RENUKA GRAMIN BIGAR SHETI SAHAKARI PAT SANSTHA MARYADIT,,SOLAPUR vs. INCOME-TAX OFFICER, WARD - 2,, PANDHARPUR

आयकर अपीलीय अिधकरण पुणे �यायपीठ एक-सद�य मामला पुणे म� IN THE INCOME TAX APPELLATE TRIBUNAL PUNE BENCH “SMC”, PUNE सु�ी सुषमा चावला, �याियक सद�य के सम� BEFORE MS. SUSHMA CHOWLA, JM आयकर अपील सं. / ITA No.2253/PUN/2017 िनधा�रण वष� / Assessment Year : 2013-14 Renuka Gramin Bigar Sheti Sahakari Pat Sanstha Maryadit, Natepute, Malshiras, Solapur. अपीलाथ�/Appellant PAN: AAAAR3361C …. Vs. The Income Tax Officer, …. ��यथ� / Respondent Ward- 2, Pandharpur. अपीलाथ� क� ओर से / Appellant by : Shri Abhay Avchat : Shri Rajesh Gawali ��यथ� क� ओर से / Respondent by घोषणा क� तारीख / सुनवाई क� तारीख / Date of Pronouncement: 28.12.2018 Date of Hearing : 17.12.2018 आदेश / ORDER PER SUSHMA CHOWLA, JM: The appeal filed by the assessee is against the order of CIT(A)-7, Pune dated 05.06.2017 relating to assessment year 2013-14 against order passed under section 143(3) of the Income-tax Act, 1961 (in short ‘the Act’). 2. The assessee has raised the following grounds of appeal :- 1. The Income Tax Officer, Ward-2, Pandharpur and Commissioner of Income Tax, has erred in assessing total income returned by the Assessee AOP of Rs.Nil/- at a higher amount of Rs.9,01,450/- and the learned Commissioner of Income Tax (Appeal)-7, Pune has erred in confirming the same. 2. The Income Tax Officer, Ward-2, Pandharpur and Commissioner of Income Tax, has erred in making aggregate disallowance of Rs.5,60,469/- towards interest earned on business related deposits.

ITA No.2253/PUN/2017 2 3. The Income Tax Officer, Ward-2, Pandharpur, and Commissioner of Income Tax has erred in taxing interest earned on investments mentioned above under section 56 of the Income Tax Act as he held it as expense ‘not attributable’ to the business activities of Appellant, when there are business relation with the banks. 4. The assessee society has debited an amount of Rs.16,98,600/- on account of agent’s commission. The respective agents have obtained Certificate from TDS Authorities regarding no deduction of tax at source from commission amount, hence no TDS was made. 5. The Income Tax Officer, Ward-2, Pandharpur and Commissioner of Income Tax erred by disallowing commission payment of Rs.3,40,683/- as provided in section 40(a)(ia) and adding it back to total income of the assessee society as he held that the assessee society has not complied with the statutory obligation of deducting tax at source on commission. 6. The Income Tax Officer, Ward-2, Pandharpur and Commissioner of Income Tax has denied the deduction under section 80P(2)(a)(i) for the interest income earned during the course of business. 7. The Income Tax Officer, Ward-2, Pandharpur and Commissioner of Income Tax erred in not allowing deduction under section 80P(2) of the Act for the business income assessed of Rs.3,40,683/- by way of disallowance under section 40(a)(ia) of the Act. 8. The appellant craves leave to add, amend or alter any of the grounds of appeal.” 3. The ground of appeal no.1 raised by the assessee is general in nature. Further, ground of appeal nos.3 to 5 are not pressed. Hence, all these grounds are dismissed. 4. The issue arising in ground of appeal nos.2 and 6 is against the treatment of interest income earned by the assessee and whether the assessee is entitled to claim of deduction under section 80P(2)(a)(i) of the Act on the aforesaid income earned. 5. Briefly, in the facts relating to the issue, the assessee was a Co- operative Credit Society engaged in accepting deposits and providing credit facilities to its members. During the year under consideration, the assessee had earned interest income of Rs.5,60,469/- on its deposits kept with Nationalized Bank. The assessee had claimed deduction under section 80P(2)(a)(i) of the Act on the aforesaid interest income which was denied by the Assessing Officer. The CIT(A) also upheld the order of the Assessing Officer.

ITA No.2253/PUN/2017 3 6. The learned Authorized Representative for the assessee pointed out that the issue stands covered in favour of the assessee by the order of the Pune Bench of the Tribunal in assessee’s own case relating to assessment year 2012-13 wherein the Tribunal in ITA No.396/PUN/2018 vide order dated 29.11.2018 has decided the issue in favour of the assessee. 7. The learned Departmental Representative for the Revenue placed reliance on the orders of the authorities below. 8. On perusal of the record and after hearing both the sides, I find the issue raised in respect of the claim of deduction under section 80P(2)(a)(i) of the Act on the interest income earned by the assessee on its deposits kept with Nationalized Bank stands squarely covered by the decision of the Pune Bench of the Tribunal in assessment year 2012-13 (supra). The Tribunal vide para 8 had relied on the decision of the Co-ordinate Bench of the Tribunal in the case of Hinglajmata Nagari Sahakari Patsanstha Maryadit in A.Y. 2013-14 (ITA No.2062/PUN/2017 order dated 05.10.2018) and held that the assessee is entitled to the aforesaid claim under section 80P(2)(a)(i) of the Act. The relevant findings of the Tribunal are in para 8 and 9 at pages 4 to 19 of the Tribunal’s order. Reference to the same is made, but not reproducing herein for the sake of brevity. Accordingly, in my opinion, the assessee is entitled to claim of deduction under section 80P(2)(a)(i) of the Act on the aforesaid interest income earned by the assessee on FDRs with the Nationalized Bank. Thus, ground of appeal nos.2 and 6 raised by the assessee are allowed. 9. Now, coming to the ground of appeal no.7 raised by the assessee wherein certain disallowances were made in the hands of the assessee on account of violation of the provisions of section 40(a)(ia) of the Act.

ITA No.2253/PUN/2017 4 10. The assessee had failed to deduct TDS out of certain payments totaling Rs.3,40,683/- and hence the disallowance made by the Assessing Officer, which was confirmed by the CIT(A). The assessee claims that the said disallowance of business expenditure in turn enhanced business income and hence the assessee was entitled to claim of deduction under section 80P(2)(a)(i) of the Act on such enhanced business income. In this regard, I find merit in the claim of the assessee that once the business income has been enhanced in the hands of the assessee then the assessee is entitled to claim of deduction under section 80P(2)(a)(i) of the Act on the enhanced business income. The same is allowed in the hands of the assessee. The ground no.7 is thus allowed. 11. In the result, the appeal of the assessee is partly allowed. Order pronounced on this 28th day of December, 2018. Sd/- (SUSHMA CHOWLA) �याियक सद�य / JUDICIAL MEMBER पुणे / Pune; �दनांक Dated : 28th December, 2018. Sujeet आदेश क� �ितिलिप अ�ेिषत/Copy of the Order is forwarded to : 1. अपीलाथ� / The Appellant; 2. ��यथ� / The Respondent; The CIT(A)-7, Pune; 3. 4. The CCIT, Pune; िवभागीय �ितिनिध, आयकर अपीलीय अिधकरण, पुणे, एक-सद�य 5. मामला / DR ‘SMC’, ITAT, Pune; गाड� फाईल / Guard file. 6. आदेशानुसार/ BY ORDER, स�यािपत �ित //True Copy// व�र� िनजी सिचव / Sr. Private Secretary आयकर अपीलीय अिधकरण ,पुणे / ITAT, Pune