Ito , Jhalawar vs Assessee

Jh vkj-ih-rksykuh] U;kf;d lnL; ,oa Jh Vh-vkj-ehuk] ys[kk lnL; ds le{k BEFORE: SHRI R.P. TOLANI, JM & SHRI T.R. MEENA, AM

M.A. No. 47/JP/2012 (Arising out of ITA No. 812/JP/2011) Asstt. Year-2005-06

Jhalawar Sahkari Bhoomi Vikas cuke I.T.O., Bank Ltd., Jhalawar Vs. Jhalawar.

LFkk;h ys[kk la-@thvkbZvkj la-@PAN/GIR No. AAAAJ 1243 M vihykFkhZ@Appellant izR;FkhZ@Respondent

M.A. No. 45/JP/2012 (Arising out of ITA No. 812/JP/2011) Asstt. Year-2005-06

I.T.O., cuke Jhalawar Sahkari Bhoomi Vikas Jhalawar. Vs. Bank Ltd., Jhalawar

LFkk;h ys[kk la-@thvkbZvkj la-@PAN/GIR No. AAAAJ 1243 M vihykFkhZ@Appellant izR;FkhZ@Respondent

fu/kZkfjrh dh vksj ls@ Assessee by : Shri Mahendra Gargia (Adv) jktLo dh vksj ls@ Revenue by : Shri Kailash Mangal (JCIT)

lquokbZ dh rkjh[k@ Date of Hearing : 15/05/2015 ?kks"k.kk dh rkjh[k@ Date of Pronouncement : 15/05/2015 2 M.A. No. 47 & 45 /JP/2012_ Jhalawar Sahkari Bhoomi Vikas Bank Ltd. Vs. ITO

vkns'k@ ORDER

PER: T.R. MEENA, A.M.

Both are the cross Misc. applications, one by the assessee and another

by the revenue filed U/s U/s 254(2) of the Income Tax Act, 1961 (in short the

Act) against the order of this Bench of ITAT, Jaipur in ITA No. 812/JP/2011,

which was passed on 31/05/2012.

2. In assessee's M.A., it submitted as under:-

1. That above appeal was decided by this Hon'ble ITAT vide order dated 31/05/2012, for A.Y. 2005-06, in the appeal filed by the revenue. A copy of the same is enclosed here with for a ready reference and marked as "Annexure-1".

2. Before proceeding to point out the exact nature of mistake, it is necessary to appraise the Hon'ble Bench with the relevant factual background.

The assessee is a financial institution registered under Co- operative Society Act and derives income from interest. The return of income (ROI) was filed on 26/10/2007, showing total income at Nil, after setting off B/F business losses for previous years, whereas assessment order was passed U/s 143(3) on 26/10/2007 at total income of Rs. 28,64,487/- by determining the declared income as income from other sources. However, due to set off of carry forward business losses the net income was 3 M.A. No. 47 & 45 /JP/2012_ Jhalawar Sahkari Bhoomi Vikas Bank Ltd. Vs. ITO

assessed at Nil. Subsequently, the A.O. passed order U/s 154 dated 29/05/2009 and withdrew the benefit of set off. The appeal against the said order U/s 154 was decided on dated 29/07/2011 in appeal No. 61/09-10. The ld. CIT(A) however, dismissed the same, against which the Department has come in second appeal. On the other hand, the appeal against U/s 143(3) was decided by the ld CIT(A) on 28/07/2011 in appeal No. 15/10- 11 holding the subjected three incomes were business income and eligible for deduction U/s 80P(2)(a)(i) of the Act.

3. The Hon'ble ITAT proceeded to decide the appeal against the order of the ld. CIT(A) dated 28/07/2011 being against the order U/s 143(3) as modified by the order U/s 154 dated 29/07/2011. Vide para 2 of the subjected order, the Hon'ble ITAT proceeded to decide the issue whether the three items of income viz income from employees of Rs. 2,91,626/-, Jeep charges of Rs. 8,53,392/- and income from no dues certificates of Rs. 43,990/- could be excluded while computing the deduction U/s 80P(2)(a)(i) of the Act. Further vide para 3.3 the Hon'ble ITAT decided that interest from employees was not eligible for deduction following the decisions of Hon'ble Supreme Court in the case of Totagar's Cooperative Sale Society Ltd. Vs. ITO (2010) 322 ITR 283 (SC) and CIT Vs/ Kotagiri Indl. Coop. Tea Factory (1997) 224 ITR 604 (SC). Further vide para 4 & 5 the Hon'ble ITAT held the incomes from Jeep charges and no dues certificates as eligible for the deduction. However, thereafter vide para 6.1 the Hon'ble ITAT observed that the real issue was not the eligibility of certain 4 M.A. No. 47 & 45 /JP/2012_ Jhalawar Sahkari Bhoomi Vikas Bank Ltd. Vs. ITO

income for deduction U/s 80P(2)(a)(i) of the Act but was whether such incomes would fall to be assessed as income from other sources U/s 56 of the Act or as sprofits or gains of business U/s

28. In para 6.3, the Hon'ble ITAT considered all the three incomes as incomes to be assessed as icome from profits or gains of business and not income from other sources. Some of the findings recorded by the Hon'ble ITAT in para 6.2 are extracted hereunder:

"6.2.------As regards the income by way of interest from employees' discussed vide para 3 of this order, the same in our view would stand to be answered in favour of it being a business income.

---------Accordingly, all the three incomes under reference, irrespective of whether exigble to deduction U/s 80P(2)(a)(i) or not, are liable to be assessed as business income i.e. as returned by the assessee.

----------there is no case for disturbing the assessee's return in respect of these three incomes, being liable to be assessed as business income, which would stand to be set off against the brought forward loss U/s 72 of the Act.---------------"

The Hon'ble ITAT also distinguished the case of Totagar's (supra) on fact and hence, was not applicable on the case in hand. The primary issue framed by the Hon'ble ITAT vide para 6.1 before it, was thus, decided in favour of the assessee.

4. However, in para 7 at page 7, the Hon'ble ITAT once again came back to the case laws relied upon by the assessee and observed 5 M.A. No. 47 & 45 /JP/2012_ Jhalawar Sahkari Bhoomi Vikas Bank Ltd. Vs. ITO

that they were not on the issue involved nor were relevant and were given prior to the decision of Totagar's (supra) and therefore, Totagar's (supra) and Kotagiri Indl. Coop. Tea Factor (supra) were found to be applicable on the facts of the case and accordingly, were applied. The appeal of the revenue was disposed off thus, in the above terms.

5. It is humbly submitted that the Hon'ble ITAT has clearly framed the primary issue before it vide para 6.1 and also cited certain case laws to bring home the point that the law is well settled that the Tribunal has got enough power and its jurisdiction permits it to adjudicate the real issue before it. Otherwise also the real issue was whether the three items of income were to be treated as business income or income from other sources. The Hon'ble ITAT in a detailed manner had already decided vide para 6.2 as above that all the three items of income where to be treated as business income.

However, again vide para 7 the findings recorded by the Hon'ble ITAT (with a cross reference to para 3.1 of the same order), has created a bonafide confusion as to whether the Hon'ble ITAT having decided the issue clearly in favour of the assessee vide para 6.1 and 6.2, has taken a 'u-turn' i.e. appears to have decided the appeal against the assessee. This is more particularly when in the last para No. 8, it is held that "the Revenue's appeal is disposed of in the above terms." It is not clear whether the appeal of the revenue is dismissed or allowed. IN any case, however, the Hon'ble ITAT, having already closed the issue of the 6 M.A. No. 47 & 45 /JP/2012_ Jhalawar Sahkari Bhoomi Vikas Bank Ltd. Vs. ITO

allowability or otherwise of the deduction U/s 80P(2)(a)(i) of the Act which was not the real issue as the assessee neither claimed nor there was any possibility of making a claim of such deduction of Chapter VI A for want of the positive gross total income, and having framed the real issue before it, there was no necessity of again repeating or recording finding in para 7.

6. This way, a mistake apparent from the fact has crept which deserves a suitable rectification U/s 254(2) of the Act and it is humbly prayed that para 7, if thought fit kindly be removed which is creating a confusion and it may kindly be declared very specifically what has been the fate of the appeal of the revenue."

3. The revenue has submitted that admittedly, the M.A. against the appeal

order dated 31/5/2012 passed in ITA No. 812/JP/2011 in case of Jhalawar

Sahkari Bhoomi Bank Ltd. in A.Y. 2005-06 as the issue decided in the

departmental appeal is covered by the decision of Hon'ble Supreme Court in

the case of Totagar's Cooperative Sale Society Ltd. Vs. ITO (supra) and prayed

to review the appeal order by the Assessing Officer.

4. We have heard the rival contentions of both the parties and perused the

material available on the record and also gone through the Coordinate Bench

decision. We do not find any apparent mistake in the order dated 31/5/2012

passed by this Bench. The Coordinate Bench had considered the Hon'ble

Supreme Court's decision in the case of Totagar's Cooperative Sale Society 7 M.A. No. 47 & 45 /JP/2012_ Jhalawar Sahkari Bhoomi Vikas Bank Ltd. Vs. ITO

Ltd. Vs. ITO (supra) on page No. 2 and detailed findings have been given on it

wherein three items of income i.e. interest from employees at Rs. 2,91,626/-,

jeep charges at Rs. 8,53,392/- and no dues certificate income at Rs. 43,990/-.

Therefore, there is no apparent mistake.

5. In the result, both the Misc. Applications filed by the assessee as well as

the revenue are dismissed.

Order pronounced in the open court on 15/05/2015.

Sd/- Sd/- ¼vkj-ih-rksykuh½ ¼Vh-vkj-ehuk½ (R.P.Tolani) (T.R. Meena) U;kf;d lnL;@Judicial Member ys[kk lnL;@Accountant Member

Tk;iqj@Jaipur fnukad@Dated:- 15th May, 2015

*Ranjan

vkns'k dh izfrfyfi vxzsf'kr@Copy of the order forwarded to:

1. vihykFkhZ@The Appellant- Jhalawar Sahkari Bhoomi Vikas Bank Ltd., Jhalawar

2. izR;FkhZ@ The Respondent- The I.T.O., Jhalawar.

3. vk;dj vk;qDr@ CIT

4. vk;dj vk;qDr¼vihy½@The CIT(A)

5. foHkkxh; izfrfuf/k] vk;dj vihyh; vf/kdj.k] t;iqj@DR, ITAT, Jaipur

6. xkMZ QkbZy@ Guard File (M.A. 47 & 45/JP/2012) vkns'kkuqlkj@ By order,

lgk;d iathdkj@Asst. Registrar