THE AMOD CO. OP. CREDIT SOCIETY LIMITED,ANAND vs. THE INCOME TAX OFFICER, WARD-1(3)(1), PETLAD

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ITA 3216/AHD/2016Status: DisposedITAT Ahmedabad23 May 2018AY 2013-143 pages
AI SummaryDismissed

What did the Tribunal hold?

The Tribunal upheld the disallowance of interest income from bank deposits as a deduction under Section 80P(2)(a)(i). However, it directed the AO to allow any expenditure incurred by the assessee for earning such income, determining the net interest income for exclusion.

What were the facts?

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

What were the issues?

Whether interest income earned by a cooperative credit society on its surplus funds deposited in banks is eligible for deduction under Section 80P(2)(a)(i)?

Which sections of the Income-tax Act were involved?

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

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 Parin Shah, 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. 3216/Ahd/2016 �नधा�रण वष�/Assessment Year: 2013-14 The Amod Co-op. Credit Society Ltd. ITO, Ward-1(3)(1) Nani Khadki, Amod 388 160. Vs Petlad. Tal. Petlad, Dist. Anand

PAN : AADAT 6558 Q अपीलाथ�/ (Appellant) �� यथ�/ (Respondent) Assessee by : Shri Parin Shah, 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 19.7.2016 passed for the Asstt.Year 2013-14. 2. In the grounds of appeal, sole issue involved for adjudication relates to disallowance interest income earned on fixed deposits with banks which was claimed by the assessee as deduction under section 80P(2)(a)(i) of the Income Tax Act.

3.

On behalf of senior counsel for the assessee, Shri S.N. Sopakar, an application dated 21.5.2018 is filed for adjournment of case on the ground that Shri S.N. Soparkar is out of India. We reject this request of the assessee, since the ld.DR for the Revenue pointed out that the issue

ITA No.3216/Ahd/2016 - 2 -

involved in the appeal is otherwise also squarely covered against the assessee by the decision of the Hon’ble jurisdictional High Court in the case of CIT Vs. State Bank of India, 389 ITR 578, and this Tribunal has followed in number of cases decided earlier.

4.

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 16.2.2014 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 facilities to its members, is not deductible under section 80P(2)(d). In recent past the Tribunal in number of decisions involving similar issue 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 are not inclined to disturb 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

ITA No.3216/Ahd/2016 - 3 -

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.

5.

In the result, appeal of the assessee is treated to be dismissed.

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

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

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