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Income Tax Appellate Tribunal, MUMBAI BENCHES “E”, MUMBAI
Before: SHRI MAHAVIR SINGH & SHRI ASHWANI TANEJA
Date of hearing : 13-12-2016 Date of order : 11 -01-2017
O R D E R
Per ASHWANI TANEJA, AM
This appeal has been filed by the Revenue against the order passed by the Commissioner of Income-tax (Appeals)-29, Mumbai [hereinafter called CIT(A)] dated 25-09-2013 passed against the assessment order of the AO dated 28-12-2012 u/s 143(3) for AY. 2010-11 on the following grounds:-
“I On the facts and in the circumstances of the case and in law, the Ld. CIT(A) has erred in:
1. On the facts and circumstances of the case and in law, the Ld. CIT(A) erred in deleting the addition of Rs. 33,70,030/ - holding that the assessee is eligible for deduction u/s. 80P(2)(a)(i) of the Act.
On the facts and circumstances of the case and in law, the Ld. CIT(A) erred in deleting the addition of Rs.33, 70,030/- without appreciating the fact that after initiation of scrutiny proceedings by issue of notice u/s. 143(2), the assessee had filed revised statement of income during the course of assessment proceedings wherein deduction u/s.80P(2)(d) amounting to Rs,33, 14,284/- was claimed, which was not claimed by it in the original as well as revised return filed. 3. On the facts and circumstances of the case and in law, the Ld. CIT(A) erred in holding that the interest income of Rs.33, 70,030/- received from various investments made in the Co- Operative Banks should be treated under the head 'Profit and Gain from the Business' and not under the head 'Income from Other Sources' by holding that the judgment in the case of Totgars Co-Operative Sale Society Ltd. vs. ITO reported in 322 ITR 283 (SC) (2010) has not been correctly applied in the case of the assessee by the Assessing Officer. 2) For these and other reasons it is submitted that the order of the CIT(A) may be set aside and that the AO restored.” 2. The only issue raised in this appeal is whether the Ld.CIT(A) has rightly allowed the benefit of deduction u/s 80P to the assessee society on the amount of interest income. 3. During the course of assessment proceedings, it was stated by the Ld. Counsel that the Ld.CIT(A) has allowed the relief to the assessee on both the grounds i.e. relief has been allowed u/s 80P(2)(a)(i) of the Act on the ground that assessee was eligible for deduction u/s 80P since whole amount of profits and gains of business was attributable to the activity of carrying on the business of banking by providing credit facilities to its members as well as the assessee was eligible for deduction u/s 80P(2)(d) since the interest income was earned by the assessee society from the Ld.CIT(A) should be upheld in view of the detailed findings recorded by the Ld.CIT(A) in his order.
Per contra, the Ld. DR submitted that fairly speaking, the assessee may not be eligible for deduction u/s 80(P)(2)(a)(i) of the Act, but assessee may be eligible for deduction u/s 80P(2)(d) since the impugned interest has been earned from other co-operative banks only.
We have gone through the orders passed by the lower authorities. It is noted that the Ld. CIT(A) has inter-alia held that the assessee society is eligible for the benefit of deduction u/s 80P(2)(d) with following observations:- “27. The interest income earned by the appellant is not taxable in view of the provisions of section 80P(2)(d) also. The entire deposits made by the of the appellant society are with the cooperative banks and as per the provisions of section 80P(2)(d), any interest income received from the deposits with the cooperative banks are not taxable. It can be observed from the details filed that all the deposits of the appellant are with the cooperative banks, the details of which are as under;-
Deposit With Rs. The Mumbal District Central Coop Bank Ltd 2,09,61,325.00
100000 The Mumbai District Central Coop Bank Ltd. The Maharashtra State Coop Bank Ltd. 36,51,544.00 The Maharashtra State Coop Bank Ltd 21,89,176.00 3,33,767.00 The Maharashtra State Coop Bank Ltd. The Maharashtra State Coop Bank Ltd. 1,60,000.00 Saraswat Co-op Bank Ltd 15,00,000 25,00,000.00 Abhyudaya Coop Bank Ltd,
Dombivli Nagark Sahakari Bank Ltd 29,98,475.00
TOTAL 3,82,12,980.00 Since all the deposits of the society are with the cooperative banks, the interest earned on such deposits is exempt under section 80(2)(P) and therefore the claim of exemption is allowable under the above section.”
It has been jointly stated by both the parties that the impugned interest income is derived only from co-operative banks. Thus, the assessee society is clearly eligible, on facts, for deduction u/s 80P(2)(d). Thus, addition made by the AO has rightly been deleted by the Ld. CIT(A).
Since we have upheld the order of Ld. CIT(A) on the ground of eligibility for deduction u/s 80P(2)(d), we are not going into other aspects, viz. whether the assessee was eligible for deduction u/s 80P(2)(a)(i) of the Act.
As a result, appeal of the Revenue is dismissed subject to the aforesaid directions.
Order pronounced in the court on this _11th day of January, 2017.