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TMI Blog2024 (2) TMI 888X X X X Extracts X X X X X X X X Extracts X X X X ..... adjudication of the matter before us are that the assessee is a cooperative society engaged in providing short term agriculture credit to its members and had also acted as an agent on behalf of Government of Himachal Pradesh for supply of food grains under the PDS system during the financial year relevant to the impugned assessment year. 4.1 During the year under consideration, it filed its return of income claiming deduction under section 80P amounting to Rs. 25,73,020/- and which includes deduction under section 80P(2)(d) of the Act amounting to Rs. 20,51,316/- in respect of interest income on deposits placed with Kangra Central Cooperative Bank (KCCB) Ltd. 4.2 The Assessing officer was of the view that since assessee has received interest income from a cooperative bank and not a cooperative society, the assessee was not eligible for claim of deduction under section 80P(2)(d) of the Act and accordingly a show cause dt. 12/04/2021 was issued to the assessee as to why the claim of deduction under section 80P(2)(d) should not be disallowed and thereafter, in absence of any response from the assessee, the AO went ahead and disallowed the claim of deduction under section 80P(2)(d) ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... er Section 80P(2)(d) of the Act in respect of interest income of Rs. 13,58,969/- received by the assessee cooperative society on deposits placed with Yamuna Nagar Central Co-op Bank Ltd. 16. As per the provisions of section 80P(1) of the Act, the income referred to in sub-section (2) to section 80P shall be allowed as a deduction to an assessee being a Co-operative Society. Further, Section 80P(2)(d) of the Act provides for deduction 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. Thus, for the purpose of Section 80P(2)(d) of the Act, there are only two conditions which are required to be cumulatively satisfied, i.e, the income should be by way of interest or dividend earned by a Co-operative Society from its investments, and secondly, such investments should be with any other Cooperative Society. Besides these two conditions, there are no other condition(s) which has been provided in the statue as apparent from the plain reading of the provisions of Section 80P(2)(d) of the Act. 17. The term "co-operative society" as defined under section 2(19) of the Act (19) means a co-oper ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... iety. We therefore find that the AO has duly examined the facts of the present case and has allowed the deduction in respect of interest income received from the Yamuna Nagar Central Co-op Bank Ltd. as being in compliance with the provisions of Section 80P(2)(d) of the Act. Where the facts in the present case and legal position is not in dispute, we therefore don't understand how the ld PCIT in the same breath hold that the assessee shall not be eligible for claim of deduction under section 80P(2)(d) of the Act. 20. Now, coming to the decision of the Hon'ble Punjab and Haryana High Court in case of CIT Vs. Punjab State Cooperative Federation of Housing Building Societies Ltd (Supra), the question for consideration before the Hon'ble High Court was whether the Tribunal was right in holding that interest income from commercial banks, being attributable to business activity of the assessee qualifies for deduction u/s 80P(2)(a)(i) of the Act ignoring the fact that direct source of income is not the loans advanced to members of the society and it is only the interest income from commercial banks in form of fixed deposits and saving bank accounts. Referring to the decision of the Hon'b ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 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). For facility of reference, it is reproduced as under: "(d)in respect of any income by way of interest or dividends derived by the cooperative society from its investments with any other co-operative society, the whole of such income;" 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 Capce Brandy Syndicate v. IRC [1921] 1 KB 64 : "... 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." (p. 71) The principle laid down by Rowlatt, J., has also been time and again approved and applied by the Supreme Court in different cases including the one Hansraj Gordhandas v. H.H. Dave, Assistant Collector of Central Excise & Customs AIR 1970 SC 755 at p. 759. 6. Sectio ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... to examine whether interest income is earned from any specified co-operative activity or it is a case of deployment of surplus funds by the assessee society so long as the interest income is earned from deposits placed with a co-operative society. Where the AO has allowed the claim of the assessee under section 80P(2)(d) of the Act after due examination of the facts of the case, he has rightly followed the dicta laid down by the Hon'ble Jurisdictional High Court and therefore, the order so passed by the AO cannot be held as erroneous in so far as prejudicial to the interest of Revenue. 23. Now, coming to the decisions of the Hon'ble Karnataka High Court, we find that there are two decisions in case of Pr. CIT v. Totagars Co-operative Sale Society and in both of these decisions, the Hon'ble Karnataka High Court has referred to the decision of the Hon'ble Supreme Court in case of Totagars Cooperative Sale Society vs ITO (Supra). In case of first decision referred by the ld AR, it was held that according to section 80P(2)(d) of the Act, the amount of interest earned from a Co-operative Society Bank would be deductable from the gross income of the Co-operative Society in order to ass ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tion 80P(2)(d) in respect of its interest income on investments/deposits parked with a cooperative bank and at the same time, she has placed reliance on the said decision of Hon'ble Karnataka High Court. As against that, we find that the AO has referred to the said decision in case of Mavilayi Service Cooperative Bank Ltd. Vs. CIT (Supra) and has thus followed the dicta laid down by the Hon'ble Supreme Court and thus, the order so passed cannot be held as erroneous in so far as prejudicial to the interest of Revenue. 25. In light of aforesaid discussion and in the entirety of facts and circumstances of the case, we find that there is no legal and justifiable basis to invoke the provisions of section 263 by the ld PCIT and therefore, the order so passed u/s 263 is hereby set-aside and that of the AO who has rightly allowed the deduction u/s 80(P)(2)(d) is sustained." 7. In the aforesaid decision, we have considered the various authorities on the subject including the decision of the Jurisdictional Punjab & Haryana High Court in case of CIT Vs. Doaba Co-op Sugar Mills Limited, the decision of Hon'ble Karnataka High Court in case of Totagars Co-operative sale society Ltd., the deci ..... X X X X Extracts X X X X X X X X Extracts X X X X
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