9911796707
|
Home
Forgot password New User/ Regiser ⇒ Register to get Live Demo
2017 (9) TMI 1910 - AT - Income TaxEntitlement to deduction u/s. 80P(2)(a)(i) on jewel loans extended to members - claim for deduction on interest income on jewel loans - HELD THAT - The assessee, in the garb of claiming deduction u/s. 80P(2)(a)(i), is seeking deduction qua other, non-eligible income, since already assessed and brought to tax. True, the AO has, while giving appeal affect, apportioned the general expenses on only interest income under reference, i.e., on jewel and other loans falling u/s. 80P(2)(a)(i). That, however, would make no difference to the net assessable (or total) income under the Act as interest income on the other (marketing) division has already been allowed deduction u/s. 80P(2)(a)(iii) on gross income basis. In fact, this is itself debatable as the said interest (for marketing the products) would equally be deductible u/s. 80P(2)(a)(i) which he allows for the first time, as the provision makes no distinction with reference to the purpose for which the loan/credit is extended by a cooperative society to its member. We observe no infirmity, both in principle and in effect, in the AO s working for the two years under reference. AO, in the first instance, had rejected the assessee s claim for deduction u/s. 80P(2)(a)(i) at the threshold, i.e., on the ground of it being ineligible. That is, regarded it as not qualifying for deduction. The question of the quantum of deduction or its determination did not arise for consideration. The claim being held valid, he has allowed the same on the basis of the underlying facts and figures. It is only at this stage that he was called upon to, and has, accordingly, allowed deduction, which is to be at the correct amount. We have examined the algorithm of the assessee s working to find it to be in accordance with the fundamental principle of only the net income being assessable and, further, of only the relevant income as included in the GTI being eligible for deduction. Merely because the same works to a figure lower than that claimed by the assessee, is, by itself, no ground for regarding the same as erroneous. The assessee s working, after all, cannot be considered as sacrosanct. Deduction could only be of the income included in the GTI, so that the assessee s claim, made on the basis of gross interest income, is without basis in law as well as on facts. This has led to its claim u/s. 80P(1) exceeding the GTI. Further, no infirmity or fallacy in the AO s working has either been found by us or pointed out by the assessee at any stage. The AO has not exceeded his jurisdiction. Why, the Apex Court in The Citizen Co-operative Society Ltd. 2017 (8) TMI 536 - SUPREME COURT also made light of the inclusion of associate members, which aspect/s though cannot be considered in appeal giving effect proceedings or the appellate proceedings arising there-from. AO s working is accordingly confirmed. The assessee, as it transpires, by not taking the proportionate expenses into account, is seeking to claim deduction u/s. 80P on other, assessable income. As regards the assessee s COs, the same were not pressed and, besides, there is no estoppel against law (also refer C.K.Gangadharan Anr. v. CIT 2008 (7) TMI 10 - SUPREME COURT . We, accordingly, have no hesitation in, setting aside the impugned order, restoring that of the AO.
Issues Involved:
1. Correctness of the Assessing Officer (AO) in giving appeal effect for deductions under Section 80P(2)(a)(i) of the Income Tax Act, 1961. 2. Validity of the assessee’s claim for deduction under Section 80P(2)(a)(i) on interest income from jewel loans. 3. Whether the Assessing Officer exceeded his jurisdiction in computing the deductions. Detailed Analysis: 1. Correctness of the AO in Giving Appeal Effect for Deductions Under Section 80P(2)(a)(i): The main issue was whether the AO correctly implemented the appellate order by the tribunal, which allowed the assessee’s claim for deduction under Section 80P(2)(a)(i) on interest income from jewel loans. The tribunal had previously confirmed the deduction, and this decision was upheld by the Hon'ble jurisdictional High Court. The AO, bound by this decision, allowed the deduction for the assessment years 2008-09 and 2010-11, but the assessee contended that the AO's calculations were incorrect. The tribunal found that the AO's calculations were based on the figures from the assessee's final accounts and that no specific errors were pointed out by the assessee. The tribunal concluded that the issue in principle was settled in favor of the assessee, reducing the matter to one of calculation, which the assessee failed to properly contest. 2. Validity of the Assessee’s Claim for Deduction Under Section 80P(2)(a)(i) on Interest Income from Jewel Loans: The assessee claimed deductions on interest income from jewel loans under Section 80P(2)(a)(i). The AO initially disallowed this claim, arguing that the assessee, a co-operative bank, did not qualify as a primary agricultural credit society or a primary co-operative agricultural and rural development bank, and that the bulk of the jewel loans were extended to associate members who did not qualify as members. The tribunal, however, upheld the assessee’s entitlement to the deduction, noting that the issue had been settled in the assessee's favor by higher judicial authorities. The tribunal emphasized that the AO's role was to compute the correct amount of deduction, which should be based on net income after deducting relevant expenses. 3. Whether the AO Exceeded His Jurisdiction in Computing the Deductions: The tribunal examined whether the AO exceeded his jurisdiction in his calculations. The AO had deducted interest expenditure and proportionate general expenses from the gross interest income to arrive at the net income eligible for deduction under Section 80P(2)(a)(i). The tribunal found no fault with this approach, as it aligned with established legal principles that only net income, after deducting expenses, is assessable and eligible for deductions. The tribunal noted that the assessee’s claim for deduction exceeded the gross total income (GTI) because it was based on gross income without deducting expenses, which was not permissible. The tribunal upheld the AO's method of apportioning general expenses based on gross income and found no infirmity in the AO’s working. The tribunal also dismissed the assessee's cross objections, noting that each assessment year is independent, and there is no estoppel against law. Conclusion: The tribunal concluded that the AO had correctly implemented the appellate order and computed the deductions in accordance with legal principles. The assessee's failure to provide an alternative calculation or point out specific errors in the AO's working led to the dismissal of the assessee’s claims. The tribunal restored the AO's order and allowed the Revenue’s appeals while dismissing the assessee’s cross objections. Order: The Revenue’s appeals were allowed, and the assessee’s cross objections were dismissed. The order was pronounced on September 22, 2017, in Chennai.
|
