THE GOVT. TELECOMMUNICATION EMPLOYEES CO-OP. SOCIETY LTD.,CHENNAI vs. ITO, CHENNAI

These two appeals filed by the Assessee are directed against separate orders of the learned Commissioner of Income Tax (Appeals)- 13, Chennai in & I.T.A. No.108/CIT(A)-13/AY 2013-14 both dated 04.08.2016 relevant to the Assessment years 2012-2013 & 2013 - 2014.

The facts of the case in brief is that the Assessee is a Co-operative Society established in the year 1926 by the employees of the Telecom and BSNL. The Assessee has advanced certain funds to the employees of the Assessee’s Society had received an interest income, claimed as eligible for Section 80P of the Income Tax Act, 1961. The Assessing Officer has rejected the claim of the Assessee on the ground that the employees of the Assessee’s Society are not members of the Society. Therefore, the interest income received is not eligible for Section 80P of the Income Tax Act, 1961.

The learned Commissioner of Income Tax (Appeals) confirmed the order of the Assessing Officer.

On appeal, the learned Counsel of the Assessee has submitted that the staff of the Assessee’s Society do automatically become members of the Society and therefore the interest received from the staff of the Assessee’s Society is eligible for Section 80P of the Income Tax Act, 1961.

The learned Authorized Representative submitted that the staff of the Society are not eligible to be as members of the Society as the Society is created for the benefit of the members alone. If at all the & 2899/Chny/2016 :- 3 -: Section 80P of the Income Tax Act, 1961 has to be allowed, it is to be allowed only to the members and not to the staff of the Society.

We have heard both the sides, perused the materials available on record and gone through the orders of the authorities below.

The Assessee is a Telecom Employees Co-operative Society established for the benefits of the members. The Assessee’s Society advanced certain loans to the staff of the Employees Society and received interest income. The Assessee’s Society has claimed an exemption u/s.80P of the Income Tax Act, 1961 in respect of the interest income received from the staff of the Assessee’s Society. The Assessing Officer has denied on the ground that the interest income from the staff is not qualified for exemption u/s.80P of the Income Tax Act, 1961. The same is confirmed by the learned Commissioner of Income Tax (Appeals).

We find that the Assessee’s Society has existed only for the members of the Telecom Employees Co-operative Society and not for the benefit of the staff of the Telecom Employees Co-operative Society. The Telecom Employees Co-operative Society is an altogether different from the staff of the Assessee. Therefore, the claim made by the Assessee u/s.80P of the Income Tax Act, 1961 is not an eligible claim & 2899/Chny/2016 :- 4 -: and therefore the Assessing Officer as well as the learned Commissioner of Income Tax (Appeals) rightly denied the claim of the Assessee u/s.80P of the Income Tax Act, 1961. In view of the above, in this appeal, the issue has been decided against the Assessee and in favour of the Revenue. Thus, the ground raised by the Assessee is dismissed. The appeal filed by the Assessee is dismissed.

The second ground of appeal raised by the Assessee is that the Assessing Officer has treated the interest income as income from other sources and has not allowed the expenditure incurred by the Assessee. He only estimated that the expenditure which is not in accordance with law and submitted that the issue may be remitted back to the Assessing Officer to examine de novo.

On the other hand, the learned Departmental Representative has not raised any objection.

We have heard both the sides, perused the materials available on record and gone through the orders of the authorities below.

The only issue for consideration is the expenditure incurred by the Assessee to earn the interest income. The case of the Assessee is that the Assessing Officer has treated the interest income earned by the & 2899/Chny/2016 :- 5 -: Assessee has income from other sources and estimated the expenditure only. In the Assessment Order, the Assessing Officer has not properly considered the expenditure incurred by the Assessee to earn the interest income and simply estimated the interest expenditure.

In our view, it is not correct. Thus we set aside the order passed by the learned Commissioner of Income Tax (Appeals) on this count and remit back the matter back to the Assessing Officer to adjudicate the issue afresh in accordance with law de novo.

In the result, the appeal of the Assessee in I.T.A.No.2898/Chny/2016 is partly allowed for statistical purpose.

The facts and issues in this appeal are similar to that of the appeal in . Thus, the decision taken in the earlier case applies to this order also. In view of the same, the appeal filed by the Assessee is partly allowed for statistical purpose.

The order passed by the learned Commissioner of Income Tax (Appeals) is therefore set aside and the appeal filed by the Assessee is partly allowed for statistical purpose. & 2899/Chny/2016 :- 6 -: 17. In the result, the appeals filed by the Assessee in I.T.A.No.2898 & 2899/Chny/2016 are partly allowed for statistical purpose.