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TMI Blog2017 (9) TMI 1910X X X X Extracts X X X X X X X X Extracts X X X X ..... rve 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 assess ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... loans, disallowed by the AO. The order by the tribunal has in fact been upheld by the Hon'ble jurisdictional High Court in Tax Case Appeal (TCA) Nos.484 to 487 490 of 2016 dated 02.08.2016. In other words, has the AO correctly allowed the deduction u/s. 80P(2)(a)(ii) on interest income on jewel loans to members. The same had been disallowed by the AO on the ground that the assessee, a co-operative bank, was neither a primary agricultural credit society nor primary co-operative agricultural and rural development bank, so as to be saved by the exclusion clause of s. 80P(4) and, two, the associate (Class B) members, to whom the bulk of the jewel loans had been extended, did not qualify to be members, for the assessee to be eligible for the deduction u/s. 80P(1) in respect of interest on jewel loans, claimed u/s. 80P(2)(a)(i), which reads as under: Deduction in respect of income of co-operative societies. 80P. (1) Where, in the case of an assessee being a co-operative society . (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 cred ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... His further stating that the same defeats the outcome of the appellate order fails to appreciate that it is this outcome which is itself in dispute. As afore-noted, it is not the AO as stated by the ld. CIT(A), but the assessee who has to, in case of difference/s, initiate action or take recourse to rectification/correction, pointing out the mistake/error/s attending the Revenue s calculation. In the present case we are at loss to understand as to what that mistake/error is, and which explains our observation to that effect earlier. The impugned order/s, which is identical in both the cases, is therefore unsustainable. The ld. counsel for the assessee, Shri S.Sridhar, Advocate, who appeared on 26.07.2017, also did precious little other than by way of furnishing some loose, unattested sheets, which appear to be extracts from the assessee s final accounts. Now, it is nobody s case that the figures drawn by the AO are not from the assessee s final accounts. As aforenoted, it is only where the error/s attending the AO s working are pointed out, preferably by furnishing an alternative working, that an adjudicating authority would be informed of all the differences and appreciate t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ncome, i.e., comprising gross interest income and other income, both prior to the general expenses. What, then, one may ask, is wrong with the same a amiss therein? The expenditure, be it on account of interest on borrowed capital toward the relevant advances, or the establishment costs as allocable to the relevant activity (being apportioned on gross income basis), has to be deducted to arrive at the income earned on the relevant advances. Income, after all, is only net of expenses (CIT v. Walfort Share Stock Brokers (P.) Ltd. [2010] 326 ITR 1 (SC); Godrej Boyce Mfg. Co. Ltd. v. Dy. CIT [2010] 328 ITR 81 (Bom)) and it is only the income as included in the gross total income (GTI) on which deduction under Chapter VI-A is allowable (s. 80AB), and toward which the Revenue relies on the decision in Sabarkantha Zilla Kharid Venchan Sangh Ltd. v. CIT [1993] 203 ITR 1027 (SC), a principle reiterated by it again recently in The Citizen Co-operative Society Ltd. v. Asst. CIT [2017] 397 ITR 1 (SC) (at para 3/pg.4 of the judgment). The law in the matter is well settled. Reference in this regard may also be made to decisions, inter alia, in IPCA Laboratory Ltd. v. Dy. CIT [2004] 266 ITR ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... f law. There is neither an estopple against law nor any vested right against a statute. The assessee s COs are, therefore, without merit. In sum, the 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 ..... X X X X Extracts X X X X X X X X Extracts X X X X
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