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TMI Blog2009 (2) TMI 60X X X X Extracts X X X X X X X X Extracts X X X X ..... taraman for the appellant. J. Balachandran for S. Sridhar for the respondent. JUDGMENT The judgment of the court was delivered by K. RAVIRAJA PANDIAN J. - By formulating the following two questions of law, the Revenue is on appeal against the order of the Income-tax Appellate Tribunal, Madras "C" Bench, dated March 24, 2003, in I. T. A. No. 1841/(Mds)/94. The relevant assessment year is 1990-91. "1. Whether, in the facts and circumstances of the case, the Appellate Tribunal was right in holding that the assessee was entitled to deduction under section 80P(2)(a)(i) of the Income-tax Act, 1961 ? 2. Whether, in the facts and circumstances of the case, the Income- tax Appellate Tribunal was right in holding that the receipt n ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d of Rs. 9,036. This resulted in a lower allowance under section 32AB than what was claimed by the assessee. 5. Aggrieved by the order of the Assessing Officer, the assessee filed an appeal before the Commissioner of Income-tax (Appeals), who confirmed the action of the Assessing Officer in denying deduction under section 80P(2)(a)(i) on the ground that under the said section the assessee will be eligible for deduction only when the chief source of income is from the business of banking or provision of credit facilities. With regard to the reduction of the deduction claimed under section 32AB, the Commissioner of Income-tax (Appeals) did not agree with the contention of the assessee that all the items deducted from the income by the Ass ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... i) of the Income-tax Act, 1961, in respect of interest received from the members of the society, we find that none of the authorities below, including the High Court, have examined the memorandum of association filed by Salem Co-operative Sugar Mills Ltd., Madurantakam Co-operative Sugar Mills Ltd., Ambur Co-operative Sugar Mills Ltd., Dharmapuri District Co-operative Sugar Mills Ltd., Vellore Co-operative Sugar Mills Ltd., Attur Agricultural Producers Co-operative Society Ltd., and Modem Engineers Constructions Co-operative Society Ltd. Under section 80P(1), deduction in respect of income of co-operative societies is provided for. Under section 80P(1), where the gross total income of a co-operative society includes any income referred to i ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e by the Tribunal. Hence, the order of the Tribunal in respect of that question of law is hereby set aside. The matter is remitted back to the Tribunal for reconsideration as per the direction of the Supreme Court in the case of Ponni Sugars and Chemicals Ltd. reported in [2008] 306 ITR 392. 13. In respect of the second question of law, the issue is squarely covered by the decision of this court in the case of CIT v. Tamil Nadu Mercantile Bank Ltd . reported in [2002] 255 ITR 205, wherein the question of law taken up for consideration was as to whether, in the facts and circumstances of the case, the Tribunal is correct in law in holding that the deduction under section 32AB of the Income-tax Act, 1961, is to be allowed at 20 per cen ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... amounts are credited to the profit and loss account. It is thus amply clear that it is the computation made in accordance with sub-section (3) of section 32AB, which is to be the basis for determining the twenty per cent. of the profits of the business for the purpose of section 32AB(1)(ii). The computation of income under the provisions of the Income-tax Act is of no relevance for the purpose of determining the extent of benefit under section 32AB(1) or (2). The computation under the Income-tax Act is relevant after the ascertainment of the amount of the deposit and the twenty per cent. of the profits of the business calculated in accordance with section 32AB(3), and the amount to be allowed in the computation under the Income-tax Act is t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Section 32AB does not require the profit for the purpose of section 32AB (1) to be calculated in accordance with the provisions of the Income-tax Act. All that it provides is that the calculations should first be made in accordance with the Companies Act and the requirements more specifically required of Parts II and III of Schedule VI to the Companies Act. There is, therefore, no scope at all for importing the concept of different heads of income found in the Income-tax Act, into the calculation of profit required to be made." 16. In view of the consistent view taken by the Division Bench of this court, which is in favour of the assessee; we are of the view that the Tribunal has rightly held the issue in favour of the assessee and the ..... X X X X Extracts X X X X X X X X Extracts X X X X
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