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TMI Blog2021 (1) TMI 1277X X X X Extracts X X X X X X X X Extracts X X X X ..... sing out of the grounds taken by the Revenue as well as the assessee before the Coordinate Benches and orders passed by the Coordinate Benches. We therefore donot see any legal infirmity in terms of raising the said issue by the Revenue before us by way of present misc. applications. For A.Y 2011-12 and A.Y 2012-13, the Coordinate Bench has held that there was no necessity to examine the issue as to whether deduction u/s 80P(2)(d) shall be allowed on the gross interest income on FDRs or it should be allowed on the net interest income as conceptually the deduction under section 80P(2)(d) has to be allowed on gross and not on net interest income as held by the Hon ble Gujarat High Court in case of Surat Vankar Sahakari Sangh Ltd. [ 2016 (7) TMI 1217 - GUJARAT HIGH COURT ] The Coordinate Bench therefore following the decision of Hon ble Gujarat High Court allowed the deduction on gross interest income for respective assessment years. For A.Y 2014-15, the Coordinate Bench followed the aforesaid decision for A.Y 2011-12 and A.Y 2012-13 allowed the deduction on gross interest income. In this year, we find that the ld DR brought to the notice of Coordinate Bench, the decision of Hon ble R ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... y the Revenue against the consolidated order passed by the Tribunal in ITA No. 633/JP/19 & 512/JP/19 for A.Y 2011-12 and 634/JP/19 & 513/JP/2019 dated 02.09.2019 and subsequent order passed by the Tribunal in ITA Nos. 187/JP/19 & 22/JP/19 dated 30.09.2019 for A.Y 2014-15. MA No. 64/JP/2020 for A.Y 2011-12 2. In this regard, the ld. DR submitted that the department has filed appeal before the Tribunal containing grounds of appeal (ITA. No. 633/JP/2019 for A.Y 2011-12) as under:- "Whether in the facts and circumstances of the case and in law, the CIT(A) is correct in holding that the income received from investments made with Jaipur Central Co-operative Bank is eligible for deduction u/s 80-P(2)(d) of the I.T Act, 1961 and thereby justified in allowing relief of ₹ 1,49,40,834/-." 3. It was submitted that the Tribunal has passed order dated 02.09.2019 in ITA No.512/JP/2019 (Assessee's appeal) and 633/JP/2019 (Department appeal) for A.Y. 2011-12 in the case of M/s. Jaipur Zila Dugdh Utpadak Sahkari Sangh Ltd., Jaipur, which was received in the office of Pr. CIT-2, Jaipur on 25.10.2019. The Tribunal while deciding the grounds of the appeal filed by the departmen ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... bunal (ITA. No. 634/JP/2019 for A.Y 2012-13) as under:- "Whether in the facts and circumstances of the case and in law, the CIT(A) is correct in holding that the income received from investments made with Jaipur Central Co-operative Bank is eligible for deduction u/s 80-P(2)(d) of the 1.T Act, 1961 and thereby justified in allowing relief of ₹ 1,59,92,544/-." 7. The Tribunal had passed order dated 02.09.2019 in ITA No.513/JP/2019 (Assessee's appeal) and 634/JP/2019 (Department appeal) for A.Y. 2011-12 in the case of M/s. Jaipur Zila Dugdh Utpadak Sahkari Sangh Ltd., Jaipur, which was received in the office of Pr. CIT- 2, Jaipur on 25.10.2019. The Tribunal while deciding the grounds of the appeal filed by the department, in para 14 of the order, has decided the issue in the combined order for AY 2011-12 and 2012-13 by holding as under:- "In the instant case for the purposes of section of the Act, Jaipur Central Cooperative Bank Ltd shall be treated as a co-operative society. Therefore, interest on FDRs placed by the assessee society with such cooperative society shall be eligible for deduction u/s 80P(2)(d) of the Act." 8. On the other hand, in as ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 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 IT Act, 1961 and thereby justified in allowing relief of ₹ 2,76,34,807/-." 11. The Tribunal has passed order dated 02.09.2019 in ITA No. 22/JP/20 (Assessee's appeal) and 187/JP/2019(Department appeal) for A.Y. 2014-15 in the case of M/s. Jaipur Zila Dugdh Utpadak Sahkari Sangh Ltd., Jaipur, which was received in the office of Pr. CIT-2, Jaipur on 25.10.2019. The Tribunal while deciding the grounds of the appeal filed by the department, have decided the issue following the combined order of the Coordinate bench for AY 2011-12 and 2012-13 also wherein it was held that for the purposes of section 80P(2)(d) of the Act, Jaipur Central Cooperative Bank Ltd shall be treated as a co-operative society. Therefore, interest on FDRs placed by the assessee society with such cooperative society shall be eligible for deduction u/s 80P(2)(d) of the Act. It further held that :- " We thus in the backdrop of our aforesaid observations are unable to persuade ourselves to be in agreement with the view taken ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e, as the Tribunal has now established in assessee's own case for A.Y. 2016-17 (ITA No. 1243/JP/2019) that the deduction u/s 80P(2)(d) can be allowed only on the net receipt after deducting the expenditure incurred for earning exempt income. This issue has not been adjudicated upon by the Honble Bench in its decision in this instant case for AY 2014-15, it is requested that the same may be taken up under section 254(2) of the I.T. Act, 1961 for adjudication by recalling and modifying the order dated 02.09.2019 in the case of DCIT, Circle-6, Jaipur vs. M/s Jaipur Zila Dugdh Utpadak Sahkari Sangh Ltd., Jaipur, in ITA No.22/JP/20 (Assessee's appeal) and 187/JP/2019(Department appeal) for A.Y. 2014-15. 14. We now refer to the contentions advanced by the ld AR. In this regard, the ld. AR submitted that the Tribunal has decided the cross appeal filed by the department and the assessee for AY 2011-12 & 2012- 13 vide order dt. 02.09.19 and for AY 2014-15 vide order dt. 30.09.2019 whereby the appeal of the assessee was allowed and appeal of the department was dismissed. Against the dismissal of departmental appeal, present misc. application has been filed. It may be noted that the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... deduction u/s 80P(2)(d) was disallowed to this extent. Against this finding of the CIT(A), assessee filed an appeal before the Tribunal which was allowed in favour of the assessee. 17. For AY 2016-17, the Tribunal vide order dt. 04.03.2020 while deciding the assessee's appeal at Para 13 observed that whether deduction u/s 80P(2)(d) should be allowed on gross interest income on FDR or net interest income calculated after deducting the interest expenditure, it has relied on the decision of Hon'ble Gujarat High Court in earlier years but the decision of Rajasthan High Court which has been brought to its notice by Ld. CIT was not considered and this being the decision of jurisdictional High Court the same is binding on the Tribunal. Accordingly, in Para 14 it held that deduction u/s 80P(2)(d) can be allowed only on the net receipt after deducting the expenditure and according set aside this issue to the file of Ld. CIT(A) to examine the same afresh. 18. Now the department has filed an Misc. Application stating that in AY 2016-17, the Tribunal has set aside the issue of calculating of eligible deduction of interest u/s 80P(2)(d) to the society by referring para 14 of the order dt. 0 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rest expenditure in earning such interest income but the matter require further information & verification and therefore it is set aside to the file of CIT(A) to examine the afresh. 21. It was submitted that in AY 2011-12, 2012-13 & 2014-15, the Tribunal has allowed the appeal of assessee considering the later decision of Gujarat High Court dt. 12.07.2016. The decision of Hon'ble Rajasthan High Court dt. 12.01.1995 was not on record while deciding the appeal for AY 2011-12 & 2012-13 but while deciding the appeal for AY 2014-15 the said decision was also considered. Further in the later decision of Hon'ble Gujarat High Court, the earlier decision of Hon'ble Rajasthan High Court has been referred & considered. Thus when the Tribunal has relied on later decision of Hon'ble Gujarat High Court and in AY 2014-15 again relied on the same decision even after taking note of the decision of Rajasthan High Court and thereafter given a finding on the issue, the same cannot be considered as a mistake apparent on record solely for the reason that in AY 2016-17, the Tribunal has set aside the matter to CIT(A) on this issue. 22. Without prejudice to above, it was submitted that in AY 2011-12 & 2 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d deduction u/s 80P(2)(d) to the extent of net interest instead of gross interest as claimed by the assessee and disallowed the excess claim of deduction in this regard for all the years under consideration. The amount disallowed by the Assessing Officer and deduction granted by the Assessing Officer is tabularized and recorded as under: Particular Assessment Years 1991-92 1992-93 1993-94 1994-95 Dividend - From co- opsocieties 9743 48000 3491 42674 Interest (As shown in the return of income) 1022699 1214259 1220756 902765 Deduction u/s 80P(2)(d) of the Act as per return 1027719 1045298 1223026 943736 Disallowed by Assessing Officer 477863 640219 641273 76116 Deduction granted u/s 80P(2)(d) of the Act by Assessing Officer 549856 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 Se ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... y Mr. Gupta that the assessee has paid interest to Jalandhar Central Co-operative Bank and has also received interest from the said co- operative bank, thereby showing that the assessee has on the aggregate paid interest to the bank and, therefore, no deduction under Section 80P(2)(d) can be allowed. To appreciate this argument, we have to look to the provisions of Section 80P(2)(d) of the Act, For facility of reference, it is reproduced as under : "80P. (2)(d) in respect of any income by way of interest or dividends derived by the co-operative society from its investments with any other co- operative society, the whole of such income." 6. So far as the principle of interpretation applicable to a taxing statute is concerned, we can do no better than to quote 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 Row ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the business or the earning of the income and the option depends upon personal considerations or upon motives of the assessee, that expenditure cannot possibly come within the ambit of Section 12(2). In the present case, the loan was taken for business purpose more particularly purchase of yarn and not for fixed deposits. 9. In view of the above, the questions raised in the present appeals are answered in favour of the assessee and against the revenue. The order passed by the Tribunal is accordingly quashed and set aside." 19. In light of above discussion and respectfully following the decisions referred supra, the assessee society is held eligible for deduction under section 80P(2)(d) in case of interest income of ₹ 1,49,40,834 on FDRs placed with Jaipur Central 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." 25. For A.Y 2014-15 (in ITA no. 22 & 187/JP/2019 dated 30.09.2019), the relevant findings of t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ether deduction u/s 80P(2)(d) should be allowed on gross interest income on FDR on or net interest income calculating after deducting the interest expenditure, the Coordinate Bench has relied on the Hon'ble Gujarat High Court decision in case of Surat Vankar Sahakari Sangh Ltd vs ACIT (supra) and the decision of the Hon'ble Rajsthan High Court in case of Rajasthan Rajya Sahkari Upbhokta Sangh Ltd (supra) which has been brought to our notice by the ld. CIT DR was not considered and being the decision of the Jurisdictional High Court, the same is binding on the Tribunal and therefore, to this extent the decision rendered by the Co-ordinate Bench for earlier years stand distinguishable. In the case of Rajasthan Rajya Sahkari Upbhokta Sangh Ltd (supra), the Hon'ble Rajasthan High Court has held as under:- "3. We have considered the arguments of the learned counsel for the revenue. The provisions of section 80P contemplate the deduction of income of co-operative societies. It is provided under sub-section (1) that where, in the case of an assessee being a co-operative society, the gross total income includes any income referred to in subsection (2), there shall be deducted, in accorda ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ere is no problem. If separate books of account have not been maintained and expenses have been incurred jointly for earning both the incomes then such expenses relatable to earn the non-exempted activities must be estimated. The income exempted under section 80P(2) has to be arrived at separately in order to determine the income under section 80P(2) and it can never be envisaged that the total income which has been so received could be allowed without deducting the expenditure incurred in earning the income. The use of the words 'the whole of the amount of profits and gains of business attributable to any one or more of such activities' appearing at the end of sub-section (2) of section 80P could be only for such income which is attributable to the activities which are exempted. In order to ascertain the real profit, the expenses incurred in earning the said income has to be deducted. In the present case, the Tribunal has found that allowing the deduction for commission at 50 per cent of the receipts is justified. The Tribunal has relied upon the decision in the case of Cloth Traders (P.) Ltd. v. Addl CIT [1979] 118 ITR 243 (SC), which was overruled by the Apex Court in ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... thing on record to this effect. There is no dispute on the legal proposition that where interest free funds are more than the interest bearing funds, a presumption will arise that investment has been made out of interest free funds. However, such a presumption has to be tested at the point in time when the investment was made and not at the beginning or at the end of the year. In the instant case, merely stating that the assessee has interest free funds by way of share capital and accumulated profits at the yearend will not help the case of the assessee as the same reflect the position subsequent to deployment of funds in FDRs which were placed sometime during the year and not at the end of the year. Further, whether such interest free funds at the yearend are liquid funds or are represented by fixed assets and other currents. In case, there are no liquid funds and all the funds are deployed in fixed and current assets, then the said theory of interest free funds doesn't support the case of the assessee. Though the ld AR has submitted some figures, however, we find that the matter require further information and verification and in absence of findings of the lower authorities, fo ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ities, however, given that Coordinate Bench in assessee's own case has decided the matter recently on 2.09.2019 for A.Y 2011-12 and A.Y 2012-13, it decided to follow the earlier decision and decided the matter in favour of the assessee. 30. For A.Y 2016-17, the Coordinate Bench in its order dated 4.03.2020 held that in the earlier decisions so rendered for A.Y 2011-12, AY 2012-13 and A.Y 2014-15, the Coordinate Benches have relied on the Hon'ble Gujarat High Court decision in case of Surat Vankar Sahakari Sangh Ltd vs ACIT (supra) and the decision of the Hon'ble Rajsthan High Court in case of Rajasthan Rajya Sahkari Upbhokta Sangh Ltd (supra), which has been brought to its notice by the ld. CIT DR, was not considered and being the decision of the Jurisdictional High Court, the same is binding on the Tribunal and therefore, to this extent the decision rendered by the Co-ordinate Bench for earlier years stand distinguishable. And following the decision of the Hon'ble Rajasthan High Court in case of Rajasthan Rajya Sahkari Upbhokta Sangh Ltd (supra), it held as under: "14. The legal proposition thus laid down by the Hon'ble High Court is that the income exempted under section 80P(2 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the situation as the decision of the Hon'ble jurisdictional High Court will always carry the precedence and not following the same will be a breach of judicial discipline for the Jaipur Benches of the Tribunal and the orders so passed clearly call for rectification. Therefore, in our considered view, the orders so passed by the Coordinate Benches thus need to be recalled for limited purposes of adjudication of the said matter afresh taking into consideration the decision rendered by the Hon'ble Rajasthan High Court way back on 12.01.1995 much prior to the two decisions rendered by the Co-ordinate Benches. 32. Further, we agree with the contention advanced by the ld AR that the legal issue challenging the validity of order passed u/s 147 was earlier dismissed as infructious for A.Y 2011-12 and A.Y 2012-13 as the matter was only decided on merits and the same should be also be recalled and decided afresh. 33. In the entirety of facts and circumstances of the case, we hereby recall the earlier orders so passed by the Coordinate Benches in ITA No. 633/JP/19 & 512/JP/19 for A.Y 2011-12 and 634/JP/19 & 513/JP/2019 dated 02.09.2019 and subsequent order passed by the Tribunal in ITA Nos ..... X X X X Extracts X X X X X X X X Extracts X X X X
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