SINDHUDURG NAGRI SAHKARI PATPEDHI LTD,MUMBAI vs. ASST, CIT CIR 2, KALYAN

Order u/s.254(1)of the Income-tax Act,1961(Act) लेखा लेखा सद�य लेखा लेखा सद�य सद�य राजे�� सद�य राजे�� राजे�� केकेकेके अनुसार राजे�� अनुसार अनुसार PER RAJENDRA, AM- अनुसार Challenging the order dated 18.3.2011 of the CIT (A)-II, Thane,the assessee has filed the appeals for above mentioned two Assessment Years (AY.s.). ITA/5185/Mum/2011-AY.-2007-08 Assessee ,a cooperative society,is engaged in providing the credit facility to its Members. It filed its return of income on 5.10.2007 declaring total income of Rs. Nil.The Assessing Officer(AO)completed the assessment on 18.9.2009 u/s. 143(3) of the Act, determining its income at Rs. 4,46,013/-. 2.During the assessment proceedings, the AO found that the assessee had claimed exemption u/s.80P (2)(a)(i) of the Act,that the assessee had made various investment and had earned total interest of Rs. 22.87 lakhs.He directed the assessee to submit the details of its investment and the interest received on it.From the detail submitted,he observed that some of its investments were with non-cooperative institutions.Referring to provisions of section 80P(2)(d)of the Act,he held that interest received from investment with non-cooperative institutions was not allowable as deduction, that such interest worked out at Rs. 5,00,239/-. Before him,the assessee argued that proportionate expenses should be allowed against the interest.However, the AO was of the view that assessee was entitled to claim proportionate expenses amounting to Rs. 54,226/- as against Rs. 4.32 lakhs claimed by it. 3.Aggrieved by the order of the AO,the assessee preferred an appeal before the First Appellate Authority(FAA).After considering the submission of the assessee and the assessment order,he held that interest received from investment made with non-cooperative institution was not allowable as deduction, that if the income was derived by a cooperative society from the business of banking only than it would fall within the exemption clause, that if the income arose from and out of the business with third party the exemption was not available,that the investment of asset was not a part of business of the assessee. He referred to case of Totgars Cooperative Sale Society (322 ITR 283) and held that the order of the AO taxing the interest income received from investment in other banks as income from other sources was in order. On the issue allowance of expenses against such income he upheld the order of the AO. In short he dismissed the appeal filed by the assessee.

2 Sindhudurg Nagri Sahakari Patpedhi Ltd.5185/11 &1186/12 4.During the course of hearing before us,the authorised representative (AR) contended that similar issue had arisen in the appeal filed by the AO for the AY.2009-10 (ITA No. 1935/ Mum/2014 dated 10.9.2015), that the Tribunal had dismissed the appeal filed by the AO. He also relied upon the case of Jaoli Taluka Sahakari Patpedhi Maryadit (ITA 6620/Mum/2014 – AY.2011-12 dated 10.8.2015), Mehsana District Cooperative Bank Ltd. (251 ITR 522). 5.We have heard the rival submissions and perused the material before us.We find that the while deciding the appeal for A.Y. 2009-10,the Tribunal has, in para 2, mentioned the fact as under : The grievance of the Revenue is two folds. Firstly the ld. CIT(A) erred in deleting the addition of Rs. 33,19,403 on account of disallowance of deduction u/s. 80P(2)(d) of the Act , secondly, the ld. CIT(A) erred in allowing the claim u/s. 80P(2)(a)(i) of the Act. We find that the Tribunal had rejected the appeal filed by the Revenue.As the facts of the case for the year under consideration are similar to the facts of AY.2009-10,so,respectfully following the order for that year we decide the effective ground of appeal (GOA-1) in favour of the assessee.