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TMI Blog2020 (7) TMI 715X X X X Extracts X X X X X X X X Extracts X X X X ..... commercial banks and cooperative banks/societies on the ground that such interest income is not eligible for deduction under that section. 2. Without prejudice that the CIT(A) erred on facts and in law in not alternatively allowing deduction to the extent of Rs. 1,83,33,282 under section 80P(2)(d) of the Act on interest income earned from deposits made with cooperative societies/ banks." 3. In ITA No. 6935/Del/2018, following grounds have been raised by the assessee: " 1. That on the facts and circumstances of the case, the CIT(A) erred in upholding the action of the assessing officer in disallowing deduction of Rs. 68,38,319 under section 80P(2)(a)(i) of the Income Tax Act. 1961 (" the Act") on the ground that interest income of Rs. 1,82,03,792 earned from fixed deposits/investments with co-operative banks/societies is not derived from business and was taxable under the head 'income from other sources', which is not eligible for deduction under that section. 2. Without prejudice, that on the facts and circumstances of the case, the CIT(A) erred in holding that the interest income of Rs. 1,82,03,792 received from deposits made with co-operative banks/ societies was eligible ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... from members 369,93,244 384,54,406 380,39,196 Interest from Co-operative Societies (Bank) 183,33,282 182,03,792 186,15,316 Interest from Schedule Commercial Banks & Misc Income 8,75,951 6,59,626 1,25,283 Total Income earned 562,02,477 573,17,824 567,79,795 Total interest paid on deposits to members 314,00,043 324,30,415 329,75,423 Total overhead expenses 175,31,351 195,03,420 190,72,615 Total disallowance 15,28,066 14,54,330 6,81,174 Total taxable income 87,99,149 68,38,319 54,12,931 Deduction claimed in return of income - 80P(2)(a)(i) 87,99,149 68,38,319 54,12,931 Tax demand if deduction u/s 80P(2)(a)(i) is restricted to income earned from members only 80,77,256 76,45,770 84,00,520 Alternate claim of deduction considering deduction under section 80P(2)(d) (As per HC order in assessee's own case) 86,62,009 67,59,622 54,00,987 Tax Payale 39,286 21,227 1,430 Total tax payable 61,943 Tax already paid 35,00,000 Table 2 Assessment Year Gross Interest income earned Income earned from investment with cooperative banks/societies Income earned from investment with commercial Banks Income earned from members on ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 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 asses see. (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 amount of profits & gains of business attributable to anyone are more of such activities." 9. Since, it has been held by the Hon'ble High Court that the assessee is a thrift & credit society and its functions should not be constituted as "banking". The Hon' ble High Court has clearly held that the assessee is not a banking company and the expression " business of banking" cannot be given a spacious meaning to unrealistically expand the term beyond, the assessee is not eligible for deduction u/ s 80P(2)(a)(i). 10. Accordingly, we hereby hold that the interest earned from the fixed deposits made out of the surplus funds is not eligible for the claim of deduction u/s 80P(2)(a)(i). Deduction u/s 80P(2)(d): 11. Having found itself in eligible for de ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... by the Hon' ble High Court of Punjab & Haryana, Hon' ble J Iqbal Singh that "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." 18. Thus, we also find that 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 derived by the co-operative society from any investment with a co-operative society. The revenue is not required to look to the nature of the investment whether it was from its surplus funds or otherwise. 19. We have also considered the case of Totgars Co- operative Sale Society Ltd. 322 ITR 283 relied upon by the ld. DR and find that the Hon' ble Supreme Court has deliberated on the issue of deduction u/s 80P(2)(a)(i) but not on Section 80P(2)(d). We also observed that in the ..... X X X X Extracts X X X X X X X X Extracts X X X X
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