ADDL.CIT, Hyderabad v. M/s Sri Saraswathi Grameen Bank, Hyderabad

ITA 1076/HYD/2009 | 2006-2007
Pronouncement Date: 05-01-2010

Appeal Details

RSA Number 107622514 RSA 2009
Bench Hyderabad
Appeal Number ITA 1076/HYD/2009
Duration Of Justice 2 month(s)
Appellant ADDL.CIT, Hyderabad
Respondent M/s Sri Saraswathi Grameen Bank, Hyderabad
Appeal Type Income Tax Appeal
Pronouncement Date 05-01-2010
Appeal Filed By Department
Bench Allotted A
Tribunal Order Date 05-01-2010
Date Of Final Hearing 05-01-2010
Next Hearing Date 05-01-2010
Assessment Year 2006-2007
Appeal Filed On 05-11-2009
Judgment Text
IN THE INCOME TAX APPELLATE TRIBUNAL HYDERABAD BENCH A HYDERABAD BEFORE SHRI G.C. GUPTA VICE PRESIDENTAND SHRI AKBER BASHA ACCOUNTANT MEMBER ITA/CO NO. ASST. YR. APPELLANT RESPONDENT 1074/HYD/09 2006-07 ADDL. CIT RANGE-9 HYDERABAD. M/S. SRI RAMA GRAMEENA BANK HYD. C.O.56/HYD/2009 2006-07 M/S. SRI RAMA GRAMEENA BANK HYD. ADDL. CIT RANGE-9 HYDERABAD. 1076/HYD/09 2006-07 ADDL. CIT RANGE-9 HYDERABAD. M/S. SRI SARASWATHI GRAMEENA BANK HYD. C.O.57/HYD/2009 -DO- M/S. SRI SARASWATHI GRAMEENA BANK HYD. ADDL. CIT RANGE-9 HYDERABAD. 1077/HYD/09 -DO- ADDL. CIT RANGE-9 HYDERABAD. M/S. GOLCONDA GRAMEENA BANK HYD. C.O.58/HYD/09 -DO- M/S. GOLCONDA GRAMEENA BANK HYD. ADDL. CIT RANGE-9 HYDERABAD. ASSESSEES BY : SHRI T. UMAKANTH DEPARTMENT BY : SHRI K.V.N. CHARYA O R D E R PER BENCH THESE THREE APPEALS BY THE REVENUE AND THE OTHER TH REE CROSS OBJECTIONS BY DIFFERENT ASSESSEES ARE DIRECTED AGAINST THE DIFFERENT ORDERS PASSED BY THE LEARNED CIT (A)-VI HYDE RABAD ALL 2 PERTAINING TO THE ASSESSMENT YEAR 2006-07. SINCE COMMON I SSUE IS INVOLVED IN ALL THESE APPEALS AS WELL AS CROSS OBJECTIONS THESE ARE HEARD TOGETHER AND DISPOSED OF BY THIS COMMON ORDER FOR THE SAKE OF CONVENIENCE. 2. FOR THE SAKE OF BREVITY WE DEAL WITH FACTS MENT IONED IN ITA N.1074/HYD/09. THE ASSESSEE VIZ. SRI RAMA GRAMEENA BANK REPRESENTED BY DECCAN GRAMEENA BANK CLAIMED DEDUCTION U/S 80P EVEN ON INCOME FROM INVESTMENT OF SURPLUS FUNDS. AS THE SURPLU S FUNDS WERE NOT DEPLOYED IN THE BANKING BUSINESS AND AS THEY WERE INVESTED WITH A VIEW TO EARN INCOME FROM THEM SUCH INCOME WAS TREATED A S INCOME UNDER THE HEAD 'OTHER SOURCES' FOLLOWING THE DECISIONS O F THE APEX COURT IN TUTITORIN ALKALI CHEMICALS & FERTILIZERS LIMITED V S. CIT (227 ITR 172). HOWEVER THE FIRST APPELLATE AUTHORITY FOLLOWING THE DECISION OF SUPREME COURT IN VARIOUS CASES ALLOWED DEDUCTION U/S 80P ON INCOM E FROM INVESTMENTS MADE BY THE ASSESSEE AND HELD THAT THE INTERE ST INCOME EARNED ON INVESTMENT MADE OUT OF NON-SLR FUNDS SHOULD BE TAXED UNDER THE HEAD PROFITS AND GAINS OF BUSINESS AND THE S AME IS ELIGIBLE FOR DEDUCTION UNDER SECTION 80P[2][A][I] OF THE ACT.. IN T HE PRESENT CASE THE ASSESSEE COULD NOT PROVE THAT SURPLUS FUNDS WERE INVE STED FOR MAINTENANCE OF LIQUIDITY AT A SHORT NOTICE AND THE INV ESTMENTS ARE IN THE MEDIUM TERM. BUT THE FIRST APPELLATE AUTHORITY GAV E A FINDING THAT THERE IS NO NEED FOR THE ASSESSEE TO PROVE THE UTILIZATI ON OF FUNDS IN BANKING BUSINESS AND IT IS SUBMITTED THAT NONE OF THE DE CISIONS OF SUPREME COURT HOLD THAT THE ACTIVITY DONE WITH THE MIND SET OF THE INVESTOR HAS TO BE TREATED AS PART OF BANKING BUSINESS. HENCE THE PRESENT APPEAL IS FILED BY THE REVENUE BEFORE THE TRI BUNAL AGAINST THE DECISIONS OF THE FIRST APPELLATE AUTHORITY. THE ASSESSEES ALSO FILED CROSS 3 OBJECTION AGAINST THE SAME ORDERS OF THE CIT [A] ON TH E GROUND THAT RESTRICTING THE TDS CREDIT TO THE ASSESSEES ONLY FOR PART O F THE YEAR IS UNJUST AND UNSUSTAINABLE. 3. WE HAVE HEARD THE RIVAL SUBMISSIONS GONE THROUGH T HE ORDERS OF THE AUTHORITIES AND PERUSED THE MATERIAL AVAILABLE ON RECORD. DURING THE COURSE OF HEARING AN ORDER OF THE TRIBUNAL PASSED IN I TA NO.341/HYD/07 FOR ASSESSMENT YEAR 2003-04 IN THE CASE OF THE SUDHA CO-O PERATIVE URBAN BANK LTD. SURYAPET HAS BEEN PRODUCED BEFORE U S. WE HAVE GONE THROUGH THE SAID ORDER AND FIND THAT THE ISSUES IN VOLVED IN THESE TWO CASES ARE QUITE SIMILAR AND IDENTICAL. THE TRIBUNAL IN THE AFORESAID CASE HELD THAT THE INTEREST INCOME EARNED ON INVESTMENT OF FDR WITH APSFC IS A PART OF PROFIT AND GAINS OF BANKING BUSINESS ELIGIBLE FOR DEDUCTION U/S 80P(2)(A)(I) OF THE ACT AND ACCORDINGLY TH E ORDER PASSED BY THE FIRST APPELLATE AUTHORITY WAS UPHELD. RESPECTFU LLY FOLLOWING THE AFORESAID ORDER OF THE TRIBUNAL WE DO NOT FIND INFI RMITY IN THE ORDERS OF FIRST APPELLATE AUTHORITY AND HENCE HIS ORDERS ARE CONF IRMED. GROUNDS RAISED BY THE REVENUE ON THIS ISSUE ARE REJECTED. 3. IN THE CROSS OBJECTIONS THE ASSESSEES HAVE RAISED THE F OLLOWING COMMON GROUNDS:- '1. THE APPELLATE ORDER PASSED BY THE CIT (A)-VI HYDERA BAD IN SO FAR AS CONFIRMING THE ORDER OF THE ASSESSING AUTHORITY RES TRICTING THE TDS CREDIT TO THE ASSESSEE ONLY FOR PART OF THE YEAR (RELATING TO ASST. YEAR 2006-07) IS CONTRARY TO LAW UNJUST AND UNSUSTAINABLE. 2. THE APPELLATE AUTHORITY OUGHT TO HAVE CONSIDERED THAT THE BANKS/FINANCIAL INSTITUTIONS USUALLY DEDUCT TAX ONL Y AT THE TIME OF PAYMENT OF INTEREST AND REMIT THE SAME TO THE GOVER NMENT IN THE SAME ASSESSMENT YEAR IN WHICH THE DEDUCTION IS MADE.' 4 4. THERE WAS NO SERIOUS ARGUMENT ADVANCED BY THE LEA RNED COUNSEL FOR THE ASSESSEE ON THE MAIN GROUND RAISED IN THE CROSS OBJECTIONS. HOWEVER THE LEARNED COUNSEL FOR HE ASSESSEES SUB MITTED THAT THE ASSESSEE WILL NOT HAVE ANY GRIEVANCE IF AT LEAST TDS CREDIT FOR THE BALANCE AMOUNT IS GIVEN IN THE YEAR IN WHICH SUCH INCOME IS DISCLOSED. THE LEARNED DR SUBMITTED THAT AS PER PARA 9 .2 OF THE IMPUGNED ORDER THE FIRST APPELLATE AUTHORITY ALREAD Y GIVEN SUCH RELIEF AS REQUIRED BY THE ASSESSEE AND HENCE THE ASSESSEE WILL NOT HA VE ANY GRIEVANCE IN THIS REGARD. IN VIEW OF THE ABOVE WE D O NOT SEE ANY INFIRMITY IN THE ORDERS OF THE FIRST APPELLATE AUTHOR ITY ON THIS ISSUE. THEREFORE THE ORDERS OF THE FIRST APPELLATE AUTHORITI ES ON THIS ISSUE ARE CONFIRMED AND THE GROUNDS RAISED BY THE ASSESSEES IN THE CR OSS OBJECTIONS ARE HEREBY REJECTED. 5. IN THE RESULT ALL THE APPEALS FILED BY THE REVENU E AND CROSS OBJECTIONS FILED BY THE ASSESSEES STAND DISMISSED. ORDER WAS PRONOUNCED IN THE OPEN COURT ON 5 .01.2010 SD/- (G.C. GUPTA) SD/- (AKBER BASHA) VICE PRESIDENT ACCOUNTANT MEMBER. DT/- 5TH JANUARY 2010. COPY FORWARDED TO: 1. ASSESSEES AS MENTIONED IN CAUSE-TITLE. 2. ADDL CIT RANGE-9 HYDERABAD. 3. CIT AP HYDERABAD. 4. CIT(A) VI HYDERABAD. 5. THE D.R. ITAT HYDERABAD. JMR