KOLHAPUR SAHAKARI MAJUR AND HAMAL SANSTHA LTD.,,KOLHAPUR vs. INCOME TAX OFFICER,, KOLHAPUR

The assessee has raised the following grounds of appeal:- 1. On the facts and in the circumstances of the case and in law the Ld. CIT(A) was not justified in deciding the issue in the absence of assessee before him against the assessee. The directions of the Hon’ble Tribunal after remand dt. 31st May, 2013 in the case of the assessee were not properly followed by the A.O. resultantly the Ld. CIT(A) failed to appreciate the issue that the assessee was entitled to exemption u/s 80P(2)(a)(vi) of the Act. It be held accordingly. 2. On the facts and in the circumstances of the case and in law the Ld. CIT(A) was not justified to uphold order of the A.O. who in turn had held that the 50% of the total interest of Rs.7,59,984/- amounting to Rs.3,79,992/- was only business income from interest earned on FD’s with Bank. The logic applied by A.O. was not according to law. The orders of both the authorities below be set aside giving relief of amount of Rs.7,59,984/- as being exempt u/s 80P(2)(a)(vii) of the Act.

The learned Authorized Representative for the assessee at the outset pointed out that the issue raised in the present appeal is squarely covered by the orders of Tribunal in assessee‟s own case in earlier years starting from assessment year 2007-08 to 2011-12. The learned Authorized Representative for the assessee also pointed out that the Assessing Officer while giving effect to the order of Tribunal in assessment year 2011-12, had computed the income in the hands of assessee at Nil i.e. accepting the claim of assessee that interest received from fixed deposits, is entitled to the claim of deduction under section 80P(2) of the Act.

The learned Departmental Representative for the Revenue on the other hand, placed reliance on the orders of authorities below.

Briefly, in the facts of the case, the assessee was a Co-operative society and was engaged in the business of “the collective disposal of the labour of its members”. The assessee had claimed deduction under section 80P(2)(a)(vii) of the Act in respect of its receipts from carrying on its activities and also in respect of interest received on fixed deposits. The Assessing Officer allowed

Similar issue of disallowance of deduction under section 80P(2)(a)(vii) of the Act on fixed deposits income arose before the Tribunal in assessee‟s own case in ITA Nos.2273 to 2277/PN/2016, relating to assessment years 2007-08 to 2011-12. The Tribunal vide order dated 09.11.2016 in turn relying on earlier order of Tribunal in ITA No.1086/PN/2009, relating to assessment year 2006- 07, order dated 30.06.2011, restored the issue back to the file of Assessing Officer with direction to adjudicate the same in line with earlier directions. The Assessing Officer while giving effect to the order of Tribunal, passed order dated 29.12.2017. The Assessing Officer noted that there was direct nexus of fixed deposits with the business of assessee being on account of security deposits, bank guarantee required, solvency certificate to be provided, held the assessee to be entitled to claim the aforesaid deduction under section 80P(2)(a)(vii) of the Act on the entire interest on fixed deposits. The learned Authorized Representative for the assessee fairly pointed out before the Tribunal that fixed deposits for the year under consideration were also utilized for different purposes of business and hence, were utilized for carrying on the business activity of co-operative society. Applying the principle laid down by the Tribunal in assessee‟s own case, which in turn, has been given effect to by the Assessing Officer in assessment year 2011-12 also, it is held that interest

In the result, appeal of assessee is allowed.