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Income Tax Appellate Tribunal, PUNE BENCH “B”, PUNE
Before: SHRI D.KARUNAKARA RAO, AM & SHRI VIKAS AWASTHY, JM
आदेश आदेश / ORDER आदेश आदेश
PER D. KARUNAKARA RAO, AM :
This appeal is filed by the Revenue against the order of CIT(A)-2, Pune, dated 14-12-2015 for the Assessment Year 2011-12.
Relevant facts of the case are that the assessee is a Cooperative Society engaged in the business of banking/providing credit facilities to its members. During the year, the assessee earned Rs.3.28 crores (rounded off) from the investments kept in Nationalized Banks and other Cooperative Banks. Out of it, the assessee earned interest income of Rs.8,13,767/- from the investments with the Nationalized Banks.
Regarding the interest income earned from the Banks and
Cooperative Banks, assessee claimed the deduction u/s.80P(2)(d) of the
Act. The said claim of deduction was denied by the AO in the
assessment and treated the same as income from other sources.
Relying on various decisions, CIT(A) allowed the claim of the assessee.
CIT(A) held that the claim of deduction is available to assessee
u/s.80P(2)(a)(i) of the Act. However, the CIT(A) granted relief as per the
discussion given in the impugned order dated 14-12-2015.
Aggrieved with the same, Revenue raised the following grounds
and the same read as under :
“1.Whether the order of the learned CIT (Appeals) is contrary to law and to the facts and circumstances of the case. 2. Whether the Learned CIT (Appeals) has erred on facts and in law in deleting the aggregate addition of Rs.3,36,06,752/- made in assessment order on account of interests received from banks. 3. Whether on the facts and in the circumstances of the case and in law, the Ld.CIT(A) has erred in deleting addition of Rs.3,27,92,985/- by wrongly applying provisions of section 80P(2)(a)(i) rather than section 80P(2)(d), whereby erroneously treated other source income as business income and allowed exemption u/s.80P(2)(a)(i) instead of allowing exemption under section 80P(2)(d) which is specifically meant for that purpose.
Whether on the facts and in the circumstances of the case and in law, the Ld CIT (Appeals) has erred in deleting the addition of Rs.8,13,767/- on account of interest income received from non- members as well as nationalized banks, whereby treating other source income as business income and allowing deduction u/s.80P(2)(a)(i). 5. For this and such other reasons as may be urged at the time of hearing, the order of the CIT(A) may be vacated and that of the Assessing Officer be restored. 6. The appellant craves leave to add, amend, alter or delete any of the above grounds of appeal during the course of appellate proceedings before the Hon'ble Tribunal.”
From the above, it is evident that apart from the general issues
raised in Ground Nos. 1, 5 and 6, the core issues were raised in Ground
Nos. 2, 3 and 4. Ground No.2 mentions that the whole of the interest is
received from the Banks. Ground No.3 relates to the issue relating to
applicability of the correct provisions of section 80P(2)(d) of the Act in
place of section 80P(2)(a)(i) of the Act as held by the CIT(A). The issue
raised in Ground No.4 pertains to the treatment of the interest income
as “income from other sources” and not as “business income” as held by
the CIT(A).
During the proceedings before us, there is none on behalf of the
respondent assessee. However, it is a fact that the notice of hearing is
duly served on the assessee. However, assessee chose not to appear
before us in person or through the authorized representative. However,
Manager of the assessee made an appearance before the Tribunal.
Before us, Ld. DR for the Revenue submitted that this is a case
covered by the ratio of the Hon’ble Supreme Court judgment in the case
of M/s. The Totgar’s Cooperative Sale Society Limited Vs. ITO vide Civil
Appeal No.1622 of 2010 dated 08-02-2010. Considering the same, we
proceed to adjudicate the same.
On hearing the facts and the parties, we find that there is no
dispute on the source of the interest income from the Banks and
Cooperative Banks. It is the scheme of the provisions of section 80P of
the Act, the deduction provisions do not apply to the Banks and the
interest income earned from the Banks. The judgments cited by the
Ld. DR for the Revenue in the cases of (1) Mantola Co-operative Thrift &
Credit Society Ltd. Vs. CIT (2014) 50 taxmann.com 278 (Delhi) (2) Sri
Basaveshwara Credit Co-operative Society Ltd. Vs. CIT (2014) 47
taxmann.com 189 (Bangalore-Trib.) and (3) Matoshri Ramabai
Ambedkar are relevant.
However, CIT(A) granted relief to the assessee by relying on the
Coordinate Bench decision of Pune Tribunal in the case of ITO Vs.
Ashokrao Banker Gramin Biger Sethi Sahakari Pat Samstha Ltd. which
is relevant for the proposition that the deposits kept with the
cooperative Banks constitutes business income of the assessee engaged
in the activity of the credit cooperative societies. For the sake of
completeness, the contents of said para are reproduced here under :
“6.2.1 I have gone through the arguments put forth on behalf of the appellant. It is seen that Hon'ble ITAT Pune Bench in the case of ITO Vs. Ashokrao Banker Gramin Biger sethi Sahakari Path Samstha Ltd. in ITA No.1584/PN/2012 dated 30.04.2014 has held that interest on fixed deposits kept by the co-operative society with other banks is to be treated as business income and therefore the same is eligible for deduction u/s.80P(2)(a)(i) of the I.T. Act. Respectfully following the decision of Hon'ble ITAT Pune Bench, I hold that the interest income received by the appellant amounting to Rs.3,36,06,752/- is business income and therefore, eligible for deduction u/s.80P(2)(a)(i) of the I.T. Act. This ground is accordingly allowed.”
Considering the above, we are of the view that the CIT(A) has not
considered the existing judgments in the case laws cited by the Ld. DR
for the Revenue above. It is evident that the relevant facts and
decisions were not considered by the CIT(A). From the fairness point of
view, we find the judgments (supra) relied on by the Ld. DR need to be
considered. For this reason, we remand the issue to the file of CIT(A)
for fresh adjudication. CIT(A) is directed to pass a speaking order on
this issue and adjudicate the same after granting reasonable
opportunity of being heard to the assessee. Accordingly, all the grounds
raised by the Revenue are allowed for statistical purposes.
In the result, appeal of the Revenue is allowed for statistical
purposes.
Order pronounced in the open court on this 28th day of February, 2018.
Sd/- Sd/- (VIKAS AWASTHY) (D. KARUNAKARA RAO) �याियक �याियक सद�य �याियक �याियक सद�य सद�य /JUDICIAL MEMBER लेखा सद�य लेखा लेखा सद�य लेखा सद�य सद�य / ACCOUNTANT MEMBER सद�य
पुणे Pune; �दनांक Dated : 28th February, 2018 सतीश
आदेश आदेश क� आदेश आदेश क� क� �ितिलिप क� �ितिलिप �ितिलिप अ�ेिषत �ितिलिप अ�ेिषत अ�ेिषत/Copy of the Order forwarded to : अ�ेिषत
अपीलाथ� / The Appellant 1. ��यथ� / The Respondent 2. 3. The CIT(A)-2, Pune 4. CIT-2, Pune िवभागीय �ितिनिध, आयकर अपीलीय अिधकरण, “B Bench” 5. Pune; गाड� फाईल / Guard file. 6. आदेशानुसार आदेशानुसार/ BY ORDER,स आदेशानुसार आदेशानुसार
स�यािपत �ित //True Copy// //True Copy// Senior Private Secretary आयकर अपीलीय अिधकरण ,पुणे / ITAT, Pune