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TMI Blog2018 (2) TMI 499X X X X Extracts X X X X X X X X Extracts X X X X ..... gly, this issue is common as the issue involved in the AY 2013-14 and hence, the same is set aside to the record of the Ld. CIT(A) for fresh adjudication. Similarly, the Ld. CIT(A) has not discussed and adjudicated the issue of deduction u/s 80P(2)(e) in respect of income from letting out of godowns. Thus, there is no dispute about the allowability of this deduction in respect of the rental income from letting out of the godowns as per section 80P(2)(e) as there is no condition for availing the deduction under this provision. However, since this issue has not been adjudicated by the authorities below therefore, in the facts and circumstances of the fact, we set aside this issue to the record of the Ld. CIT(A) for proper adjudication, after giving an opportunity of hearing to the assessee. - ITA Nos. 418, 419/JP/2017 And C.O. No. 23 And 24/JP/2017 - - - Dated:- 31-1-2018 - SHRI VIJAY PAL RAO, JM AND SHRI VIKRAM SINGH YADAV, AM For The Revenue : Shri R.A. Verma (Add l CIT) For The Assessee : Shri Mahendra Gargieya (Advocate) ORDER PER BENCH These two Appeals by the Revenue and Cross Objections by the assessee are directed against two separate orde ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the business activity of the society. 5. On the other hand, Ld. AR of the assessee has submitted that a bare perusal of section 80P(2)(d) of the Act shows that to get the deduction under this section, a co-operative society is not required to prove anything except that the interest is earned from the investment made in FDRs with other Cooperative Society. Therefore, the requirement of carrying on the banking business or other business was not mandatory for the claim of benefit u/s 80P(2)(d) of the Act. In support of his contention, he has relied upon the decision of the Hon ble Jurisdictional High Court dated 1st September 2016 in case of CIT vs. Rajasthan Rajya Sahakari Kray Vikray Sangh Ltd. DB ITA Nos. 139/2002, 20/2004, 24/2004, 27/2004. The Ld. A/R has also relied upon the decision of the Hon ble Gujarat High Court in the case of Surat Vankar Sahakari Sangh Ltd. vs. ACIT 72 taxman.com 169 (Guj.) as well as the decision of the Mumbai Bench of the Tribunal dated 15.01.2016 in case of Lands End and Co-operative Housing Society Ltd. vs. ITO in ITA No. 3566/Mum/2014. Hence, the Ld. A/R has contended that a co-operative bank is primarily a co-operative society and sub-classificat ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ion of some part of the land owned by it, the State Government has given it a compensation amount previously which had been invested in Bank deposits by the appellant from which interest the day to day expenses are being met. The A.O. has apparently not understood the provisions involved applied provisions of section 80P (2) (a)(i) in the case. Subsequently he has held that the society is not eligible for any other deductions u/s 80P. It is notable that the assessee sugar mill has no other income besides the interest income, being in liquidation. In order to claim deduction u/s 80P (2)(d) of the Act, the only condition is that the assessee should be a cooperative society and it should be having interest income accrued from investment with other cooperative society (including co-op. Banks) which is a part of its Gross total income. While the above cases are more on allowability of gross interest u/s 80P (2)(d), they emphasize the allowability of interest related deduction as such. This issue has findings in the landmark order, Hon ble Supreme Court in the case of Totagar s Co-operative Sale Society Ltd. vs. ITO 322 ITR 283 283 held that the interest incom ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ources and deduction u/s 80(P)(2)(a)(i) would not be available meaning thereby that deduction u/s 80(P)(2)(a)(i) is available only in respect of income which is assessable as business income and not as income from other sources. Whereas in distinction to this , the provisions of section 80(P)(2)(d) of the Act provides for deduction in respect of income of a coop society by way of interest or dividend from its investments with other coop society if such income is included in the gross total income of the such coop society. The ITAT, Mumbai has also held the same view in the case of Lands End Cooperative Housing Society vs. I.T.O. ward-16(1)(3), Mumbai in ITA No. 3566/Mum/ 2014 for Assessment Year: 2009-10 vide order dated 15/01/2016. In view these facts and circumstances I am of the view that the assessee is entitled to the deduction of ₹ 2, 65, 43,870/- in respect of interest received/derived by it or414bsits with coop. banks under section 80(P)(2)(d). Therefore the AO is directed to delete the above disallowance and subsequent addition made u/s 56 accordingly. In the result, this ground of assessee s appeal is allowed. 6.1 As regards the claim u ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ing of these two provisions the relevant extract of the section are reproduced below: 80P: Deduction in respect of income of co-operative Societies. 1. Where, in the case of an assesssee being a co-operative society, the gross total income, includes any income referred to in sub-section (2), there shall be deducted, in accordance with and subject to the provisions of this section, the sums specified in sub-section (2), in computing the total income of the assessee. 2. The sums referred to in sub-section (1) shall be the following, namely:- ( a) In the case of a co-operative society engaged in- ( i) Carrying on the business of banking or providing credit facilities to its members. The whole of the amount of profits and gains of business attributable to any one or more of much attributes. ( d)In respect of any income by way of interest or dividends derived by the cooperative society from its investments with any other co-operative society, the whole of such income. From the close perusal of the provisions of u/s 80P(2)(a)(i) and 80P(2)(d) it is clear that the former deals with deduction in respect of profits and gain of business in ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e case of CIT vs. Rajasthan Rajya Sahakari Kray Vikray Sangh Ltd. (Supra) by following the decision of Hon ble Gujarat High Court in the case of Surat Vankar Sahakari Sangh Ltd. vs. ACIT, 72 taxmann.com 169 has held in as under: 8. We have considered the decisions cited by learned advocate for the assessee as well as the revenue. We feel that the decisions cited by the learned advocate for the assessee shall be applicable on the facts of the present case. In the case of K. Nandakumar v. ITO [1993] 204 ITR 856/[1994] 72 Taxman 223 (Ker.), the Kerala High Court has held as under: '4. The effect of Section 80AB is that, for the purpose of computing the deduction under Section 80L, the amount of income of that nature as computed in accordance with the provisions of the Act shall alone be deemed to be the amount of income of that nature. What the section means is that the net income by way of interest computed in the manner provided by the provisions of the Act shall alone be taken into account for computing the benefit. But it must be noted that payment of interest under a loan transaction incurred for the purpose of deriving income from business is not an item w ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... m its investments with any other co- operative society, the whole of such income. 6. So far as the principle of interpretation applicable to a taxing statute is concerned, we can do no better than to quote the by-now classic words of Rowlatt J., in Cape Brandy Syndicate v. IRC [1921] 1 KB 64, 71 : ... In a taxing Act, one has to look merely at what is clearly said. There is no room for any intendment. There is no equity about a tax. There is no presumption as to a tax. Nothing is to be read in, nothing is to be implied. One can only look fairly at the language used, 7. The principle laid down by Rowlatt J., has also been time and again approved and applied by the Supreme Court in different cases including the one, Hansraj Gordhandas v. H. H. Dave, Assistant Collector of Central Excise and Customs, AIR 1970 SC 755, 759. 8. Section 80P(2)(d) of the Act allows whole deduction of an income by way of interest or dividends derived by the co-operative society from its investment with any other co-operative society. This provision does not make any distinction in regard to source of the investment because this Section envisages deduction in respect of any income ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ble Karnataka High Court in case of PCIT and Another vs. Totagars Co-operative Sale Society 392 ITR 0074 as relied upon by the Ld. AR of the assessee as held in para 7 to 11 as under:- 7. However, the contention being taken by the learned counsel is untenable. For the issue that was before the ITAT, was a limited one, namely whether for the purpose of Section 80P(2)(d) of the Act, a Co-operative Bank should be considered as a Co-operative Society or not? For, if a Co operative Bank is considered to be a Co-operative Society, then any interest earned by the Cooperative Society from a Co-operative Bank would necessarily be deductable under Section 80P(1) of the Act. 8. The issue whether a Co-operative Bank is considered to be a Co-operative Society is no longer res integra. For the said issue has been decided by the ITAT itself in different cases. Moreover the word Co-operative Society are the words of a large extent, and denotes a genus, whereas the word Cooperative Bank is a word of limited extent, which merely demarcates and identifies a particular species of the genus Co-operative Societies. Co- Operative Society can be of different nature, and can be involved in ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... efore, the issue of deduction u/s 80P(2)(c)(ii) is set aside to the record of the Ld. CIT(A) for fresh adjudication. 7. For the Assessment Year 2014-15 the Revenue has raised the following grounds of appeal:- On the facts and in the circumstances of the case the Ld. CIT(A), kota has erred in:- 1. Deleting addition of ₹ 1,72,42,513/- made by disallowing deduction u/s 80P of the Act without appreciating the facts mentioned by the AO in the assessment order; 2. The appellant craves liberty to raise additional ground and to modify/amend the ground of appeal at the time of hearing. 7.1 It is manifest from the grounds raised by the Revenue that it is identical as raised for the AY 2013-14 except the quantum of deduction disallowed by the AO and allowed by the Ld. CIT(A). 7.2 We have heard the Ld. D/R as well as Ld. AR and considered the relevant material on record. As regards the deduction u/s 80P(2)(d) the issue stands decided for the AY 2013-14 and accordingly, the order of the Ld. CIT(A) to the extent of the claim u/s 80P(2)(d) is upheld. We find that for the AY 2014-15 the assessee claimed deduction u/s 80P(2)(c)(ii) of ₹ 20,685/- on account ..... X X X X Extracts X X X X X X X X Extracts X X X X
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