The Mantola Cooperative Thrift & Credit Society, New Delhi V. ITO ward-62(5), New Delhi

ITA 2036/DEL/2019

• Counselvise Citation: [2020] 110 COUNSELVISE.COM (IT) 8819 (ITAT-DELHI)
• Duration Of Justice: 1 year(s) 4 month(s) 21 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 27-07-2020
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: E
• Assessment Year: 2014-2015
• Appeal Filed On: 08-03-2019
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Keywords: Proportionate interest; Capital expenditure
• Section: 80P; 64; 13; 22; 32

Judgement Text

FIN THE INCOME TAX APPELLATE TRIBUNAL DELHI BENCH E, NEW DELHI BEFORE SH. AMIT SHUKLA, JUDICIAL MEMBER DR. B. R. R. KUMAR, ACCOUNTANT MEMBER (E-COURT MODULE) ITA NO. 4078/DEL/2019 : ASSTT. YEAR : 2012-13 ITA NO. 6935/DEL/2018 : ASSTT. YEAR : 2013-14 ITA NO. 2036/DEL/2019 : ASSTT. YEAR : 2014-15 THE MANTOLA COOPERATIVE THRIFT & CREDIT SOCIETY LTD., 541, MANTOLA, PHAR GANJ, NEW DELHI - 110055 VS INCOME TAX OFFICER, WARD-62(5), NEW DELHI (APPELLANT) (RESPONDENT) PAN NO. AAAJT1976A ASSESSEE BY : SH. GAURAV JAIN, ADV. REVENUE BY : MS. RAKHI VIMAL, SR. DR DATE OF HEAR ING: 22 . 0 6 .20 20 DATE OF PRONOUNCEMENT: 27 .0 7 .20 20 ORDER PER DR. B. R. R. KUMAR, ACCOUNTANT MEMBER: THE PRESENT APPEALS HAVE BEEN FILED BY THE ASSESSE E AGAINST THE ORDER OF THE LD. CIT(A)-18, NEW DELHI D ATED 06.03.2019 FOR A.Y. 2012-13, ORDER OF THE LD. CIT(A )-27, NEW DELHI DATED 17.08.2018 FOR A.Y. 2013-14 AND ORDER O F THE LD. CIT(A)-20, NEW DELHI DATED 18.12.2018 FOR A.Y. 2014 -15. 2. IN ITA NO. 4078/DEL/2019, FOLLOWING EFFECTIVE GR OUNDS HAVE BEEN RAISED BY THE ASSESSEE: 1. THAT ON THE FACTS AND CIRCUMSTANCES OF THE CASE , THE CIT(A) ERRED IN UPHOLDING ACTION OF THE ASSESSI NG OFFICER IN SUSTAINING DISALLOWANCE OF DEDUCTION UND ER SECTION 80P(2)(A)(I) OF THE INCOME TAX ACT, 1961 ITA NOS. 2036 & 4078/DEL/2019 ITA NO. 6935/DEL/2018 MANTOLA COOPERATIVE THRIFT & CREDIT SOCIETY LTD. 2 (THE ACT) TO THE EXTENT OF RS. 1,90,90,288 CLAIME D ON INTEREST INCOME EARNED FROM INVESTMENT OF FUNDS IN COMMERCIAL BANKS AND COOPERATIVE BANKS/SOCIETIES ON THE GROUND THAT SUCH INTEREST INCOME IS NOT ELIGIBLE FOR DEDUCTION UNDER THAT SECTION. 2. WITHOUT PREJUDICE THAT THE CIT(A) ERRED ON FACTS AND IN LAW IN NOT ALTERNATIVELY ALLOWING DEDUCTION TO THE EXTENT OF RS. 1,83,33,282 UNDER SECTION 80P(2)( D) OF THE ACT ON INTEREST INCOME EARNED FROM DEPOSITS MADE WITH COOPERATIVE SOCIETIES/BANKS. 3. IN ITA NO. 6935/DEL/2018, FOLLOWING GROUNDS HAVE BEEN RAISED BY THE ASSESSEE: 1. THAT ON THE FACTS AND CIRCUMSTANCES OF THE CASE , THE CIT(A) ERRED IN UPHOLDING THE ACTION OF THE ASSESSING OFFICER IN DISALLOWING DEDUCTION OF RS. 68,38,319 UNDER SECTION 80P(2)(A)(I) OF THE INCOME TAX ACT. 1961 (THE ACT') ON THE GROUND THAT INTERE ST INCOME OF RS. 1,82,03,792 EARNED FROM FIXED DEPOSITS/INVESTMENTS WITH CO-OPERATIVE BANKS/SOCIETIES IS NOT DERIVED FROM BUSINESS AND WA S TAXABLE UNDER THE HEAD INCOME FROM OTHER SOURCES, WHICH IS NOT ELIGIBLE FOR DEDUCTION UNDER THAT SECT ION. 2. WITHOUT PREJUDICE, THAT ON THE FACTS AND CIRCUMSTANCES OF THE CASE, THE CIT(A) ERRED IN HOLD ING THAT THE INTEREST INCOME OF RS. 1,82,03,792 RECEIVE D FROM DEPOSITS MADE WITH CO-OPERATIVE BANKS/SOCIETIE S WAS ELIGIBLE NOT, IN THE ALTERNATE, FOR DEDUCTION U NDER SECTION 80P(2)(D) OF THE ACT. 3. FURTHER WITHOUT PREJUDICE, ON THE FACTS AND CIRCUMSTANCES OF THE CASE, THE CIT(A) ERRED IN LAW IN NOT ADJUDICATING GROUND OF APPEAL CHALLENGING THE ACTION OF THE ASSESSING OFFICER IN NOT ALLOWING DEDUCTION OF PROPORTIONATE INTEREST AND OTHER EXPENSES, ATTRIBUTABLE TO INTEREST INCOME EARNED FR OM DEPOSITS WITH COOPERATIVE BANK/SOCIETIES, UNDER SECTION 57 OF THE ACT AGAINST INTEREST INCOME OF RS . 1,82,03,792 BROUGHT TO TAX UNDER THE HEAD INCOME FROM OTHER SOURCES, WITHOUT APPRECIATING THAT SIMIL AR ITA NOS. 2036 & 4078/DEL/2019 ITA NO. 6935/DEL/2018 MANTOLA COOPERATIVE THRIFT & CREDIT SOCIETY LTD. 3 DEDUCTION WAS UPHELD BY THE APPELLATE AUTHORITIES I N THE EARLIER ASSESSMENT YEARS. 3.1 THAT ON THE FACTS AND CIRCUMSTANCES OF THE CASE , THE CIT(A) ERRED IN NOT APPRECIATING THAT, IF THE NETTING OFF OF PROPORTIONATE EXPENSES WAS ALLOWED AGAINST INTEREST INCOME OF RS. 1,82,03,792, THE APPELLANT WAS ELIGIBLE FOR DEDUCTION OF RS. 45,87,8 14 UNDER SECTION 80P(2)(A)(I) WITH RESPECT TO INTEREST EARNED FROM LOANS ADVANCED TO MEMBERS, WHICH WAS CLEARLY/UNDISPUTEDLY ELIGIBLE FOR DEDUCTION UNDER T HAT SECTION. 4. IN ITA NO. 2036/DEL/2019, FOLLOWING GROUNDS HAVE BEEN RAISED BY THE ASSESSEE: 1. THAT ON THE FACTS AND CIRCUMSTANCES OF THE CASE , THE CIT(A) ERRED IN UPHOLDING THE ACTION OF THE ASSESSING OFFICER IN SUSTAINING DISALLOWANCE OF DEDUCTION UNDER SECTION 80P(2)(A)(I) OF THE INCOME TAX ACT, 1961 (THE ACT) TO THE EXTENT OF RS. 17,74,635 ON THE GROUND THAT SUCH INTEREST INCOME I S NOT ELIGIBLE FOR DEDUCTION UNDER THAT SECTION. 2. WITHOUT PREJUDICE THAT THE CIT(A) ERRED ON FACTS AND IN LAW IN NOT ALTERNATIVELY ALLOWING INTEREST O F RS. 17,51,780 (NET) EARNED FROM DEPOSITS MADE WITH COOPERATIVE SOCIETIES/BANKS UNDER SECTION 80P(2)(D) OF THE ACT. 2.1 THAT ON THE FACTS AND CIRCUMSTANCES OF THE CASE , THE CIT(A) ERRED IN UPHOLDING THE ACTION OF THE ASSESSING OFFICER IN MAKING DISALLOWANCE OF DEDUCTI ON UNDER SECTION 80P AND DISMISSING THE GROUND RAISED BY THE APPELLANT, DESPITE HOLDING IN PARA 6.1.8 THA T THE INTEREST RECEIVED FROM DEPOSITS MADE WITH CO- OPERATIVE BANKS/SOCIETIES IS ELIGIBLE FOR DEDUCTION UNDER SECTION 80P (SIC SECTION 80P(2)(D)) OF THE AC T. ITA NOS. 2036 & 4078/DEL/2019 ITA NO. 6935/DEL/2018 MANTOLA COOPERATIVE THRIFT & CREDIT SOCIETY LTD. 4 5. SINCE, THE ISSUES INVOLVED IN ALL THESE APPEALS ARE COMMON, THEY WERE HEARD TOGETHER AND ARE BEING DISP OSED OFF BY COMMON ORDER. THE RELEVANT DATA IS AS UNDER: TABLE 1 PARTICULARS AY 2012 - 13 AY 2013 - 14 AY 2014 - 15 INCOME EARNED FROM MEMBERS INTEREST FROM CO-OPERATIVE SOCIETIES (BANK) INTEREST FROM SCHEDULE COMMERCIAL BANKS & MISC INCOME TOTAL INCOME EARNED 369,93,244 183,33,282 8,75,951 562,02,477 384,54,406 182,03,792 6,59,626 573,17,824 380,39,196 186,15,316 1,25,283 567,79,795 TOTAL INTEREST PAID ON DEPOSITS TO MEMBERS TOTAL OVERHEAD EXPENSES TOTAL DISALLOWANCE 314,00,043 175,31,351 15,28,066 324,30,415 195,03,420 14,54,330 329,75,423 190,72,615 6,81,174 TOTAL TAXABLE INCOME 87,99,149 68,38,319 54,12,931 DEDUCTION CLAIMED IN RETURN OF INCOME - 80P(2)(A)(I) 87,99,149 68,38,319 54,12,931 TAX DEMAND IF DEDUCTION U/S 80P(2)(A)(I) IS RESTRICTED TO INCOME EARNED FROM MEMBERS ONLY 80,77,256 76,45,770 84,00,520 ALTERNATE CLAIM OF DEDUCTION CONSIDERING DEDUCTION UNDER SECTION 80P(2)(D) (AS PER HC ORDER IN ASSESSEE'S OWN CASE) 86,62,009 67,59,622 54,00,987 TAX PAYALE 39,286 21,227 1,430 TOTAL TAX PAYABLE 61,943 TAX ALREADY PAID 35,00,000 TABLE 2 ASSESSMENT YEAR GROSS INTEREST INCOME EARNED INCOME EARNED FROM INVESTMENT WITH COOPERATIVE BANKS/SOCIETIES INCOME EARNED FROM INVESTMENT WITH COMMERCIAL BANKS INCOME EARNED FROM MEMBERS ON LOANS GRANTED 2012-13 5,62,02,477 1,83,33,282 7,57,006 3,69,93,24 4 2013-14 5,73,17,824 1,82,03,792 6,59,626 3,84,54,40 6 2014 - 15 5,67,79,795 1,86,15,316 1,25,283 3,80,38,156 ITA NOS. 2036 & 4078/DEL/2019 ITA NO. 6935/DEL/2018 MANTOLA COOPERATIVE THRIFT & CREDIT SOCIETY LTD. 5 ITA NO. 4078/DEL/2019 ASSESSMENT YEAR 2012-13 DEDUCTION U/S 80P(2)(A)(I): 6. DURING THE YEAR THE ASSESSEE HAS SHOWN INTEREST INCOME OF RS. 1,90,90,288/- ON FDRS AND DEPOSITS IN NON-MEMBER CO- OPERATIVE BANKS AND COMMERCIAL BANKS. THIS INTEREST INCOME FROM BAN KS HAS BEEN CLAIMED AS DEDUCTION U/S 80P OF THE ACT. THE AO HAS STATED THAT ANY INCOME EARNED BY A CO-OPERATIVE SOCIETY OTHER THAN FROM TH E BUSINESS OF PROVIDING CREDIT FACILITIES TO ITS MEMBERS, IS NOT ENTITLED F OR DEDUCTION U/S 80P. THEREFORE, THE AO HAS DISALLOWED DEDUCTION U/S 80P FOR AN AMOUNT OF RS. 1,90,90,288/- IN RESPECT OF THE ABOVE-MENTIONED INT EREST ON BANK DEPOSITS AND HAS TREATED THE SAID INTEREST AS INCOME FROM OT HER SOURCES. 7. THE AO ALSO HELD THAT AS PER THE PROVISIONS OF S ECTION 80P INCLUDING THE INSERTION OF SUB SECTION (4) IN THIS SECTION W. E.F. 01.04.2007 ACCORDING WHICH CO-OPERATIVE BANKS HAVE BEEN EXCLUDED FROM TH E APPLICABILITY OF SECTION 80P OF THE ACT AND ACCORDINGLY, THE INTERES T INCOME EARNED BY THE CO-OPERATIVE SOCIETIES FROM DEPOSITS MADE IN CO-OPE RATIVE BANKS IS ALSO NOT ELIGIBLE FOR DEDUCTION U/S 80P(2)(D) OF THE ACT . THE AO HAS FURTHER HELD THAT THE PRINCIPLE OF MUTUALITY IS NOT APPLICABLE A ND NOTICED THAT THE INTEREST EARNED FROM BANK DEPOSITS DOES NOT SATISFY THIS PRINCIPLE AND THEREFORE, THE INTEREST INCOME EARNED FROM BANK DEP OSITS IS TAXABLE AND IS NOT ENTITLED FOR DEDUCTION U/S 80P OF THE ACT. ACCO RDINGLY, THE AO HAS MADE THE ADDITION BY DISALLOWING THIS DEDUCTION IN RESPECT OF THE INTEREST EARNED FROM BANK DEPOSITS. WHILE DOING SO, THE AO R ELIED UPON THE JUDGMENT OF THE HONBLE SUPREME COURT IN THE CASE O F TOTGARS CO- OPERATIVE SALE SOCIETY LTD. VS. ITO [2010] 188 TAXM AN 282 . ITA NOS. 2036 & 4078/DEL/2019 ITA NO. 6935/DEL/2018 MANTOLA COOPERATIVE THRIFT & CREDIT SOCIETY LTD. 6 8. THE LD. CIT (A) CONFIRMED THE ACTION OF THE ASSE SSING OFFICER. FURTHER, THE MATTER TRAVELLED UPTO THE HON BLE JURISDICTIONAL HIGH COURT OF DELHI WHEREIN THE HON BLE COURT HAS HELD THAT THE ASSESSEE IS NOT ELIGIBLE TO CLAIM DED UCTION U/S 80P(2)(A)(I) ON THE INTEREST EARNED FROM THE FIXED DEPOSITS MADE OUT OF THE SURPLUS FUNDS. SECTION U/S 80P(2)(A )(I) READS AS UNDER: 80P. (1) WHERE, IN THE CASE OF AN ASSESSEE BEING A CO-OPERATIVE SOCIETY, THE GROSS TOTAL INCOME INCLUDES ANY INCOME REFERRED TO IN SUB-SECTION (2), THERE SHALL BE DEDUCTED, IN ACCORD ANCE WITH AND SUBJECT TO THE PROVISIONS OF THIS SECTION, THE SUMS SPECIFIED IN SUB- SECTION (2), IN COMPUTING THE TOTAL INCOME OF THE A SSES SEE. (2) THE SUMS REFERRED TO IN SUB-SECTION (1) SHALL B E THE FOLLOWING, NAMELY : (A) IN THE CASE OF A CO-OPERATIVE SOCIETY ENGAGED I N (I) CARRYING ON THE BUSINESS OF BANKING OR PROVIDIN G CREDIT FACILITIES TO ITS MEMBERS... THE WHOLE OF AMOUNT OF PROFITS & GAINS OF BUSINESS ATTRIBUTABLE TO ANYONE ARE MORE OF SUCH ACTIVITIES. 9. SINCE, IT HAS BEEN HELD BY THE HONBLE HIGH COUR T THAT THE ASSESSEE IS A THRIFT & CREDIT SOCIETY AND ITS FUNCT IONS SHOULD NOT BE CONSTITUTED AS BANKING. THE HONBLE HIGH COURT HAS CLEARLY HELD THAT THE ASSESSEE IS NOT A BANKING COMPANY AND THE EXPRESSION BUSINESS OF BANKING CANNOT BE GIVEN A SPACIOUS MEANING TO UNREALISTICALLY EXPAND THE TERM BEYOND, THE ASSESSEE IS NOT ELIGIBLE FOR DEDUCTION U/S 80P(2)(A )(I). ITA NOS. 2036 & 4078/DEL/2019 ITA NO. 6935/DEL/2018 MANTOLA COOPERATIVE THRIFT & CREDIT SOCIETY LTD. 7 10. ACCORDINGLY, WE HEREBY HOLD THAT THE INTEREST E ARNED FROM THE FIXED DEPOSITS MADE OUT OF THE SURPLUS FUNDS IS NOT ELIGIBLE FOR THE CLAIM OF DEDUCTION U/S 80P(2)(A)(I). DEDUCTION U/S 80P(2)(D): 11. HAVING FOUND ITSELF IN ELIGIBLE FOR DEDUCTION U /S 80P(2)(A)(I), THE ASSESSEE SUBMITTED AN ALTERNATIVE PLEA FOR DEDUCTION U/S 80P(2)(D). THE SAID SECTION READS AS UNDER: SECTION 80P(2). (D) IN RESPECT OF ANY INCOME BY WAY OF INTEREST OR DIVIDENDS DERIVED BY THE CO-OPERATIVE SOCIETY FROM ITS INVESTMENTS WI TH ANY OTHER CO- OPERATIVE SOCIETY, THE WHOLE OF SUCH INCOME. 12. THE LD. AR ARGUED THAT THE ASSESSEE IS REGISTER ED UNDER DELHI CO-OPERATIVE SOCIETIES ACT AND AS PER THE STR AIGHT PROVISIONS OF THE ACT, THE ASSESSEE IS ELIGIBLE FOR DEDUCTION ON THE INTEREST OR DIVIDENDS DERIVED BY ITS INVESTMENT S WITH OTHER CO-OPERATIVE SOCIETIES. IT WAS ARGUED THAT THE ASSE SSEE HAS EARNED INTEREST AMOUNT OF RS. 1,83,33,282/-. IT WAS ALSO ARGUED THAT THE CO-OPERATIVE BANK ARE PRIMARILY CO-OPERATI VE SOCIETIES WHICH ARE IN THE BUSINESS OF BANKING ARE PROVIDING CREDIT FACILITIES, HENCE THE ASSESSEE IS RIGHTLY ELIGIBLE FOR THE DEDUCTION U/S 80P(2)(D). 13. THE LD. DR OPPOSED THE ARGUMENTS OF THE ASSESSE E AND ARGUED THAT IT IS AGAINST THE SPIRIT AND INTENT OF THE HONBLE SUPREME COURT JUDGMENT IN THE CASE OF TOTGARS CO-OP ERATIVE SALE SOCIETY LTD. 322 ITR 283. ITA NOS. 2036 & 4078/DEL/2019 ITA NO. 6935/DEL/2018 MANTOLA COOPERATIVE THRIFT & CREDIT SOCIETY LTD. 8 14. HEARD THE ARGUMENTS OF BOTH THE PARTIES AND PER USED THE MATERIAL AVAILABLE ON RECORD. 15. HAVING DECIDED THE MATTER IN THE ISSUE OF SECTI ON 80P(2)(A)(I), THE CLAIM OF THE ASSESSEE FOR DEDUCTI ON U/S 80P(2)(D) IS VIEWED DE NOVO. 16. WE HAVE GIVEN A THOUGHT TO CONSIDER WHETHER THE CO- OPERATIVE BANK WHEREIN THE ASSESSEE MADE DEPOSITS O UT OF THIS SURPLUS FUND BE CONSIDERED AS A CO-OPERATIVE SOCIET Y, FOR IF A CO-OPERATIVE BANK IS CONSIDERED TO BE A CO-OPERATIV E SOCIETY THAN ONLY THE INTEREST EARNED BY THE ASSESSEE ON TH E DEPOSITS WOULD BE ELIGIBLE FOR DEDUCTION U/S 80P(2)(D). WE F IND THAT CO- OPERATIVE SOCIETY IS A BROAD AND LARGER UMBRELLA UN DER WHICH THE CO-OPERATIVE BANKS DO PERFORM. ALL CO-OPERATIVE SOCIETIES MAY NOT BE BANKS BUT ALL CO-OPERATIVE BANKS ARE DEE MED TO BE CO-OPERATIVE SOCIETIES. ACCORDING TO BANKING REGULA TIONS ACT, A CO-OPERATIVE SOCIETY BANK AS THE SAME MEANING OF TH E CO- OPERATIVE SOCIETY. 17. FURTHER, WE HAVE ALSO GIVEN A THOUGHT AS TO THE INTEREST EARNED BY THE SURPLUS FUNDS. AS PER THE INCOME TAX ACT, THERE IS NO SUCH STIPULATION OR PREREQUISITE AS TO THE NA TURE OF THE FUNDS. SO FAR AS THE PRINCIPLES OF INTERPRETATION T O A TAXING STATUE IS CONCERNED, WE DERIVE IT FROM CAPE BRANDY SYNDICATE VS IRC 1 KB 64 AS QUOTED BY THE HONBLE HIGH COURT OF PUNJAB & HARYANA, HONBLE J IQBAL SINGH THAT IN A TAXING ACT, ONE HAS TO LOOK MERELY AT WHAT IS CLEARLY SAID. THERE IS NO ROOM FOR ANY INTENDMENT. THERE IS NO EQ UITY ABOUT A TAX. THERE IS NO PRESUMPTION AS TO A TAX. NOTHING IS TO BE ITA NOS. 2036 & 4078/DEL/2019 ITA NO. 6935/DEL/2018 MANTOLA COOPERATIVE THRIFT & CREDIT SOCIETY LTD. 9 READ IN, NOTHING IS TO BE IMPLIED. ONE CAN ONLY LOO K FAIRLY AT THE LANGUAGE USED. 18. THUS, WE ALSO FIND THAT SECTION 80P(2)(D) OF TH E ACT ALLOWS WHOLE DEDUCTION OF AN INCOME BY WAY OF INTEREST OR DIVIDENDS DERIVED BY THE CO-OPERATIVE SOCIETY FROM ITS INVEST MENT WITH ANY OTHER CO-OPERATIVE SOCIETY. THIS PROVISION DOES NOT MAKE ANY DISTINCTION IN REGARD TO SOURCE OF THE INVESTME NT BECAUSE THIS SECTION ENVISAGES DEDUCTION IN RESPECT OF ANY INCOME DERIVED BY THE CO-OPERATIVE SOCIETY FROM ANY INVEST MENT WITH A CO-OPERATIVE SOCIETY. THE REVENUE IS NOT REQUIRED T O LOOK TO THE NATURE OF THE INVESTMENT WHETHER IT WAS FROM ITS SU RPLUS FUNDS OR OTHERWISE. 19. WE HAVE ALSO CONSIDERED THE CASE OF TOTGARS CO- OPERATIVE SALE SOCIETY LTD. 322 ITR 283 RELIED UPON BY THE LD . DR AND FIND THAT THE HONBLE SUPREME COURT HAS DELIBERATED ON T HE ISSUE OF DEDUCTION U/S 80P(2)(A)(I) BUT NOT ON SECTION 80P(2 )(D). WE ALSO OBSERVED THAT IN THE CASE OF TOTGARS CO-OPERAT IVE SALE SOCIETY LTD. ITSELF THE HONBLE HIGH COURT OF KARNA TAKA HAS ALLOWED THE CLAIM OF DEDUCTION U/S 80P(2)(D) VIDE O RDER DATED 05.01.2017. 20. HENCE, KEEPING IN VIEW THE PROVISIONS OF THE AC T AND THE JUDGMENTS OF THE HONBLE HIGH COURT AND SUPREME COU RT IN THE CASE OF TOTGARS CO-OPERATIVE SALE SOCIETY LTD., WE HEREBY HOLD THAT THE ASSESSEE IS ELIGIBLE FOR DEDUCTION U/S 80P (2)(D) ON THE INCOME EARNED BY THE WAY OF INTEREST FROM THE CO-OP ERATIVE SOCIETIES. ITA NOS. 2036 & 4078/DEL/2019 ITA NO. 6935/DEL/2018 MANTOLA COOPERATIVE THRIFT & CREDIT SOCIETY LTD. 10 EXPENDITURE - U/S 57: 21. THE ASSESSEE HAS TAKEN A PLEA THAT THE EXPENDIT URE INCURRED IN EARNING OF INTEREST FROM THE COMMERCIAL BANKS BE ALLOWED WHILE COMPUTING THE TAXABLE INCOME. THE PRO VISION OF SECTION 57 READS AS UNDER: SECTION 57: THE INCOME CHARGEABLE UNDER THE HEAD ' INCOME FROM OTHER SOURCES' SHALL BE COMPUTED AFTER MAKING THE F OLLOWING DEDUCTIONS, NAMELY: (I) IN THE CASE OF [DIVIDENDS, 94[OTHER THAN DIVIDE NDS REFERRED TO IN SECTION 115-O,]] [OR INTEREST ON SECURITIES], ANY R EASONABLE SUM PAID BY WAY OF COMMISSION OR REMUNERATION TO A BANKER OR ANY OTHER PERSON FOR THE PURPOSE OF REALISING SUCH DIVIDEND [ OR INTEREST] ON BEHALF OF THE ASSESSEE; [(IA) IN THE CASE OF INCOME OF THE NATURE REFERRED TO IN SUB-CLAUSE (X) OF CLAUSE (24) OF SECTION 2 WHICH IS CHARGEABLE TO INCOME-TAX UNDER THE HEAD 'INCOME FROM OTHER SOURCES', DEDUCTIONS, S O FAR AS MAY BE, IN ACCORDANCE WITH THE PROVISIONS OF CLAUSE (VA) OF SUB-SECTION (1) OF SECTION 36 ;] (II) IN THE CASE OF INCOME OF THE NATURE REFERRED T O IN CLAUSES (II) AND (III) OF SUB-SECTION (2) OF SECTION 56, DEDUCTIONS, SO FAR AS MAY BE, IN ACCORDANCE WITH THE PROVISIONS OF SUB-CLAUSE (II) O F CLAUSE (A) AND CLAUSE (C) OF SECTION 30, SECTION 31 AND [SUB-SECTI ONS (1) [***] AND (2)] OF SECTION 32 AND SUBJECT TO THE PROVISIONS OF [SECTION 38]; [(IIA) IN THE CASE OF INCOME IN THE NATURE OF FAMIL Y PENSION, A DEDUCTION OF A SUM EQUAL TO THIRTY-THREE AND ONE-TH IRD PER CENT OF SUCH INCOME OR [FIFTEEN] THOUSAND RUPEES, WHICHEVER IS LESS. ITA NOS. 2036 & 4078/DEL/2019 ITA NO. 6935/DEL/2018 MANTOLA COOPERATIVE THRIFT & CREDIT SOCIETY LTD. 11 EXPLANATION.FOR THE PURPOSES OF THIS CLAUSE, 'FAMI LY PENSION' MEANS A REGULAR MONTHLY AMOUNT PAYABLE BY THE EMPLO YER TO A PERSON BELONGING TO THE FAMILY OF AN EMPLOYEE IN TH E EVENT OF HIS DEATH ;] (III) ANY OTHER EXPENDITURE (NOT BEING IN THE NATUR E OF CAPITAL EXPENDITURE) LAID OUT OR EXPENDED WHOLLY AND EXCLUS IVELY FOR THE PURPOSE OF MAKING OR EARNING SUCH INCOME; [(IV) IN THE CASE OF INCOME OF THE NATURE REFERRED TO IN CLAUSE (VIII) OF SUB-SECTION (2) OF SECTION 56, A DEDUCTION OF A SUM EQUAL TO FIFTY PER CENT OF SUCH INCOME AND NO DEDUCTION SHALL BE ALLOW ED UNDER ANY OTHER CLAUSE OF THIS SECTION.] 22. HAVING HEARD THE ARGUMENTS, WE HEREBY DIRECT TH AT THE ASSESSING OFFICER SHALL ALLOW THE EXPENDITURE INCUR RED IN RELATION TO EARNING OF INTEREST FROM THE COMMERCIAL BANKS. 23. IN CONCLUSION, A. THE ASSESSEE BEING A CO-OPERATIVE SOCIETY NOT INVOL VED IN BANKING OPERATION IS NOT ELIGIBLE FOR DEDUCTION U/S 80P(2)(A)(I). B. THE ASSESSEE BEING A CO-OPERATIVE SOCIETY IS ELIGIB LE FOR DEDUCTION U/S 80P(2)(D) ON THE INTEREST EARNED FROM OTHER CO-OPERATIVE SOCIETIES. C. THE ASSESSEE IS ELIGIBLE FOR THE EXPENDITURE U/S 57 INCURRED IN EARNING THE INTEREST INCOME WHICH IS TAXABLE UND ER THE HEAD INCOME FROM OTHER SOURCES AS PER SECTION 56. ITA NOS. 2036 & 4078/DEL/2019 ITA NO. 6935/DEL/2018 MANTOLA COOPERATIVE THRIFT & CREDIT SOCIETY LTD. 12 24. IN THE RESULT, ALL THE APPEALS OF THE ASSESSEE ARE ALLOWED. ORDER PRONOUNCED IN THE OPEN COURT ON 27/07/2020. SD/- SD/- (AMIT SHUKLA) (DR. B. R. R. KUMAR) JUDICIAL MEMBER ACCOUNT ANT MEMBER DATED: 27/07/2020 *SUBODH* COPY FORWARDED TO: 1. APPELLANT 2. RESPONDENT 3. CIT 4. CIT(APPEALS) 5. DR: ITAT ASSISTANT REGISTRAR