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Income Tax Appellate Tribunal, PUNE BENCH “SMC”, PUNE
Before: SHRI R.S. SYAL
PER R.S.SYAL, VP : These two appeals by the assessee relate to the assessment years 2012-13 & 2014-15. Since some common issue is raised in these appeals, I am, therefore, proceeding to dispose them off by this consolidated order for the sake of convenience.
ITA No. 559/PUN/2018 – A.Y. 2012-13 :
The only issue raised in this appeal is against denial of deduction u/s.80P of the Income-tax Act, 1961 (hereinafter also called as ‘the Act’) in relation to the interest income of
2 ITA Nos.559 & 560/PUN/2018 M/s. Ratnatray Gramin Bigar Sheti Sah. Pat Sanstha Maryadit
Rs.5,33,321/- received by the assessee from Nationalised
Banks.
Briefly stated, facts of the case are that the assessee is a
Co-operative Society engaged in providing credit facilities to
its members. During the course of assessment proceedings,
the AO observed that the assessee earned interest income of
Rs.4,28,999/- on FDRs placed with IDBI Bank and Axis Bank,
on which deduction was claimed u/s.80P of the Income-tax
Act, 1961 (hereinafter also called `the Act’). The AO
negatived the assessee’s claim of deduction on such interest
income, which action came to be echoed in the first appeal.
I have heard both the sides and perused the relevant
material on record. The only issue in this appeal is whether
interest income earned from FDRs with the nationalized banks
is eligible for deduction u/s 80P of the Act? The Pune Bench
of the Tribunal in the case of Shri Laxmi Narayan Nagari
Sahakari Pat Sanstha Maryadit Vs. ITO (ITA
No.604/PN/2014) has allowed deduction u/s 80P of the Act in
similar circumstances vide its order dated 19-08-2015. In that
case, the Pune Bench discussed the contrary views expressed
3 ITA Nos.559 & 560/PUN/2018 M/s. Ratnatray Gramin Bigar Sheti Sah. Pat Sanstha Maryadit
by the Hon’ble Karnataka High Court in Tumkur Merchants
Souharda Credit Cooperative Ltd. Vs. ITO (2015) 230
taxmann 309 (Kar.) allowing the deduction u/s. 80P on interest
income and the Hon’ble Delhi High Court in Mantola
Cooperative Thrift Credit Society Ltd. Vs. CIT (2014) 110
DTR 89 (Delhi) not allowing deduction u/s.80P on interest
income earned from banks under similar circumstances. Both
the Hon’ble High Courts have taken into consideration the
ratio laid down in the case of Totgar’s Cooperative Sale
Society Ltd. 322 ITR 283 (SC). There being no direct
judgment from the Hon’ble jurisdictional High Court on the
point, the Tribunal in Shri Laxmi Narayan Nagari Sahakari
Pat Sanstha Maryadit (supra) preferred to go with the view
taken in favour of the assessee by the Hon’ble Karnataka High
Court in the case of Tumkur Merchants Souharda Credit
Cooperative Ltd. (supra). In the absence of their being any
change in the legal position prevailing on this issue after the
passing of the order by the Pune Bench of the Tribunal in Shri
Laxmi Narayan Nagari Sahakari Pat Sanstha Maryadit
(supra) and a host of other orders reiterating the similar view,
respectfully following the precedent, I overturn the impugned
4 ITA Nos.559 & 560/PUN/2018 M/s. Ratnatray Gramin Bigar Sheti Sah. Pat Sanstha Maryadit
order in not allowing deduction u/s.80P on the interest income
and direct to grant deduction on such interest income.
ITA No. 560/PUN/2018 – A.Y. 2014-15 :
The first issue raised in this appeal is against the denial
of deduction u/s. 80P of the Act in respect of interest
amounting to Rs.5,33,321/- earned from fixed deposit receipts
kept with banks.
Both the sides are in agreement that the facts and
circumstances of the instant ground are mutatis mutandis
similar to those of the assessment year 2012-13. Following
the view taken hereinabove, I order to grant deduction u/s.80P
on such interest income.
The only other issue which survives in this appeal is
against making disallowance of Rs.2,70,834/- u/s. 40(a)(ia) of
the Act.
Facts apropos this issue are that the assessee paid
commission to Pigmy agents. On being called upon to explain
as to whether any deduction of tax at source was made, the
assessee furnished a copy of certificate issued by ITO (TDS)
5 ITA Nos.559 & 560/PUN/2018 M/s. Ratnatray Gramin Bigar Sheti Sah. Pat Sanstha Maryadit
permitting non-deduction of tax at source on such commission
payment to the extent of Rs.5,80,000/-. The AO found that
small amounts totalling to Rs.28,405/- were paid as
commission to six persons, which did not attract tax
withholding. Out of the total commission payment by the
assessee to the tune of Rs.8,79,239/-, the AO reduced the
amount covered under TDS certificate at Rs.5,80,000/- and the
amount paid to six commission agents Rs.28,405/-. The
remaining amount of Rs.2,70,834/- was disallowed u/s.
40(a)(ia) of the Act. The assessee did not challenge this issue
before the ld. CIT(A). However, an additional ground has
been raised before the Tribunal urging it to delete the
disallowance which was made by the AO and inadvertently
not challenged before the ld. CIT(A).
Having heard both the sides and gone through the
relevant material on record, I find that there can be no reason
to stop the assessee from taking a fresh legal plea before the
Tribunal which was inadvertently not taken up before the ld.
CIT(A). Since this matter has not been examined by the ld.
CIT(A) on merits, I am of the considered opinion that it would
6 ITA Nos.559 & 560/PUN/2018 M/s. Ratnatray Gramin Bigar Sheti Sah. Pat Sanstha Maryadit
be in the fitness of things if the ld. CIT(A) is directed to
examine the assessee’s case on this issue. Needless to say, the
assessee will be allowed reasonable opportunity of hearing.
In the result, the appeal for A.Y. 2012-13 is allowed and
that for the A.Y.2014-15 is partly allowed.
Order pronounced in the Open Court on 11th December, 2018.
Sd/- (R.S.SYAL) उपा�य�/ VICE PRESIDENT उपा�य� उपा�य� उपा�य�
पुणे Pune; �दनांक Dated : 11th December, 2018 सतीश
आदेश क� क� �ितिलिप �ितिलिप अ�ेिषत अ�ेिषत / Copy of the Order is forwarded to : क� क� �ितिलिप �ितिलिप अ�ेिषत अ�ेिषत आदेश आदेश आदेश अपीलाथ� / The Appellant; 1. ��यथ� / The Respondent; 2. आयकर आयु�(अपील) / 3. The CIT (Appeals-7, Pune आयकर आयु� / The Pr. CIT-6, Pune 4. िवभागीय �ितिनिध, आयकर अपीलीय अिधकरण, पुणे “SMC” / 5. DR ‘SMC’, ITAT, Pune; गाड� फाईल / Guard file. 6. // True copy // आदेशानुसार आदेशानुसार आदेशानुसार/ BY ORDER, आदेशानुसार
// True Copy // Senior Private Secretary आयकर अपीलीय अिधकरण ,पुणे / ITAT, Pune
ITA Nos.559 & 560/PUN/2018 M/s. Ratnatray Gramin Bigar Sheti Sah. Pat Sanstha Maryadit
Date 1. Draft dictated on 11-12-18 Sr.PS 2. Draft placed before author 11-12-18 Sr.PS 3. Draft proposed & placed before the JM second member 4. Draft discussed/approved by Second JM Member. 5. Approved Draft comes to the Sr.PS/PS Sr.PS 6. Kept for pronouncement on Sr.PS 7. Date of uploading order Sr.PS 8. File sent to the Bench Clerk Sr.PS 9. Date on which file goes to the Head Clerk 10. Date on which file goes to the A.R. 11. Date of dispatch of Order. *