DEPUTY COMMISSIONER OF INCOME TAX, CIRCLE-6, Jaipur V. M/S JAIPUR ZILA DUGDH UTPADAK SAHKARI SANGH LTD., Jaipur

ITA 187/JPR/2019

• Counselvise Citation: [2019] 115 COUNSELVISE.COM (IT) 5985 (ITAT-JAIPUR)
• Duration Of Justice: 7 month(s) 13 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 30-09-2019
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: B
• Assessment Year: 2014-2015
• Appeal Filed On: 15-02-2019
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: BK GUPTA
• Keywords: Business income; Business expenditure; Search and seizure; Set aside
• Section: 37(1); 80G; 80P; 147; 37

Judgement Text

VK;DJ VIHYH; VF/KDJ.K] T;IQJ U;K;IHB] T;IQJ IN THE INCOME TAX APPELLATE TRIBUNAL, JAIPUR BENCHES,B JAIPUR JH LAANHI XKSLKBZ] U;KF;D LNL; ,OA JH FOE FLAG ;KNO] YS[KK LNL; DS LE{K BEFORE: SHRI SANDEEP GOSAIN, JM & SHRI VIKRAM SINGH YA DAV, AM VK;DJ VIHY LA- @ ITA NO. 22/JP/2019 FU/KZKJ.K O'K Z @ ASSESSMENT YEAR : 2014-15 M/S. JAIPUR ZILA DUGDH UTPADAN SAHAKARI SANGH LTD. JAIPUR DAIRY NEAR GANDHI NAGAR RLY. STATION, JAIPUR CUKE VS. THE ACIT CIRCLE 6 JAIPUR LFKK;H YS[KK LA-@THVKBZVKJ LA-@ PAN/GIR NO.: AAAA0767G VIHYKFKHZ@ APPELLANT IZR;FKHZ@ RESPONDENT VK;DJ VIHY LA- @ ITA NO. 187/JP/2019 FU/KZKJ.K O'K Z @ ASSESSMENT YEAR : 2014-15 THE DCIT CIRCLE 6 JAIPUR CUKE VS. M/S. JAIPUR ZILA DUGDH UTPADAN SAHAKARI SANGH LTD. JAIPUR DAIRY NEAR GANDHI NAGAR RLY. STATION, JAIPUR LFKK;H YS[KK LA-@THVKBZVKJ LA-@ PAN/GIR NO.: AAAA0767G VIHYKFKHZ@ APPELLANT IZR;FKHZ@ RESPONDENT FU/KZKFJRH DH VKSJ L S@ ASSESSEE BY : SHRI P.C. PARWAL, CA JKTLO DH VKSJ LS @ REVENUE BY : SHRI B.K. GUPTA, (CIT) LQUOKBZ DH RKJH[ K@ DATE OF HEARING : 26/09/2019 MN?KKS'K.KK DH RKJH[ K@ DATE OF PRONOUNCEMENT: 30 /09/2019 VKNS'K@ ORDER PER: SANDEEP GOSAIN, J.M. BOTH THESE APPEALS ARE THE CROSS APPEALS FILED AGAI NST THE ORDER OF CIT(A), AJMER DATED 20.11.2018 FOR THE ASSESSME NT YEAR 2014-15 WHEREIN THE RESPECTIVE PARTIES HAVE RAISED FOLLOWING GROUNDS. ITA NO. 22/JP/2019 M/S. JAIPUR ZILA DUGDH UTPADAK SAHAKARI SANGH LTD VS ACIT, CIRCLE 6, JAIPUR 2 ITA NO. 22/JP/2019 ASSESSEE 1. THE LD. CIT(A) HAS ERRED ON FACTS AND IN LAW IN HOLDING THAT INTEREST EXPENDITURE TO THE EXTENT OF RS. 1,78,92,810/-IS ATTRIBUTABLE TO THE INTEREST INCOME OF RS. 4,55,27,617/- EARNED ON FDRS MAINTAINED WITH JAIPUR COOPERATIVE BANK LTD., THEREBY DISALLOWING DEDUCTION U/S 80P TO THIS EXTENT. 1.1 THE LD. CIT(A) HAS ERRED ON FACTS AND IN LAW IN NO T CONSIDERING THAT INVESTMENT IN FDRS IS MADE OUT OF OWN FUNDS AND BORROWED FUNDS HAS BEEN UTILIZED FOR BUSIN ESS PURPOSE AND THEREFORE, NO INTEREST CAN BE ATTRIBUTE D FOR EARNING THE INTEREST INCOME. ITA NO.187/JP/2019 REVENUE 1. WHETHER IN THE FACTS AND CIRCUMSTANCES OF THE CASE AND IN LAW THE LD. CIT(A) HAS ERRED IN DELETING THE A DDITION OF RS. 1,43,24,928/- ON ACCOUNT OF CONTRIBUTION MAD E TO SPARSH TRUST WITHOUT APPRECIATING THE FACT THAT A SSESSEE FAILED TO PROVE DIRECT BUSINESS NEXUS OF THE EXPEND ITURE AND IT IS NOT AN ALLOWABLE EXPENDITURE U/S 37(1) OF THE I.T. ACT, 1961. 2. WHETHER IN THE FACTS AND CIRCUMSTANCES OF THE CA SE AND 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 I.T. ACT, 1961 AND THEREBY JUSTIFIE D IN ALLOWING RELIEF OF RS. 2,76,34,807/-. 2.1 BRIEF FACTS OF THE CASE ARE THAT THE ASSESSEE I S A COOPERATIVE SOCIETY WHICH IS ENGAGED IN THE BUSINESS OF DEALING OF PROCUREMENT OF MILK, PROCESSING TO PREPARE ITS PRODUCTS AND SALE T HEREOF. THE ASSESSEE ITA NO. 22/JP/2019 M/S. JAIPUR ZILA DUGDH UTPADAK SAHAKARI SANGH LTD VS ACIT, CIRCLE 6, JAIPUR 3 FILED ITS RETURN OF INCOME DECLARING INCOME OF RS. 7,6,30,810/- FOR THE ASSESSMENT YEAR UNDER CONSIDERATION IN THE STATUS OF COOPERATIVE SOCIETIES ON 30-09-2014. SUBSEQUENTLY, THE CASE OF THE ASSESSEE WAS SELECTED FOR SCRUTINY AND AFTER SERVING STATUTORY N OTICES AND SEEKING REPLY OF THE ASSESSEE THE ADDITIONS/ DISALLOWANCES WE RE MADE BY THE AO. 2.2 AGGRIEVED BY THE ORDER OF THE AO, THE ASSESSEE PREFERRED AN APPEAL BEFORE THE LD. CIT(A) WHO AFTER CONSIDERING T HE CASE OF BOTH THE PARTIES, PARTLY ALLOWED THE APPEAL FILED BY THE ASS ESSEE. 2.3 NOW AGGRIEVED BY THE ORDER OF THE LD. CIT(A), THE ASSESSEE AS WELL AS REVENUE ARE IN APPEAL BEFORE THE TRIBUNAL FOR REDRESSAL OF THEIR GRIEVANCE. 2.4 DURING THE COURSE OF HEARING, THE BENCH NOTED T HAT THE ASSESSEES GROUND 1 & 1.1 AND THE REVENUE GROUND NO. 2 MENTI ONED HEREUNDER ARE COMMONLY INTERRELATED AND INTERCONNECTED. THEREF ORE, THESE GROUNDS ARE DISPOSED OFF BY A COMMON ORDER FOR THE SAKE OF CONVENIENCE AND BREVITY OF THE CASE. 1. THE LD. CIT(A) HAS ERRED ON FACTS AND IN LAW IN HOLDING THAT INTEREST EXPENDITURE TO THE EXTE NT OF RS. 1,78,92,810/-IS ATTRIBUTABLE TO THE INTEREST INCOME OF RS. 4,55,27,617/- EARNED ON FDRS MAINTAINED WITH JAIPUR ITA NO. 22/JP/2019 M/S. JAIPUR ZILA DUGDH UTPADAK SAHAKARI SANGH LTD VS ACIT, CIRCLE 6, JAIPUR 4 COOPERATIVE BANK LTD., THEREBY DISALLOWING DEDUCTION U/S 80P TO THIS EXTENT. 1.1 THE LD. CIT(A) HAS ERRED ON FACTS AND IN LAW IN NO T CONSIDERING THAT INVESTMENT IN FDRS IS MADE OUT OF OWN FUNDS AND BORROWED FUNDS HAS BEEN UTILIZED FOR BUSIN ESS PURPOSE AND THEREFORE, NO INTEREST CAN BE ATTRIBUTE D FOR EARNING THE INTEREST INCOME. 2. WHETHER IN THE FACTS AND CIRCUMSTANCES OF THE CASE AND 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 I.T. ACT, 1961 AND THEREBY JUSTIFIE D IN ALLOWING RELIEF OF RS. 2,76,34,807/-. 2.5 AT THE OUTSET OF THE HEARING, THE LD.AR OF THE ASSESSEE SUBMITTED THAT THE GROUND NO. 1 & 1.1. OF THE ASSESSEE AND GR OUND NO. 2 OF THE REVENUE RAISED IN THE RESPECTIVE APPEALS ARE SQUARE LY COVERED BY THE DECISION DATED 2-09-2019 OF COORDINATE BENCH IN ASS ESSEE'S OWN CASE IN ITA NO.512 & 513/JP/2015 FOR THE ASSESSMENT YEAR 20 11-12- AND 2012-13 AND REVENUES APPEAL IN ITA NO. 633 & 634/J P/2019 FOR THE ASSESSMENT YEAR 2011-12 AND 2012-13 FOR WHICH THE LD .AR OF THE ASSESSEE RELIED ON PARA 15 TO 20 OF THE TRIBUNAL OR DER AS UNDER:- 15. NOW, COMING TO A RELATED ISSUE AS TO WHETHER B Y VIRTUE OF PROVISIONS OF SECTION 80P(4) OF THE ACT, THE CLAIM OF THE ASSESSEE UNDER SECTION 80(P)(2)(D) CAN BE DENIED TO THE ASSESSEE SOCIETY. THE RELEVANT PROVISIONS OF SECTION 80P(4) R EADS AS UNDER: ITA NO. 22/JP/2019 M/S. JAIPUR ZILA DUGDH UTPADAK SAHAKARI SANGH LTD VS ACIT, CIRCLE 6, JAIPUR 5 (4) THE PROVISIONS OF THIS SECTION SHALL NOT APPLY IN RELATION TO ANY CO-OPERATIVE BANK OTHER THAN A PRIM ARY AGRICULTURAL CREDIT SOCIETY OR A PRIMARY CO-OPERATI VE AGRICULTURAL AND RURAL DEVELOPMENT BANK. 16. THE COORDINATE BENCH IN CASE OF KALIANDAS UDYOG BHAVAN PREMISES CO-OP SOCIETY LTD. VS INCOME-TAX OFFICER-21(2)(1), MUMBAI [2018] 94 TAXMANN.COM 15 HAD AN OCCASION TO EXAMINE SIMILAR CONTENTION AND IT WAS HE LD THAT THOUGH THE CO-OPERATIVE BANK PURSUANT TO THE INSERT ION OF SUB- SECTION (4) OF SEC. 80P WOULD NO MORE BE ENTITLED FO R CLAIM OF DEDUCTION UNDER SEC. 80P OF THE ACT, HOWEVER, AS A C O-OPERATIVE BANK CONTINUES TO BE A CO-OPERATIVE SOCIETY REGISTE RED UNDER THE CO-OPERATIVE SOCIETIES ACT, 1912 (2 OF 1912), OR UN DER ANY OTHER LAW FOR THE TIME BEING ENFORCED IN ANY STATE FOR THE REGISTRATION OF CO-OPERATIVE SOCIETIES, THEREFORE, THE INTEREST INC OME DERIVED BY A CO-OPERATIVE SOCIETY FROM ITS INVESTMENTS HELD WITH A CO-OPERATIVE BANK, WOULD BE ENTITLED FOR CLAIM OF DEDUCTION UNDER SEC.80P(2)(D) OF THE ACT. WE SEE NO REASON TO DEVIA TE FROM THE SAME AND AGREE WITH THE AFORESAID VIEW TAKEN BY THE C O-ORDINATE BENCH AND. THE RELEVANT FINDINGS OF THE CO-ORDINATE BENCH READ AS UNDER: 6. WE HAVE HEARD THE AUTHORISED REPRESENTATIVES FOR BOTH THE PARTIES, PERUSED THE ORDERS OF THE LOWE R AUTHORITIES AND THE MATERIAL AVAILABLE ON RECORD. W E FIND THAT OUR INDULGENCE IN THE PRESENT APPEAL HAS BEEN SOUGHT TO ADJUDICATE AS TO WHETHER THE CLAIM OF THE ASSESSE E FOR DEDUCTION UNDER SECTION 80P(2)(D), IN RESPECT OF IN TEREST INCOME EARNED FROM THE INVESTMENTS MADE WITH THE CO- OPERATIVE BANKS IS IN ORDER OR NOT. WE FIND THAT TH E ISSUE INVOLVED IN THE PRESENT APPEAL HINGES AROUND THE ADJUDICATION OF THE SCOPE AND GAMUT OF SUB-SECTION (4) OF SEC. 80P, AS HAD BEEN MADE AVAILABLE ON THE STATUTE BY THE LEGISLATURE VIDE THE FINANCE ACT 2006, WITH EFFECT F ROM 01.04.2007. WE FIND THAT THE LOWER AUTHORITIES HAD T AKEN A VIEW THAT PURSUANT TO INSERTION OF SUB-SECTION (4) O F SEC. 80P, THE ASSESSEE WOULD NO MORE BE ENTITLED FOR CLA IM OF DEDUCTION UNDER SEC. 80P(2)(D) OF THE INTEREST INCO ME EARNED ON THE AMOUNTS PARKED AS INVESTMENTS WITH CO- ITA NO. 22/JP/2019 M/S. JAIPUR ZILA DUGDH UTPADAK SAHAKARI SANGH LTD VS ACIT, CIRCLE 6, JAIPUR 6 OPERATIVE BANKS, OTHER THAN A PRIMARY AGRICULTURAL CREDIT SOCIETY OR A PRIMARY CO-OPERATIVE AGRICULTURAL AND RURAL DEVELOPMENT BANK. WE FIND THAT THE LOWER AUTHORITIE S HAD OBSERVED THAT AS THE CO-OPERATIVE BANK WITH WHICH TH E SURPLUS FUNDS OF THE ASSESSEE WERE PARKED AS INVESTM ENTS, WERE NEITHER PRIMARY AGRICULTURAL CREDIT SOCIETY NOR A PRIMARY CO-OPERATIVE AGRICULTURAL AND RURAL DEVELOP MENT BANK, THEREFORE, THE INTEREST INCOME EARNED ON SUCH INVESTMENTS WOULD NOT BE ENTITLED FOR CLAIM OF DEDUC TION UNDER SEC. 80P(2)(D) OF THE ACT. 7. WE HAVE DELIBERATED AT LENGTH ON THE ISSUE UNDER CONSIDERATION AND ARE UNABLE TO PERSUADE OURSELVES TO BE IN AGREEMENT WITH THE VIEW TAKEN BY THE LOWER AUTHORIT IES. BEFORE PROCEEDING FURTHER, WE MAY HEREIN REPRODUCE T HE RELEVANT EXTRACT OF THE SAID STATUTORY PROVISION, V IZ. SEC. 80P(2)(D), AS THE SAME WOULD HAVE A STRONG BEARING O N THE ADJUDICATION OF THE ISSUE BEFORE US. '80P(2)(D) (1) WHERE IN THE CASE OF AN ASSESSEE BEING A CO-OPE RATIVE SOCIETY, THE GROSS TOTAL INCOME INCLUDES ANY INCOME REFERRED TO IN SUB-SECTION (2), THERE SHALL BE DEDU CTED, IN ACCORDANCE WITH AND SUBJECT TO THE PROVISIONS OF THI S SECTION, THE SUMS SPECIFIED IN SUB-SECTION (2), IN COMPUTING THE TOTAL INCOME OF THE ASSESSEE. (2) THE SUMS REFERRED TO IN SUB-SECTION (1) SHALL B E THE FOLLOWING, NAMELY : (A) TO (C)** ** ** (D) IN RESPECT OF ANY INCOME BY WAY OF INTEREST OR D IVIDENDS DERIVED BY THE CO-OPERATIVE SOCIETY FROM ITS INVEST MENTS WITH ANY OTHER CO-OPERATIVE SOCIETY, THE WHOLE OF SU CH INCOME;' THUS, FROM A PERUSAL OF THE AFORESAID SEC. 80P(2)(D) IT CAN SAFELY BE GATHERED THAT INCOME BY WAY OF INTEREST IN COME DERIVED BY AN ASSESSEE CO-OPERATIVE SOCIETY FROM IT S ITA NO. 22/JP/2019 M/S. JAIPUR ZILA DUGDH UTPADAK SAHAKARI SANGH LTD VS ACIT, CIRCLE 6, JAIPUR 7 INVESTMENTS HELD WITH ANY OTHER COOPERATIVE SOCIETY, SHALL BE DEDUCTED IN COMPUTING THE TOTAL INCOME OF THE AS SESSEE. WE MAY HEREIN OBSERVE, THAT WHAT IS RELEVANT FOR CLA IM OF DEDUCTION UNDER SEC. 80P(2)(D) IS THAT THE INTEREST INCOME SHOULD HAVE BEEN DERIVED FROM THE INVESTMENTS MADE BY THE ASSESSEE CO-OPERATIVE SOCIETY WITH ANY OTHER COOPERATIVE SOCIETY. WE THOUGH ARE IN AGREEMENT WITH THE OBSERVATIONS OF THE LOWER AUTHORITIES THAT WITH THE I NSERTION OF SUB-SECTION (4) OF SEC. 80P, VIDE THE FINANCE AC T, 2006, WITH EFFECT FROM 01.04.2007, THE PROVISIONS OF SEC. 80P WOULD NO MORE BE APPLICABLE IN RELATION TO ANY CO-OP ERATIVE BANK, OTHER THAN A PRIMARY AGRICULTURAL CREDIT SOCI ETY OR A PRIMARY CO-OPERATIVE AGRICULTURAL AND RURAL DEVELOP MENT BANK, BUT HOWEVER, ARE UNABLE TO SUBSCRIBE TO THEIR VIEW THAT THE SAME SHALL ALSO JEOPARDISE THE CLAIM OF DE DUCTION OF A CO-OPERATIVE SOCIETY UNDER SEC. 80P(2)(D) IN R ESPECT OF THE INTEREST INCOME ON THEIR INVESTMENTS PARKED WITH A CO- OPERATIVE BANK. WE HAVE GIVEN A THOUGHTFUL CONSIDER ATION TO THE ISSUE BEFORE US AND ARE OF THE CONSIDERED VI EW THAT AS LONG AS IT IS PROVED THAT THE INTEREST INCOME IS BEING DERIVED BY A CO-OPERATIVE SOCIETY FROM ITS INVESTME NTS MADE WITH ANY OTHER CO-OPERATIVE SOCIETY, THE CLAIM OF DEDUCTION UNDER THE AFORESAID STATUTORY PROVISION, VIZ. SEC. 80P(2)(D) WOULD BE DULY AVAILABLE. WE MAY HEREIN OBS ERVE THAT THE TERM 'CO-OPERATIVE SOCIETY' HAD BEEN DEFIN ED UNDER SEC. 2(19) OF THE ACT, AS UNDER: '(19) 'CO-OPERATIVE SOCIETY' MEANS A COOPERATIVE SO CIETY REGISTERED UNDER THE CO-OPERATIVE SOCIETIES ACT, 19 12 (2 OF 1912), OR UNDER ANY OTHER LAW FOR THE TIME BEING IN FORCE IN ANY STATE FOR THE REGISTRATION OF CO-OPERATIVE SOCI ETIES;' WE ARE OF THE CONSIDERED VIEW, THAT THOUGH THE CO- OPERATIVE BANK PURSUANT TO THE INSERTION OF SUB-SEC TION (4) OF SEC. 80P WOULD NO MORE BE ENTITLED FOR CLAIM OF DEDUCTION UNDER SEC. 80P OF THE ACT, BUT HOWEVER, AS A CO- OPERATIVE BANK CONTINUES TO BE A CO-OPERATIVE SOCIE TY REGISTERED UNDER THE CO-OPERATIVE SOCIETIES ACT, 19 12 (2 OF ITA NO. 22/JP/2019 M/S. JAIPUR ZILA DUGDH UTPADAK SAHAKARI SANGH LTD VS ACIT, CIRCLE 6, JAIPUR 8 1912), OR UNDER ANY OTHER LAW FOR THE TIME BEING ENF ORCED IN ANY STATE FOR THE REGISTRATION OF CO-OPERATIVE S OCIETIES, THEREFORE, THE INTEREST INCOME DERIVED BY A CO-OPER ATIVE SOCIETY FROM ITS INVESTMENTS HELD WITH A CO-OPERATIV E BANK, WOULD BE ENTITLED FOR CLAIM OF DEDUCTION UNDER SEC.80P(2)(D) OF THE ACT. 8. WE SHALL NOW ADVERT TO THE JUDICIAL PRONOUNCEMENTS THAT HAD BEEN RELIED UPON BY THE AUTHORIZED REPRESENTATI VES FOR BOTH THE PARTIES AND THE LOWER AUTHORITIES. WE FIND THAT THE ISSUE THAT A CO-OPERATIVE SOCIETY WOULD BE ENTITLED FOR CLAIM OF DEDUCTION UNDER SEC. 80P(2)(D) FOR THE INTEREST INCOME DERIVED FROM ITS INVESTMENTS HELD WITH A COOPERATIVE BANK IS COVERED IN FAVOUR OF THE ASSESSEE IN THE FOLLOWIN G CASES: (I) LAND AND COOPERATIVE HOUSING SOCIETY LTD. (SUPRA) (II) SEA GREEN COOPERATIVE HOUSING AND SOCIETY LTD. (SUP RA) (III) MARWANJEE CAMA PARK COOPERATIVE HOUSING SOCIETY LTD. (SUPRA). WE FURTHER FIND THAT THE HON'BLE HIGH COURT OF KARN ATAKA IN THE CASE OF TOTAGARS COOPERATIVE SALE SOCIETY(SUPRA) AND HON'BLE HIGH COURT OF GUJARAT IN THE CASE OF STATE BANK OF INDIA (SUPRA), HAD ALSO HELD THAT THE INTEREST INCO ME EARNED BY THE ASSESSEE ON ITS INVESTMENTS HELD WITH A CO- OPERATIVE BANK WOULD BE ELIGIBLE FOR CLAIM OF DEDUCT ION UNDER SEC. 80P(2)(D) OF THE ACT. STILL FURTHER, WE F IND THAT THE CBDT CIRCULAR NO. 14, DATED 28.12.2006, AS HAD B EEN RELIED UPON BY THE LD. A.R, ALSO MAKES IT CLEAR BEY OND ANY SCOPE OF DOUBT, THAT THE PURPOSE BEHIND ENACTMENT O F SUB- SECTION (4) OF SEC. 80P WAS TO PROVIDE THAT THE CO-O PERATIVE BANKS WHICH ARE FUNCTIONING AT PAR WITH OTHER BANKS WO ULD NO MORE BE ENTITLED FOR CLAIM OF DEDUCTION UNDER SE C. 80P(4) OF THE ACT. WE ARE OF THE CONSIDERED VIEW THA T THE RELIANCE PLACED BY THE CIT (A) ON THE JUDGMENT OF TH E HON'BLE SUPREME COURT IN THE CASE OF TOTGARS CO-OPER ATIVE SALE SOCIETY LTD. (SUPRA) BEING DISTINGUISHABLE ON FACTS, THUS, HAD WRONGLY BEEN RELIED UPON BY HIM. THE ITA NO. 22/JP/2019 M/S. JAIPUR ZILA DUGDH UTPADAK SAHAKARI SANGH LTD VS ACIT, CIRCLE 6, JAIPUR 9 ADJUDICATION BY THE HON'BLE APEX COURT IN THE AFORE SAID CASE WAS IN CONTEXT OF SEC. 80P(2)(A)(I), AND NOT ON THE ENTITLEMENT OF A CO-OPERATIVE SOCIETY TOWARDS DEDUCT ION UNDER SEC. 80P(2)(D) ON THE INTEREST INCOME ON THE INVESTMENTS PARKED WITH A CO-OPERATIVE BANK. WE FURT HER FIND THAT THE RELIANCE PLACE BY THE LD. D.R ON THE ORDER OF THE ITAT 'F' BENCH, MUMBAI IN THE CASE OF VAIBHAV COOPERATIVE CREDIT SOCIETY (SUPRA) IS ALSO DISTINGU ISHABLE ON FACTS. WE FIND THAT THE SAID ORDER WAS PASSED BY THE TRIBUNAL IN CONTEXT OF ADJUDICATION OF THE ENTITLEME NT OF THE ASSESSEE CO-OPERATIVE BANK TOWARDS CLAIM OF DEDUCTIO N UNDER SEC.80P(2)(A)(I) OF THE ACT. WE FIND THAT IT WAS IN THE BACKDROP OF THE AFORESAID FACTS THAT THE TRIBUNAL AF TER CARRYING OUT A CONJOINT READING OF SEC. 80P(2)(A)(I ) R.W. SEC. 80P(4) HAD ADJUDICATED THE ISSUE BEFORE THEM. WE ARE AFRAID THAT THE RELIANCE PLACED BY THE LD. D.R ON T HE AFORESAID ORDER OF THE TRIBUNAL BEING DISTINGUISHABL E ON FACTS, THUS, WOULD BE OF NO ASSISTANCE FOR ADJUDICAT ION OF THE ISSUE BEFORE US. STILL FURTHER, THE RELIANCE PL ACED BY THE LD. D.R ON THE ORDER OF THE ITAT 'SMC' BENCH, MUMBAI IN THE CASE OF SHRI SAI DATTA CO-OPERATIVE CREDIT SOCI ETY LTD. (SUPRA), WOULD ALSO NOT BE OF ANY ASSISTANCE, F OR THE REASON THAT IN THE SAID MATTER THE TRIBUNAL HAD SET ASIDE THE ISSUE TO THE FILE OF THE ASSESSING OFFICER FOR FRESH EXAMINATION. THAT AS REGARDS THE RELIANCE PLACED BY THE LD. D.R ON THE JUDGMENT OF THE HON'BLE HIGH COURT OF KARNATAKA IN THE CASE OF TOTAGARS CO-OPERATIVE SALE SOCIETY (SUPRA), THE HIGH COURT HAD CONCLUDED THAT A CO- OPERATIVE SOCIETY WOULD NOT BE ENTITLED TO CLAIM OF DEDUCTION UNDER SEC. 80P(2)(D). WE HOWEVER FIND THAT AS HELD BY THE HON'BLE HIGH COURT OF BOMBAY IN THE CAS E OF K. SUBRAMANIAN V. SIEMENS INDIA LTD. [1983] 15 TAXMAN 594/[1985] 156 ITR 11 (BOM) , WHERE THERE IS A CONFLICT BETWEEN THE DECISIONS OF NON-JURISDICTIONAL HIGH COU RT'S, THEN A VIEW WHICH IS IN FAVOUR OF THE ASSESSEE IS TO BE PREFERRED AS AGAINST THAT TAKEN AGAINST HIM. THUS, T AKING SUPPORT FROM THE AFORESAID JUDICIAL PRONOUNCEMENT O F THE HON'BLE HIGH COURT OF JURISDICTION, WE RESPECTFULLY FOLLOW THE VIEW TAKEN BY THE HON'BLE HIGH COURT OF KARNATAK A IN ITA NO. 22/JP/2019 M/S. JAIPUR ZILA DUGDH UTPADAK SAHAKARI SANGH LTD VS ACIT, CIRCLE 6, JAIPUR 10 THE CASE OF TOTAGARS COOPERATIVE SALE SOCIETY(SUPRA) AND HON'BLE HIGH COURT OF GUJARAT IN THE CASE OF STATE BANK OF INDIA (SUPRA), WHEREIN IT WAS OBSERVED THAT THE INTER EST INCOME EARNED BY A CO-OPERATIVE SOCIETY ON ITS INVE STMENTS HELD WITH A CO-OPERATIVE BANK WOULD BE ELIGIBLE FOR C LAIM OF DEDUCTION UNDER SEC.80P(2)(D) OF THE ACT. 9. WE THUS IN THE BACKDROP OF OUR AFORESAID OBSERVATI ONS ARE UNABLE TO PERSUADE OURSELVES TO BE IN AGREEMENT WITH THE VIEW TAKEN BY THE LOWER AUTHORITIES THAT THE ASS ESSEE WOULD NOT BE ENTITLED FOR CLAIM OF DEDUCTION UNDER S EC. 80P(2)(D), IN RESPECT OF THE INTEREST INCOME ON THE INVESTMENTS MADE WITH THE CO-OPERATIVE BANK. WE THUS SET ASIDE THE ORDER OF THE LOWER AUTHORITIES AND CONCLUD E THAT THE INTEREST INCOME OF RS. 27,48,553/-EARNED BY THE ASSESSEE ON THE INVESTMENTS HELD WITH THE CO-OPERATI VE BANK WOULD BE ENTITLED FOR CLAIM OF DEDUCTION UNDER SEC. 80P(2)(D). 17. IN LIGHT OF ABOVE, BY VIRTUE OF PROVISIONS OF S ECTION 80P(4) OF THE ACT, THE CLAIM OF THE ASSESSEE UNDER SECTION 80(P)(2)(D) CANNOT BE DENIED TO THE ASSESSEE SOCIET Y. 18. ANOTHER ISSUE THAT ARISE FOR CONSIDERATION IS WHETHER DEDUCTION U/S 80P(2)(D) SHALL BE ALLOWED ON THE GROS S INTEREST INCOME ON FDRS OR IT SHOULD BE ALLOWED ON T HE NET INTEREST INCOME CALCULATED AFTER DEDUCTING THE INTE REST EXPENDITURE ALLOCABLE TO FUNDS PLACED IN FORM OF FD R. THOUGH THE ASSESSEE HAS CHALLENGED THE FINDINGS OF T HE LD CIT(A) TO THE EFFECT THAT IT HAS NOT INCURRED ANY IN TEREST EXPENDITURE, WE FIND THAT THERE IS NO NECESSITY TO EXAMINE THE SAME AS CONCEPTUALLY, THE DEDUCTION UNDER SECTI ON 80P(2)(D) HAS TO BE ALLOWED ON GROSS AND NOT ON NET INTEREST INCOME AS HELD BY THE HONBLE GUJARAT HIGH COURT IN CASE OF SURAT VANKAR SAHAKARI SANGH LTD VS ACIT [2016] 72 TAXMANN.COM 169 (GUJ) WHEREIN IT WAS HELD AS UNDER: ITA NO. 22/JP/2019 M/S. JAIPUR ZILA DUGDH UTPADAK SAHAKARI SANGH LTD VS ACIT, CIRCLE 6, JAIPUR 11 3. IN ALL THE FOUR APPEALS, THE COMMON ISSUE IS GR ANT OF NET DEDUCTION U/S 80P(2)(D) OF THE ACT, IN RESPE CT OF INTEREST AND DIVIDEND RECEIVED BY THE ASSESSEE FROM CO- OPERATIVE SOCIETIES I.E. BANK IN THIS CASE. THE ASSE SSING OFFICER ALLOWED DEDUCTION U/S 80P(2)(D) TO THE EXTEN T OF NET INTEREST INSTEAD OF GROSS INTEREST AS CLAIMED BY TH E ASSESSEE AND DISALLOWED THE EXCESS CLAIM OF DEDUCTIO N IN THIS REGARD FOR ALL THE YEARS UNDER CONSIDERATION. THE AMOUNT DISALLOWED BY THE ASSESSING OFFICER AND DEDUC TION 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- OP SOCIETIES 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 LEARNE D ADVOCATE FOR THE ASSESSEE AS WELL AS THE REVENUE. WE FEEL THAT THE DECISIONS CITED BY THE LEARNED ADVOCATE FO R THE ASSESSEE SHALL BE APPLICABLE ON THE FACTS OF THE PR ESENT CASE. IN THE CASE OF K. NANDAKUMAR V. ITO [1993] 20 4 ITR 856/[1994] 72 TAXMAN 223 (KER.), THE KERALA HIGH COU RT HAS HELD AS UNDER: '4. THE EFFECT OF SECTION 80AB IS THAT, FOR THE PURP OSE OF COMPUTING THE DEDUCTION UNDER SECTION 80L, THE A MOUNT OF INCOME OF THAT NATURE AS COMPUTED IN ACCORDANCE WITH THE PROVISIONS OF THE ACT SHALL ALONE BE DEEMED TO BE THE ITA NO. 22/JP/2019 M/S. JAIPUR ZILA DUGDH UTPADAK SAHAKARI SANGH LTD VS ACIT, CIRCLE 6, JAIPUR 12 AMOUNT OF INCOME OF THAT NATURE. WHAT THE SECTION M EANS IS THAT THE NET INCOME BY WAY OF INTEREST COMPUTED I N THE MANNER PROVIDED BY THE PROVISIONS OF THE ACT SHALL ALONE BE TAKEN INTO ACCOUNT FOR COMPUTING THE BENEFIT. BUT I T MUST BE NOTED THAT PAYMENT OF INTEREST UNDER A LOAN TRAN SACTION INCURRED FOR THE PURPOSE OF DERIVING INCOME FROM BU SINESS IS NOT AN ITEM WHICH ARISES IN THE COMPUTATION OF IN TEREST INCOME 'IN ACCORDANCE WITH THE PROVISIONS' OF THE AC T. THE SAID AMOUNT HAS TO BE PAID IRRESPECTIVE OF WHETHER A NY INTEREST INCOME IS OTHERWISE RECEIVED OR NOT. THOUGH THE INTEREST IS PAYABLE TO THE SAME BANK, THE FACT REMA INS THAT THE AMOUNT OF INCOME BY-WAY OF INTEREST IS NOT CALCU LATED UNDER THE PROVISIONS OF THE ACT WITH REFERENCE TO SU CH OUTGOINGS WHICH FALL UNDER DIFFERENT HEADS. THE ASSE SSEE IS ENTITLED TO DEDUCTION UNDER SECTION 37 OF ALL EXPEN DITURE INCURRED FOR THE PURPOSE OF DERIVING THE BUSINESS I NCOME, AND IT IS UNDER THAT HEAD THAT THE INTEREST PAID ON THE LOAN TAKEN FROM THE BANK IS DEDUCTED. THE NET AMOUNT OF INTEREST CONTEMPLATED BY SECTION 80AB SHOULD TAKE I N THE NET AMOUNT ARRIVED AT AFTER MEETING THE EXPENSES DEDUCTIBLE FROM THAT ITEM UNDER THE PROVISIONS OF T HE ACT AS EXPLAINED ABOVE. THAT IS NOT THE CASE HERE. THEREFORE , SECTION 80AB HAS NO APPLICATION TO THE FACTS OF THE SE 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 DEPOSI TS. THE ASSESSEES WERE THEREFORE RIGHT IN THE SUBMISSIONS WHI CH THEY MADE BEFORE THE COMMISSIONER OF INCOME-TAX IN THE REVISION PETITIONS WHICH THEY FILED. THIS ASPECT OF T HE 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 WR ONG ITA NO. 22/JP/2019 M/S. JAIPUR ZILA DUGDH UTPADAK SAHAKARI SANGH LTD VS ACIT, CIRCLE 6, JAIPUR 13 IN ALLOWING DEDUCTION UNDER SECTION 80P(2) (D) OF TH E 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 BAN K AND HAS ALSO RECEIVED INTEREST FROM THE SAID CO- OPERAT IVE BANK, THEREBY SHOWING THAT THE ASSESSEE HAS ON THE AGGREGA TE PAID INTEREST TO THE BANK AND, THEREFORE, NO DEDUCT ION UNDER SECTION 80P(2)(D) CAN BE ALLOWED. TO APPRECIATE THIS ARGUMENT, WE HAVE TO LOOK TO THE PROVISIONS OF SECTI ON 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 S OCIETY FROM ITS INVESTMENTS WITH ANY OTHER CO- OPERATIVE SO CIETY, THE WHOLE OF SUCH INCOME.' 6. SO FAR AS THE PRINCIPLE OF INTERPRETATION APPLIC ABLE TO A TAXING STATUTE IS CONCERNED, WE CAN DO NO BETTER THA N 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. TH ERE 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 ROWLATT J., HAS ALSO BEE N TIME AND AGAIN APPROVED AND APPLIED BY THE SUPREME COURT IN DIFFERENT CASES INCLUDING THE ONE, HANSRAJ GORDHAND AS V. H. H. DAVE, ASSISTANT COLLECTOR OF CENTRAL EXCISE AND CUSTOMS, AIR 1970 SC 755, 759. 8. SECTION 80P(2)(D) OF THE ACT ALLOWS WHOLE DEDUCTI ON OF AN INCOME BY WAY OF INTEREST OR DIVIDENDS DERIVED BY THE ITA NO. 22/JP/2019 M/S. JAIPUR ZILA DUGDH UTPADAK SAHAKARI SANGH LTD VS ACIT, CIRCLE 6, JAIPUR 14 CO-OPERATIVE SOCIETY FROM ITS INVESTMENT WITH ANY OT HER CO- OPERATIVE SOCIETY. THIS PROVISION DOES NOT MAKE ANY DISTINCTION IN REGARD TO SOURCE OF THE INVESTMENT B ECAUSE THIS SECTION ENVISAGES DEDUCTION IN RESPECT OF ANY INCOME DERIVED BY THE CO-OPERATIVE SOCIETY FROM ANY INVEST MENT WITH A CO-OPERATIVE SOCIETY. IT IS IMMATERIAL WHETHER ANY INTEREST PAID TO THE CO- OPERATIVE SOCIETY EXCEEDS THE INTEREST RECEIVED FROM THE BANK ON INVESTMENTS. THE REVENUE IS NOT REQUIRED TO LOOK TO THE NATURE OF TH E INVESTMENT WHETHER IT WAS FROM ITS SURPLUS FUNDS OR OTHERWISE. THE ACT DOES NOT SPEAK OF ANY ADJUSTMENT A S SOUGHT TO BE MADE OUT BY LEARNED COUNSEL FOR THE RE VENUE. THE PROVISION DOES NOT INDICATE ANY SUCH ADJUSTMENT IN REGARD TO INTEREST DERIVED FROM THE CO-OPERATIVE SO CIETY FROM ITS INVESTMENT IN ANY OTHER CO-OPERATIVE SOCIE TY. THEREFORE, WE DO NOT AGREE WITH THE ARGUMENT ADVANCED BY LEARNED COUNSEL FOR THE REVENUE. IN OUR OPINION, THE LEARNED TRIBUNAL WAS RIGHT IN LAW IN ALLOWING DEDUCTION UNDER SECTION 80P(2)(D) OF THE INCOME- TAX ACT, 196 1. IN RESPECT OF INTEREST OF RS. 4,00,919 ON ACCOUNT OF I NTEREST RECEIVED FROM NAWANSHALN CENTRAL CO-OPERATIVE BANK WITHOUT ADJUSTING THE INTEREST PAID TO THE HANK. THER EFORE, 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 PURPOS E 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 E NTITLED TO THE DEDUCTION CLAIMED UNDER SECTION 12(2). THE HI GH COURT HELD THAT IF AN ASSESSEE HAD NO OPTION EXCEPT TO INCUR AN EXPENDITURE IN ORDER TO MAKE THE EARNING OF AN I NCOME POSSIBLE, THEN UNDOUBTEDLY THE EXERCISE OF THAT OPT ION IS COMPULSORY AND ANY EXPENDITURE INCURRED BY REASON O F THE EXERCISE OF THAT OPTION WOULD COME WITHIN THE AMBIT O F 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 OPTIO N ITA NO. 22/JP/2019 M/S. JAIPUR ZILA DUGDH UTPADAK SAHAKARI SANGH LTD VS ACIT, CIRCLE 6, JAIPUR 15 DEPENDS UPON PERSONAL CONSIDERATIONS OR UPON MOTIVE S OF THE ASSESSEE, THAT EXPENDITURE CANNOT POSSIBLY COME WITHIN THE AMBIT OF SECTION 12(2). IN THE PRESENT CASE, TH E LOAN WAS TAKEN FOR BUSINESS PURPOSE MORE PARTICULARLY PUR CHASE 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 A GAINST 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 RS 1,49,40,834 ON FDRS P LACED WITH JAIPUR CENTRAL COOPERATIVE BANK LTD. 20. IN THE RESULT, THE SOLE GROUND OF REVENUES APPEAL IS DISMISSED AND GROUND NO. 2 IN ASSESSEES CROSS APPEAL IS ALLOWED. HAVING DECIDED THE MATTER ON MER ITS, THE LEGAL GROUND RAISED BY THE ASSESSEE CHALLENGING THE VALIDITY OF THE PROCEEDINGS U/S 147 HAS BECOME INFR UCTOUS AND IS DISMISSED. 2.6 DURING THE COURSE OF HEARING, THE LD. DR SUPPOR TED THE ORDER OF THE AO AND ALSO FILED FOLLOWING CASE LAWS TO THIS EFF ECT. 1. PCIT VS TOAGARS COOPERATIVE SALE SOCIETY [2017] TAXMANN.COM 140 (KARNATAKA) 2. CIT VS RAJASTHAN RAJYA SAHAKARI UPBHOKTA SANGH LTD [1996) 84 TAXMAN 33 (RAJ). 2.7 WE HAVE HEARD THE RIVAL CONTENTIONS AND PERUSED THE MATERIALS AVAILABLE ON RECORD. THE BENCH HAS ALSO TAKEN INTO C ONSIDERATION THE ITA NO. 22/JP/2019 M/S. JAIPUR ZILA DUGDH UTPADAK SAHAKARI SANGH LTD VS ACIT, CIRCLE 6, JAIPUR 16 JUDGEMENT CITED BY THE REVENUE AUTHORITIES. HOWEVER, THE BENCH NOTED THAT RECENT JUDGMENT ON THE PARTICULAR ISSUE HAS AL READY BEEN PRONOUNCED BY THE ITAT COORDINATE BENCH VIDE ITS ORD ER DATED 02-8-2019 IN THE ASSESSEE'S OWN CASE. THEREFORE, RES PECTFULLY FOLLOWING THE DECISION OF THE ITAT COORDINATE BENCH IN ASSESSE E'S OWN CASE (SUPRA), ON THE ISSUE IN QUESTION, WE ALLOW THE GROUN D NO. 1 AND 1.1 OF THE ASSESSEE AND DISMISS THE GROUND NO. 2 OF THE R EVENUE. 3.1 NOW WE TAKE UP THE GROUND NO. 1 OF THE REVENUE WHE REIN THE REVENUE IS AGGRIEVED THAT THE LD. CIT(A) HAS ERRED IN ALLOWING THE CLAIM OF DEDUCTION FOR CONTRIBUTION MADE TO SPARSH TRUST OF RS. 1,43,24,928/-. 3.2 AT THE OUTSET OF THE HEARING, THE LD.AR OF THE ASSESSEE SUBMITTED THAT THE ISSUE IN QUESTION IS COVERED AND IT HAS A LREADY BEEN DECIDED ON 15-06-2016 BY THE COORDINATE BENCH IN ASSESSEE'S OWN CASE IN ITA NO. 1003/JP/2015 FOR THE ASSESSMENT YEAR 2012-12. 3.3 ON THE OTHER HAND, THE LD. DR SUPPORTED THE ORD ER OF THE AO. 3.4 WE HAVE HEARD THE RIVAL CONTENTIONS AND PERUSED THE MATERIALS AVAILABLE ON RECORD. IT IS NOT IMPERATIVE REPEAT TH E FACTS OF THE ISSUE IN QUESTION AS SIMILAR ISSUE HAS ALREADY BEEN DECIDED ON 15-06-2016 BY ITA NO. 22/JP/2019 M/S. JAIPUR ZILA DUGDH UTPADAK SAHAKARI SANGH LTD VS ACIT, CIRCLE 6, JAIPUR 17 THE COORDINATE BENCH IN ITA NO. 1003/JP/2015 VIDE ITS PARA 2.4 TO 2.5 AS UNDER:- 2.4 THE COORDINATE BENCH VIDE ITS ORDER DT. 15.03.2012 IN ITA NO. 820/JP/11 FOR A.Y. 08-09 HAS GIVEN ITS FINDINGS AS UNDER: AFTER CONSIDERING THE SUBMISSIONS, ORDERS OF THE AUTHORITIES BELOW, WE FIND THAT ASSESSEE DESERVE TO SUCCEED IN ITS GROUND RAISED. IT IS NOTICED THAT BE FORE CREATING SPARSH, THE ASSESSEE WAS DOING ALL THESE EXPENDITURE ITSELF. JUST FOR BETTERMENT OF ADMINIST RATION SERVICES, THE ASSESSEE CREATED THE TRUST THROUGH WH OM THESE EXPENSES ARE INCURRED. THE PROFIT & LOSS ACCOU NT OF THE TRUST IS MAINTAINED, COPY OF WHICH IS PLACED IN T HE COMPILATION AND IT IS SEEN THAT WHATEVER AMOUNT HAS BEEN GIVEN BY ASSESSEE OR REIMBURSED BY ASSESSEE, THAT H AS BEEN SPENT BY THE TRUST ON THE ANIMALS TO GET BETTE R QUALITY AND QUANTITY OF MILK. THE ASSESSEE HAS CONTRIBUTED @ RS.0.05 PER LITRE OF MILK PROCURED TO ITS TRUST FOR THE PURPOSE OF INCURRING EXPENDITURE FOR BETTER QUALITY OF MILK. AN AGENDA NOTE WAS PREPARED WHICH CLEARLY STATES THAT THE PURPOSE OF CONTRIBUTION IS FOR MEDICAL AND HEALTH F ACILITY OF THE ANIMALS OF THE MILK PRODUCERS AT THE DISTRICT L EVEL. THE CONTRIBUTION MADE BY ASSESSEE TO TRUST IS THUS DIRE CTLY LINKED WITH THE PROCUREMENT OF BETTER QUALITY, HYGIE NIC AND MORE QUANTITY OF THE MILK. IT IS IN THE INTEREST OF THE ASSESSEE THAT THE MILK ANIMALS AT THE VILLAGE LEVEL FROM WHERE IT PROCURES THE MILK ARE HEALTHY AND FOR THIS PURPOSE, SPARSH TRUST INCURRED EXPENDITURE IN PROVIDING VATER NITY CARE, REGULAR TREATMENT, EMERGENCY CARE, PREVENTIVE CARE, BREED IMPROVEMENT THROUGH A.I. UNINTERRUPTED SUPPLY OF NUTRITIONAL SUPPLEMENT ETC. THEREFORE, IN OUR CONSID ERED VIEW, CONTRIBUTION MADE BY ASSESSEE TO THIS TRUST IS AN EXPENDITURE INCURRED WHOLLY AND EXCLUSIVELY FOR THE PURPOSE OF BUSINESS WHICH IS ALLOWABLE U/S 37(1). FROM THE I NCOME AND EXPENDITURE ACCOUNT OF THE TRUST, IT CAN BE NOT ED THAT IT ITA NO. 22/JP/2019 M/S. JAIPUR ZILA DUGDH UTPADAK SAHAKARI SANGH LTD VS ACIT, CIRCLE 6, JAIPUR 18 HAS INCURRED AN EXPENDITURE IN PURSUANCE OF ITS OBJ ECTIVES AND AFTER CONSIDERING THE RECEIPTS, THERE IS DEFICI T TO THE TRUST IN THE YEAR UNDER CONSIDERATION. SUCH DEFICIT IS MET OUT OF THE CONTRIBUTION MADE BY ASSESSEE TO THE TRUS T. IT IS FURTHER SEEN THAT BEFORE CREATING THIS TRUST, THE A SSESSEE WAS INCURRING ALL THESE EXPENSES ITSELF AND ALL THES E EXPENSES WERE ALLOWED BY THE DEPARTMENT WHILE COMPLETING ASSESSMENT U/S 143(3).THEREFORE, THIS IS NOT A CASE THAT ASSESSEE HAS MADE DONATION TO ANY TRUST A ND, THEREFORE, THE SAME CANNOT BE ALLOWED AS BUSINESS EXPENDITURE. THE ID. CIT (A) HAS DISALLOWED THE CLAIM OF ASSESSEE BY OBSERVING THAT SINCE ASSESSEE HAS MADE DONATION U/S 80G AND, THEREFORE, DEDUCTION U/S 80G IS ALLOWABLE WHEREAS THE FACTS ARE OTHERWISE. THE ASSESSE E HAS NOT MADE ANY DONATION BUT HAS CONTRIBUTED TO TH E TRUST FOR A SPECIFIC PURPOSE I.E. TO INCUR THE EXPENDITUR E TO GET BETTER MILK FROM MILK ANIMAL. VARIOUS CASE LAWS RELI ED UPON BY THE ASSESSEE ARE IN SUPPORT OF THE CASE OF THE A SSESSEE. WE ARE NOT GETTING INTO DETAILS IN RESPECT OF THOSE CASES AS THEY HAVE ALREADY BEEN MENTIONED IN THE WRITTEN SUBMISSIONS WHICH ARE REPRODUCED HEREIN ABOVE. IN VI EW OF THESE FACTS AND CIRCUMSTANCES, WE HOLD THAT THE EXPENDITURE/CONTRIBUTION MADE BY ASSESSEE IS ALLOWAB LE AS BUSINESS EXPENDITURE. ACCORDINGLY, THE ADDITION MAD E AND CONFIRMED BY LOWER AUTHORITIES IS DELETED. 2.5 SIMILAR ORDERS WERE PASSED BY THE TRIBUNAL FOR THE ASSESSMENT YEAR 2009- 10 AND 2010-11. THERE IS N O CHANGE OF CIRCUMSTANCES BROUGHT TO OUR NOTICE AFTER PASSING OF THE ORDERS REFERRED HEREINABOVE OR NO CH ANGE IN LAW HAS BEEN BROUGHT TO OUR NOTICE BY EITHER OF PART IES. WE HAVE HEARD THE RIVAL CONTENTIONS AND PERUSED THE MA TERIAL AVAILABLE ON RECORD. THE ISSUE IN QUESTION IS COVERE D IN FAVOUR OF THE ASSESSEE BY THE EARLIER DECISIONS OF THE COORDINATE BENCHES IN ASSESSEES OWN CASE. RESPECTF ULLY FOLLOWING THE EARLIER DECISIONS OF THE COORDINATE BE NCHES, THE CONTRIBUTION OF RS. 1,23,63,091/- MADE BY THE A SSESSEE TO SPARSH TRUST IS ACCORDINGLY ALLOWED AS AN ELIGIBL E BUSINESS EXPENDITURE UNDER SECTION 37(1) OF THE ACT . THUS, THE GROUND RAISED BY THE REVENUE IS DISMISSED. ITA NO. 22/JP/2019 M/S. JAIPUR ZILA DUGDH UTPADAK SAHAKARI SANGH LTD VS ACIT, CIRCLE 6, JAIPUR 19 3.5 RESPECTFULLY FOLLOWING THE DECISION OF THE COORD INATE BENCH IN THE ABOVE CASE, WE FIND THAT THE ISSUE IN QUESTION IS CO VERED BY THE ABOVE DECISION DATED 15-06-2016 OF ITAT COORDINATE BENCH. HENCE, THE GROUND NO. GROUND NO. 1 OF THE REVENUE IS DISMISSED . 3.0 IN THE RESULT, THE APPEAL FILED BY THE ASSESSEE IS ALLOWED AND THAT OF THE REVENUE IS DISMISSED WITH NO ORDER AS TO COST . ORDER PRONOUNCED IN THE OPEN COURT ON 30/09/2019. SD/- SD/- FOE FLAG ;KNO LANHI XKSLKBZ (VIKRAM SINGH YADAV) (SANDEEP GOSAIN) YS[KK LNL;@ ACCOUNTANT MEMBER U;KF;D LNL;@ JUDICIAL MEMBER TK;IQJ@ JAIPUR FNUKAD@ DATED:- 30 /09/2019. *MISHRA VKNS'K DH IZFRFYFI VXZSFKR@ COPY OF THE ORDER FORWARDED TO: 1. VIHYKFKHZ@ THE APPELLANT- M/S. JAIPUR ZILA DUGDH UTPADAK SAHAKA RI SANGH LTD, JAIPUR 2. IZR;FKHZ@ THE RESPONDENT-THE ACIT, CIRCLE - 6, JAIPUR 3. VK;DJ VK;QDR@ CIT 4. VK;DJ VK;QDR@ CIT(A) 5. FOHKKXH; IZFRFUF/K] VK;DJ VIHYH; VF/KDJ.K] T;IQJ@ DR, ITAT, JAIPUR. 6. XKMZ QKBZY@ GUARD FILE {ITA NO. 22/JP/2019} VKNS'KKUQLKJ@ BY ORDER, LGK;D IATHDKJ@ ASSTT. REGISTRAR