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Income Tax Appellate Tribunal, DELHI BENCH: ‘G’ NEW DELHI
Before: SHRI R. K. PANDA & MS SUCHITRA KAMBLE
PER SUCHITRA KAMBLE, JM
This appeal is filed by the Revenue against the order dated 17/04/2016 passed by CIT(A)-Ghaziabad, Assessment Year 2012-13.
The grounds of appeal are as under:-
“Ld. CIT (A) has erred in law as well as on facts in not Section 80P of the Act, which was amended by the Finance Act, 2006 with effect from 01.04.2007 introducing subsection(4) which laid down specifically that the provisions of section 80P of the Act will not apply to any co-operative bank and accordingly deduction under section 80P was no more available to any Regional Rural Bank (RRB) from A.Y. 2007-08.
Ld. CIT (A) has erred in law as well as on facts in deleting the addition of
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Rs. 1.82.02.860/- in view of the OM dated 25.08.2006 addressed to RBI clarifying that Regional Rural Banks would not be eligible for deduction u/s 80P of the Act from A.Y. 2007-08.
Ld. CIT (A) has erred in law as well as on facts in deleting the addition of Rs. 1.82.02.860/- in view of the circular No.6/2010dat:ec1 20.09.2010 which clarified that circular No. 319 dated 11.01.1982 deeming any Regional Rural Bank to be co-operative society stands withdrawn and RRBs are not eligible for deduction u/s 80P of the Act from A.Y. 2007-08.
Therefore the order of Ld. CIT (A) be set aside and the order of the AO be restored.”
The assessee is a cooperative society derives income from banking activity and house property. Return declaring income of Rs. 3,50,53,910/- was E-filed on 27.09.2012. During the course of assessment proceedings, it was observed by the Assessing Officer that the assessee had credited the amount of Rs. 1,82,02,860/- on account of dividend under the head gross receipts which had been claimed exempt in the computation of income. It was also observed by the Assessing Officer that the IFFCO from whom dividend was received was not a company but was a cooperative society and dividend distribution tax had not been deducted by IFFCO. It was held by the Assessing Officer that the dividend income was not exempt in the hands of the assessee. Thus, the amount of Rs.1,82,02,860/- was disallowed and added to the income of the assessee.
Being aggrieved by the Assessment Order, the assessee filed appeal before the CIT(A). The CIT(A) partly allowed the appeal of the assessee.
The Ld. DR submitted that the dividend received from IFFCO is exempt u/s 80P(2)(1) of the Income Tax Act, as per the claim of the assessee. But the Assessing Officer rightly observed that Section 115O of the Income Tax Act 1961 provides special provisions relating to tax on Distributed Profit of Domestic Companies. Since, no tax on the dividend received by the assessee
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has been paid by the dividend paying society, being cooperative society, therefore, the dividend income cannot be exempted in the hands of the assessee. Therefore, the Assessing Officer rightly added Rs. 1,82,02,860/- to the income of the assessee. The Ld. DR submitted that the CIT(A) in deleting this addition.
The Ld. AR relied upon the order of the CIT(A).
We have heard both the parties and perused all the relevant material available on record. In the present case, dividend received from IFFCO and UP Cooperative Bank Ltd. are exempt u/s 80P(2)(1) of the Income Tax Act, 1961 as IFFCO and U.P. Cooperative Bank Ltd. are cooperative society. The CIT(A) held as under:-
“4. Having considered facts of the case and rival contentions, the appeal is decided as under:-
4.1. All the grounds of appeal except ground No. 4 being inter-related are against the addition of Rs.1,82,02,860/- being disallowance of dividend income received form IFFCO and U.P. Cooperative Bank Ltd. During appeal proceedings the appellant has made written submission, the relevant para is reproduced as under:-
“……………….. Unfortunately the claim of exemption in respect of dividend income of the appellant considered with reference to the provisions of section 1150 and section 10(34) was not correct as the claim is admissible u/s 80P(2)(d) of the Income Tax Act. It may be submitted that the appellant is a cooperative society and the dividend paying concern i.e. Indian Farmer Fertilizer cooperative Ltd. is also a society. Since the dividend income derived by the appellant is from a concern which is also a cooperative society, the whole of such income is exempt u/s 80P(2)(d) of the I.T. Act. It may very humbly be submitted that exactly similar issue had also arisen in
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the assessment year 2007-08, 2009-10, 2010-11 and 2011-12 where Ld. Predecessors and your honor had been pleased to accept the claim of the appellant. Copies of those decisions are enclosed herewith for ready reference.
In view of the above submissions, the appellant is entitled to exemption in respect of total income of Rs. 18202860/-/- from div idend.”
4.2 The facts of the case as well as submission made by the appellant have been carefully considered. It is observed that the Assessing Officer had made addition of Rs. 1,82,02,860/- holding that dividend income received from IFFCO is not exempt. The aforesaid cooperative society had not paid tax on dividend paid to the appellant as per provisions of section 10 (34) r.w. Section 1150 of the Act. On the other hand the appellant has vehemently argued that dividend income received from the aforesaid cooperative society was exempt u/s 80P (2)(d) of the Act. It is also contended that the A.O. has ignored the fact that part dividend has come from U.P. Cooperative Bank. The appellant has also furnished copies of the order of CIT (A) wherein in similar facts and circumstances, the CIT (A) in their orders dated 20.09.2013, 21.02.2014, 23.02.2015 & 17.04.2015 had allowed the appeals of appellant for A.Yrs. 2007- OS, 2009-10, 2010-11 & 2011-12 respectively. To decide the impugned issue let us go through the relevant provisions of the Act.
Section 80P(2)(d) of the Act says- “in respect of any income by way of interest or dividends derived by the co operative investment with any other co-operative society, the whole of such income.”
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The appellant has received dividend from IFFCO and U.P. Cooperative Bank Ltd, which are cooperative society. As far as IFFCO is concerned, the fact that it is a cooperative society is an established fact in earlier years and this year also the A.O. has mentioned that it is a cooperative society. As far as the U.P. Cooperative Bank Ltd. is concerned, the A.O. has not mentioned anything about it. I have verified that it is cooperative society as is ascertainable from the Registration Certificate produced by the appellant and on my behest the appellant has also produced I.T. Return of the Bank wherein the status is mentioned to be cooperative society. Even otherwise it is not the case of the A.O. that U.P. Cooperative Bank Ltd. is a company. Thus, the amount of Rs. 1,82,02,860/- being dividend received from the aforesaid cooperative societies is expressly exempt u/s 80P (2)(d) of the Act. Similar view has also been taken by the CIT (A) in appellant’s own case for A.Ys. 2007-08, 2009- 10, 2010-11 & 2011-12. In view of the above, it is held that the Assessing Officer is not justified to make addition of Rs. 1,82,02.860/-. The same is deleted and related grounds of appeal are allowed.”
The CIT(A) has extensively given the finding and followed the earlier years orders. The Ld. DR also could not point out whether the Revenue has challenged the earlier years order or not. There is no need to interfere with the findings of the CIT(A). Thus, we are following the rules of consistency and thus, appeal of the Revenue is dismissed.
In the result, the appeal of the Revenue is dismissed.
Order pronounced in the Open Court on 18th September, 2018.
Sd/- Sd/- (R. K. PANDA) (SUCHITRA KAMBLE) ACCOUNTANT MEMBER JUDICIAL MEMBER
Dated: 18/09/2018