M/S. JAFARI MOMIN VIKAS CO-OP. CREDIT SOCIETY LTD.,PATAN vs. THE INCOME TAX OFFICER, WARD-2, PATAN

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ITA 2321/AHD/2014Status: DisposedITAT Ahmedabad28 August 2018AY 2010-113 pages
AI SummaryPartly Allowed

What did the Tribunal hold?

The Tribunal confirmed the denial of deduction under Section 80P(2)(a)(i) based on the High Court's ruling. However, it directed the AO to allow proportionate administrative and financial expenses incurred for earning such interest income.

What were the facts?

The assessee, a cooperative society providing credit facilities to its members, claimed deduction under Section 80P(2)(a)(i) for interest income earned on FDRs. The Assessing Officer and CIT(A) denied this deduction, relying on a jurisdictional High Court judgment.

What were the issues?

Whether interest income earned by a cooperative society on surplus funds parked with banks is eligible for deduction under Section 80P(2)(a)(i), and if not, whether expenses incurred for earning such income are allowable.

Which sections of the Income-tax Act were involved?

Section 80P(2)(a)(i)

AI-generated summary — verify with the full judgment below

Cases cited in this judgment(1)Show list

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Income Tax Appellate Tribunal, AHMEDABAD – BENCH ‘A’

Before: SHRI RAJPAL YADAV & SHRI WASEEM AHMED

For Appellant: Shri H.V. Doshi, AR
For Respondent: Shri S.K. Dev, SR.DR
Hearing: 14/08/2018Pronounced: 28/08/2018

आयकर अपील�य अ�धकरण, अहमदाबाद �यायपीठ - अहमदाबाद । IN THE INCOME TAX APPELLATE TRIBUNAL AHMEDABAD – BENCH ‘A’

BEFORE SHRI RAJPAL YADAV, JUDICIAL MEMBER AND SHRI WASEEM AHMED, ACCOUNTANT MEMBER आयकर अपील सं./ ITA No. 2320, 2321 and 2322/Ahd/2014 �नधा�रण वष�/Assessment Year: 2007-08, 2010-11 and 2011-12

M/s.Jafari Momin Vikas Co-op. ITO, ward-2 Credit Society Vs Patan. At-Kakoshi, Ta-Siddhpur Dist – Patan अपीलाथ�/ (Appellant) �� यथ�/ (Respondent) Assessee by : Shri H.V. Doshi, AR Revenue by : Shri S.K. Dev, SR.DR

सुनवाई क� तार�ख/Date of Hearing : 14/08/2018 घोषणा क� तार�ख /Date of Pronouncement : 28/08/2018 O R D E R PER RAJPAL YADAV, JUDICIAL MEMBER : Present three appeals directed at the instance of the assessee against orders of ld.CIT(A), Gandhinagar, Ahmedabad of even dated 19.5.2014 passed for above three assessment years.

2.

Common issue raised in these three appeals are against the order of the ld.CIT(A), whereby the ld.CIT(A) confirmed order of the assessing officer AO in denying deduction under section 80P(2)(a)(i) of the Income Tax Act, 1961. Facts in all these appeals are common except variation in quantum, therefore, we proceed to dispose of all these appeals by this common order.

ITA No.2320/Ahd/2014 – 2 Others - 2 -

3.

At the outset, 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 all the appeals of the assessee may be dismissed. However, the ld.counsel for the assessee does not contest judgment of Hon’ble Gujarat High Court, but submitted that in case claim of the assessee is not found to be admissible, then proportionate administrative and financial expenses incurred for earning such interest/investment income be allowed to the assessee.

4.

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. The assessee-society has filed return of income declaring NIL income, after claiming deduction under section 80P(2)(a)(i) for the interest income earned on FDRs. with the banks. This claim was denied by the AO on the ground that provisions of section 80P(2)(a)(i) does not cover assessee-society. The ld.CIT(A) concurred with the order of the AO by relying upon the judgment of Hon’ble jurisdictional High Court in the case of State Bank of India Co-operative Society (supra). We find

ITA No.2320/Ahd/2014 – 2 Others - 3 -

that Hon’ble jurisdictional High Court has held that interest earned from investment made in nationalized bank by a cooperative society engaged in providing credit facilities to its members, is not eligible for deduction under section 80P. 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 accordance with the 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 ld.AO has to determine the net interest income as well as misc. income earned by the assessee, and only thereafter that income has to be excluded from the admissibility of deduction under section 80P of the Act.

5.

In the result, appeals of the assessee are partly allowed for statistical purpose. Pronounced in the Open Court on 28th August, 2018.

Sd/- Sd/- (WASEEM AHMED) (RAJPAL YADAV) ACCOUNTANT MEMBER JUDICIAL MEMBER

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