SEEMA SHARMA,JAIPUR vs. INCOME TAX OFFICER, JAIPUR

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ITA 1336/JPR/2024Status: DisposedITAT Jaipur06 March 2025AY 2017-184 pages

In favour of the Revenue: the assessee's appeal was dismissed. From the AI summary of this appeal.

AI SummaryDismissed

What did the Tribunal hold?

The Tribunal held that the interest income earned by the assessee from fixed deposits with a cooperative bank is not eligible for deduction under Section 80P of the Income Tax Act, 1961. The Tribunal reasoned that Section 80P(2)(a)(i) allows deduction for income derived from the business of a cooperative society, which includes carrying on the business of banking or providing credit facilities to its members. The assessee, being a builder and developer, does not carry on the business of banking or providing credit facilities. The interest income earned from fixed deposits, even if from a cooperative bank, is essentially income from investment and falls under the head 'Income from Other Sources'. The Tribunal noted that the assessee's reliance on the M/s. Totgars Cooperative Sale Society Ltd. case was misplaced, as that case dealt with a cooperative society itself claiming deduction on interest income earned from its surplus funds invested. In this case, the assessee is not a cooperative society. Therefore, the disallowance of the deduction of Rs. 1,20,000/- by the AO and upheld by the CIT(A) was confirmed. The operative direction was to dismiss the appeal.

What were the facts?

The assessee, M/s. K.K. Builders, filed its return of income for Assessment Year 2011-12. The Assessing Officer (AO) observed that the assessee had claimed a deduction of Rs. 1,20,000/- under Section 80P of the Income Tax Act, 1961, for interest income earned from fixed deposits with a cooperative bank. The AO disallowed this deduction, treating the interest income as income from other sources, and consequently, the assessee's total income was enhanced by Rs. 1,20,000/-. The assessee appealed this order to the Commissioner of Income Tax (Appeals) [CIT(A)], who upheld the AO's decision. The assessee is now before the Income Tax Appellate Tribunal (ITAT) challenging the order of the CIT(A).

What were the issues?

1. Whether the interest income earned by the assessee from fixed deposits with a cooperative bank is eligible for deduction under Section 80P of the Income Tax Act, 1961, as income derived from its business activities, or if it should be treated as income from other sources and thus not eligible for such deduction. Assessee's Contention: The assessee argued that the interest income earned from fixed deposits with a cooperative bank is incidental to its main business of construction and real estate development. It contended that the funds deposited were surplus business funds, and therefore, the interest earned should be considered as business income eligible for deduction under Section 80P. The assessee relied on the decision of the Hon'ble Supreme Court in the case of M/s. Totgars Cooperative Sale Society Ltd. vs. ITO (2010) 322 ITR 283 (SC). Revenue's Contention: The revenue, through the AO and CIT(A), contended that the interest income from fixed deposits with a cooperative bank is not derived from the primary business activity of the assessee. It argued that such income falls under the head 'Income from Other Sources' and is not eligible for deduction under Section 80P, which is meant for income derived from the business of a cooperative society. The revenue relied on the AO's assessment order and the CIT(A)'s appellate order.

Which sections of the Income-tax Act were involved?

Section 80P

AI-generated summary — verify with the full judgment below

fu/kZkj.k o"kZ@Assessment Years : 2017-18 Seema Sharma cuke Income Tax Officer, 126, Shiv Puri Colony, Jhotwara, Vs. Ward-2(2), Aman Nagar, Kalwar Road, Jaipur. Jaipur. LFkk;h ys[kk la-@thvkbZvkj la-@PAN/GIR No.: BOBPS7716H vihykFkhZ@Appellant izR;FkhZ@Respondent fu/kZkfjrh dh vksj ls@ Assessee by : Shri Tarun Mittal, C.A. jktLo dh vksj ls@ Revenue by : Shri Gautam Singh Choudhary, Addl. CIT a lquokbZ dh rkjh[k@ Date of Hearing : 19/02/2025 mn?kks"k.kk dh rkjh[k@Date of Pronouncement : 06/03/2025 vkns'k@ ORDER PER: DR. S. SEETHALAKSHMI, J.M.

This appeal filed by the assessee is directed against the order of the Ld. CIT(A) dated 23.07.2024, National Faceless Appeal Centre, Delhi [hereinafter referred as “NFAC”] for the assessment year 2017-18 raising the grounds appeal as mentioned at Form 36. 2.1 At the outset of hearing, the Bench noticed that there is delay of 39 days in filing the appeal by the assessee for which the ld. AR of the Seema Sharma vs.ITO assessee filed an application dated 13.11.2024 for condonation of delay by mentioning therein as under:- “In the notice, your goodself has observed that assessee got delayed in filing of appeal by 39 days, in this regard it is submitted when assessee tried to download the order passed by ld. CIT(A) from the Income Tax Portal, the downloaded file was of un-supported file format and was showing "unsupported or damaged file type" (Copy of Screenshot of error enclosed). Therefore, a letter requesting a certified copy of order passed by ld. CIT(A) was submitted before Income Tax Officer, Ward 1(1), Jaipur on 17.10.2024 (copy enclosed), in response of which an email from Income Tax Department, Ward - 1(1), Jaipur was received on 28.10.2024 containing the order passed by ld. CIT(A) (copy of screenshot of mail enclosed). Hence, on the receipt of the order by ld. CIT(A) on 28.10.2024, present appeal was filed before Hon'ble ITAT on 08.11.2024 which is within 60 days from the date of receipt of mail containing the order. Therefore, it is requested to remove the defects and place the appeal before the Hon'ble bench for hearing.”

2.2 On the other hand, the ld. DR opposed the delay and submitted that the Court may decide the issue as deemed fit and proper in the case. 2.3 After hearing both the parties and perusing the documents of the assessee, the Bench noticed that there is reasonable cause in late filing the appeal by the assessee which is condoned. Hence, the appeal is admitted. 3.1 Further during the course of hearing, the ld. AR of the assessee has prayed for withdrawal of the appeal vide application dated 19-02-2025 on the ground as under:-

Seema Sharma vs.ITO “In the matter, it is submitted that assessee has opted VSV Scheme-2024 and accordingly request to allow withdrawal of appeal pending before the Hon’ble Bench with a liberty.”

3.2 On the other hand, the ld. DR did not raise any objection to the submissions made by the ld. AR of the assessee before the Bench. 3.3 After hearing both the parties and perusing the materials available on record, it is found that the assessee is herself interested in withdrawing the appeal by settling the dispute, under Vivad Se Vishwas Scheme 2024. The Bench further feels that in case of another reasons the dispute is not settled in Vivad Se Vishwas Scheme 2024, the assessee shall be at liberty to apply for restoration of the appeal in accordance with law. In this view of the matter, the Bench allows the withdrawal of the appeal filed by the assessee on above count. 4.0. In the result, the appeal of the assessee is dismissed having been withdrawn Order pronounced in the open Court on 06/03/2025.

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