ADDL.CIT, Hyderabad v. Sudha Co-operative Urban Bank Ltd.,, Suryapet

ITA 1094/HYD/2009 | 2004-2005
Pronouncement Date: 05-01-2010

Appeal Details

RSA Number 109422514 RSA 2009
Bench Hyderabad
Appeal Number ITA 1094/HYD/2009
Duration Of Justice 2 month(s)
Appellant ADDL.CIT, Hyderabad
Respondent Sudha Co-operative Urban Bank Ltd.,, Suryapet
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 31-01-2011
Next Hearing Date 31-01-2011
Assessment Year 2004-2005
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 NO.1094/HYD/2009 : ASSTT. YEAR 2004 -05 ADDL. CIT RANGE-9 HYDERABAD. (APPELLANT) VS SUDHA CO-OP. URBAN BANK LTD. SURYAPET NALGONDA DISTRICT. (PAN:AAHCS0706 K) (RESPONDENT) C.O.55/HYD/09 : IN ITA NO.1094/HYD /09- ASST. YR. 2004-05 SUDHA CO-OP. URBAN BANK LTD. ADDL. CIT RAN GE-9 NALGONDA DISTRICT. -V- HYDER ABAD. (PAN:AAHCS0706 K) (APPELLANT) (RESPONDENT) ASSESSEE BY : SHRI.Y.V. BHANU NARAYAN RAO DEPARTMENT BY : SHRI K.V.N. CHARYA O R D E R PER AKBER BASHA ACCOUNTANT MEMBER THE APPEAL PREFERRED BY THE REVENUE AND THE CROSS OBJECTION BY THE ASSESSEE ARE DIRECTED AGAINST THE ORDE R PASSED BY THE LEARNED CIT (A)-VI HYDERABAD DATED 11-8-2009 FOR TH E ASSESSMENT YEAR 2004-05. 2 2. BRIEF FACTS OF THE CASE ARE THAT THE ASSESSEE IS A CO- OPERATIVE BANK AND CLAIMED DEDUCTION U/S 80P EVEN ON INCOME FRO M INVESTMENT OF SURPLUS FUNDS. AS THE SURPLUS 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 AS INCOME UNDER THE HEAD ' OTHER SOURCES' FOLLOWING THE DECISIONS OF THE APEX COURT IN TUT ITORIN ALKALI CHEMICALS & FERTILIZERS LIMITED VS. CIT (227 ITR 172). HOWEVER THE FIRST APPELLATE AUTHORITY FOLLOWING THE DECISION OF SU PREME COURT IN VARIOUS CASES ALLOWED DEDUCTION U/S 80P ON INCOME FROM INV ESTMENTS MADE BY THE ASSESSEE AND IT MAY BE MENTIONED HERE THAT IT IS NOT NECESSARY THAT ENTIRE INCOME OF A BANK HAS TO BE CATEGORI ZED AS INCOME FROM BUSINESS. IT IS QUITE POSSIBLE THAT A BANK CAN HAVE DIFFERENT SOURCES OF INCOME AND INCOME FROM OTHER SOURCES MAY BE ON SUCH SOURCE WHEN A BANK INVESTS SURPLUS FUNDS AND NOT USES THEM I N THE DAILY BANKING BUSINESS THEN DEFINITELY SUCH AN ACTIVITY IS ONE THE MIND SET OF THE INVESTOR AND NOT AS A BANKER. IN THE PRESENT CASE THE ASSESSEE COULD NOT PROVE THAT SURPLUS FUNDS WERE INVESTED FOR MA INTENANCE OF LIQUIDITY AT A SHORT NOTICE AND THE INVESTMENTS ARE IN THE MEDIUM TERM. BUT THE FIRST APPELLATE AUTHORITY GAVE A FINDING TH AT THERE IS NO NEED FOR THE ASSESSEE TO PROVE THE UTILIZATION OF FUNDS IN BANKIN G BUSINESS AND IT IS SUBMITTED THAT NONE OF THE DECISIONS 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 B EFORE THE TRIBUNAL AGAINST THE DECISIONS OF THE FIRST APPELLATE A UTHORITY. 3. WE HAVE HEARD THE RIVAL SUBMISSIONS GONE THROUGH T HE ORDERS OF THE AUTHORITIES AND PERUSED THE MATERIAL AVAILABLE ON RECORD. DURING THE 3 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 SAME ASSESSEE HAS BEEN PRODUCED BEFORE US. WE HAVE GONE THROUGH THE SAID OR DER AND FIND THAT THE ISSUES INVOLVED IN THESE TWO CASES ARE QUITE SIMILAR AN D IDENTICAL. THE TRIBUNAL IN THE AFORESAID CASE HELD THAT THE INTER EST INCOME EARNED ON INVESTMENT OF FDR WITH APSFC IS A PART OF PROFIT A ND GAINS OF BANKING BUSINESS ELIGIBLE FOR DEDUCTION U/S 80P(2)(A)(I) OF TH E ACT AND ACCORDINGLY THE ORDER PASSED BY THE FIRST APPELLATE AUTH ORITY WAS UPHELD. RESPECTFULLY FOLLOWING THE AFORESAID ORDER OF THE TRIB UNAL WE REJECT THE GROUNDS TAKEN BY THE REVENUE. 3. THE CROSS OBJECTION FILED BY THE ASSESSEE MERELY SUPPORT S THE ORDER OF THE FIRST APPELLATE AUTHORITY. SINCE WE HAVE REJECTED THE GROUNDS TAKEN BY THE REVENUE THE CROSS OBJECTION FILED BY THE ASSESSEE HAS BECOME INFRUCTUOUS AND ACCORDINGLY THE SAME IS REJECTE D. 4. IN THE RESULT BOTH THE APPEAL FILED BY THE REVEN UE AND THE CROSS OBJECTION BY THE ASSESSEE ARE DISMISSED. ORDER WAS PRONOUNCED IN THE OPEN COURT ON 05 .01.2010 SD/- (G.C. GUPTA) SD/- (AKBER BASHA) VICE PRESIDENT ACCOUNTANT MEMBER. DT/- 5TH JANUARY 2010. 4 COPY FORWARDED TO: 1. M/S. SUDHA CO-OP. URBAN BANK LTD. OPP. MUNICIPAL OFFICE SURYAPET. 2. ITO KRISHNA NAGAR SURYAPET. 3. CIT AP HYDERABAD. 4. CIT(A) VI HYDERABAD. 5. THE D.R. ITAT HYDERABAD. JMR