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TMI Blog2021 (3) TMI 528X X X X Extracts X X X X X X X X Extracts X X X X ..... nderstood the term 'net profit' used in Act, which differs from the expression 'net profit' as used in the context of provisions of Income Tax Act, 1961. It has further been held that the aforesaid circular allows payment which are made in the nature of incentives and since, the payment in question has been made by the assessee to its member banks as incentives, the aforesaid amount is allowable as expenditure. The assessee has incurred the expenditure during the course of the business which was duly approved by the board of the assessee in its meeting. Revenue is not opposed to the action of the assessee giving incentives to the member banks but is only opposed to the manner in which the incentive has been paid. It is no ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... is a Co-operative Apex Bank registered under the provisions of Karnataka Co operative Societies Act, 1959 (hereinafter referred to as 'the Act' for short). A licence to carry on the business of banking has been issued by the Reserve Bank of India to the assessee under the provisions of Banking Regulation Act, 1949. The assessee filed the return of income for Assessment Year 2009-10 on 29.09.2009 and declared a total income of ₹ 33,83,04,,750/-. The assessee subsequently filed a revised return and declared a revised income of ₹ 33,61,92,270/- on 31.03.2010. The return was processed under Section 143(1) of the Act and was selected for scrutiny. The Assessing Officer by an order dated 31.12.2011 under Section 143(3) of the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tral Co-Operative Banks and Primary Agricultural Co-operative Societies was duly authorized by Board of Directors in its meeting held on 19.03.2009. It is also submitted that the payment cannot be held as appropriation of net profit as the same could not have been done by the Board Of Directors in their meeting. It is contended that he expenditure is towards development of co-operative sector apart from just providing services to the co-operative sector. It is also submitted that expenditure was incurred only exclusively for the purpose of business of the assessee. 5. It is also pointed out that the tribunal itself has held that incentive could have been given to the District Central Cooperative Banks and Primary Agricultural Cooperative ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... SAFE DEPOSIT CO. LTD', (1982) 133 ITR 756 (SC), 'S.A.BUILDERS VS. CIT (A)', (2007) 288 ITR 1 (SC) and KANHAIYALAL DUDHERIA VS. JCIT', (2020) 113 TAXMANN.COM 217 (KAR.). 6. On the other hand, learned counsel for the revenue while inviting the attention of this court to Section 37 of the Act submitted that the burden was on the assessee to prove the fact that the expenses were incurred for the purposes of business. However, the assessee has failed to discharge the burden. It is further submitted that the expenses were incurred by the assessee even before payment of tax, therefore, the expenses were personnel in nature. It is further submitted that the order passed by the tribunal is just and proper, which does not call fo ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the prudent business man would act and should not look at the matter from their own perspective. 8. In the instant case, the assessee had claimed deduction of the aforesaid amount which was paid by way of incentives to member banks on the ground that the aforesaid expenditure resulted in earning higher income for the assessee and therefore, the expenditure was allowable as deduction. The Assessing Officer has held that from the details furnished by the assessee, it is evident that the assessee has made payment of the aforesaid amounts out of its net profit i.e., after meeting all its expenses including income tax and since, this payment was found to have been made from general revenue, the claim of assessee for deduction has been denied ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... oresaid circular allows payment which are made in the nature of incentives and since, the payment in question has been made by the assessee to its member banks as incentives, the aforesaid amount is allowable as expenditure. The assessee has incurred the expenditure during the course of the business which was duly approved by the board of the assessee in its meeting. The tribunal in para 8 of its order has held that if the assessee could provide higher rate of interest to a particular District Central Co-Operative Banks or Primary Agricultural Co-operative Societies on making a deposit beyond a threshold limit, it was a permissible course of action. Thus, the revenue is not opposed to the action of the assessee giving incentives to the m ..... X X X X Extracts X X X X X X X X Extracts X X X X
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