MESERS THE HOSHIARPUR TELECOM EMPLOYEES COOP.THRIFT AND CREDIT SOCIETY LIMITED,HOSHIARPUR vs. DEPUTY COMMISSIONER OF INCOME,CIRCLE HOSHIARPUR, HOSHIARPUR

ITA 385/ASR/2018Status: DisposedITAT Amritsar05 April 2019AY 2015-169 pages
AI SummaryRemanded

What did the Tribunal hold?

The Tribunal held that the Commissioner of Income Tax (Appeals) erred in not distinguishing the case from the assessee's own preceding years (AY 2013-14 and AY 2014-15) where identical facts led to the deletion of similar disallowances. The Tribunal noted that the CIT(A) relied on the Supreme Court's decision in Totgar's Co-operative Society vs. ITO, which was distinguishable. The Tribunal reasoned that the term 'attributable to' in Section 80P(2)(a)(i) is broader than 'derived from' and covers receipts related to the business of providing credit facilities. The judgment in Totgar's case involved a society that also purchased agricultural produce from members and invested surplus funds in securities and short-term deposits, which was different from the present assessee whose core activity was providing credit and accepting deposits. The Tribunal found that the CIT(A)'s assumption that the funds were surplus/idle was contrary to the assessee's claim of business exigency. Therefore, the matter was restored to the CIT(A) for re-adjudication after necessary verification, considering the predecessor's view and the Tribunal's observations, with an opportunity for the assessee to be heard.

What were the facts?

The assessee, Hoshiarpur Telecom Employees Coop. Thrift & Credit Society Ltd., filed its return for AY 2015-16, claiming a deduction of Rs. 86,24,254/- under Section 80P(2) of the Income Tax Act, 1961. The Assessing Officer (AO) disallowed a deduction of Rs. 2,60,312/- claimed on interest income from bank deposits, viewing it as ineligible under Section 80P. The assessee's surplus funds of Rs. 25,43,50,900/- were advanced as loans to members, and Rs. 60,54,343/- was deposited in banks, earning interest. The Commissioner of Income Tax (Appeals) upheld the AO's disallowance, relying on the Supreme Court's decision in Totgar's Coop. Society. The assessee appealed to the ITAT, citing previous years' orders where similar disallowances were deleted.

What were the issues?

1. Whether the interest income earned by the assessee society on its bank deposits is eligible for deduction under Section 80P(2)(a)(i) read with Section 80P(2)(d) of the Income Tax Act, 1961, considering the ratio in M/s The Totgars Co-op. Sale Society Ltd. vs. ITO. Assessee's contentions: The assessee argued that the CIT(A) erred in confirming the addition, violating principles of natural justice and judicial discipline by not following the consistent view taken in its own case for the preceding two assessment years (AY 2013-14 and AY 2014-15) where similar disallowances were deleted. The assessee contended that the Hon'ble Apex Court's decision in Totgar's case was distinguishable as the assessee's primary activity was providing credit facilities and accepting deposits from members, and the funds were deposited due to business exigency, not as idle surplus. Reliance was placed on ITAT Bangalore Bench's decision in Honnali Credit Co-op Society Ltd. vs. ITO and Apex Court's decision in Radha Soami Satsang vs. CIT. Revenue's contentions: The judgment does not record specific contentions made by the Revenue.

Which sections of the Income-tax Act were involved?

Section 80P(2)(a)(i),Section 80P(2)(d),Section 143(3),Section 143(1),Section 143(2),Section 56

AI-generated summary — verify with the full judgment below

Income Tax Appellate Tribunal, Camp Bench at Jalandhar

Before: Shri N.K. Saini & Shri Ravish Sood

For Appellant: Shri J.S. Bhasin, A.R
For Respondent: Shri Lalit Mohan Jindal, D.R
Hearing: 16.01.2019Pronounced: 05.04.2019

PER RAVISH SOOD, JM

The present appeal filed by the assessee for A.Y. 2015-16 is directed against the order passed by the CIT(A)-1, Jalandhar, dated 30.03.2018, which in turn arises from the order passed by the A.O under Sec. 143(3) of the Income Tax Act, 1961 (for short IT Act), dated 31.10.2017. The assessee assailing the order of the CIT(A) has raised before us the following grounds of appeal:

“1, That the facts and the circumstances of the case, the Id. CIT(A) has grossly mi irected herself in arbitrarily confirming the addition of Rs.

The order continues below.

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