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TMI Blog2002 (8) TMI 22X X X X Extracts X X X X X X X X Extracts X X X X ..... on: "Whether, on the facts and in the circumstances of the case and in law, the Tribunal was justified in allowing claim under section 80P(2)(a)(iii) of the Income-tax Act, 1961, notwithstanding the fact that the business was not wholly done with the members only?" The assessee is a co-operative society deriving income from sale of fertilizers, agricultural commodities, pesticides, controlled sugar, etc. It also derives income from tractor, matador, truck, godown rent, interest and receipts. On the basis of computation furnished by the assessee, the assessee had claimed relief under section 80P(2) at Rs. 4,75,999. The Income-tax Officer, however, required it to furnish the working of the net income from the business done with the memb ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... learned counsel for the Revenue, submits that after the insertion of section 14A by the Finance Act, 2001, no deduction shall be allowed in respect of the expenditure incurred by the assessee in relation to income which is exempted under this Act. He also brought to our notice that new section 14A has been inserted in the Act to clarify the position of law relating to expenditure relating to exempted income. After the insertion of section 14A, the expenditure can be allowed only in respect of the income which is taxable under the Act and if any expense is incurred in respect of non-taxable income or which is exempt, that expenditure should not be allowed. Before the insertion, of section 14A, there was a dispute on allowability of the e ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e of apportionment of the expenditure will apply because there will be no nexus between the expenditure attributable to the venture, not forming an integral part of the business and the expenditure sought to be deducted as the business expenditure of the assessee." In Punjab State Co-operative Supply and Marketing Federation Ltd. v. CIT [1981] 128 ITR 189, at page 209, the Punjab and Haryana High Court observed as under: "It cannot be disputed that the assessee is entitled to claim expenditure which he incurred wholly or exclusively for the purposes of the business in view of the provisions of section 37 of the Act. The assessee was pursuing various activities. The Income of the assessee in respect of profits and gains of business carri ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... , which the assessee earned, in the dealings with the members of the assessee-society and restricted that income to Rs. 76,723. When the assessee himself has given the working of the income earned in dealings with the members of the society which is exempt, that means the business of the assessee can be segregated regarding the income earned from a part of the business from dealings with the members of the society and the income which is derived from the dealings with the non-members of the society, therefore, in the case in hand, it cannot be said that the business of the assessee is not segregable or indivisible in respect of the exempted income. When the business of the assessee is segregable for the purpose of exempted income, the I ..... X X X X Extracts X X X X X X X X Extracts X X X X
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