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

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ITA 2985/AHD/2016Status: DisposedITAT Ahmedabad23 May 2018AY 2012-133 pages
AI SummaryDismissed

What did the Tribunal hold?

The Tribunal upheld the orders of the Revenue authorities, stating that interest earned from bank deposits by a cooperative credit society is not deductible under Section 80P(2)(a)(i). However, it allowed for the deduction of expenses incurred in earning such income.

What were the facts?

The assessee, a cooperative credit society, claimed deduction under Section 80P(2)(a)(i) for interest income earned from bank deposits. The AO denied this deduction, and the CIT(A) upheld the denial.

What were the issues?

Whether interest income earned by a cooperative credit society from bank deposits is deductible under Section 80P(2)(a)(i) of the Income Tax Act.

Which sections of the Income-tax Act were involved?

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

AI-generated summary — verify with the full judgment below

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Income Tax Appellate Tribunal, AHMEDABAD – BENCH ‘A’

Before: SHRI RAJPAL YADAV & SHRI WASEEM AHMED

For Appellant: Shri Bhargav Thakkar, AR
For Respondent: Shri Prasson Kabra, Sr.DR
Hearing: 23/05/2018Pronounced: 23/05/2018

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. 2985/Ahd/2016 �नधा�रण वष�/Assessment Year: 2012-13 The Karamsad Nagrik Co-op. Credit ITO, Ward-2 Society Ltd. Vs Anand. Shree Vithal Seva Samaj Building Nr. Bus Stand Karamsad 388 325 PAN : AAAAT 4728 K. अपीलाथ�/ (Appellant) �� यथ�/ (Respondent) Assessee by : Shri Bhargav Thakkar, AR Revenue by : Shri Prasson Kabra, Sr.DR

सुनवाई क� तार�ख/Date of Hearing : 23/05/2018 घोषणा क� तार�ख /Date of Pronouncement : 23/05/2018 O R D E R PER RAJPAL YADAV, JUDICIAL MEMBER : Present appeal is directed at the instance of the assessee against order of ld.CIT(A)-4, Baroda dated 27.6.2016 passed for the Asstt.Year 2012-13. The assessee is aggrieved by the action of the Revenue authorities in denying the benefit under section 80(2)(a)(i) of the Income Tax Act, 1961 in respect of interest income earned from bank deposits.

2.

Shri Dhiren Shah, learned counsel for the assessee filed a letter dated 21.5.2018 seeking adjournment of the case. Request for adjournment is rejected. Further, it has been pointed out by the Registry that appeal of the assessee is time barred by one day. Though no reason

ITA No.2985/Ahd/2016 - 2 -

has been advanced by the assessee for the delay in filing appeal, delay of one day being minimal, we are not inclined to treat the appeal inadmissible at the threshold. It has been pointed by the ld.DR that the issue involved in this appeal is otherwise also covered in favour of the Revenue by the decision of Hon’ble jurisdictional High Court in the case of State Bank of India Vs. CIT, 389 ITR 578 for the proposition that in case of co-op credit society, whose activity relates to receiving deposits and lending money to its members, interest derived by depositing surplus funds with the nationalized banks, not being attributable to the business carried on by the assessee, cannot be deducted under section 80P(2)(a)(i) of the Act.

3.

Having heard ld. DR and gone through the record, we find that Assessee is a cooperative society engaged in providing credit facilities to its members. The assessee has filed its return of income on 28.9.2012 declaring total income at Rs.NIL by claiming entire net income deductible under section 80P(2)(a) of the Income Tax Act. This claim was denied by the AO on the ground that assessee being a cooperative credit society engaged in providing credit facilities to its members deposits its surplus fund in FDRs/SB accounts with nationalized bank and earn interest out of such deposits, then such interest income would not qualify for deduction under the relevant provisions appended to section 80P of the Act. The AO accordingly rejected the claim of the assessee. The ld.CIT(A) upheld the order of the AO by taking support from the decision of the Hon’ble jurisdictional High Court in the case of CIT Vs. State Bank of India (supra). We find 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

ITA No.2985/Ahd/2016 - 3 -

facilities to its members, is not deductible under section 80P(2)(d). In recent past the Tribunal in slew of decisions has taken a consistent view on this issue by following above judgment of the Hon’ble jurisdictional High Court. In this view of the matter, we do not incline to disturb the orders of the Revenue authorities on this issue, which we uphold. However, any expenditure incurred by the assessee for earning such income could be allowed to it. In other words, the ld.AO has to determine the net interest income earned by the assessee on such investment with bank, and only thereafter that income has to be excluded from the admissibility of deduction under section 80P(2) of the Act.

4.

In the result, appeal of the assessee is dismissed.

Pronounced in the Open Court on 23rd May, 2018.

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

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