KAIVAL CREDIT CO. OP. SOCIETY LTD.,ANAND vs. THE INCOME TAX OFFICER, WARD-2, ANAND

PDF · subscribers
ITA 144/AHD/2017Status: DisposedITAT Ahmedabad03 July 2018AY 2013-143 pages
AI SummaryPartly Allowed

What did the Tribunal hold?

The Tribunal held that interest earned on surplus funds deposited with a nationalized bank is not eligible for deduction under Section 80P(2)(a)(i). However, it found merit in the assessee's alternative plea for deducting expenses attributable to earning such interest and remitted this aspect to the AO.

What were the facts?

The assessee, a credit co-operative society, claimed deduction for interest earned from a nationalized bank under Section 80P(2)(a)(i). The lower authorities disallowed this deduction. The assessee also argued for the deduction of expenses attributable to earning this interest.

What were the issues?

Whether interest earned by a co-operative society on deposits with a nationalized bank is deductible under Section 80P(2)(a)(i), and if not, whether expenses attributable to earning such interest are deductible.

Which sections of the Income-tax Act were involved?

Section 80P(2)(a)(i),Section 80P(2)(c)(ii)

AI-generated summary — verify with the full judgment below

Cases cited in this judgment(1)Show list

Detected automatically from the text. Citations are also linked where they appear in the judgment. The count shows how many other judgments on BharatTax rely on the same authority.

Income Tax Appellate Tribunal, “SMC” BENCH, AHMEDABAD

Before: SHRI PRADIP KUMAR KEDIA & SHRI MAHAVIR PRASAD

For Appellant: Dr. Anupama Singia, Sr.D.R

PER PRADIP KUMAR KEDIA - AM:

The captioned appeal has been filed at the instance of the assessee against the order of the CIT(A)-4, Vadodara (‘CIT(A)’ in short), dated 30.09.2016 arising in the assessment order dated 29.10.2015 passed by the Assessing Officer (AO) under s. 143(3) of the Income Tax Act, 1961 (the Act) concerning AY 2013-14.

2.

The grounds of appeal raised by the assessee reads as under:

“1. The Learned Commissioner of Income Tax, (Appeals)-4, Vadodara has erred in law and on facts of the case in not allowing

ITA No. 144/Ahd/17 [Kaival Credit Co.Op. Society Ltd. vs. ITO] A.Y. 2013-14 - 2 - interest of Rs.3,00,250/- received from nationalized bank u/s.80P(2)(a)(i) of the I.T.Act, 1961. 2. Without prejudice to above, while disallowing interest of Rs.3,00,250/-, the C.I.T.(Appeals) has not deducted therefrom interest paid to depositors in respect of the same, and accordingly, disallowing only net interest of Rs.1,26,132/- u/s.80P(2)(a)(i) of the I.T.Act, 1961.”

3.

When the matter was called for hearing, the learned AR for the assessee pleaded for allowability of interest of Rs.3,00,250/- received from nationalized bank under s.80P(2)(a)(i) of the Act. In the alternative, she contended that the expenditure attributable to earning of such income requires to be deducted from the gross interest earned from the nationalized bank.

4.

The learned AR also pleaded that the assessee is entitled to deduction of Rs.50,000/- against the interest income so earned under s.80P(2)(a)(i) of the Act.

5.

The learned DR relied upon the order of the lower authorities.

6.

We do not find any merit in the principle plea lead by assessee for allowability of interest derived on deposits under s. 80P(2)(a)(i) of the Act of surplus funds with the nationalized bank, in view of several decisions including the decision of Hon’ble Gujarat High Court in the case of SBI Employees Co-credit & Supply Society v. CIT(A) (2016) 389 ITR 578. Thus, we decline to interfere with the action of the Revenue on this score. However, we find merit in the alternative plea of the assessee for allowability of expenditure attributable to the earning of such income, if any. This aspect will require factual verification and accordingly remitted back to the file of the AO for deciding the allowability of expenditure attributable to interest earned on deposits, if any, with nationalized banks.

ITA No. 144/Ahd/17 [Kaival Credit Co.Op. Society Ltd. vs. ITO] A.Y. 2013-14 - 3 - 6.1 We also remit the issue towards eligibility of standard deduction contemplated under s.80P(2)(c)(ii) of the Act in the light of the facts of the case, to the file of AO. The AO shall decide the issue in accordance with the law after giving fair opportunity to the assessee.

7.

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

This Order pronounced in Open Court on 03/07/2018

Sd/- Sd/- (MAHAVIR PRASAD) (PRADIP KUMAR KEDIA) JUDICIAL MEMBER ACCOUNTANT MEMBER Ahmedabad: Dated 03/07/2018 True Copy S. K. SINHA आदेश क� ��त�ल�प अ�े�षत / Copy of Order Forwarded to:- 1. राज�व / Revenue 2. आवेदक / Assessee 3. संबं�धत आयकर आयु�त / Concerned CIT 4. आयकर आयु�त- अपील / CIT (A) 5. �वभागीय ��त�न�ध, आयकर अपील�य अ�धकरण, अहमदाबाद / DR, ITAT, Ahmedabad 6. गाड� फाइल / Guard file. By order/आदेश से,

उप/सहायक पंजीकार आयकर अपील�य अ�धकरण, अहमदाबाद ।

More judgments on Section 80P(2)(a)(i)

All 2,347 judgments and leading authorities on Section 80P(2)(a)(i) →

Recent GST High Court judgments

Search GST case law →