Bardoli Vibhag Gram Vikas Co.Op.Credit So.Ltd.,, Dist.Surat v. The Income tax Officer,Ward-6(1),, Surat

ITA 3129/AHD/2008 | 2005-2006
Pronouncement Date: 13-01-2011 | Result: Partly Allowed

Appeal Details

RSA Number 312920514 RSA 2008
Assessee PAN AAATB8135B
Bench Ahmedabad
Appeal Number ITA 3129/AHD/2008
Duration Of Justice 2 year(s) 4 month(s) 10 day(s)
Appellant Bardoli Vibhag Gram Vikas Co.Op.Credit So.Ltd.,, Dist.Surat
Respondent The Income tax Officer,Ward-6(1),, Surat
Appeal Type Income Tax Appeal
Pronouncement Date 13-01-2011
Appeal Filed By Assessee
Order Result Partly Allowed
Bench Allotted D
Tribunal Order Date 13-01-2011
Date Of Final Hearing 15-12-2010
Next Hearing Date 15-12-2010
Assessment Year 2005-2006
Appeal Filed On 03-09-2008
Judgment Text
IN THE INCOME TAX APPELLATE TRIBUNAL AHMEDABAD BENCH D BEFORE SHRI MUKUL KR. SHRAWAT JUDICIAL MEMBER AND SHRI N.S. SAINI ACCOUNTANT MEMBER DATE OF HEARING : 15/12/2010 DRAFTED ON: 03/01/2011 1. ITA NO.2985/AHD/2008 A.Y. 2005-06 2. ITA NO.3129/AHD/2008 A.Y. 2005-06 1. INCOME TAX OFFICER WARD-6(1) SURAT 2. BARDOLI VIBHAG GRAM VIKAS COOP CREDIT SOC LTD. BARDOLI DIST. SURAT VS. 1. BARDOLI VIBHAG GRAM VIKAS COOP.CREDIT SOC. LTD. SARDAR BAUG BARDOLI DIST.SURAT 2. INCOME TAX OFFICER WARD-6(1) SURAT PAN/GIR NO. : AAATB 8135 B ( APPELLANTS ) .. ( RESPONDENTS ) ASSESSEE BY : SHRI M.K. PATEL A.R. REVENUE BY : SHRI U.B. MISHRA D.R. O R D E R PER SHRI MUKUL KR. SHRAWAT JUDICIAL MEMBER : FOR ASSESSMENT YEAR 2005-06 THESE ARE CROSS APPE ALS BY THE REVENUE AS WELL AS BY THE ASSESSEE ARISING FROM THE ORDER OF CIT(A)-IV SURAT DATED 20/06/2008. BOTH THESE APPEALS HAVE BEEN HEARD TOGETHER AND HEREBY DECIDED THROUGH THIS COMMON ORDER. (A) REVENUES APPEAL ; ITA NO.2985/AHD/2008 2. THE FOLLOWING GROUNDS HAVE BEEN RAISED BY THE R EVENUE IN ITS APPEAL: ITA NO.2985/AHD/2008 (BY REVENUE)& ITA NO.3129/AHD/2008(BY ASSESSEE) ITO VS. BARDOLI VIBHAG GRAM VIKAS COOP CREDIT SOC.L TD. ASST.YEAR 2005-06 - 2 - [1] ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE AND IN LAW THE LD. CIT(A)-IV SURAT HAS ERRED IN RESTRICTING T HE ADDITION OF RS.94 53 213/- TO RS.11 63 444/- MADE BY THE ASSESS ING OFFICER ON ACCOUNT OF DEDUCTION U/S.80P(2). [2] ON THE FACTS AND IN THE CIRCUMSTANCES OF TH E CASE AND IN LAW THE LD. CIT(A)-IV SURAT OUGHT TO HAVE UPHELD THE ORDER OF THE ASSESSING OFFICER. 2.1. THE ASSESSEE IS A CO-OPERATIVE CREDIT SOCIETY ENGAGED IN THE BANKING ACTIVITY. AS PER THE RETURN A DEDUCTION U/S.80P OF THE I.T .ACT OF RS.5 85 94 515/- WAS CLAIMED. THE BIFURCATION O F THE SAME WAS AS FOLLOWS:- INTEREST RECEIVED FROM THE CO-OP.BANK 3 71 91 552 /- DIVIDEND RECEIVED FROM THE CO-OP.BANK 90 3 75/- INTEREST ON LOAN AND ADVANCES TO MEMBERS U/S.80P(2)(A)(I) 2 12 62 588/- BASIC DEDUCTION U/S.80P(2)(C) 50 000/- ---------------- 5 85 94 515/- 2.2. ON THE BASIS OF ABOVE CALCULATION THE ASSESSI NG OFFICER HAS RAISED AN OBJECTION THAT WHY THE DEDUCTION U/S.80P OF THE I.T.ACT WAS CLAIMED ON GROSS AMOUNT. THE ASSESSING OFFICER HAS ALSO DI SCUSSED THE PROVISIONS OF SECTION 80B(5) OF THE I.T.ACT SO AS T O INFORM THE DEFINITION OF GROSS TOTAL INCOME TO THE ASSESSEE. THEREAFTE R HE HAS MENTIONED THAT THE GROSS TOTAL INCOME BEFORE ALLOWING THE C LAIM OF DEDUCTION U/S.80P WAS ONLY AT RS.1 11 99 966/- WHICH COULD BE TAKEN INTO ACCOUNT FOR THE COMPUTATION OF NET INCOME OF THE ASSESSEE. AN ANOTHER CALCULATION HAS THEREAFTER BEEN MADE BY THE ASSESSI NG OFFICER ACCORDING ITA NO.2985/AHD/2008 (BY REVENUE)& ITA NO.3129/AHD/2008(BY ASSESSEE) ITO VS. BARDOLI VIBHAG GRAM VIKAS COOP CREDIT SOC.L TD. ASST.YEAR 2005-06 - 3 - TO WHICH THE TOTAL RECEIPTS WHICH ACCORDING TO ASSE SSING OFFICER WERE ADMISSIBLE FOR DEDUCTION U/S.80P WERE AMOUNTED TO R S.3 71 91 552/-. THIS INCOME WAS STATED TO BE INCOME DERIVED FROM CO -OPERATIVE BANKING OR OUT OF THE LOANS GIVEN TO THE MEMBERS ETC. AGA INST THAT INCOME THE ASSESSING OFFICER HAS ALLOWED THE EXPENDITURE TO TH E TUNE OF RS.4 91 47 302/- AS AGAINST THE CLAIMED EXPENDITUR E OF THE ASSESSEE AT RS.5 57 54 113/-. THE ASSESSING OFFICER HAS MENTI ONED THAT THE EXPENDITURE OF RS.67 92 105/- PERTAINING TO BUILDIN G FUND RELIEF EXPENSES UTKARSH FUND ETC. WERE ALREADY ADDED BA CK BY THE ASSESSEE ITSELF AND FURTHER THERE WAS AN AMOUNT OF DEPRECIAT ION OF RS.1 85 294/- THEREFORE WITHOUT ALLOWING THIS EXPENDITURE THE N ET AMOUNT OF RS.4 91 47 302/- WAS DEDUCTED TO ARRIVE AT THE NET FIGURE OF ELIGIBLE PROFIT U/S.80P OF RS.93 97 213/-. FOR READY REFERENCE RE LEVANT PARAGRAPH IS REPRODUCED BELOW:- 3.5. ON PERUSAL OF THE BALANCE SHEET IT IS NOTICED THAT THE ENTIRE AMOUNT OF THE DEPOSITS/FUNDS ARE INVESTED EITHER IN THE CO- OPERATIVE BANKS IN THE FORM OF DEPOSITS/SHARES OR G IVEN LOAN TO THE MEMBERS. THE INTEREST INCOME/DIVIDEND INCOME FROM SUCH INVESTMENT CLAIMED AS DEDUCTION AND HENCE ENTIRE EX PENSES CLAIMED IN THE RETURN OF INCOME AND IN PROFIT AND L OSS ACCOUNT ARE WHOLLY AND EXCLUSIVELY RELATED FOR EARNING THE SPEC IFIC INCOME. IN THE PROFIT AND LOSS ACCOUNT THE ASSESSEE HAS CLAIME D TOTAL EXPENSES OF RS.5 57 54 113/- OUT OF WHICH THE EXPENSES TO TH E TUNE OF RS.67 92 105/- ARE NOT ALLOWABLE AND SHOWN BY THE A SSESSEE IN THE COMPUTATION OF INCOME AND AFTER CONSIDERING ALLOWAB LE CURRENT DEPRECIATION OF RS.1 85 295/- THE TOTAL EXPENSES OF RS.4 91 47 302/- ARE WHOLLY AND EXCLUSIVELY RELATED FOR EARNING THE SPECIFIC INCOME. AS SUCH THE EXPENSES ARE DEDUCTIBLE TO ARRIVE AT THE ELIGIBLE AMOUNT OF DEDUCTION U/S.80P OF THE ACT. IT IS THER EFORE THE ELIGIBLE DEDUCTION U/S.80P OF THE ACT IS RECALCULATED HEREUN DER: ITA NO.2985/AHD/2008 (BY REVENUE)& ITA NO.3129/AHD/2008(BY ASSESSEE) ITO VS. BARDOLI VIBHAG GRAM VIKAS COOP CREDIT SOC.L TD. ASST.YEAR 2005-06 - 4 - ELIGIBLE RECEIPT FOR DEDUCTION U/S.80P INTEREST RECEIVED FROM THE CO-OP.BANK 3 71 91 552 /- DIVIDEND RECEIVED FROM THE CO-OP.BANK 90 37 5/- INTEREST ON LOAN AND ADVANCES TO MEMBERS U/S.80P(2) (A)(I) 2 12 62 588/- ----------------- 5 85 44 515/- LESS : EXPENSES WHOLLY AND EXCLUSIVELY PERTAINS FOR EARNING THE ABOVE MENTIONED INCOME PROVIDED IN THE SECTION 80B(5) AND DISCUSSED ABOVE 4 91 47 302/- ELIGIBLE PROFIT FOR DEDUCTION U/S.80P 93 97 213 /- CALCULATION OF DEDUCTION U/S.80P 100% OF ELIGIBLE INCOME 93 97 213/- ======== 2. 3. THE RESULT OF THE ABOVE TWO CALCULATION WAS T HAT AS AGAINST THE CLAIM OF DEDUCTION U/S.80P OF RS.1 11 99 966/- THE ASSESSING OFFICER HAS ALLOWED THE DEDUCTION ONLY OF RS.93 97 213/- THERE FORE THE BALANCE OF RS.17 46 753/- WAS ASSESSED IN THE HANDS OF THE ASS ESSEE AS PER THE FOLLOWING CALCULATION:- ITA NO.2985/AHD/2008 (BY REVENUE)& ITA NO.3129/AHD/2008(BY ASSESSEE) ITO VS. BARDOLI VIBHAG GRAM VIKAS COOP CREDIT SOC.L TD. ASST.YEAR 2005-06 - 5 - GROSS TOTAL INCOME BEFORE ALLOWING DEDUCTION UNDE R CHAPTER VI AS PER RETURN OF INCOME RS.1 11 99 966/- LESS I) DEDUCTION U/S.80 G 50% OF (11 000 + 1 01 000) RS. 56 000/- II) DEDUCTION U/S.80P AS DISCUSSED ABOVE RS.93 97 213/- RS.94 53 213/- ------------------ ----------------- TOTAL INCOME RS.17 46 753/- BEING AGGRIEVED MATTER WAS CARRIED BEFORE THE FIRS T APPELLATE AUTHORITY. 3. THE LEARNED CIT(APPEALS) HAS NOT ADDRESSED THE E NTIRE ISSUE IN ITS TOTALITY AND CONFINED HIMSELF TO THE ISSUE IN RESPE CT OF CLAIM OF DEDUCTION PERTAINING TO INCOME-TAX RE-FUND AND THE INCOME UND ER THE HEAD OTHER INCOME OF RS.5 32 624/-. THE TOTAL OF THE TWO I. E. RS.11 63 444/- WAS CONSIDERED AS NOT ELIGIBLE FOR THE DEDUCTION U/S.80 P OF THE I.T.ACT AND IN PLACE OF RS.17 46 753/- AS ASSESSED BY THE ASSESSIN G OFFICER LEARNED CIT(APPEALS) HAS RESTRICTED THE SAME TO RS.11 63 44 4/- AS PER THE FOLLOWING PARAGRAPH:- IT IS SEEN THAT THE INCOME RECEIVED AS INTEREST FR OM IT REFUNDS AT RS.6 30 820/- AND OTHER INCOME OF RS.5 32 624/- DO NOT FALL UNDER ANY OF THE ABOVE ACTIVITIES AND THEREFORE BECOME TA XABLE WHICH HAS NOT BEEN DONE BY THE APPELLANT DUE TO INCORRECT COM PUTATION OF DEDUCTION I.E. CLAIMING THE ENTIRE RECEIPTS AND NO T THE PROFIT AND GAINS OF SUCH BUSINESS. HOWEVER I AM ALSO NOT INC LINED TO AGREE WITH THE AO REGARDING APPLICATION OF SECTION 14A O F THE ACT. ITA NO.2985/AHD/2008 (BY REVENUE)& ITA NO.3129/AHD/2008(BY ASSESSEE) ITO VS. BARDOLI VIBHAG GRAM VIKAS COOP CREDIT SOC.L TD. ASST.YEAR 2005-06 - 6 - FURTHER THE INTEREST RECEIVED FROM MEMBERS IS ALSO ELIGIBLE FOR DEDUCTION U/S.80P(2) OF THE IT ACT. THE NET INTERE ST RECEIVED IS EXEMPT U/S.80P(2)(A) OF THE IT ACT AND PROVISIONS O F SECTION-14A OF THE ACT ARE NOT APPLICABLE IN RESPECT OF SUCH INCOM E. THEREFORE THE DEDUCTION U/S.80P OF THE IT ACT WILL BE RESTRIC TED TO ONLY THE ELIGIBLE INCOME I.E. INTEREST ON BANKING ACTIVITY AND THE BALANCE AMOUNT IS NOT ELIGIBLE FOR DEDUCTION U/S.80P(2) OF THE IT ACT. THEREFORE THE TOTAL ADDITION TO THE INCOME OF THE APPELLANT IS DIRECTED TO BE RESTRICTED TO RS.11 63 444/- (RS.630 820/- + RS.532624/-). THE AO SHALL ALSO ALLOW STATUTORY DEDUCTION U/S.80P OF THE IT ACT AS PER LAW OUT OF THIS AMOUNT . 4. WITH THIS BRIEF BACKGROUND WE HAVE HEARD BOTH T HE SIDES. AS FAR AS GROUND IN QUESTION IS CONCERNED THAT THE LEARNE D CIT(APPEALS) HAS ERRED IN RESTRICTING THE ADDITION FROM RS.94 53 213 /- TO RS.11 63 444/- WE ARE OF THE FIRM VIEW THAT THE GROUND HAS WRONGLY BEEN RAISED AND NOT IN ACCORDANCE WITH THE FACTS OF THE CASE. THE VERD ICT OF THE LEARNED CIT(APPEALS) HAS NOT BEEN CORRECTLY UNDERSTOOD WHIL E RAISING THIS GROUND. IN FACT THE LEARNED CIT(APPEALS) HAS HELD AS NOTED ABOVE THAT THE TWO RESOURCES OF INCOME; I.E. INCOME-TAX REFUN D OF RS.6 30 820/- AND THE INCOME UNDER THE HEAD OTHER INCOME OF RS. 5 32 624/- TOTALLING TO RS.11 63 444/- WERE NOT ADMISSIBLE FOR DEDUCTIO N U/S.80P(2) OF THE I.T.ACT. THE GROUND WHICH IS VERY MUCH GENERAL IN NATURE WITHOUT SPECIFYING THE DEFECT IN THE ORDER OF LEARNED CIT(A PPEALS) THEREFORE HAS NO SUBSTANCE. THE TWO ADDITIONS WHICH WERE AFFIRM ED BY THE LEARNED CIT(APPEALS) ARE AS FOLLOWS:- ITA NO.2985/AHD/2008 (BY REVENUE)& ITA NO.3129/AHD/2008(BY ASSESSEE) ITO VS. BARDOLI VIBHAG GRAM VIKAS COOP CREDIT SOC.L TD. ASST.YEAR 2005-06 - 7 - (I) INTEREST OF REFUND RS. 6 30 820/- (II) OTHER INCOME RS. 5 32 624/- T O T A L . RS.11 63 444/- THESE TWO ADDITIONS HAVE BEEN CONTESTED BY THE ASS ESSEE WHICH SHALL BE DEALT WITH IN THE FOLLOWING PARAGRAPH. 5. AS FAR AS THE QUESTION OF REDUCING THE ADDITION FROM RS.94 53 213/- TO RS.11 63 444/- IT IS APPARENT FROM THE ABOVE CA LCULATION THAT THE ASSESSING OFFICER HAS NEVER MADE AN ADDITION OF RS. 94 53 213/- BUT HE HAS ASSESSED THE INCOME AT RS.17 46 753/-. BY THI S CALCULATION ITSELF THE GROUND IS MISPLACED AND DESERVES TO BE DISMISSED. AS FAR AS THE QUESTION OF ASSESSEES CLAIM OF 80P OF THE I.T.ACT ON THE GROSS TOTAL INCOME IS CONCERNED THE SAME SHALL ALSO BE DEALT WITH IN THE FOLLOWING PARAGRAPH WHILE DECIDING THE ASSESSEES APPEAL THE REFORE IN EFFECT THAT RESULT SHALL AUTOMATICALLY COVER THE TOTAL INCOME A S ASSESSED BY THE ASSESSING OFFICER. IN THE RESULT WE DISMISS THE G ROUND OF THE REVENUE. (B) ASSESSEES APPEAL; I.E. ITA NO.3129/AHD/2008 6. GROUND NO.1 READS AS UNDER: (1) THAT THE LEARNED COMMISSIONER OF INCOME-TAX (AP PEALS) HAS GRIEVOUSLY ERRED IN LAW AND ON FACTS IN HOLDING THA T THE DEDUCTION U/S.80P(2)(A) OF THE ACT IS ALLOWABLE ONL Y ON THE NET INCOME AND NOT ON THE GROSS INCOME OF THE ASSES SEE. 6.1. IN THE LIGHT OF THE ABOVE DISCUSSION WE HAVE NOTICED THAT THE ASSESSEE HAS CLAIMED A DEDUCTION U/S.80P ON THE G ROSS TOTAL INCOME OF ITA NO.2985/AHD/2008 (BY REVENUE)& ITA NO.3129/AHD/2008(BY ASSESSEE) ITO VS. BARDOLI VIBHAG GRAM VIKAS COOP CREDIT SOC.L TD. ASST.YEAR 2005-06 - 8 - RS.5 85 94 515/-. THIS CLAIM HAS TO BE REJECTED BE CAUSE AS PER THE PROVISIONS OF DEDUCTION U/S.80P OF THE I.T.ACT WH ERE AN ASSESSEE BEING A CO-OPERATIVE SOCIETY HAS THE GROSS TOTAL INCOME W HICH INCLUDE INCOME FROM CO-OPERATIVE BANKING COTTAGE INDUSTRY MARKET ING AGRICULTURAL PRODUCE ETC. THEN SUCH AN INCOME SHALL BE DEDUCTE D THEREFROM. MEANING THEREBY OUT OF THE GROSS TOTAL INCOME TH E ASSESSEE IS ENTITLED FOR THE DEDUCTION ONLY IN RESPECT OF SUCH INCOME WH ICH ARE DEFINED IN SUB-SECTION(2) OF SECTION 80P OF THE I.T.ACT. AS FAR AS THE DEFINITION OF GROSS TOTAL INCOME IS CONCERNED AS PER SECTION 8 0B(5) MEANS THE TOTAL INCOME COMPUTED IN ACCORDANCE WITH THE PROVISIONS O F THIS ACT BEFORE MAKING ANY DEDUCTION UNDER CHAPTER VI-A OF THE I.T. ACT. IN VIEW OF THIS DEFINITION THE ASSESSING OFFICER HAS RIGHTLY HELD THAT THE ASSESSEE HAS WRONGLY CLAIMED THE DEDUCTION U/S.80P OF THE I.T.AC T ON THE GROSS TOTAL INCOME. THE ASSESSING OFFICER WAS RIGHT IN HOLDI NG THAT A CO-OPERATIVE SOCIETY IS ENTITLED FOR DEDUCTION U/S.80P OF THE I .T.ACT ONLY IN RESPECT OF THAT INCOME WHICH QUALIFIES U/S.80P(2) OF THE I.T.A CT AND NOT THE ENTIRE GROSS TOTAL INCOME OF THE SOCIETY. IN VIEW OF T HIS WE HEREBY DISMISS THIS GROUND OF THE ASSESSEE. 7. GROUND NO.2 READS AS UNDER: (2) THAT THE LEARNED COMMISSIONER OF INCOME-TAX (A PPEALS) HAS GRIEVOUSLY ERRED IN LAW AND ON FACTS IN CONFIRM ING THE DISALLOWANCE OF DEDUCTION U/S.80P IN RESPECT OF INC OME-TAX REFUND OF RS.6 30 820/- AND OTHER INCOME OF RS.5 32 624/-. 7.1. THIS GROUND OF THE ASSESSEE HAS RAISED TWO QUE STIONS; ONE IS IN RESPECT OF CLAIM OF DEDUCTION U/S.80P OF THE I.T.AC T PERTAINING TO ITA NO.2985/AHD/2008 (BY REVENUE)& ITA NO.3129/AHD/2008(BY ASSESSEE) ITO VS. BARDOLI VIBHAG GRAM VIKAS COOP CREDIT SOC.L TD. ASST.YEAR 2005-06 - 9 - INCOME-TAX REFUND AND THE OTHER QUESTION IS IN RESPECT OF CLAIM OF DEDUCTION U/S.80P OF THE I.T.ACT PERTAINING TO OTH ER INCOME OF RS.5 32 624/- THE DETAILS OF WHICH ARE AS FOLLOWS: - (I) BY PENALTY INTEREST RS.4 58 217.00 (II) BY LOCKERS RENT RS.59 550.00 (III) BY SHARE TRANSFER FEE RS.374.00 (IV) BY LATE FEE RS.583.00 (V) BY INSURANCE REFUND RS.8 900.00 (VI) BY RAJDUT SALE PROFIT RS.5 000.00 7.2. FIRST WE SHALL DEAL WITH THE ADMISSIBILITY OF CLAIM OF INCOME-TAX REFUND WHETHER ALLOWABLE U/S.80P OF THE I.T.ACT OR NOT. AN ARGUMENT WAS THAT TAX AT SOURCE WAS DEDUCTED WHICH HAD A DIR ECT NEXUS WITH THE BANKING BUSINESS OF THE ASSESSEE. IN SUPPORT THE LEARNED AUTHORISED REPRESENTATIVE OF THE ASSESSEE MR.M.K.PATEL HAS PLA CED RELIANCE ON THE DECISION OF ITAT AHMEDABAD SPECIAL BENCH IN THE CA SE OF SURAT DISTRICT CO-OPERATIVE BANK LTD. & ORS VS. ITO & ORS. REPORTE D AS [2003]85 ITD 01 (AHD)[SB]. 8. WE HAVE EXAMINED THE FACTS OF THAT PRECEDENT WHE REIN IT WAS HELD THAT INTEREST ON INVESTMENTS MADE BY A CO-OPERATIVE BANK IN GOVERNMENT SECURITIES ATTRIBUTABLE TO UTILIZATION OF ITS FUNDS FROM STATUTORY RESERVES OF GUJARAT CO-OPERATIVE SOCIETIES AND THE INTEREST IN COME FROM INVESTMENT MADE BY WAY OF MANDATORY MINIMUM BANKING RESERVES A S REQUIRED BY THE RELEVANT PROVISIONS OF THE BANKING REGULATION ACT A ND INCOME FROM HIRING OF SALE SAFE DEPOSIT VAULTS ARE ELIGIBLE FOR GRANT OF DEDUCTION ITA NO.2985/AHD/2008 (BY REVENUE)& ITA NO.3129/AHD/2008(BY ASSESSEE) ITO VS. BARDOLI VIBHAG GRAM VIKAS COOP CREDIT SOC.L TD. ASST.YEAR 2005-06 - 10 - U/S.80P OF THE I.T.ACT. AT PRESENT WE ARE NOT DEAL ING ANY SUCH SOURCE OF INCOME HENCE THIS CITATION IS NOT USEFUL TO THE A SSESSEE. 8.1. NEXT WAS THE QUESTION IN RESPECT OF INTEREST INCOME ON INVESTMENTS IN GOVERNMENT SECURITIES FDS KVP IVP UTI ETC. OUT OF SURPLUS OR IDLE MONEY AVAILABLE FROM WORKING CAPITAL INCLUDIN G VOLUNTARY RESERVES. ALL THESE ARE INCOME ATTRIBUTABLE TO THE BUSINESS OF BANKING AND THEREFORE ELIGIBLE FOR GRANT OF DEDUCTION U/S.80P OF THE I.T.ACT. HOWEVER THERE IS NO SUCH FACT IN THIS PART OF THE GROUND WH ICH ARE RELATED TO SUCH NATURE OF FUNDS HENCE THE SAID CASE-LAW IS NOT USEF UL TO THE ASSESSEE. 8.2. THERE WAS ONE MORE ISSUE WHICH WAS SETTLED BY THE RESPECTED SPECIAL BENCH OF ITAT AHMEDABAD IN RESPECT OF SURP LUS OF INTEREST TAX COLLECTED BY THE CO-OPERATIVE BANKS AND THAT WAS HE LD AS INTEGRAL PART OF INCOME ATTRIBUTABLE TO BANKING ACTIVITIES AND THE REFORE HELD AS QUALIFIED FOR DEDUCTION U/S.80P(2)(A)(I) OF THE I.T.ACT. ON CAREFUL READING OF THIS JUDGEMENT OF RESPECTED SPECIAL BENCH A CONCLUSION C AN BE DRAWN THAT THE SUMS AS REFERRED IN SECTION 80P(2) ONLY QUALIFY FOR THE DEDUCTION U/S.80P(1) OF THE I.T.ACT. THE QUESTION OF ADMISSI BILITY OF INCOME TAX REFUND DO NOT ARISE BECAUSE THERE IS NO SUCH MENTIO N THAT THE ASSESSEE CAN BE ENTITLED FOR DEDUCTION OF INCOME-TAX REFUND AMOU NT. THE ONLY ARGUMENT IS THAT THE INCOME-TAX REFUND WAS CONNECTE D WITH THE BUSINESS OF BANKING OR CREDIT FACILITIES PROVIDED TO ITS MEM BERS. BUT THIS ARGUMENT IS VERY FAR-FETCHED PROPOSITION. AS PER THE SETTLE D POSITION OF LAW NO TAXPAYER IS ENTITLED FOR CLAIM OF DEDUCTION IN RESP ECT OF EXPENDITURE INCURRED TOWARDS PAYMENT OF INCOME-TAX. ONCE AN IN COME-TAX ITA NO.2985/AHD/2008 (BY REVENUE)& ITA NO.3129/AHD/2008(BY ASSESSEE) ITO VS. BARDOLI VIBHAG GRAM VIKAS COOP CREDIT SOC.L TD. ASST.YEAR 2005-06 - 11 - EXPENDITURE IS NOT ALLOWABLE AS DEDUCTION IN THE CO MPUTATION OF TAXABLE INCOME THEN THE INCOME-TAX REFUND WHICH HAD A N EXUS ONLY WITH THE COLLECTION OF TAX AT SOURCE THEREFORE IN OUR CON SIDERED OPINION VERY MUCH BEYOND THE SCOPE OF THE PROVISIONS OF SECTION 80P(2) OF THE I.T.ACT. WE THEREFORE HOLD THAT THE ASSESSING OFFICER HAS RIGHTLY DISALLOWED THE CLAIM. THIS PART OF THE GROUND IS CONSEQUENTLY DISM ISSED. 8.3. NEXT IS THE QUESTION OF ADMISSIBILITY OF OTHE R INCOME AS LISTED HEREINABOVE. THE RECEIPTS FROM LOCKER RENT SHARE TRANSFER FEE INSURANCE RE-FUND ETC. CAN BE HELD AS ADMISSIBLE FOR DEDUCT ION U/S.80P OF THE I.T.ACT BECAUSE THESE ARE ALREADY HELD BY SEVERAL C OURTS AS ELIGIBLE INCOME FOR GRANT OF DEDUCTION. 8.4. NOW WE ARE LEFT WITH AN AMOUNT OF RS.4 58 217 /- IN RESPECT OF PENALTY INTEREST. THE ASSESSING OFFICER AS WELL AS THE LEARNED CIT(APPEALS) HAVE NOT EXAMINED THE EXACT NATURE OF THE PENALTY WHICH WAS IMPOSED ON THE ASSESSEE AND WHY THE ASSESSEE HA S THEN EARNED INTEREST THEREON. IN THE ABSENCE OF ANY SUCH FINDI NG BEING NOT GIVEN BY THE AUTHORITIES BELOW WE DEEM IT PROPER TO RESTORE THIS PART OF THE GROUND BACK TO THE ASSESSING OFFICER SO THAT HE CAN INVEST IGATE WHETHER THE INTEREST ON PENALTY HAD ANY NEXUS WITH THE BANKING ACTIVITY OF THE ASSESSEE. 8.5. FINALLY WE ARE LEFT ONLY WITH AN AMOUNT O F RS.5 000/- EARNED ON SALE OF MOTOR CYCLE. WE ARE OF THE VIEW THAT THE S ALE OF MOTOR CYCLE MAY BE CONNECTED WITH THE ASSETS OF THE CO-OPERATIVE SO CIETY BUT BY NO ITA NO.2985/AHD/2008 (BY REVENUE)& ITA NO.3129/AHD/2008(BY ASSESSEE) ITO VS. BARDOLI VIBHAG GRAM VIKAS COOP CREDIT SOC.L TD. ASST.YEAR 2005-06 - 12 - MEANS SALE OF MOTOR CYCLE CAN BE SAID TO BE A BUSIN ESS OF BANKING CARRIED ON BY THE ASSESSEE. AN EMPLOYEE OF THE SOCIETY M IGHT HAVE BEEN USING THE MOTOR CYCLE BUT THAT USE OF MOTOR CYCLE HAD NO NEXUS WITH BANKING ACTIVITY BECAUSE BANKING ACTIVITY IS AN ACTIVITY WH ICH IS CONNECTED WITH THE DEPLOYMENT OF FUNDS AND NOT THE DEPLOYMENT OF A N EMPLOYEE. WE THEREFORE UPHOLD THE VIEW TAKEN BY THE LOWER AUTHO RITIES AND CONFIRM THE DISALLOWANCE. WITH THE RESULT THIS PART OF THE GRO UND IS PARTLY ALLOWED. 9. IN THE RESULT APPEAL OF THE REVENUE IS DISMISSE D WHEREAS APPEAL OF THE ASSESSEE IS PARTLY ALLOWED. ORDER SIGNED DATED AND PRONOUNCED IN THE COURT ON 13/ 1 /2011. SD/- SD/- ( N.S. SAINI ) ( MUKUL KR. SHRAWAT ) ACCOUNTANT MEMBER JUDICIAL MEM BER AHMEDABAD; DATED 13 / 01 /2011 T.C. NAIR SR. PS COPY OF THE ORDER FORWARDED TO : 1. THE ASSESSEE. 2. THE DEPARTMENT. 3. THE CIT CONCERNED 4. THE LD. CIT(APPEALS)-IV SURAT 5. THE DR AHMEDABAD BENCH 6. THE GUARD FILE. BY ORDER //TRUE COPY// (DY./ASSTT.REGISTRAR) ITAT AHMEDABAD ITA NO.2985/AHD/2008 (BY REVENUE)& ITA NO.3129/AHD/2008(BY ASSESSEE) ITO VS. BARDOLI VIBHAG GRAM VIKAS COOP CREDIT SOC.L TD. ASST.YEAR 2005-06 - 13 - 1. DATE OF DICTATION..03/01/2011 2. DATE ON WHICH THE TYPED DRAFT IS PLACED BEFORE THE DICTATING MEMBER 05/01/2011 OTHER MEMBER 3. DATE ON WHICH THE APPROVED DRAFT COMES TO THE SR.P. S./P.S.. 4. DATE ON WHICH THE FAIR ORDER IS PLACED BEFORE THE D ICTATING MEMBER FOR PRONOUNCEMENT 5. DATE ON WHICH THE FAIR ORDER COMES BACK TO THE SR.P .S./P.S. 6. DATE ON WHICH THE FILE GOES TO THE BENCH CLERK 7. DATE ON WHICH THE FILE GOES TO THE HEAD CLERK . 8. THE DATE ON WHICH THE FILE GOES TO THE ASSISTANT RE GISTRAR FOR SIGNATURE ON THE ORDER.. 9. DATE OF DESPATCH OF THE ORDER