STATE BANK OF INDIA STAFF CO-OPERATIVE CREDIT SOCIETY LTD,SOLAPUR vs. INCOME-TAX OFFICER, WARD - 1(1), SOLAPUR

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ITA 765/PUN/2018Status: DisposedITAT Pune10 January 2019AY 2014-154 pages
AI SummaryPartly Allowed

What did the Tribunal hold?

The Tribunal held that interest income earned on fixed deposits with scheduled banks constitutes business income for a co-operative society and is eligible for deduction under Section 80P(2)(a)(i).

What were the facts?

The assessee, a co-operative society, claimed deduction under Section 80P(2)(a)(i) for interest earned on Fixed Deposits with a bank. The AO disallowed this, treating it as income from other sources.

What were the issues?

Whether interest income on FDRs held with a bank is eligible for deduction under Section 80P(2)(a)(i) for a co-operative society, and whether charging of interest under sections 234A, 234B, and 234C is justified.

Which sections of the Income-tax Act were involved?

Section 80P(2)(a)(i),Section 234A,Section 234B,Section 234C

AI-generated summary — verify with the full judgment below

Income Tax Appellate Tribunal, “SMC” BENCH, PUNE

Before: SHRI VIKAS AWASTHY, JM

For Appellant: Shri S.N. Puranik
For Respondent: Shri Rajesh Gawali

आदेश / ORDER

PER VIKAS AWASTHY, JM :

This appeal by the assessee is directed against the order of Commissioner of Income Tax (Appeals)-7, Pune dated 24-01-2018 for the assessment year 2014-15.

2.

The assessee has assailed the order of Commissioner of Income Tax (Appeals) by raising following grounds : “1. Learned CIT(A) has erred in confirming the disallowance of Rs.9,78,877/- u/s 80P (2) (a) (i) alleging that interest on FD with State

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Bank of India is Income from other source and not eligible for deduction vi] s 80P (2) (a) (i). Appellant prays to hold the same as eligible for deduction u/ s 80P(2) (a) (i) 2. Without prejudice to ground No. 1 above commissioner (Appeals) has erred in not allowing deduction of Proportionate Interest expenditure on FD Investment against Interest earned on FD. 3. Appellant prays for just and equitable relief. 4. Without prejudice to ground No. 1 and 2 CIT(A) has erred in not accepting returned income as only taxable Income of the appellant, appellant prays cancellation of addition made. 5. Appellant denies Liability to Interest u/s 234A, 234B, 234C. 6. Appellant prays for cancellation of Interest charged is] s 234A, B, C. 7. Appellant prays to add, alter, amend, and/or withdraw the Ground/s as occasion may demand.”

3.

Shri S.N. Puranik appearing on behalf of the assessee submitted at the outset that the ground No. 1 raised in the appeals is squarely covered by the decision of Co-ordinate Bench of the Tribunal in assessee’s own case for assessment year 2011-12 in ITA No. 968/PUN/2017 decided on 25-05-2018.

4.

Shri Rajesh Gawali representing the Department vehemently defended the order of Commissioner of Income Tax (Appeals). However, the ld. DR fairly admitted that the issue raised in present appeal is identical to the one adjudicated by the Tribunal in assessee’s own case in earlier assessment year.

5.

Both sides heard. Orders of the authorities below perused. In ground No. 1 of the appeal the assessee has assailed disallowance of interest on FD with State Bank of India Rs.9,78,877/- u/s. 80P(2)(a)(i) of the Act. The stand of the Revenue is that the interest income earned by

3 ITA No. 765/PUN/2018, A.Y. 2014-15

the assessee Co-operative Society is not eligible for deduction u/s. 80P(2)(a)(i) of the Act. We find that the identical disallowance was made in the case of assessee in assessment year 2011-12. The matter travelled to the Tribunal in ITA No. 968/PUN/2017 (supra). The Co-ordinate Bench of the Tribunal following the decision in the case of Baliraja Gramin Bigarsheti Sahakari Pat Sanstha Maryadit Vs. Income Tax Officer in ITA Nos. 50 & 51/PUN/2017 for the assessment years 2013-14 and 2012-13 decided on 26-03-2018 concluded as under : “From the above, it is evident that the Pune Bench of the Tribunal took a view in favour of the assessee after considering the judgment of Hon’ble Supreme Court in the case of Totgars’ Cooperative Sale Society Ltd. Vs. ITO (supra) and also the judgment of Hon’ble Delhi High Court in the case of Mantola Co-operative Thrift & Credit Society Ltd. Vs. CIT (supra) apart from others cited above. Considering the precedent on the same issue by the Coordinate Bench of the Tribunal, I am of the opinion that the assessee is entitled to deduction u/s.80P(2)(a)(i) in respect of the interest income earned on fixed deposits kept with the Nationalized Banks/Scheduled Banks and the same constitute as business income of the assessee. Accordingly, the only ground raised by the assessee is allowed in favour of the assessee.”

6.

No judgment/material has been furnished by the Revenue controverting the findings of Co-ordinate Bench or to show that the facts in the present case are at variance. Thus, in view of identical set of facts, following the decision of Co-ordinate Bench, ground No. 1 raised in the appeal by the assessee is allowed.

7.

In ground Nos. 2, 3 and 4 of the appeal the assessee has raised alternate contentions. Since, the ground No. 1 of the appeal has been accepted, the alternate contentions raised in ground Nos. 2 to 4 have become academic and thus are not deliberated upon.

8.

In ground Nos. 5 and 6 of the appeal, the assessee has assailed charging of interest u/s. 234A, 234B and 234C of the Act. Charging of

4 ITA No. 765/PUN/2018, A.Y. 2014-15

interest u/s. 234A, 234B and 234C is consequential and mandatory, hence, ground Nos. 5 and 6 raised in appeal by the assessee are dismissed being devoid of any merit.

9.

The ground No. 7 is general in nature, hence, requires no adjudication.

10.

In the result, the appeal of assessee is partly allowed.

Order pronounced on Thursday, the 10th day of January, 2019.

Sd/- (ववकास अवस्थी / Vikas Awasthy) न्याययक सदस्य / JUDICIAL MEMBER

ऩुणे / Pune; ददनाांक / Dated : 10th January, 2019 RK आदेश की प्रयिलऱवऩ अग्रेवर्ि / Copy of the Order forwarded to : अऩीऱाथी / The Appellant. 1. प्रत्यथी / The Respondent. 2. आयकर आयुक्त (अऩीऱ) / The CIT(A)-7, Pune 3. 4. The Pr. Commissioner of Income Tax-6, Pune ववभागीय प्रयतयनधध, आयकर अऩीऱीय अधधकरण, “एक-सदस्य मामऱा” बेंच, 5. ऩुणे / DR, ITAT, “SMC” Bench, Pune. गार्ड फ़ाइऱ / Guard File. 6. //सत्यावऩत प्रयत // True Copy// आदेशानुसार / BY ORDER,

यनजी सधचव / Private Secretary, आयकर अऩीऱीय अधधकरण, ऩुणे / ITAT, Pune

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