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TMI Blog2019 (9) TMI 1338X X X X Extracts X X X X X X X X Extracts X X X X ..... ntentions and perused the material available on record. The issue in question is covered in favour of the assessee by the earlier decisions of the Co-ordinate Benches in assessee s own case. Respectfully following the earlier decisions of the Coordinate Benches, the contribution made by the assessee to SPARSH Trust is accordingly allowed as an eligible business expenditure under section 37(1) - Decided in favour of assessee. X X X X Extracts X X X X X X X X Extracts X X X X ..... 80P to this extent. 1.1 The ld. CIT(A) has erred on facts and in law in not considering that investment in FDRs is made out of own funds and borrowed funds has been utilized for business purpose and therefore, no interest can be attributed for earning the interest income.'' 2. Whether in the facts and circumstances of the case and in law the ld. CIT(A) is correct in holding that the income received from investments made with Jaipur Central Cooperative Bank is eligible for deduction u/s 80P(2)(d) of the I.T. Act, 1961 and thereby justified in allowing relief of ₹ 2,76,34,807/-.'' 2.5 At the outset of the hearing, the ld.AR of the assessee submitted that the Ground No. 1 & 1.1. of the assessee and Ground No. 2 of the Revenue raised in the respective appeals are squarely covered by the decision dated 2-09-2019 of Coordinate Bench in assessee's own case in ITA No.512 & 513/JP/2015 for the Assessment Year 2011-12- and 2012-13 and Revenue's appeal in ITA No. 633 & 634/JP/2019 for the Assessment Year 2011-12 and 2012-13 for which the ld.AR of the assessee relied on para 15 to 20 of the tribunal order as under:- ''15. Now, coming to a related issue as to whether by virtue ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... redit Society or a Primary Co-operative Agricultural and Rural Development Bank. We find that the lower authorities had observed that as the co-operative bank with which the surplus funds of the assessee were parked as investments, were neither Primary Agricultural Credit Society nor a Primary Co-operative Agricultural and Rural Development Bank, therefore, the interest income earned on such investments would not be entitled for claim of deduction under Sec. 80P(2)(d) of the Act. 7. We have deliberated at length on the issue under consideration and are unable to persuade ourselves to be in agreement with the view taken by the lower authorities. Before proceeding further, we may herein reproduce the relevant extract of the said statutory provision, viz. Sec. 80P(2)(d), as the same would have a strong bearing on the adjudication of the issue before us. "80P(2)(d) (1) Where in the case of an assessee 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 asse ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... P of the Act, but however, as a cooperative bank continues to be a co-operative society registered under the Co-operative Societies Act, 1912 (2 of 1912), or under any other law for the time being enforced in any state for the registration of co-operative societies, therefore, the interest income derived by a co-operative society from its investments held with a co-operative bank, would be entitled for claim of deduction under Sec.80P(2)(d) of the Act. 8. We shall now advert to the judicial pronouncements that had been relied upon by the authorized representatives for both the parties and the lower authorities. We find that the issue that a co-operative society would be entitled for claim of deduction under Sec. 80P(2)(d) for the interest income derived from its investments held with a cooperative bank is covered in favour of the assessee in the following cases: (i) Land and Cooperative Housing Society Ltd. (supra) (ii) Sea Green Cooperative Housing and Society Ltd. (supra) (iii) Marwanjee Cama Park Cooperative Housing Society Ltd. (supra). We further find that the Hon'ble High Court of Karnataka in the case of Totagars Cooperative Sale Society(supra) and Hon'ble ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... urt of Karnataka in the case of Totagars co-operative Sale Society (supra), the High Court had concluded that a co-operative society would not be entitled to claim of deduction under Sec. 80P(2)(d). We however find that as held by the Hon'ble High Court of Bombay in the case of K. Subramanian v. Siemens India Ltd. [1983] 15 Taxman 594/[1985] 156 ITR 11 (Bom), where there is a conflict between the decisions of non-jurisdictional High Court's, then a view which is in favour of the assessee is to be preferred as against that taken against him. Thus, taking support from the aforesaid judicial pronouncement of the Hon'ble High Court of jurisdiction, we respectfully follow the view taken by the Hon'ble High Court of Karnataka in the case of Totagars Cooperative Sale Society(supra) and Hon'ble High Court of Gujarat in the case of State Bank Of India (supra), wherein it was observed that the interest income earned by a co-operative society on its investments held with a co-operative bank would be eligible for claim of deduction under Sec.80P(2)(d) of the Act. 9. We thus in the backdrop of our aforesaid observations are unable to persuade ourselves to be in agreement w ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 9856 405079 581753 867618 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 which arises in the computation of interest income "in accordance with the provisions" of the Act. The said amount has to be paid irrespective of whether any interest income is otherwise received or not. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 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 cooperative 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 derived by the co-operative society from any investment with a co-operative society. It is immaterial whether any interest paid to the co- operative society exceeds the interest received from the bank on investment ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ntral Cooperative Bank Ltd. 20. In the result, the sole ground of Revenue's appeal is dismissed and ground no. 2 in assessee's cross appeal is allowed. Having decided the matter on merits, the legal ground raised by the assessee challenging the validity of the proceedings u/s 147 has become infructous and is dismissed.'' 2.6 During the course of hearing, the ld. DR supported the order of the AO and also filed following case laws to this effect. 1. PCIT vs Toagars Cooperative Sale Society [2017] taxmann.com 140 (Karnataka) 2. CIT vs Rajasthan Rajya Sahakari Upbhokta Sangh Ltd [1996) 84 taxman 33 (Raj). 2.7 We have heard the rival contentions and perused the materials available on record. The Bench has also taken into consideration the judgement cited by the Revenue authorities. However, the Bench noted that recent judgment on the particular issue has already been pronounced by the ITAT Coordinate Bench vide its order dated 02-8-2019 in the assessee's own case. Therefore, respectfully following the decision of the ITAT Coordinate Bench in assessee's own case (supra), on the issue in question, we allow the Ground No. 1 and 1.1 of the assessee and dismiss the Ground No. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... supply of nutritional supplement etc. Therefore, in our considered view, contribution made by assessee to this trust is an expenditure incurred wholly and exclusively for the purpose of business which is allowable u/s 37(1). From the income and expenditure account of the trust, it can be noted that it has incurred an expenditure in pursuance of its objectives and after considering the receipts, there is deficit to the trust in the year under consideration. Such deficit is met out of the contribution made by assessee to the Trust. It is further seen that before creating this trust, the assessee was incurring all these expenses itself and all these expenses were allowed by the department while completing assessment u/s 143(3).Therefore, this is not a case that assessee has made donation to any trust and, therefore, the same cannot be allowed as business expenditure. The Id. CIT (A) has disallowed the claim of assessee by observing that since assessee has made donation u/s 80G and, therefore, deduction u/s 80G is allowable whereas the facts are otherwise. The assessee has not made any donation but has contributed to the trust for a specific purpose i.e. to incur the expenditure to get ..... X X X X Extracts X X X X X X X X Extracts X X X X
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