A.C.I.T., Circle - 1, Hooghly, Hooghly v. The Baidyabati Sheoraphuli Co-op. Bank Ltd., Hooghly

ITA 1513/KOL/2009 | 2006-2007
Pronouncement Date: 28-07-2011

Appeal Details

RSA Number 151323514 RSA 2009
Assessee PAN UMBER1979F
Bench Kolkata
Appeal Number ITA 1513/KOL/2009
Duration Of Justice 1 year(s) 11 month(s)
Appellant A.C.I.T., Circle - 1, Hooghly, Hooghly
Respondent The Baidyabati Sheoraphuli Co-op. Bank Ltd., Hooghly
Appeal Type Income Tax Appeal
Pronouncement Date 28-07-2011
Appeal Filed By Department
Bench Allotted C
Tribunal Order Date 28-07-2011
Assessment Year 2006-2007
Appeal Filed On 27-08-2009
Judgment Text
I.T.A NO. 1513/KOL/2009-C--SVM 1 C IN THE INCOME TAX APPELLATE TRIBUNAL C BENCH : KOLKATA BEFORE HONBLE SRI B.R. MITTA L JM & HONBLE SRI S.V MEHROTRA AM () . . ! . '.#$% #& !' / I.T.A NO. 1513/KOL/2009 () *+ / ASSESSMENT YEAR : 2006-07 ASSTT. COMMISSIONER OF INCOME-TAX VS. THE BAIDYABA TI SHERAPHULI CIRCLE-1 HOOGHLY CO-OPERATIVE BANK LTD PAN: AACFB-83 20N (-. /APPELLANT ) (/0-./ RESPONDENT ) -. / FOR THE APPELLANT : 1 / SHRI NIRAJ KUMAR LD.CIT/DR /0-. / FOR THE RESPONDENT : 1 /SHRI S.M SURANA LD. AR #2 / ORDER . '.#$% #& SHRI S.V MEHROTRA ACCOUNTANT MEMBER : THIS IS AN APPEAL FILED BY THE DEPARTMENT AGAINST THE ORDER OF THE LEARNED COMMISSIONER OF INCOME-TAX (A)-XXXVII KOLKATA DAT ED 18-03-2009 FOR THE ASSESSMENT YEAR 2006-07. 2. THE APPEAL FILED BY THE DEPARTMENT IS TIME BARRE D BY 54 DAYS FOR WHICH A CONDONATION PETITION BY WAY OF AN AFFIDAVIT HAS BEEN FILED BY THE REVENUE WHEREIN SHRI CHANDRA PRAKASH BHATIA ASSTT. COMMISSIONER OF INCOME-TAX CIRCLE-1 HOOGHLY INTER-ALIA HAS STATED AS UNDER :- 4. THAT THIS IS A MOFUSSIL OFFICE LOCATED ABOUT 4 OKMS. FROM KOLKATA; 5. THAT THE ASSESSMENT RECORDS FOR THIS A.Y. WERE DISPATCHED TO KOLKATA ON 27/7/09 AFTER GIVING APPEAL EFFECT PREPA RING APPEAL SCRUTINY REPORT AND SUGGESTING SECOND APPEAL SO TH AT COUNTER COMMENTS THEREON ARE KINDLY OFFERED BY THE LD. ADDL . COMMISSIONER OF INCOME TAX RANGE-I. HOOGHLY. 6. THAT THESE RECORDS WERE SENT TO THE LD. CIT. K OLKATA-XX. KOLKATA ON 27/7/09 AFTER FURTHER PROCESSING AND COU NTER- COMMENTS OF THE LD. ADDI. COMMISSIONER OF INCOME TA X. RANGE-I. HOOGHLY 7. THAT THE UNDERSIGNED TOOK OVER THE ADDITIONAL C HARGE OF ACIT CIRCLE-I. HOOGHLY ON3/8/09. I.T.A NO. 1513/KOL/2009-C--SVM 2 8. THAT THE DECISION OF THE LD. COMMISSIONER OF IN COME-TAX. KOLKAIA-XX. KOLKATA TO FILE SECOND APPEAL IN THE CA SE WAS COMMUNICATED TO THE UNDERSIGNED ON 26/8/09 ALONGWIT H THE CONCERNED ASSESSMENT RECORDS. 3. AFTER CONSIDERING THE AVERMENTS MADE IN THE AF FIDAVIT WE ARE OF THE OPINION THAT THE DEPARTMENT WAS PREVENTED BY REASONABLE CAUSE FROM PREFERRING THE APPEAL WITHIN THE STIPULATED PERIOD. WE ACCORDINGLY CONDONE THE DEL AY IN FILING THE APPEAL IN VIEW OF THE DECISION OF THE HONBLE SUPREME COURT IN THE CASE O F CIT VS. WEST BENGAL INFRASTRUCTURAL & FINANCIAL CORPORATION LTD REPORTED IN 2011 [ 196 T AXMAN 321(SC) ] AND PROCEED TO DECIDE THE APPEAL ON MERIT. 4. BRIEF FACTS OF THE CASE THAT THE ASSESSEE A CO- OPERATIVE BANK FILED ITS RETURN OF INCOME DECLARING TOTAL INCOME AT RS.NIL AFTER CLAIMING E NTIRE NET PROFIT OF RS.48 28 283/- DEDUCTIBLE U/S.80P. THE ASSESSING OFFICER OBSERVED THAT ASSESSEE WAS ENTITLED FOR DEDUCTION OF RS.50 000/- ONLY IN RESPECT OF PROFITS ARISING OUT OF OTHER ACTIVITIES. HE CONCLUDED THAT THE FOLLOWING ITEMS WERE NOT RELATABLE TO ASSESSEES BU SINESS ACTIVITIES :- 1) INCOME A) INTT. ON INVESTMENT RS.2 65 05 616.26 B) PROFIT ON SALE OF INVESTMENT RS. 7 80 390.00 C) RENT RS. 2 90 636.00 RS.2 75 76 642.26 2) EXPENDITURE A) LOSS ON SALE OF INVESTMENT RS. 45 23 500.00 B) DEPRECIATION ON INVESTMENT (VIDE OTHER EXPENDITURE FOR RS.42 84 188/- ANNEXURE-B) RS.20 04 800.00 C) EXPENSES PROVISION & CONTINGENCY RS.22 06 560.00 TOTAL RS.3 63 11 502.26 5. BEFORE THE LEARNED COMMISSIONER OF INCOME-TAX ( APPEALS) IT WAS CONTENDED THAT INCOME EARNED BY ASSESSEE BEING A CO-OPERATIVE BANK WAS EXEMPT U/S.80P. BEFORE HIM THE ASSESSEE HAS RELIED ON THE FOLLOWING CASE LAWS:- A. KARNATAKA CO-OP BANK [251 ITR 194(SC) B. SURAT DIST. CO-OP BANK VS. ITO [262 ITR 1-ITAT SPL. BENCH] C. CIT VS. RAJASTHAN STATE CO-OP BANK [272 ITR 600 ] D. CIT VS. BARODA PEOPLES CO-OP BANK LTD [280 ITR 2 82] I.T.A NO. 1513/KOL/2009-C--SVM 3 6. AFTER CONSIDERING THE ABOVE SUBMISSIONS OF THE A SSESSEE THE LEARNED COMMISSIONER OF INCOME-TAX (APPEALS) ALLOWED THE APPEAL OF THE ASSE SSEE. 7. BEING AGGRIEVED WITH THE ORDER OF LEARNED COMMI SSIONER OF INCOME-TAX (APPEALS) THE DEPARTMENT IS IN APPEAL BEFORE US AND HAS RAISED T HE FOLLOWING GROUNDS OF APPEAL:- A) IN THE FACTS AND IN THE CIRCUMSTANCES OF THE C ASE THE OBSERVATION OR ID. CIT(A)XXX VII KOLKATA IS BAD IN LAW.. B) IN THE FACTS AND IN THE CIRCUMSTANCES O THE CAS E THE ONUS WAS ON THE ASSESSEE TO PROVE THAT SUCH INCOME WAS EXEMP T U/S 80P OF THE I ACT1961. C) THAT THE TAX EFFECT IN THE ABOVE CASE EXCEEDS T HE LIMIT PRESCRIBED BY INSTRUCTION NUMBER 1979 FOR FILING AN APPEAL BEFORE ITAT D) ANY OTHER GROUND TO HE RAISED ATE TIME OF HEARI NG. 8. THE LEARNED DEPARTMENTAL REPRESENTATIVE RELIED O N THE ORDER OF THE ASSESSING OFFICER AND SUBMITTED THAT DEDUCTION IN RESPECT OF RENTAL INCOME OF RS.2 90 636/- CANNOT BE ALLOWED IN VIEW OF DECISION OF THE HONBLE PATNA HIGH COURT I N THE CASE OF BIHAR RAJYA SAHAKARI BHOOMI VIKAS CO-OPERATIVE BANK LTD VS. CIT REPORTED IN (20 09) [ 313 ITR 247 (PAT)] 9. THE LEARNED COUNSEL FAIRLY CONCEDED THAT AS FAR AS RENTAL INCOME IS CONCERNED DEDUCTION U/S.80P CANNOT BE ALLOWED IN VIEW OF THE DECISION OF THE HONBLE PATNA HIGH COURT IN THE CASE OF BIHAR RAJYA SAHAKARI BHOOMI VIKAS CO-OPERATIVE BANK LTD VS. CIT REPORTED IN (2009) [ 313 ITR 247 (PAT)]. HOWEVER AS FAR AS INTEREST ON INVESTMENT OF RS.2 65 05 616.26 IS CONCERNED THE SAME IS ELIGIBLE FOR DEDUCTION IN VIEW OF FOLLOWING DECISIONS:- A. TOTGARS CO-OPERATIVE SALE SOCIETY LTD VS. ITO [ 322 ITR 272(KAR)] B. TOTGARS CO-OPERATIVE SALE SOCIETY LTD VS. ITO [322 ITR 283(SC)] 10. WE HAVE CONSIDERED THE RIVAL SUBMISSIONS AND H AVE PERUSED THE RECORD OF THE CASE. THE LEARNED COMMISSIONER OF INCOME-TAX (APPEALS) HA S OBSERVED THAT THE INVESTMENTS WERE MADE BY THE ASSESSEE AS PER DIRECTIONS OF THE RESE RVE BANK OF INDIA AND INCOME DERIVED BY THE ASSESSEE WAS FROM BANKING BUSINESS. THESE FIND INGS HAVE NOT BEEN CONTROVERTED BY THE LEARNED DEPARTMENTAL REPRESENTATIVE. THE LEARNED CO MMISSIONER OF INCOME-TAX (APPEALS) HAS RIGHTLY PLACED RELIANCE ON THE DECISION OF THE ITA T AHEMEDABAD SPECIAL BENCH IN THE CASE I.T.A NO. 1513/KOL/2009-C--SVM 4 OF SURAT DIST. CO-OP BANK LTD & ORS VS. ITO REPORTED IN [262 ITR 1] WHEREIN IT HAS BEEN HELD AS UNDER:- THEREFORE THE INTEREST ON INVESTMENTS MADE BY CO- OPERATIVE BANKS IN GOVERNMENT SECURITIES ATTRIBUTABLE TO UTILIZATION O F ITS FUNDS FROM STATUTORY RESERVES UNDER SECTION 67(2) OF THE GUJAR AT CO-OPERATIVE SOCIETIES ACT 1961 THE INTEREST INCOME FROM INV ESTMENT MADE BY WAY OF MANDATORY MINIMUM BANKING RESERVES AS REQUIRED BY THE RELEVANT PROVISIONS OF THE BANKING REGULATION ACT AND INCOME FROM HIRING OF SAFE DEPOSIT VAULTS ARE ELIGIBLE FOR GRANT OF DEDUC TION UNDER SECTION 80P(2)(A)(I). INCOME FROM INVESTMENTS IN GOVERNMENT SECURITIES FIXED DEPOSITS WITH BANKS INVESTMENTS IN INDIRA VIKAS P ATRA KISAN VIKAS PATRA AND OTHER APPROVED MODES OF INVESTMENT OUT OF SURPLUS FUNDS AVAILABLE OUT OF WORKING CAPITAL INCLUDING VOLUNT ARY RESERVES ARE AN INTEGRAL PART OF NORMAL BANKING ACTIVITIES CARRI ED ON BY CO-OPERATIVE BANKS AND THE BANKS ARE ENTITLED TO GRANT DEDUCTIO N IN RESPECT OF SUCH INCOME UNDER THE MAIN PROVISIONS OF SECTION 80P(2)( A)(I) OF THE ACT. THEREFORE INTEREST EARNED ON INVESTMENT AND PROFI T ON SALE OF INVESTMENT WERE ATTRIBUTABLE TO BANKING BUSINESS OF THE ASSESSEE.. 11. HOWEVER AS FAR AS RENTAL INCOME IS CONCERNED THE SAME IS NOT ELIGIBLE FOR DEDUCTION U/S.80P(2)(A)(I) IN VIEW OF DECISION OF THE HONBLE PATNA HIGH COURT IN THE CASE OF BIHAR RAJYA SAHAKARI BHOOMI VIKAS CO-OPERATIVE BANK LTD ( SUPRA). 12. AS FAR AS DISALLOWANCE OUT OF EXPENSES IS CONC ERNED WE FIND THAT MAINLY DISALLOWANCE WAS MADE IN RESPECT OF INVESTMENTS AND EXPENSES PRO VISIONS. SINCE THE ASSESSEES MAIN SOURCE OF INCOME WAS FROM INVESTMENT WHICH WAS ELIGIBLE FOR DEDUCTION U/S. 80P(2)(A)(I) OF THE ACT THE DEDUCTION CLAIMED AGAINST THE SAID INCOME COUL D NOT BE DISALLOWED. 13. IN THE RESULT THE REVENUES APPEAL [ITA NO.151 3/KOL/2009] IS PARTLY ALLOWED. $ #2 &3# 4 3( 5 $6 7& 28-.07-2011 ORDER PRONOUNCED IN THE OPEN COURT ON 28-07-2011 SD/- SD/- [ . . ] [ . '.#$% #& ] ( B.R.MITTAL JUDICIAL MEMBER) (S.V. MEHROTRA ACCOUNTANT MEMBE R ) (7&) DATED :28-07-2011 I.T.A NO. 1513/KOL/2009-C--SVM 5 *PP 89 (:; < /SR.P.S. #2 = /> ?#>*@- COPY OF THE ORDER FORWARDED TO: 1. -. /APPELLANT- A.C.I.T CIR-1 ROOPMATI MAHAL KHADI NA MORE CHINSURAH HOOGHLY. 2 /0-. / RESPONDENT : THE BAIDYABATI SHORAPHULI CO-OP BAN K LTD 6 KALAHATA LANE SEORAPHULI HOOGHLY. 3. 2(/ THE CIT 4. 2( ()/ THE CIT(A) KOLKATA. 5. '5 /(/ DR KOLKATA BENCHES KOLKATA 0> // TRUE COPY #2(3/ BY ORDER $ !; /ASSTT. REGISTRAR