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TMI Blog2021 (10) TMI 971X X X X Extracts X X X X X X X X Extracts X X X X ..... for such argument is that the Circular relied by the Tribunal is inapplicable, and secondly the dis-allowance forms part of a situation contemplated by Section 68 of the Act. Applicability of the Circular to the case on hand. Circular Dated 02.11.2016 refers to Section 32, 40(a)(ia), 40A(3), 43B, etc . The appreciation of Revenue that it is applicable only to the sections stated therein, is unacceptable and stated so without noticing the word 'etc' used in the Circular. Therefore, the objection now raised against the Tribunal that the Tribunal relied on an inapplicable Circular is incorrect and accordingly rejected. The Circular comprehensively sets out the procedure for treating such items of expenditure. The assessee/Socie ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... For the Respondent : Adv. Sri.Firoze B. Andhyarujina (Sr), Adv. Sri.Firoze B. Andhyarujina Sr, Adv. Sri.S.Arun Raj JUDGMENT S.V. BHATTI, J. Revenue is the appellant. The appeal is directed against the judgment of the Income Tax Appellate Tribunal in I.T.A. No. 358/Coch/2016 dated 17.11.2016. The circumstances relevant for disposing of the appeal are stated thus: 2. The assessee is a registered Primary Agricultural Credit Society. The appeal pertains to the returns filed by the assessee/respondent for the Assessment Year 2012-13. The assessee claims deduction under Section 80P(2)(i)(a) of the Income Tax Act. The Assessing Officer held that the assessee cannot be considered as a Primary Agricultural Credit Society, and ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s that are in support to disallow the claim for the assessment year under reference. Thus, I hold that the assessee is eligible for exemption under section 80P(2)(i)(a) for the assessment year 2012-2013. xxx xxx xxx 12. Section 80P(2)(d) allows exemption for the whole income by way of interest or dividends derived by a Co-operative Society from its investments with any other Co-operative Society. The appellant in their return has separately shown ₹ 2,20,200/- under other sources being dividend from IFFCO. As the same represents dividends received from Indian Farmers Co-operative Society Ltd., [IFFCO] the receipt squarely comes under the eligible clause 80P(2)(d) and accordingly the appellant's claim under this clause is also ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ired to consider the other two objections raised by the Revenue against the order under appeal, by duly taking note of the fact that assessee is entitled to the deduction under Section 80P(2) of the Income Tax Act. 5. Learned Senior Counsel Sri P K R Menon argues that the assessee is not entitled to claim deduction on income received by way of interest from Treasury and Laxmi Vilas Bank. According to him, even as per the judgment of the apex Court in Mavilayi Service Co-operative Bank Ltd case, the Society is entitled to claim deduction of income/interest/dividend earned from investments made in a Co-operative Society. In other words, investments with other Co-operative Society merit deduction and not income received from other sources ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ent of granting deduction of ₹ 69,323/- in the computation of total income of assessee. The Revenue has not challenged the said decision either before the Commissioner of Income Tax (Appeals) or before the Appellate Tribunal, for the first time a ground is canvassed, in this behalf, by the Department. We are of the view that the said objection cannot straightaway be considered by this Court at this juncture without the same being subjected to challenge, as provided by law, and particularly the amount of deduction granted is ₹ 69,323/-. 8. The Commissioner of Income Tax (Appeals), as noted above, confirmed the finding of disallowing 5% of the expenditure booked towards interest paid by the assessee in the subject Assessment Ye ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tion under Section 80P(2)(i)(a) of the IT Act. The exclusion of 5% from the expenditure disallowed is treated as a deduction permissible under 80P(2)(a)(i) of the Act. The argument of the Department is that the said disallowed portion will have to be treated as 'income earned from other sources'. The foundation for such argument is that the Circular relied by the Tribunal is inapplicable, and secondly the dis-allowance forms part of a situation contemplated by Section 68 of the Act. 12. Let us first examine the applicability of the Circular to the case on hand. Circular Dated 02.11.2016 refers to Section 32, 40(a)(ia), 40A(3), 43B, etc . The appreciation of Revenue that it is applicable only to the sections stated therein, is un ..... X X X X Extracts X X X X X X X X Extracts X X X X
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