The ITO, Ward-6(1), Surat V. Bardoli Vibhag Gram Vikas Co.Op.Credit Society Ltd., Surat

ITA 2166/AHD/2014

• Counselvise Citation: [2017] 128 COUNSELVISE.COM (IT) 6197 (ITAT-AHMEDABAD)
• Duration Of Justice: 2 year(s) 8 month(s) 23 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 18-04-2017
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: A
• Next Hearing Date: 06-03-2017
• Assessment Year: 2009-2010
• Appeal Filed On: 25-07-2014
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: ASHISH POPHE RE
• Section: 143(3)

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL CAMP AT SURAT BEFORE: SHR I RAJPAL YADAV , JUDICIAL MEMBER AND SHRI AMARJIT SINGH, ACCOUNTANT MEMBER THE ITO, WARD - 6(1), ROOM NO. 614, AAYAKAR BHAVAN, MAJURA GATE, SURAT - 395003 (APPELLANT) VS BARDOLI VIBHAG GRAM VIKAS CO - OP. CREDIT SOCIETY LTD. SARDAR BAUG, BARDOLI, SURAT - 394210 PAN:AAATB8135B (RESPONDENT) REVENUE BY : S H RI ASHISH POPHE RE , SR. D . R. ASSESSEE BY: S H RI MITESH MODI WITH SHRI AKHARY MODI , A.R. DATE OF HEARING : 06 - 03 - 2 017 DATE OF PRONOUNC EMENT : 18 - 04 - 2 017 / ORDER P ER : AMARJIT SINGH, ACCOUNTANT MEMBER : - THIS REVENUE S APPEAL FOR A.Y. 2009 - 10 , AR ISES FROM ORDER OF THE CIT(A) - I, SURAT DATED 04 - 04 - 2014 IN APPEAL NO. CAS - I / TFR/478/2012 - 13 , IN PROCEEDINGS UNDER SECTION 143(3) OF THE INCOME TAX ACT, 1961 ; IN SHORT THE ACT . I T A NO . 2166 / A HD/20 14 A SSESSMENT YEAR 200 9 - 10 I.T.A NO. 2166 / AHD/2014 A.Y. 2009 - 10 PAGE NO ITO VS. BARDOLI VIBHAG GRAM VIKAS CO - OP. CREDIT SOCIETY LTD. 2 2. THE ASSESSEE HAS RAISED FOLLOWING GROUNDS OF APPEAL: - 1. ON THE FACTS AND CIRCUMSTANCES OF THE CASE AND IN LAW, THE LD. CIT(A) HAS ERRED IN CONCLUDING THAT THERE IS NO NEXUS BETWEEN THE INTEREST/DIVIDEND INCOME EARNED FROM THE C O - OP, SOCIETIES AND THE INTEREST EXPENDITURE INCURRED BY THE ASSESSES ON BORROWED FUNDS ON THE GROUND THAT THERE IS NO PROOF OF THE INVESTMENT OF SUCH INTEREST BEARING FUNDS TO EARN THE SAID INCOME WITHOUT APPRECIATING THE FACT THAT THE ASSESSEE HAS FAILED TO SUBSTANTIATE THE ABOVE IN FULL MEASURE WITH PROPER EVIDENCES. 2. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE AND IN LAW, THE LD. CIT(A) HAS ERRED IN HOLDING THAT NO EXPENSES WERE INCURRED FOR EARNING SUCH INCOME ON WHICH ASSESSEE HAS CL AIMED DEDUCTION U/S.80P(2)(D) DESPITE THE FACT THAT THE ASSESSEE HAD BEEN USING INTEREST BEARING FUNDS FOR ITS NORMAL BUSINESS ACTIVITY OF ADVANCING CREDIT TO MEMBERS. 3. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE AND IN LAW, THE LD. CIT(A) HAS ER RED IN NOT APPRECIATING THAT SUCH INCOME ON WHICH ASSESSEE HAS CLAIMED DEDUCTION U/S.80P(2)(D) WAS EARNED FROM INVESTMENTS MADE FROM NON - INTEREST BEARING FUNDS. 4. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE AND IN LAW, THE LD. CIT(A) HAS ERRED IN HOLDING THAT PROVISIONS OF SEC.80P(2)(D) AND 80P(4) OF THE ACT CLEARLY STATES THAT TAHE INTEREST RECEIVED FROM OTHER CO - OPERATIVE SOCIETIES ARE ELIGIBLE FOR DEDUCTION AND NOT FROM CO - OP, BANKS. AS PER THE PROVISIONS OF SEC. 80P(4) OF THE ACT, IT IS CLEAR T HAT CO - OP. BANKS DO NOT FALL UNDER THE CATEGORY OF CO - OP.SOCIETIES. THUS, THE AO HAS RIGHTLY HELD THAT THE INTEREST INCOME RECEIVED FROM CO - OP, BANKS ARE NOT ALLOWABLE U/S.80P OF THE ACT IN THE CASE OF THE ASSESSEE. 5. ON THE FACTS AND IN THE CIRCUMSTAN CES OF THE CASE AND IN LAW, THE LD. CIT(A) SURAT OUGHT TO HAVE UPHELD THE ORDER OF THE ASSESSING OFFICER. IT IS, THEREFORE, PRAYED THAT THE ORDER OF THE LD. CIT(A), SURAT MAY BE SET ASIDE AND THAT OF THE ASSESSING OFFICERS ORDER MAY BE RESTORED. I.T.A NO. 2166 / AHD/2014 A.Y. 2009 - 10 PAGE NO ITO VS. BARDOLI VIBHAG GRAM VIKAS CO - OP. CREDIT SOCIETY LTD. 3 THE GR OUND S OF APPEAL OF THE REVENUE ARE INTERCONNECTED SO THESE ARE DECIDED TOGETHER AS UNDER: - 3. IN THIS CASE, RETURN OF INCOME DECLARING INCOME OF RS. NIL WAS FILED ON 18 TH SEPTEMBER, 2009. SUBSEQUENTLY, THE CASE WAS SELECTED UNDER SCRUTINY BY ISSUING NOTI CE U/S. 143(2) OF THE ACT ON 29 TH AUGUST, 2011. DURING THE COURSE OF ASSESSMENT PROCEEDINGS, THE ASSESSING OFFICER OBSERVED THAT ASSESSEE HAS EARNED GROSS INCOME OF RS. 6 , 88 , 20 ,648 / - AND AFTER ALLOWING DEDUCTION OF EXPENSES DECLARED INCOME FROM BUSINESS A ND PROVISION OF RS. 1 , 36 ,41,639/ - . THEREAFTER, THE ASSESSEE CLAIMED DEDUCTION U/S. 80P OF THE ACT AND DECLARED NIL INCOME IN THE RETURN OF INCOME . T HE ASSESSING OFFICER NOTICED THAT THE FOLLOWING INCOME WAS SHOWN AS ELIGIBLE FOR CLAIMING DEDUCTION U/S. 80P OF THE ACT. A B BASIC DEDUCTION INTEREST AND DIVIDEND FROM OTHER CO OP, SOCIETIES RS. 50,000/ - RS.4,05,40,653/ - TOTAL RS.4,05,90,653/ - THE ASSESSING OFFICER HAS BIFURCATED THE INTEREST INCOME/EXPENSES, ALONG WITH INCOME/EXPENDITURE UNDE R THE DIFFERENT OTHER HEADS AS UNDER: - EXPENDITUR E AMOUNT INCOME AMOUNT I.T.A NO. 2166 / AHD/2014 A.Y. 2009 - 10 PAGE NO ITO VS. BARDOLI VIBHAG GRAM VIKAS CO - OP. CREDIT SOCIETY LTD. 4 INTEREST ON DEPOSITS 4,66,56,566/ - INTEREST RECEIVED FROM - THE CO - OP. SOCIETIES AND CO - OP. BANK (CLAIMED AS ELIGIBLE INCOME FOR DEDUCTION U/S. 80P OF THE INCOM E TAX ACT) 3,24,40,27 8/ - SALARY EXPENSES 29,03,691/ - INTEREST FROM OTHER THAN CO - - OP. SOCIETY 3,39,025/ - OTHER EXPENSES 56,18,752/ - INTEREST REC. FROM OTHER THAN CO - OP. FD 5,06,720/ - PROFIT 1,36,41,6397 - IN TEREST RECEIVED FROM HARSH DEVELOPERS ADVANCES 20,15,158/ - INTEREST FROM LOAN ADVANCES 1,11,91,68 1/ - INTEREST FROM BRANCH ACCOUNTS 1,21,47,66 5/ - INTEREST FROM PREMATURE FDS 12,65,049/ - TOTAL 5, 99,05,57 6/ - I.T.A NO. 2166 / AHD/2014 A.Y. 2009 - 10 PAGE NO ITO VS. BARDOLI VIBHAG GRAM VIKAS CO - OP. CREDIT SOCIETY LTD. 5 SHARE DIVIDEND (CLAIM AS ELIGIBLE INCOME FOR DEDUCTION U/S. 80P OF THE INCOME TAX ACT) 81,00,375/ - OTHER INCOME 8,14,697/ - TOTAL 6,88,20,6487 - TOTAL 6,88,20,64 87 - THEREAFTER, AO COMPUTED THE I NCOME CLAIMED BY ASSESSEE AS ELIGIBLE FOR DEDUCTION U/S. SOP OF THE ACT AS UNDER: - SURAT DIST. CO - OP. BANK 23,08,316/ - MADHI VIBHAG KHAND UDYOG MANDALI 7,14,286/ - KHEDUT SAHAKARI JIN & PRESS. SOCIETY 15,77,351/ - GUJARAT STATE FRUITS AND VEG. FEDE RATION LTD. 1,97,260/ - MOTA VIBHAG SEVA SAHAKARI 1,86,575/ - SURAT DIST. CO - OP. BANK 2,50,44,943/ - SURAT DIST. CO - OP. BANK 24,11,547/ - SHARE DIVIDEND 81,00,375/ - TOTAL 4,05,40,653/ - . THE ASSESSING OFFICER FURTHER NOTICED THAT DURING TH E YEAR , THE ASSESSEE HAS EARNED TOTAL GROSS INTEREST INCOME OF RS. 5 , 99 , 05 , 576/ - . THE ASSESSING OFFICER OBSERVED THAT ASSESSEE WAS NOT HAVING ANY I.T.A NO. 2166 / AHD/2014 A.Y. 2009 - 10 PAGE NO ITO VS. BARDOLI VIBHAG GRAM VIKAS CO - OP. CREDIT SOCIETY LTD. 6 FUNDS FOR INVESTMENT TO EARN INTEREST INCOME AND WHATEVER DEPOSIT RECEIVED FROM THE ME MBERS WERE PROVIDE D LO AN OUT TO THE OTHER MEMBER . T HE EXCESS AMOUNT WAS DEPOSITED IN THE BANK FROM WHICH THE ASSESSEE HAS EARNED INTEREST INCOME. HE FURTHER OBSERVED THAT WHATEVER ASSESSEE HAS ACCEPTED FROM THE MEMBERS IT HAS PAID INTEREST AND ON THE AMOUNT OF LOAN G IVEN TO ITS MEMBERS AND ON THE AMOUNT DEPOSITED IN THE BANK IT HAS EARNED INTEREST INCOME. HE OBSERVED THAT THERE WAS DIRECT NEXUS BETWEEN THE ENTIRE EXPENSES CLAIMED AND ENTIRE INCOME RECEIVED. THE ASSESSING OFFICER STATED THAT THE ASSESSEE HAS SHOWN INTEREST AND SALARY EXPENSES OF RS. 56 , 18 , 652/ - AND ALSO SHOWN OTHER INCOME OF RS. 2 ,82, 79 , 995/ - WHICH WAS NOT ELIGIBLE FOR DEDUCTION U/S. 80P OF THE ACT. THE ASSESSING OFFICER FURTHER NOTICED THAT ASSESSEE HAS EARNED TOTAL INCOME OF RS. 6 , 88 , 20 , 648/ - INCLUDING TH E SO CALLED ELIGIBLE INCOME FOR DEDUCTION U/S 80 P OF THE ACT RS.4,05,40,653 .HE ALSO STATED THAT THE ASSESSEE HAS INCREASED EXPENSES OF RS. 5 ,51, 79 , 009/ - AND THE NET INCOME OF THE ASSESSEE WAS ONLY RS. 1 , 36 , 41 , 639/ - BUT IT HAS CLAIMED DEDUCTION U/S. 80P OF THE ACT OF RS. 40 , 54 0 , 653/ - . THE ASSESSING OFFICER FURTHER STATED THAT INTEREST INCOME RECEIVED FROM CO - OPERATIVE BANKS WAS NOT ALLOWABLE U/S. 80P OF THE ACT AS PER SECTION 80P(2)(D) OF THE I.T. ACT. AND AS PROVISION OF SECTION 80P(4) OF THE IT ACT IN SERTED W.E.F. 1 ST APRIL, 2007 , THE PROVISION OF THE SECTION 80P OF THE IT ACT SHALL NOT APPLY TO ANY CO - OPERATIVE BANK , IT MEANS THAT THE CO - OPERATIVE BANK ENGAGED IN THE BUSINESS OF BANKING REGULATO RY ACT CANNOT BE TREATED AS COOPERATIVE SOCIETY AND HENC E THE INCOME DERIVE D FROM THE CO - OPERATIVE BANK ARE NOT ELIGIBLE FOR DEDUCTION U/S. 80P OF THE ACT. I.T.A NO. 2166 / AHD/2014 A.Y. 2009 - 10 PAGE NO ITO VS. BARDOLI VIBHAG GRAM VIKAS CO - OP. CREDIT SOCIETY LTD. 7 THEREFORE, THE ASSESSING OFFICER WAS OF THE VIEW THAT THE ASSESSEE HAD WRONGLY CLAIMED THE DEDUCTION U/S 80P OF THE ACT ON GROSS INCOME AND ALSO CLAIMED DE DUCTION ON THE INTEREST INCOME FROM THE CO - OP BANK I.E. S URAT DISTT. CO.OP. BANK LTD. THEREAFTER T HE ASSESSING OFFICER CONCLUDED THAT AS PER DETAILS SUBMITTED, THE ASSESSEE IS ELIGIBLE FOR 80P DEDUCTION IN RESPECT OF FOLLOWING INCOME ONLY. MADHI VIBHAG K HAND UDYOG MANDALI 714286 KHEDUT SAHAKARI JIN & PRESS. SOCIETY 1577351 GUJARAT STATE FRUITS AND VEG. FEDERATION LTD. 197260 MOTA VIBHAG SEVA SAHAKARI 186575 TOTAL 2675472 THEREAFTER , THE ASSESSING OFFICER H AS WORKED THE DEDUCTION U/S. 80P T O THE AMOUNT OF RS. 5 ,3 0 , 332/ - AFTER TAKING INTO ACCOUNT INCOME OF RS. 26 , 75 , 472/ - AND THE CORRESPONDING EXPENSES OF RS.21,45,140 (5,51,70,009/6,88,20,648X26,75,472)AS WORKED OUT FOR EARNING THIS INCOME. THE ASSESSING OFFICER HAS REJECTED THE CLAIM OF 80 P OF THE ASSESSEE FOR THE REMAINING DEDUCTION OF RS.1,30,61,307 CLAIMED BY IT. 4 . AGGRIEVED AGAINST THE ORDER OF ASSESSING OFFICER, THE ASSESSEE FILED APPEAL BEFORE THE LD. CIT(A). THE LD. CIT(A) HAS ALLOWED THE APPEAL OF THE ASSESSEE BY OBSERVING AS UNDER: - I.T.A NO. 2166 / AHD/2014 A.Y. 2009 - 10 PAGE NO ITO VS. BARDOLI VIBHAG GRAM VIKAS CO - OP. CREDIT SOCIETY LTD. 8 5. I HAVE CONSIDERED THE FACTS OF THE CASE, BASIS OF DISALLOWANCE BY AO AND SUBMISSIONS OF APPELLANT. THE AO HAS WORKED OUT THE DEDUCTION U /S. 80P(2)(D) AT RS. 26,75,475/ - BY EXCLUDING THE INTEREST RECEIVED BY APPELLANT FROM CO - OPERATIVE BANKS IN CLUDING SURAT DIST. CO - OPERATIVE BANK LTD. THIS AMOUNT IS FURTHER REDUCED ON PROPORTIONATE BASIS BY TAKING INTO ACCOUNT THE TOTAL RECEIPTS AND TOTAL EXPENSES AS SHOWN BY APPELLANT AND FINALLY THE ALLOWABLE DEDUCTION IS WORKED OUT BY HIM AT RS. 21,45,140/ - . THUS, THE AO HAS NOT ALLOWED THE DEDUCTION ON THE INTEREST AND DIVIDEND RECEIVED FROM CO - OPERATIVE BANKS AND ALSO ON GROSS AMOUNT OF INTEREST AND DIVIDEND RECEIVED FROM OTHER CO - OPERATIVE SOCIETIES. THIS STAND TAKEN BY AO DOES NOT FIND SUPPORT FROM THE FA CTS OF THE CASE. AS SUBMITTED, THE APPELLANT SOCIETY HAS BEEN STATUTORILY INVESTING ITS SURPLUS FUND FROM THE YEAR 1992 WITH OTHER CO - OPERATIVE SOCIETIES WHICH INCLUDE CO - OPERATIVE BANKS. ON SUCH INVESTMENTS, THE APPELLANT HAS BEEN RECEIVING INTEREST AND D IVIDEND WHICH HAS BEEN CLAIMED AS DEDUCTION U/S. 80P(2)(D) OF THE ACT. IT IS NOT A CASE WHERE THIS INCOME HAS DERIVED OUT OF INVESTMENTS MADE DURING THE YEAR FOR WHICH THE APPELLANT HAS INCURRED ANY EXPENDITURE DIRECT LY OR INDIRECTLY. AN ANALYSIS O F INTERE ST EXPENSES WOULD SHOW THAT THE SAME HAS BEEN INCURRED BY WAY OF INTEREST PAID TO MEMBERS SOCIETIES SAVING ACCOUNTS, FD ACCOUNTS AND OTHER DEPOSITS. IT IS EVIDENT FROM THE DET AILS OF INTEREST EXPENSES THAT THERE IS NO DIRECT OR INDIRECT NEXUS BETWEEN SUCH EXPENSES AND INTEREST AND DIVIDEND EARNED FROM INVESTMENTS MADE WITH OTHER CO - OPERATIVE SOCIETIES.. THE PRO - RATA ALLOCATION OF INTEREST EXPENSES RESULTING IN PART DISALLOWANCE OF DEDUCTION HAS BEEN DONE WITHOUT EXAMINING THE ISSUE IN DETAILS OR APPRECIATIN G THE FACTS IN ITS CORRECT PROSPECTIVE. THEREFORE, IN ABSENCE OF ANY EXPENSES DIRECTLY OR INDIRECTLY CO - RELATED TO SUCH INCOME, THE PART DISALLOWANCE OF THE DEDUCTION IS NOT JUSTIFIED. ON THE IDENTICAL FACTS, HON'BLE JURISDICTIONAL ITAT IN THE CASE DCIT VS . THE SURAT DIST. CO - OPERATIVE MILLS PRODUCER UNION LTD. ITA NO. 367 & 3386/AHD/2010 &. ITA NO. 1739/AHD/2011 VIDE ORDER DATED 02.08.2013 HAS DEALT WITH THE ISSUE AND AFTER DISCUSSING THE VARIOUS DECISIONS OF DIFFERENT COURTS AND BENCHES OF ITATS, HAS HELD AS UNDER: - '5. WE HAVE HEARD THE RIVAL CONTENTIONS AND PERUSED THE MATERIAL ON RECORD. IT IS UNDISPUTED FACT THAT THE APPELLANT HAD INVESTED SURPLUS FUND RIGHT FROM 1951 WITH OTHER CO - OPERATIVE SOCIETY. ON SUCH INVESTMENT THE APPELLANT HAD BEEN RECEIVING INTEREST AND DIVIDEND WHICH HAD BEEN CLAIMED AS DEDUCTION U/S. 80P(2)(D). IT IS NOT A CASE THAT APPELLANT HAD EITHER EARNED I.T.A NO. 2166 / AHD/2014 A.Y. 2009 - 10 PAGE NO ITO VS. BARDOLI VIBHAG GRAM VIKAS CO - OP. CREDIT SOCIETY LTD. 9 INCOME OR BORROWED FUND AND INVESTED IN THIS INVESTMENT AND DEPOSITS............ FURTHER THE A.O. CONSIDERED HON'BLE SUPREME COURT D ECISION IN DISTRIBUTORS (BARODA) P. LTD. VS. UNION OF INDIA [1985] 155 ITR 120 (SC), WHEREIN, IT WAS HELD THAT DEDUCTION U/S. 80M IS TO BE CALCULATED WITH REFERENCE TO AMOUNT ON DIVIDEND COMPUTED IN ACCORDANCE WITH THE PROVISIONS OF THE ACT AND FORMING ON THE GROSS TOTAL INCOME AND NOT WITH REFERENCE TO FULL AMOUNT OF DIVIDEND RECEIVED BY THE ASSESSEE. THE HON'BLE SUPREME COURT DECISION IS SQUARELY APPLICABLE ON DEDUCTION UNDER ANY SECTION IN CHAPTER VIA AND IS TO BE A/LOWED ON THE NET INCOME. HOWEVER, IN T HE ASSESSEE'S CASE, INTEREST EXPENSES WERE INCURRED FOR ACQUIRING DEBENTURE, DEPOSIT WITH MEMBER SOCIETY, FIX DEPOSIT OF MEMBER SOCIETY, EMPLOYEE SAVING ACCOUNTS, INTEREST ON OVER DRAFT FACILITATE FROM BANK AND BANK COMMISSION, WHICH WAS CLAIMED BY THE APP ELLANT U/S. 80P(2)(D)(A)(I). FOR THE SAKE OF CONVENIENCE, WE ARE REPRODUCING SECTIONS AS UNDER: SECTION 80P(2)(A)(I) - CARRYING ON THE BUSINESS OF BANKING OR PROVIDING CREDIT FACILITIES TO ITS MEMBERS. SECTION 80P(2)(D) - 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, THE WHOLE OF SUCH INCOME. AFTER CONSIDERING THE FACTUAL AS WELL AS LEGAL POSITION ON THIS ISSUE, THE APPELLANT HAD NOT INCURRED ANY EXPENDITURE ON THE EARNING OF THE DIVIDEND AND INTEREST FROM OTHER CO - OPERATIVE SOCIETY AS THIS INVESTMENT WAS MADE LONG BACK. NO NEW INVESTMENT HAD BEEN MADE BY THE APPELLANT DURING THE YEAR UNDER CONSIDERATION. THUS, WE CONFIRM THE ORDER OF THE CIT(A) IN ALL THE YEARS.' IN VIEW OF ABOVE, HON'BLE ITAT CONFIRMED THE ORDER OF CIT(A) WHO HAD DELETED THE ADDITION MADE BY AO BY DISALLOWING THE DEDUCTION CLAIMED ON ACCOUNT OF INTEREST RECEIVED FROM OTHER CO - OPERATIVE SOCIETIES. THUS, IN THE CASE OF APPELLANT AL SO, THE PROPORTIONATE DISALLOWANCE OF INTEREST AND DIVIDEND CANNOT BE HELD SUSTAINABLE. 5.1 THE NEXT ISSUE, TO BE DECIDED, IS THAT WHETHER DEDUCTION U/S. 8O P(2)(D) IS AVAILABLE ON THE GROSS AMOUNT OR THE NET AMOUNT. THE I.T.A NO. 2166 / AHD/2014 A.Y. 2009 - 10 PAGE NO ITO VS. BARDOLI VIBHAG GRAM VIKAS CO - OP. CREDIT SOCIETY LTD. 10 APPELLANT HAS CLAIMED THE GROSS AMO UNT OF RS. 4,05,40,653/ - U/S. 80P(2)(D) WHICH INCLUDES INTEREST INCOME OF RS. 3,24,40,278/ - AND DIVIDEND INCOME OF RS. 81,00,375/ - RECEIVED FROM OTHER CO - OPERATIVE SOCIETIES. HOWEVER, IN THE COMPUTATION OF INCOME, APPELLANT HAS RESTRICTED THE DEDUCTION AT RS. 1,36,41,639/ - WHICH IS IT'S NET INCOME. SECTION 80AB OF THE ACT STIPULATES THAT WHERE ANY DEDUCTION IS REQUIRED TO BE ALLOWED UNDER ANY SECTION INCLUDED IN CHAPTER VI - A, THE AMOUNT OF INCOME COMPUTED IN ACCORDANCE WITH THE PROVISIONS OF THIS ACT ALONE BE DEEMED TO BE THE AMOUNT OF INCOME WHICH IS DERIVED AND RECEIVED BY THE ASSESSEE AND WHICH IS INCLUDED IN HIS GROSS TOTAL INCOME. THUS, THE APPELLANT IS ELIGIBLE TO AVAIL DEDUCTION ON THE NET INCOME I.E. AFTER ALLOWING EXPENSES FROM THE GROSS AMOUNT AS DEDUCTION UNDER ANY SECTION IN CHAPTER VI - A WHICH INCLUDES 80P(2)(D) OF THE ACT. THE NET INCOME IN THE CASE OF APPELLANT IS RS. 1,36,41,639/ - WHICH IS ALLOWABLE AS DEDUCTION U/S. 80P(2)(D) OF THE ACT. 5.2 IN VIEW OF ABOVE DISCUSSION, I HOLD THAT THE APPEL LANT IS ELIGIBLE FOR DEDUCTION U/S. 80P(2)(D) OF THE ACT AT RS. 1,36,41,639/ - IN PLACE OF RS. 5,80,332/ - ALLOWED BY AO. 5.3 IN REGARDS TO THE GROUND TAKEN BY APPELLANT FOR STATUTORY DEDUCTION OF RS. 50,000/ - U/S. 80P(2)(C) OF THE ACT, IT CAN BE SEEN FROM THE ASSESSMENT ORDER THAT THE AO HAS ALREADY ALLOWED THIS DEDUCTION IN HIS CONCLUDING PARA OF ASSESSMENT ORDER. THEREFORE, THE APPELLANT HAS WRONGLY TAKEN THIS GROUND WHICH DESERVES TO BE DISMISSED. 5 . WE HAVE HEARD RIVAL CONTENTIONS. WE HAVE ALSO GONE THROUGH THE PAPER BOOK FURNISHED BY THE LD. COUNSEL CONTAINING JUDICIAL PRONOUNCEMENTS , WRITTEN SUBMISSION MADE BEFORE THE LD. CIT(A) , AUDIT REPORTS ETC . WE HAVE NOTICED THAT THE ASSESSEE HAS BEEN STATUTORILY INVESTING ITS SURPLUS FUND FROM THE YEAR 199 2 WITH OTHER CO - OPERATIVE SOCIETIES WHICH INCLUDE CO - OPERATIVE BANKS AND ON SUCH INVESTMENTS, THE APPELLANT HAS BEEN RECEIVING INTEREST AND DIVIDEND WHICH HAS BEEN CLAIMED AS DEDUCTION U/S. 80P(2)(D) OF THE ACT. WE FIND THAT THE PROVISION OF SECTION 80P(4) ARE NOT APPLICABLE TO THE I.T.A NO. 2166 / AHD/2014 A.Y. 2009 - 10 PAGE NO ITO VS. BARDOLI VIBHAG GRAM VIKAS CO - OP. CREDIT SOCIETY LTD. 11 ASSESSEE, BECAUSE SECTION 80P(4) SAYS THAT PROVISION OF THIS SECTION SHALL NOT APPLY IN RELATION TO CO - OP BANK OTHER THAN PRIMARY AGRICULTURAL CREDIT SOCIETIES OR A PRIMARY CO - OP AGRICULTURAL AND RURAL DEVELOPMENT BANK. REGARDIN G ELIGIBILITY FOR RECEIVING INTEREST RECEIVED FROM THE CO - OPERATIVE BANK W E HAVE NOTICED FROM THE JUDICIAL PRONOUNCEMENT IN THE CASE OF SURAT VANKAR SAHAKARI SANGH LTD. V. ASSISTANT COMMISSIONER OF INCOME TAX (2016)72 TAXMANN.COM 169(GUJARAT) IN WHICH THE HON BLE HIGH COURT OF GUJARAT HELD AS UNDER: - 8. SECTION 80P(2)(D) OF THE ACT ALLOWS WHOLE DEDUCTION OF AN INCOME BY WAY OF INTEREST OR DIVIDENDS 'DERIVED BY THE CO - OPERATIVE SOCIETY FROM ITS INVESTMENT WITH ANY OTHER CO - OPERATIVE SOCIETY. THIS PROVIS ION DOES NOT MAKE ANY DISTINCTION IN REGARD TO SOURCE OF THE INVESTMENT BECAUSE THIS SECTION ENVISAGES DEDUCTION IN RESPECT OF ANY INCOME DERIVED BY THE CO - OPERATIVE SOCIETY FROM ANY INVESTMENT WITH A CO - OPERATIVE SOCIETY. IT IS IMMATERIAL WHETHER ANY INTE REST 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 THE INVESTMENT WHETHER IT WAS FROM ITS SURPLUS FUNDS OR OTHERWISE. THE ACT DOES NOT SPEAK OF ANY ADJUST MENT 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 AG REE 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, 1961. IN RESPECT OF INTEREST OF RS. 4,00,919 ON ACCOUNT OF INTERE ST RECEIVED FROM NAWANSHALN 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. WE HAVE FURTHER NOTICED FROM THE FINDING OF THE LD.CIT(A) THAT THE ASSESSEE HAS CLAIMED THE GROSS AMOUNT OF RS. 4,05,40,653/ - U/S. 80P(2)(D) WHICH INCLUDES INTEREST INCOME OF RS. 3,24,40,278/ - AND I.T.A NO. 2166 / AHD/2014 A.Y. 2009 - 10 PAGE NO ITO VS. BARDOLI VIBHAG GRAM VIKAS CO - OP. CREDIT SOCIETY LTD. 12 DIVIDEND INCOME OF RS. 81,00,375/ - RECEIVED FROM OTHER CO - OPERATIVE SOCIETIES. HOWEVER, IN THE COMPUTA TION OF INCOME, A SSESSEE HAS RESTRICTED THE DEDUCTION TO RS. 1,36,41,639/ - WHICH WAS NET INCOME. THEREFORE, WE CONSIDERED THAT THE LD.CIT(A) IS JUSTIFIED IN HIS DECISION THAT T HE NET INCOME IN THE CASE OF A SSESSEE OF RS. 1,36,41,639/ - ALLOWABLE AS DEDUCT ION U/S. 80P(2)(D) OF THE ACT. IN VIEW OF THE ABOVE STATED FACTS AND DETAILED FINDINGS OF THE LD.CIT(A) GIVEN IN HIS ORDER , WE DISINCLINED TO INTERFERE IN THE DECI SI ON OF LD. CIT(A). 6. IN THE RESULT , THE APPEAL OF THE REVENUE IS DISMISSED. ORDER PR ONOUNCED IN THE OPEN C OURT ON 18 - 04 - 201 7 SD/ - SD/ - ( RAJPAL YADAV ) ( AMARJIT SINGH ) JUDICIAL MEMBER ACCOUNTANT MEMBER AHMEDABAD : DATED 18 /04 /2017 / COPY OF ORDER FORWARDED TO: - 1. ASSESSEE 2. REVENUE 3. CONCERNED CIT 4. CIT (A) 5. DR, ITAT, AHMEDABAD 6. GUARD FILE. BY ORDER/ , / ,