ACIT 23(1), MUMBAI vs. SHIVKRUPA SAHAKARI PATPEDHI LTD, MUMBAI

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ITA 6023/MUM/2013Status: DisposedITAT Mumbai11 March 2016AY 2010-115 pages

In favour of the assessee: the Revenue's appeal was dismissed. From the AI summary of this appeal.

AI SummaryDismissed

What did the Tribunal hold?

The Tribunal held that income from service charges and recovery charges is incidental to the main activity of providing credit facilities and is eligible for deduction under Section 80P(2)(a)(i). The Tribunal followed its own prior decisions on identical issues.

What were the facts?

The assessee, a co-operative society, claimed deduction under Section 80P on service and recovery charges. The Assessing Officer disallowed this deduction, but the Commissioner (Appeals) allowed it, citing previous years' precedents.

What were the issues?

Whether service charges and recovery charges earned by a co-operative society are eligible for deduction under Section 80P as income incidental to its main business.

Which sections of the Income-tax Act were involved?

Section 80P

AI-generated summary — verify with the full judgment below

Income Tax Appellate Tribunal, “E” BENCH, MUMBAI

Before: SHRI SAKTIJIT DEY & SHRI RAMIT KOCHAR

For Respondent: Shri Ritesh Misra

Aforesaid appeal of the Department is directed against the order dated 1st August 2013, passed by the learned Commissioner (Appeals)–33, Mumbai, for the assessment year 2010–11.

2.

When the case was called for hearing, none appeared on behalf of the assessee. On previous occasions also, as found from the order sheet entries, no one has appeared on behalf of the assessee to 2 Shivkrupa Sahakari Patpedhi Ltd. represent the case despite service of notice. In view of the aforesaid, we proceed to dispose off the appeal ex–parte qua the assessee after hearing the learned Departmental Representative.

The only effective ground raised by the Department is as under:–

“On the facts and in the circumstances of the case and in law, the learned Commissioner (Appeals) was right in holding that service charges and recovery charges of ` 1,09,17,794 and ` 17,62,377 respectively attributable as business income of society as per the objectives of the society.”

3.

Briefly stated the facts are, assessee a co–operative society is carrying on business of providing credit facilities to its members. For the assessment year under consideration, assessee filed its return of income on 25th September 2010, declaring total income of ` 3,34,22,600 and had claimed deduction under section 80P of the Income Tax Act, 1961 (for short "the Act"). During the assessment proceedings, Assessing Officer, while verifying assessee’s claim of deduction under section 80P, found that certain incomes earned by assessee during the relevant previous year was not incidental to activities of co–operative housing society. He, therefore, called upon the assessee to show cause as to why deduction under section 80P on these incomes should not be denied. Though, assessee submitted a detailed reply justifying its claim of deduction under section 80P,

3 Shivkrupa Sahakari Patpedhi Ltd. however, Assessing Officer having not found merit in the submissions of the assessee, disallowed assessee’s claim of deduction on the amount of ` 1,92,16,835. Being aggrieved of such disallowance of deduction under section 80P, assessee challenged the same in appeal before the learned Commissioner (Appeals).

4.

Learned Commissioner (Appeals), noticing the fact that in assessee’s own case for assessment years 2003–04, 2008–09 and 2009–10, the first appellate authority has decided the issue by holding that service charges and recovery charges are eligible for deduction under section 80P allowed assessee’s claim. Being aggrieved, Department is in appeal before us.

5.

We have heard the learned Departmental Representative and perused the material available on record. Learned Departmental Representative fairly submitted that against the learned Commissioner (Appeals)’s order for assessment years 2003–04, 2008–09 and 2009– 10, the Department had preferred appeals before the Tribunal. However, the Tribunal has decided the issue in favour of the assessee by confirming the order of the learned Commissioner (Appeals). On a perusal of the order of the Tribunal in assessee’s own case for assessment year 2009–10 in ITA no.5690/Mum./2012 dated 20th May 2014, it is observed, while deciding identical nature of dispute, the 4 Shivkrupa Sahakari Patpedhi Ltd. Bench, following its earlier order in assessee’s own case for assessment year 2008–09 in ITA no.922/Mum./2012 dated 30th September 2013, held that assessee is eligible to claim deduction under section 80P(2) on income from service charges and recovery charges. The relevant observations of the Tribunal is extracted herein below for convenience:–

“7. After carefully considering the rival contentions and on a perusal of the findings of the Tribunal given in assessee’s own case in the assessment year 2008–09 cited supra, we find that the present issue is squarely covered by the said decision of the Tribunal rendered in assessee’s own case, wherein the Tribunal held as under:– “5. We have considered the rival submission and also perused the relevant material available on record. The assessee in the present case is co-operative credit society and the income earned by it from the business of providing credit facilities to its members is entitled for deduction u/s 80-P(2)(a)(i) of the Act. Even the A.O. allowed such deduction claimed by the assessee in respect of its income from business of providing credit facilities to its members except the income from service charges and recovery charges. According to him, the income earned by the assessee in the form of recovery and service charges was not from the business of providing credit facilities to its members and the same, therefore, was not entitled for deduction u/s 80-P of the Act. However, as contended on behalf of the assessee before the ld. CIT(A) as well as before us, the activity resulting in service and recovery charges was an integral part of the main activity of the assessee of providing credit facilities to its members and since the income from service charges and recovery charges was very much incidental to the income of the assessee from the business of providing credit facilities to its members, the same in our opinion was entitled to deduction u/s 80-P(2)(a)(i) of the Act as rightly held by the ld.

5 Shivkrupa Sahakari Patpedhi Ltd. CIT(A). We therefore find no infirmity in the impugned order of the ld. CIT(A) giving relief to the assessee on this issue and upholding the same, we dismiss the appeal filed by the Revenue.”

8.

In view of the aforesaid findings of the Tribunal and consistent with the view taken therein, we do not find any infirmity in the order passed by the learned Commissioner (Appeals) and decline to interfere in the matter as such. Accordingly, the grounds raised by the Revenue are dismissed.”

There being no material difference in facts, respectfully following the aforesaid decision of the co–ordinate bench, we uphold the order of the learned Commissioner (Appeals) on this issue and dismiss the ground raised by the Department.

6.

In the result, Departmental appeal stands dismissed. Order pronounced in the open Court on 11.03.2016

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