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Income Tax Appellate Tribunal, ‘A’ BENCH,
Before: Shri Waseem Ahmed & Shri S.S.Viswanethra Ravi
This appeal by the Revenue is directed against the order of the Commissioner of Income Tax (Appeals), Kolkata dated 30- 08-2013 for the assessment year 2010-11.
In this appeal, the Revenue has raised the following grounds of appeal:-
1. That the Ld. CIT(A) had erred in law and in facts by allowing the claim of the assessee of Rs. 1,28,71,885/- as deduction u/s. 80P(2)(a)(i) of the Income-tax Act without appreciating the fact that the assessee being Co-operative Society in the banking business, falls under the definition of "Co-operative Bank" under clause (ccv) of Section 5 of the Banking Regulation Act, 1959 and therefore, is not eligible for relief under this section as it is neither a "primary agricultural co-operative society" nor a "primary co- operative agricultural and rural development bank", the only two categories of co- operative bank exempted The Baksara Co-op Credit Society Ltd 1 under section 80P(4) of the Income-tax Act, a provision inserted in the Act w.e.f. 1-4-2007.
2. That the CIT(A) erred in law in merely relying on the decision of his predecessor in the assessee's own case for the A.Y. 2009-10 in giving relief under section 80P(2)(a)(i) and completely ignored the decision of ITAT, Jaipur Bench in the case of Kekri Sahakari Bhumi Vikash Bank Ltd. reported in 22 Taxmann.com 63(JP)(2012) relied upon by the Assessing Officer.
3. That the CIT(A) erred in law by not appreciating the purport of the provision of sub- section 24(vii) of section 2 of Income Tax Act, which was inserted w.e.f. 1.4.2007, along with section 80P(4), in the Income Tax Act which clearly declares the legislative intent of withdrawing the benefit under section 80P(2)(a)(i) w.e.f. A.Y. 2007-08 in respect of all Co-operative Bank except 'Primary Agricultural Credit Society' or 'Primary Co- operative Agricultural and Rural Development Bank'.
4. That the Ld. CIT(A) erred in law and in fact in merely relying on the decision of his predecessor in the assessee's own case for the A.Y. 2009-10, in treating the income from other sources of Rs.2, 75,18,0991- as income from business, and his order suffers from perversity as he completely ignored the decision of the Hon'ble Supreme Court in the case of Totgars' Co- operative Sale Society Ltd. reported in 322 ITR 283(SC) [2010] which had held that interest income of a Co- operative Credit Society arising on the surplus invested in short-term deposits and securities, would come under the category of "Income from Other Sources" taxable under section 56 of the Income tax Act.
5. That the revenue craves leave to add, alter, include or modify the grounds of appeal.
From the above grounds of appeal, it is seen that the only ground to be decided as to whether the assessee is entitled to claim deduction u/s.80P(2)(a)(i) of the Act in the facts and circumstances of the case.
Brief facts of the case are that the assessee is a co- operative society and its business is banking and providing credit facilities to its members. The assessee filed its return of The Baksara Co-op Credit Society Ltd 2 income on 06-10-2010 declaring a total income at Rs. Nil after claiming deduction u/s. 80P of the Act. The AO denied to allow such claim of deduction in view of proviso to section 80P(4) of the Act. Thereby the AO disallowed the claim of deduction u/s. 80P of the Act to the extent of Rs.1,28,71,885/- and added the same to the total income of the assessee.
Aggrieved by such order of the AO in doing so the assessee challenged the same before the CIT-A and contended the same submissions as made before the AO. The CIT-A after considering the submissions of the assessee by relying on the decision in assessee’s own case for the AY 2009-10 by the 1st Appellate Authority deleted the impugned addition by holding that interest earned from investment on savings bank is a business income of the assessee.
Aggrieved by such order of the CIT-A, now the revenue is in appeal before us by raising the above mentioned grounds of appeal.
7. Before us the Ld.DR filed an additional evidence being Memo No.5433 dated 12/09/13 issued by the Addl. Registrar of Co-operative Societies, West Bengal, on record and prayed to admit the same as an additional evidence. By relying on such memo, he further argued that the assessee is not a co- operative society and is an urban Co-op Bank. Further argued that since the assessee is not a co-operative society, it cannot avail any claim of deduction in the return of income u/s. 80P of the Act. In view of such additional evidence as filed by the The Baksara Co-op Credit Society Ltd 3 Ld.DR prayed to remand the case to the file of the AO for verification.
The Ld.AR relied on various case laws and drew our attention to the order of the Tribunal dated 18-11-2015 in for the AY 2009-10 in assessee’s own case.
We have heard the rival submissions and perused the material available on record. We find that the assessee has claimed deduction of Rs.1,28,71,885/- u/s. 80P(2)(a)(i) of the Act. The assessee earned income from investment on savings bank account. According to the AO, the assessee is not entitled to claim such deduction u/s. 80P(2)(a)(i) of the Act as the assessee is a co-operative bank as provided u/s. 80P(4) of the Act. Further section 80P of the Act provides the deduction in respect of income of co-operative societies and such co- operative society can claim of deduction of any income earned from the activities as provided under sub section (2) of Section 80P. In the present case, the assessee claimed deduction under sub clause(i) in clause (a) of sub-section(2), wherein it provides a deduction if the assessee carries on business of banking or providing credit facilities to its members and income thereon can be claimed as deduction. As per additional evidence as filed by the Ld.DR being Memo No.5433 dated 12/09/13 issued by the Addl. Registrar of Co-operative Societies, West Bengal, goes to show that the assessee is not a co-operative society and is an urban Co-op Bank. Thus, we are of the view that since additional evidence was filed for the first time before us by the Ld.DR and the same is not on record of the AO at the time of assessment proceedings, therefore, with the consent of the parties, we deem it fit and proper to The Baksara Co-op Credit Society Ltd 4 remand the matter to the file of the AO for verification. Thus, the additional evidence as filed by the Ld.DR in Memo No.5433 dated 12/09/13 issued by the Addl. Registrar of Co-operative Societies, West Bengal is admitted and in the interest of justice the case is remitted to the file of the AO for verification and to pass an order in accordance with law after giving the assessee adequate opportunity of hearing. The assessee shall be at liberty to file requisite evidences, if any, to substantiate its claim.
In the result, the appeal filed by the revenue is allowed for statistical purpose.
Order Pronounced in the Open Court on 19th October, 2016.