KURLA NAGRIK SAHKARI CO OP BANK LTD Vs. I T O
INCOME TAX APPELLATE TRIBUNAL
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K.C. Singhal, Judicial Member -
(1.) THE only issue arising in this appeal is whether the assessee is entitled to deduction Under Section 80-P of Income-tax Act, 1961 (the Act) in respect of parking and visiting charges amounting to Rs. 2,84,606/- and income from sale of scrap amounting to Rs. 27,000/-.
(2.) Briefly stated, the facts are that the assessee is engaged in the business of banking. The assessee declared income of Rs. 4.49,87,696/- for the year under consideration comprising of interest, commission, exchange, brokerage and other miscellaneous receipts. The entire income was claimed as deduction Under Section 80-P(2)(a)(i) of the Act. In the course of assessment proceedings, it was noticed by the Assessing Officer that the income of the assessee included a sum of Rs. 2,84,606/- on account of parking and visiting charges and Rs. 27,000/- on account of sale of scrap. The Assessing Officer was of the view that income derived from carrying on business of banking or providing credit facilities to its members was exempt from taxation Under Section 80-P(2)(a)(i) of the Act and the income by way of interest and dividend derived from its investment in any other co-operative society was exempt Under Section 80-P(2)(d) of the Act. Accordingly, any other income could not be allowed as deduction Under Section 80-P. According to him, the income on account of parking and visiting charges as well as sale of scrap could not be treated as income derived from carrying on the business of banking and consequently, the deduction could not be allowed Under Section 80-P(2)(a)(i) of the Act. Thus the total income was determined at Rs. 3,11,606/-.
The matter was carried in appeal before the CIT(A) before whom it was contended that the income on account of parking and visiting charges as well as income from sale of scrap was attributable to the carrying on business of banking and therefore, the claim Under Section 80-P(2)(a)(i) should be allowed. It was explained that the assessee had advanced loans to its clients for buying vehicles. In certain cases, the clients of the assessee were not able to make the payments and as a result thereof the assessee had to seize such vehicles and park the same in parking lots on payment basis. The clients accounts were also debited with the parking charges. The difference between the parking charges recovered and the parking charges paid had been credited in the Profit & Loss Account. On these facts, it was argued that such income was attributable to the main banking business activity carried on by the assessee. Similarly, visiting charges also related to the loans given to the clients for purchase of vehicles and therefore, the same amounted to incidental charges to the main business. Reliance was placed on the decision of hon'ble Madhya Pradesh High Court in the case of Dhar Central Co-operative Bank Ltd., 149 ITR 438 (MP). On the similar analogy, it was submitted that income from the sale of scrap should also be considered as income incidental to the main business.
(3.) THE CIT(A) was not satisfied with the submissions of the assessee. According to him, the parking charges and visiting charges related to Non Performance Assets (NPA) Account. According to him, once the assets are qualified as NPA, the same go out of the ambit of business assets. It was also observed by him that in case of surplus amount on account of parking and visiting charges, they were liable to be added to the value of such NPA or alternatively it could be assessed as income from other sources. Reliance was placed by him on the decision of hon'ble Andhra Pradesh High Court in the case of Anakapalli Co-operative Marketing Ltd., 245 ITR 616. In view of these observations, it was held by him that the assessee was not eligible for deduction Under Section 80-P(2)(a)(i). It was also held by him that income on account of sale of scrap was in the nature of receipt from 'other sources' and consequently, the deduction under the above section was not available. Aggrieved by the same, the assessee is in further appeal before the Tribunal.;
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