ACIT-1(1), BHOPAL vs. M P STATE CO-OP HOUSING FEDERATION LTD, BHOPAL

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ITA 363/IND/2023Status: DisposedITAT Indore11 October 2024AY 2018-194 pages
AI SummaryDismissed

What did the Tribunal hold?

The Tribunal held that the issue of allowability of deduction under Section 80P(2)(a)(i) on interest income from FDRs and Saving Bank Accounts is a recurring issue that has been consistently decided in favour of the assessee by the ITAT in its own case for earlier assessment years. The CIT(A) had followed these previous ITAT decisions. The Tribunal noted that the Revenue had not shown any contrary decision from a higher forum reversing the ITAT's view. Therefore, the Tribunal found no error in the impugned orders passed by the CIT(A) and upheld them. The ratio decidendi is that interest earned on deposits, including FDRs and savings accounts, by a co-operative society engaged in providing credit facilities to its members, is an integral part of its business and eligible for deduction under Section 80P(2)(a)(i) of the Act, provided previous ITAT decisions in the assessee's own case support this view and have not been overturned by higher authorities. The operative direction is to dismiss the appeals filed by the Revenue.

What were the facts?

These appeals by the Revenue are against orders of the CIT(A) for AY 2017-18 and AY 2018-19. The assessee, M.P. State Co-operative Housing Federation Limited, is a co-operative society providing credit facilities to its members. The Assessing Officer (AO) made additions on account of interest income from Fixed Deposits (FDRs) and Savings Bank Accounts, disallowing the deduction claimed by the assessee under Section 80P(2)(a)(i) of the Income-tax Act, 1961. The CIT(A) deleted these additions, following previous decisions of the ITAT in the assessee's own case for earlier assessment years. The Revenue is aggrieved by the deletion of these additions.

What were the issues?

1. Whether the interest income earned by the assessee on FDRs and Saving Bank Accounts is attributable to its business of providing credit facilities to its members and is eligible for deduction under Section 80P(2)(a)(i) of the Income-tax Act, 1961, or if it is not exempt by virtue of Section 80P(2)(d) of the Act. Assessee's Contention: The assessee contended that the interest income from FDRs and Saving Bank Accounts is an integral part of its business activity of providing credit facilities to its members and is therefore eligible for deduction under Section 80P(2)(a)(i). The assessee relied on previous decisions of the ITAT in its own case for various assessment years, which had allowed such deductions. Revenue's Contention: The Revenue contended that the CIT(A) erred in deleting the addition made on account of interest on FDRs and Saving Bank Accounts, arguing that this interest income was not attributable to the business of providing credit facilities and was not exempt under Section 80P(2)(a)(i) and Section 80P(2)(d) of the Act.

Which sections of the Income-tax Act were involved?

Section 80P(2)(a)(i),Section 80P(2)(d),Section 143(3)

AI-generated summary — verify with the full judgment below

Income Tax Appellate Tribunal, INDORE BENCH, INDORE

Before: SHRI VIJAY PAL RAO

For Appellant: Shri Vipul Jain, AR
For Respondent: Shri Ram Kumar Yadav, CIT DR
Hearing: 12.09.2024Pronounced: 11.10.2024

आदेश / O R D E R

Per B.M. Biyani, A.M.:

1.

These two appeals are filed by assessee against two separate orders, both dated 31.07.2023 and both passed by learned Commissioner of Income-tax (Appeals), NFAC, Delhi [“CIT(A)”], which in turn arises out of respective assessment-orders dated 15.12.2019 for AY 2017-18 passed by learned DCIT/ACIT,1(1), Bhopal [“AO”] and dated 06.04.2021 for AY 2018-19 passed by learned National e-assessment Centre, Delhi [“AO”] u/s 143(3) of Income- tax Act, 1961 [“the Act”]. Page 1 of 4

ACIT,1(1), Bhopal vs. M.P. State Co-op. Housing Federation, Bhopal – AY 2017-18

2.

The grounds raised in these appeals are as under:

– AY 2017-18: “On the facts and in the circumstances of the case. The Ld. CIT(A), Bhopal, erred in deleting the addition of Rs. 7,00,11,534/- made on account of interest on FDRs and Saving Bank Accounts when the said interest income was no attributable to the business of the assessee of providing credit faci8lities to the members and was not exempt by virtue of provisions of Section 80P(2)(a)(i) and section 80P(2)(d) of the Income-tax Act, 1961.”

AY 2018-19: “On the facts and in the circumstances of the case, the Ld. CIT(A)-I, Bhopal, erred in deleting the addition of Rs. 7,26,38,223/- made on account of interest on FDRs and Saving Bank Accounts when the said interest income was not attributable to the business of the assessee of providing credit facilities to the members and was not exempt by virtue of provisions of sec. 80P(2)(a)(i) and Section 80P(2(d) of the Income-tax Act, 1961.”

3.

Thus, the issue involved in both years is identical with change of figures only. The revenue is claiming that the CIT(A) has erred in deleting the addition made by AO on account of disallowance of deduction claimed by assessee u/s 80P(2)(a)(i) of the Act qua the interest income from FDRs and Saving Bank A/cs.

4.

On hearing learned Representatives of both sides, we find that the assessee is a co-operative society engaged in the activity of providing credit facility to its members by way of housing loans. The assessee earned interest income from FDRs and Saving A/cs with Banks by investing surplus funds available with it and claimed the same as eligible for deduction u/s 80P(2)(a)(i). This issue of allowability of deduction is recurring year after year. The AO has disallowed deduction but in first-appeal, the CIT(A)

ACIT,1(1), Bhopal vs. M.P. State Co-op. Housing Federation, Bhopal – AY 2017-18 allowed the same by following the decision of ITAT in favour of assessee in earlier years. The relevant portion of CIT(A)’s order is re-produced below:

“5.0 The most important point of the appellant is that the Hon'ble ITAT in appellant’s own case in similar facts have given decision in appellant’s favour, The list of ITAT orders is as follow:- . ACIT, 1(2), Bhopal vs. M/s. M.P. State Coop. Housing Federation Society, Bhopal for A.Y. 2009-10 in I.T.A.No. 7/Ind/2013 dated 09.05.2013 (ITAT, Indore). . The DCIT, 1(1), Bhopal vs. M/s. M.P. State Coop. Housing Federation Society, Bhopal for A.Ys. 2010-11, 2011-12 and 2012-13 in I.T.A.Nos. 560, 607/Ind/2014 and 02/Ind/2016 dated 04.10.2016 (ITAT, Indore). . The ACIT, 1(1), Bhopal vs. M/s. M.P. State Coop. Housing Federation Society, Bhopal for A.Y. 2013-14 in I.T.A.No. 1051/Ind/2016 dated 27.03.2017 ( ITAT, Indore.)” XXX

5.4 On identical issue has also been decided by ITAT, Indore Bench for the assessment years 2003-04, 2006-07 and 2007-08 in the case of the appellant itself. While deciding the appeal of the assessee for the assessment-year 2006-07, the Tribunal vide its order dated 21.2.2012 in has held that :- “8. The assessee was having income on the deposits with Bank, U.T.I. These deposits were made out of the surplus fund available with the assessee in the intervening period of making the advances and recovery of the loans. The ITAT, Indore Bench has decided in the case cited supra that interest on IDBI Bonds and FDRs quality for deduction u/s 80P. Even in the case of CIT vs. Karnataka Coop. Bank Limited (supra), the interest on Indira Vikas Patras, Kisan Vikas Patras, UTI and IDBI Bonds was found qualified for deduction u/s 80P. The Hon'ble Supreme Court in the case of Mehsana District Central Coop. Bank Limited vs. ITO, has held that there is nothing in phraseology, of section 80P(2)(a)(i), which makes it applicable only to income derived from working or circulating capital. Even interest income from IVPs has also, held eligible for deduction. Respectfully following the ratio of the Hon'ble Supreme Court and Hon'ble High Courts and also ITAT, we hold that the assessee was eligible for deduction u/s 80P(2)(a)(i) of the Act, on the interest income from fixed deposits with the Banks and interest from S. B. Account, interest on deposits with U.T.I.” 5.5 Respectfully following all above judicial pronouncements, in the sake of the facts of the case, held that this issue is squarely covered by various

ACIT,1(1), Bhopal vs. M.P. State Co-op. Housing Federation, Bhopal – AY 2017-18 decisions of the Tribunal in favour of the assessee wherein it was categorically held that “the interest earned on deposits with bank, FDRs and saving bank accounts is an integral part of business activity of providing credit facilities to its members and, therefore, covered u/s 80P(2)(a)(i) of the Act”. Therefore, all the grounds of appeal filed by the appellant is allowed.”

5. Therefore, the CIT(A) has passed impugned order in favour of assessee following the view taken by ITAT in earlier years. Ld. DR for revenue has not shown that the decision given by ITAT in earlier years has been reversed by higher forum. Being so, we do not find any error in the impugned orders passed by CIT(A). Consequently, the same are upheld. The revenue fails in these appeals.

6.

Resultantly, these appeals are dismissed.

Order pronounced in open court on 11.10.2024

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