the order of the Learned CIT (Appeal)-18, New Delhi in confirming the addition of Rs. 4,06,466/- being the amount of interest received by the assessee from the Banks on its FDR and Savings Bank Accounts claimed by him u/s 80P is totally wrong, bad in law and needs to be quashed. 3. That the order of the Learned CIT (Appeal)-18, New Delhi in confirming the addition of Rs.73,538/- being the amount of expenses incurred by the assessee as legal charges Rs.33,949/- and Rs.39,589/- towards audit fees is totally wrong, bad in law and needs to be quashed. The addition has been made as the assessee has not deducted TDS u/s 194J of the Income Tax Act, 1961. 4. That the order of the Learned CIT (Appeal)-18, New Delhi in confirming the addition of Rs. 1,34,375/- being the amount of Provision for Gratuity : claimed by the assessee in the income & expenditure account is totally wrong, bad in law and needs to be quashed. “
The brief facts of the case shows that assessee is a registered co-operative society of Punjab National Bank employees with the sole and exclusive objects to undertake theft and credit activities and to do welfare of member employees of the bank. Assessee is accepting deposits from its members who are employees of the Punjab National Bank as well as the membership admission fees. The funds are collected by the assessee society are being given to its members as loan is required by its members from time to time and any surplus money is put in bank FDRs for short period. During the year, the assessee has earned interest on savings bank account and interest on bank FDR s deposit receipts along with other income.
Assessee filed its return of income on 30/9/2013 declaring nil income, which was revised on 13/11/2013. The case of the assessee was selected for the scrutiny. The AO noted that assessee has received interest on bank fixed deposit receipts and interest on saving bank’s which is not exempt u/s 80 P of the act and is chargeable to tax. The assessee raised several contentions have the learned AO rejected them and following the decision of the honourable Delhi High Court in case of Mantola cooperative thrift and credit Society versus Commissioner of income tax (2014) 50 taxmann.com dated 27/8/2014 held that the income of the assessee is chargeable to tax and is not eligible for deduction u/s 80 P of the act. Therefore, the addition of Rs. 406466 was made. The learned assessing officer further found that assessee has paid legal and professional charges of ₹ 73,538/– on which no tax has been deducted and therefore same is this allowable u/s 40 (a) (I a) of the act. Thus, the disallowance was made. Further the learned assessing officer noted that assessee has made a provision for gratuity of ₹ 134,003 and 75/–, according to him the provision of the gratuity is not allowable as expenses and therefore he disallowed the above sum. Accordingly the total income of the assessee was determined at ₹ 614,380/– by passing an order u/s 143 (3) of the income tax act on 31 December 2015. 05. The assessee aggrieved with the order preferred an appeal before the learned CIT – A who confirmed all the above three disallowances and therefore assessee has filed this appeal. 06. The assessee was issued notice by the registered post intimating the date of hearing on 4/8/2021. We have received an acknowledgement from the post office dated 27/7/21 with remark “left”. We have also verified whether notice has been issued to the assessee at the correct address or not and we find that it has been issued as per address mentioned in column number 10 of form number 36. It is the appeal filed by the assessee. Therefore, it is the duty of the assessee/appellant to intimate if there is any change in the address after filing of the appeal. We do not find any such notification/information available with the registry. As it is appeal filed by assessee and not by the learned assessing officer, it is unfair also to direct
the learned assessing officer to serve the notice on the assessee. As on the appointed date none appeared on behalf of the assessee at the appointed time, there is no information available with the registry to where the notice should be sounded to the assessee. Similarly, on earlier four occasions the assessee did not remain present. Therefore, we do not have any other option but to decide the appeal on merits of the case as per information available on record. 07. The learned departmental representative vehemently supported the order of the lower authorities. 08. The first ground of appeal is with respect to the addition made by the learned assessing officer with respect to the income earned by the assessee co-operative society from the bank on its fixed deposit receipts and savings bank account amounting to Rs. 406466/-. The learned CIT – A and the learned assessing officer has correctly held that above deduction is not available to the assessee under the provisions of Section 80 P (2). The views of the lower authorities are also supported by the decision of the honourable Delhi High Court in case of Mantola Credit cooperative societies Ltd [2014] 50 taxmann.com 278 (Delhi)/[2015] 229 Taxman 68 (Delhi) where on Delhi High Court has held that Where assessee, a co-operative society, engaged in providing credit facilities to its members, deposited surplus funds in fixed deposits and earned interest thereon, said interest would be assessable as 'income from other sources' and, thus, not eligible for deduction under section 80P(2)(a)(i). In view of this ground, number 2 of the appeal of assessee is dismissed. 09. The second ground of appeal is with respect to the addition/disallowance made by the learned assessing officer of legal and professional charges amounting to ₹ 73,538/– paid without deduction of tax at source where the tax should have been required to be deducted u/s 194J of the income tax act 1961. We find that admittedly the assessee has not deducted tax at source however before making a disallowance u/s 40 (a) (ia) of the act the second proviso inserted therein should have been required to be applied in the case of the assessee. If the assessee grows before the assessing officer
by filing the requisite forms and certificate that the payee has offered the above amount as its income and has also complied the conditions mentioned therein, the disallowance deserves to be deleted. In view of this, we give one more opportunity to the assessee to the approved before the learned assessing officer that the case of the assessee with respect to the above disallowances covered by the second proviso to Section 40 (a) of the act. Accordingly, ground number 3 of the appeal of the assessee is allowed with above direction. 10. Ground number four is with respect to the disallowance of the provision of gratuity of ₹ 134,375/– debited by the assessee to the profit and loss account. Admittedly the provision of the gratuity is not allowable as deduction under the provisions of Section 40 A (7) of the act unless the same is paid before the due date of filing of the return of income. The fact shows that the assessee has made a provision of gratuity for 2 employees of the society. No details are available with the assessee has paid the above sum to any approved gratuity fund or not. If the assessee has deposited the above sum with the approved gratuity fund that the assessee is eligible for deduction of the above sum in case the above contribution is been deposited with the approved gratuity fund on or before the due date of filing of the return of income. As this information is not available on record we set-aside the whole ground back to the file of the learned assessing officer with a direction to the assessee to show before the learned assessing officer that the above sum has been paid to the approved gratuity fund on or before the due date of filing of the return of income. Accordingly, ground number 4 of the appeal is allowed with above direction. 11. In view of this, the appeal of the assessee is partly allowed for statistical purposes. 12. Order pronounced in the open court on conclusion of hearing on 04/08/2021 -Sd/- -Sd/- ( KUL BHARAT ) (PRASHANT MAHARISHI) JUDICIAL MEMBER ACCOUNTANT MEMBER
Dated : 04/08/2021. *MEHTA*