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TMI Blog2024 (2) TMI 242X X X X Extracts X X X X X X X X Extracts X X X X ..... not speak of any adjustment as sought to be made out by learned counsel for the Revenue. The provision does not indicate any such adjustment in regard to interest derived from the co-operative society from its investment in any other co-operative society. Therefore, we do not agree with the argument advanced by learned counsel for the Revenue. Decided in favour of assessee. Addition in respect of rental income earned - We note that assessee has not claimed deduction u/s 80P(2)(d) of rental income - The rental income has been shown by the assessee in the computation of total income separately and paid the taxes thereon as per the income tax rate applicable, therefore the question of disallowance does not arise. We note that deduction under section 80P is available activity-wise and the rental income is not defined as per the section 80P, however assessee has shown the rental income separately and paid the taxes thereon. Hence, the question of disallowance under section 80P of the Act does not arise, specifically when the assessee has never claimed deduction under section 80P of the Act in respect of the rental income. Therefore, we delete the addition.Decided in favour of asse ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... enses, whereas, the appellant has offered this income to tax and has never claimed such deduction on this income. 4. That on facts, and in law, it ought to have been held that out of the eligible deduction u/s 80P(2)(a)(iii), 80P(2)(a)(iv), 80P(2)(d) and 80P(2)(c)(i) totaling to Rs.22,35,169/-, the appellant has claimed deduction to the extent of gross total income of Rs.20,61,093/-. 5. The appellant craves liberty to add, any ground of appeal. 3. Now, we shall take all these grounds one by one. 4. Ground No.1 raised by the assessee, relates to disallowance of deduction under section 80P(2)(d) of the Act to the tune of Rs.6,49,886/-. 5. So far as the ground no.1 is concerned, Ld. Counsel for the assessee invited our attention to the judgment passed by the Hon'ble jurisdictional Gujarat High Court in the case of Surat Vankar Sahakari Sangh Ltd. vs. ACIT, 72 taxmann.com 169 (Guj.), wherein issue relating to deduction under section 80P(2)(d) in respect of gross interest receipt/dividend from Co-operative Bank have been discussed and adjudicated in favour of the assessee. The Ld. Counsel for the assessee submitted that the present ground no.1 is squarely cov ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... re, Section 80AB has no application to the facts of these cases. The interest paid on the loan transactions has to be deducted from the business income, and not from the interest received from the bank on the fixed deposits. The assessees were therefore right in the submissions which they made before the Commissioner of Income-tax in the revision petitions which they filed. This aspect of the matter has been overlooked by the Commissioner in passing the order, exhibit P-5.' 8.1 Similarly, in the case of Doaba Co-operative Sugar Mills Ltd (supra), the Punjab Haryana High Court has held as under: '5. The contention of Mr. Gupta, learned counsel appearing for the Revenue, is that the Tribunal was wrong in allowing deduction under Section 80P(2) (d) of the Act because it is not established that the assessee had derived the interest by investing all the amount of surplus funds. It is further contended by 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 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... anshaln Central Co-operative Bank without adjusting the interest paid to the hank. Therefore, the reference is answered against the Revenue in the affirmative and in favour of the assessee.' 8.2 Moreover, the Bombay High Court in the case of Bai Bhuriben Lallubhai (supra) has held that the purpose for which the assessee borrowed money had no connection whether direct or indirect with the income which she earned from the fixed deposit and that she was not entitled to the deduction claimed under Section 12(2). The High Court held that if an assessee had no option except to incur an expenditure in order to make the earning of an income possible, then undoubtedly the exercise of that option is compulsory and any expenditure incurred by reason of the exercise of that option would come within the ambit of section 12(2) of the Indian Income-Tax Act but where the option has no connection with the carrying on of 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 particu ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... h the parties and carefully gone through the submissions put forth on behalf of the assessee along with the documents furnished and the case laws relied upon, and perused the facts of the case including the findings of the ld. CIT(A) and other material brought on record. We note that assessee has not claimed deduction under section 80P(2)(d) of the Act of rental income of Rs.3,94,590/-. The rental income has been shown by the assessee in the computation of total income separately and paid the taxes thereon as per the income tax rate applicable, therefore the question of disallowance does not arise. We note that deduction under section 80P is available activity-wise and the rental income is not defined as per the section 80P of the Act, however assessee has shown the rental income separately and paid the taxes thereon. Hence, the question of disallowance under section 80P of the Act does not arise, specifically when the assessee has never claimed deduction under section 80P of the Act in respect of the rental income. Therefore, we delete the addition of Rs.3,94,590/-. 17. In the result, ground no.2 raised by the assessee is allowed. 18. Ground No.3 raised by the assessee relat ..... 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