M/S. AJMER ZILA DUGDH UTPADAK SAHAKARI SANGH LTD., AJMER V. PR.CIT, AJMER

ITA 285/JPR/2020

• Counselvise Citation: [2021] 109 COUNSELVISE.COM (IT) 3295 (ITAT-JAIPUR)
• Duration Of Justice: 7 month(s) 24 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 01-03-2021
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: A
• Assessment Year: 2012-2013
• Appeal Filed On: 07-07-2020
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: MANISHA CHANDRA
• Keywords: Business income; Search and seizure; Opportunity of being heard; Assessment record; Co-operative Credit Society; Set aside
• Section: 43B; 143(3); 37(1); 80P; 44AB; 72; 13; 22; 2(19); 148; 37; 263; 11; 139

Judgement Text

VK;DJ VIHYH; VF/KDJ.K] T;IQJ U;K;IHB] T;IQJ IN THE INCOME TAX APPELLATE TRIBUNAL, JAIPUR BENC HES, 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 SING H YADAV, AM VK;DJ VIHY LA- @ ITA NO. 285/JP/2020 FU/KZKJ.K O'K Z @ ASSESSMENT YEAR :2012-13 AJMER ZILA DUGDH UTPADAK SAHKARI SANGH LTD. OPP. HMT, BEAWAR ROAD, AJMER CUKE VS. PR. COMMISSIONER OF INCOME TAX, AJMER LFKK;H YS[KK LA-@THVKBZVKJ LA-@ PAN/GIR NO. AABAA0141Q VIHYKFKHZ@ APPELLANT IZR;FKHZ@ RESPONDENT FU/KZKFJRH DH VKSJ L S@ ASSESSEE BY : SH. SUNIL PORWAL (CA) JKTLO DH VKSJ LS @ REVENUE BY : SMT. MANISHA CHANDRA (CIT) LQUOKBZ DH RKJH[ K@ DATE OF HEARING : 04/01/2021 MN?KKS'K.KK DH RKJH[ K@ DATE OF PRONOUNCEMENT: 01/03/2021 VKNS'K@ ORDER PER: VIKRAM SINGH YADAV, A.M. THIS IS AN APPEAL FILED BY THE ASSESSEE AGAINST THE ORDER OF LD. PR. CIT, AJMER DATED 20.03.2020 WHEREIN THE ASSESSEE HA S TAKEN THE FOLLOWING GROUNDS OF APPEAL:- 1. THAT THE INITIATION OF PROCEEDINGS U/SEC. 263 O F INCOME TAX ACT, 1961 IS BAD IN LAW AND IS VOID ABINITIO AND IS REQUESTED TO BE QUASHED. 2. CONSIDERING SPECIFIC PROVISIONS AGAINST LIABILIT Y AS GENERAL PROVISIONS/CONTINGENT FOR RS. 1,23,40,930/-. 3. DENIAL OF CLAIM U/SEC. 80(P)(2)(D) IS BAD IN LAW . ITA NO. 285/JP/2020 AJMER ZILA DUGDH UTPADAK SAHKARI SANGH LTD, AJMER VS. PR. CIT, AJMER 2 4. CONSIDERING THE SOCIETY AS COVERED BY PROVISION OF SECTION 80(P)(4) IS ALSO BAD IN LAW. 5. CONSIDERING PAYMENT OF BONUS RS. 13,00,000/- U/S EC. 43B FOR DISALLOWANCES. 2. BRIEFLY STATED, THE FACTS OF THE CASE ARE THAT T HE RETURN WAS FILED ON 25.09.2012 DECLARING TOTAL INCOME OF RS. 54,47,540. 00 U/SEC. 139 OF ACT. THE ASSESSMENT WAS COMPLETED U/SEC. 143(3) OF ACT O N 02.03.2015 ON RETURNED INCOME. LATER ON, NOTICE U/SEC. 148 WAS IS SUED & ORDER U/SEC. 143(3) / 147 WAS PASSED BY A.O. ON 07.12.2017 ON RE TURNED INCOME ITSELF. THEREAFTER, A SHOW-CAUSE NOTICE U/SEC. 263 HAS BEEN ISSUED ON 05.03.2020 CONSIDERING THE ASSESSMENT ORDERS ERRONE OUS & PREJUDICIAL TO REVENUE FOR THE REASONS AS BELOW:- 2. ON EXAMINATION OF THE ASSESSMENT RECORD, IT IS NOTICED THAT YOU HAVE ADOPTED MERCANTILE SYSTEM OF ACCOUNTING DURING THE YEAR UNDER CONSIDERATION BUT CLAIMED VARIOUS PROVISIONS, AS DE TAILED BELOW:- SR. NO. PARTICULARS AMOUNT REMARKS 1 AUDIT FEE 5,00,000.00 2 CESS 51,00,000.00 ALLOWABLE ON PAYMENT BASIS 3 REPAIRS & MAINTENANCE 4,05,600.00 4 LEAVE ENCASHMENT 50,00,000.00 ALLOWABLE ON PAYME NT BASIS 5 MILK DCS 7,00,000.00 6 PACKING MATERIAL 5,00,000.00 7 TA & OTHER WITH BOB 1,35,330.00 ITA NO. 285/JP/2020 AJMER ZILA DUGDH UTPADAK SAHKARI SANGH LTD, AJMER VS. PR. CIT, AJMER 3 AS PER INCOME TAX ACT, 1961, THE ABOVE PROVISIONS A RE NOT ALLOWABLE. HOWEVER, THE A.O. FAILED TO DISALLOW THE SAME DURIN G THE ASSESSMENT PROCEEDINGS WHICH MAKES THE ASSESSMENT ORDER ERRONE OUS IN SO FAR AS IT IS PREJUDICIAL TO THE INTEREST OF THE REVENUE. 2.1 DURING THE YEAR UNDER CONSIDERATION, YOU HAVE R ECEIVED INTEREST OF RS. 46,09,729/- FROM CO-OPERATIVE BANK WHICH IS NOT ALLOWABLE UNDER SECTION 80P(2)(D) R.W.S. 80P(4) OF THE INCOME TAX A CT, 1961. HOWEVER, THE A.O. FAILED TO DISALLOW THE SAME DURING THE ASS ESSMENT PROCEEDINGS WHICH MAKES THE ASSESSMENT ORDER ERRONEOUS IN SO FA R AS IT IS PREJUDICIAL TO THE INTEREST OF THE REVENUE. 2.2 YOU HAVE CLAIMED PROVISION FOR BONUS OF RS. 13, 00,000/- WHICH WAS PAID TO THE EMPLOYEES ON 12.11.2012 I.E. AFTER DUE DATE OF FILING OF RETURN. SUCH AMOUNT IS NOT ALLOWABLE AS PER PROVISIONS OF S ECTION 43B OF THE INCOME TAX ACT, 1961 AS THE SAME WAS PAID TO THE EM PLOYEES AFTER THE DUE DATE OF FILING OF RETURN OF INCOME. HOWEVER, TH E A.O. FAILED TO DISALLOW THE SAME DURING THE ASSESSMENT PROCEEDINGS WHICH MA KES THE ASSESSMENT ORDER ERRONEOUS IN SO FAR AS IT IS PREJUDICIAL TO T HE INTEREST OF THE REVENUE. 3. THUS, THE ORDER PASSED BY THE A.O. ON 07.12.2017 IS CONSIDERED ERRONEOUS IN SO FAR AS IT IS PREJUDICIAL TO THE INT EREST OF THE REVENUE AND A SHOW-CAUSE U/S 263 IS HEREBY GIVEN TO YOU TO AFFORD AN OPPORTUNITY OF BEING HEARD BEFORE TAKING ANY SUCH ACTION. 3. THEREAFTER AFTER TAKING INTO CONSIDERATION THE S UBMISSIONS OF THE ASSESSEE, THE MATTER WAS SET ASIDE TO THE FILE OF T HE AO TO THE AFORESAID EXTENT FOR MAKING A FRESH ORDER AFTER CARRYING OUT INQUIRIES IN THE MANNER AND AFTER GIVING OPPORTUNITY BEING HEARD TO THE ASS ESSEE. AGAINST THE SAID FINDING AND ORDER OF THE LD. PR. CIT, THE ASSESSEE IS IN APPEAL BEFORE US. ITA NO. 285/JP/2020 AJMER ZILA DUGDH UTPADAK SAHKARI SANGH LTD, AJMER VS. PR. CIT, AJMER 4 4. FIRSTLY, REGARDING, THE CLAIM OF DEDUCTION U/S 8 0(P)(2)(D) OF THE ACT IN RESPECT OF INTEREST RECEIVED FROM CO-OPERATIVE S OCIETY, THE LD. AR SUBMITTED THAT THE TRIBUNAL IN ASSESSEES OWN CASE IN ITA NO. 90/JP/2019 DATED 28.08.2019 FOR A.Y 2014-15 HAS ALLOWED THE AP PEAL OF THE ASSESSEE ON THE ISSUE OF CLAIM OF DEDUCTION U/S 80(P)(2)(D) OF THE ACT. IT WAS SUBMITTED THAT THE SAID ORDER WAS DULY BROUGHT TO T HE NOTICE OF LD. PR. CIT. HOWEVER, GIVEN THE FACT THAT THE REVENUE HAS NOT AC CEPTED THE ORDER OF THE TRIBUNAL AND FURTHER, AN APPEAL HAS BEEN PREFER RED BEFORE THE HONBLE HIGH COURT, THE CLAIM OF DEDUCTION U/S 80(P)(2)(D) WAS HELD NOT ALLOWABLE. IT WAS SUBMITTED THAT ONCE A VIEW HAS BEEN TAKEN BY THE HIGHER APPELLATE AUTHORITY WHICH HAS BEEN FOLLOWED BY THE ASSESSING OFFICER, THERE IS NO BASIS FOR LD. PR. CIT TO HOLD THAT THE VIEW TAKEN B Y THE ASSESSING OFFICER IS ERRONEOUS AND PREJUDICIAL TO THE INTEREST OF THE RE VENUE. IN THIS REGARD, OUR REFERENCE WAS DRAWN TO THE DETAILED FINDINGS OF THE CO-ORDINATE BENCH IN ITA NO. 90/JP/2019 WHICH READS AS UNDER:- 7. WE HAVE HEARD THE RIVAL CONTENTIONS AND PERUSED THE MATERIAL AVAILABLE ON RECORD. THE ISSUE UNDER CONSIDERATION IS WHETHER THE INTEREST INCOME ON FDRS PLACED BY THE ASSESSEE COOPERATIVE S OCIETY WITH AJMER CENTRAL COOPERATIVE BANK LTD IS ELIGIBLE FOR DEDUCT ION U/S 80P(2)(D) OF THE ACT WHICH 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 ACCORDANCE WITH AND SUB JECT TO THE PROVISIONS OF THIS SECTION, THE SUMS SPECIFIED IN SUB-SECTION (2), IN COMPUTING THE TOTAL INCOME OF THE ASSESSEE. ITA NO. 285/JP/2020 AJMER ZILA DUGDH UTPADAK SAHKARI SANGH LTD, AJMER VS. PR. CIT, AJMER 5 (2) THE SUMS REFERRED TO IN SUB-SECTION (1) SHALL B E THE FOLLOWING, NAMELY : (A) .. (B) .. (C) .. (D) IN RESP ECT OF ANY INCOME BY WAY OF INTEREST OR DIVIDENDS D ERIVED BY THE CO-OPERATIVE SOCIETY FROM ITS INVESTMENTS WITH ANY OTHER CO - OPERATIVE SOCIETY, THE WHOLE OF SUCH INCOME. 8. THE AFORESAID PROVISIONS HAVE BEEN EXAMINED AT L ENGTH BY THIS BENCH IN CASE OF ITO VS. SHREE KESHORAI PATAN SAHAK ARI SUGAR MILL (ITA NO. 418 & 419/JP/2017 ORDER DATED 31.01.2018) AND T HE RELEVANT FINDINGS ARE REPRODUCED AS UNDER: 6.1 AS REGARDS THE CLAIM U/S 80P(2)(D), WE FIND TH AT THE ONLY CONDITION FOR AVAILING THE DEDUCTION UNDER THIS PROVISION IS ANY INCOME BY WAY OF INTEREST OR DIVIDEND DERIVED BY THE COOPERATIVE SOC IETY FROM ITS INVESTMENT WITH ANY OTHER COOPERATIVE SOCIETY, THE WHOLE OF SU CH INCOME IS ALLOWABLE FOR DEDUCTION U/S 80P(1). THEREFORE, THERE IS NO CO NDITION FOR THE ASSESSEE SOCIETY TO ENGAGED IN THE ACTIVITY OF PROVIDE CREDI TS TO THE MEMBERS OR BANKING BUSINESS FOR AVAILING THE DEDUCTION U/S 80P (2)(D) READ WITH SECTION 80P(1) OF THE ACT. AS REGARDS THE COOPERATI VE BANK SHALL BE TREATED AS COOPERATIVE SOCIETIES FOR THE PURPOSE OF THE INT EREST INCOME ON INVESTMENT IN SUCH COOPERATIVE BANK U/S 80P(2)(D) T HE MUMBAI BENCH OF THIS TRIBUNAL IN CASE OF LANDS END CO-OPERATIVE HOU SING SOCIETY LTD. VS. ITO(SUPRA), AFTER CONSIDERING THE DECISION OF THE H ONBLE SUPREME COURT IN CASE OF TOTAGARS CO-OPERATIVE SALE SOCIETY LTD. VS . ITO (SUPRA) HAS CONSIDERED AND DECIDED THIS ISSUE IN PARA 8.3 AS UN DER:- ITA NO. 285/JP/2020 AJMER ZILA DUGDH UTPADAK SAHKARI SANGH LTD, AJMER VS. PR. CIT, AJMER 6 8.3 WE HAVE HEARD THE RIVAL SUBMISSIONS AND PERUSE D THE MATERIAL ON RECORD. WE FIND THAT THE CIT(A) ENHANCED THE INCOME OF THE ASSESSEE BY REJECTING THE DEDUCTION U/S 80P(2)(D) OF THE ACT OF RS.14,88,107/- BEING INTEREST ON INVESTMENT WITH OTHER COOP. BANKS BY FOLLOWING THE DECISION IN THE CASE OF SANDRA SAMRUDDIHI CO-OPERATIVE HOUSING SOCIETY LTD. (SUPRA ) WHICH WAS PASSED ON THE BASIS OF THE DECISION PASSED BY THE HON'BLE SUPREME COURT IN THE CASE OF TOTAGAR'S CO-OPERATIVE SALE SOCIETY LTD. IN THE CASE OF TOTAG AR'S CO-OPERATIVE SALE SOCIETY LTD V/S ITAT (SUPRA) THE HON'BLE SUPREME COURT WHILE IN TERPRETING THE SECTION 80P(2)(A)(0 OF THE ACT HELD THAT SURPLUS FUNDS NOT IMMEDIATELY REQUIRED IN THE BUSINESS AND INVESTED IN THE SHORT TERM DEPOSIT WOU LD BE ASSESSABLE UNDER THE HEAD 'INCOME FROM OTHER SOURCES' WHERE THE CO-OPERATIVE SOCIETY IS ENGAGED IN CARRYING ON BUSINESS OF BANKING OR PROVIDING CREDIT FACILITI ES TO ITS MEMBERS AND CONSEQUENTLY NO DEDUCTION IS ALLOWABLE U/S 80P(2)(A)(I) OF THE A CT. WHEREAS IN THE CASE BEFORE US THE ISSUE IS WHETHER A CO-OPERATIVE SOCIETY WHICH H AS DERIVED INCOME ON INVESTMENT WITH COOPERATIVE BANKS IS ENTITLED TO DEDUCTION U/S 80P(2)(D). THE PROVISIONS OF SECTION 80P(2)(D) OF THE ACT PROVIDE DEDUCTION IN R ESPECT OF INCOME BY WAY OF INTEREST OR DIVIDEND ON INVESTMENTS MADE WITH OTHER COOPERATIVE SOCIETY. FOR THE PURPOSES OF BETTER PROPER UNDERSTANDING OF THESE TW O PROVISIONS THE RELEVANT EXTRACT OF THE SECTION ARE REPRODUCED BELOW: 80P: DEDUCTION IN RESPECT OF INCOME OF CO-OPERATIVE SOCIETIES. 1. WHERE, IN THE CASE OF AN ASSESSSEE BEING A CO-OP ERATIVE SOCIETY, THE GROSS TOTAL INCOME, INCLUDES ANY INCOME REFERRED TO IN SUB-SECT ION (2), THERE SHALL BE DEDUCTED, IN ACCORDANCE WITH AND SUBJECT TO THE PROVISIONS OF TH IS SECTION, THE SUMS SPECIFIED IN SUB-SECTION (2), IN COMPUTING THE TOTAL INCOME OF T HE ASSESSEE. 2. THE SUMS REFERRED TO IN SUB-SECTION (1) SHALL BE THE FOLLOWING, NAMELY:- (A) IN THE CASE OF A CO-OPERATIVE SOCIETY ENGAGED I N- ITA NO. 285/JP/2020 AJMER ZILA DUGDH UTPADAK SAHKARI SANGH LTD, AJMER VS. PR. CIT, AJMER 7 (I) CARRYING ON THE BUSINESS OF BANKING OR PROVIDIN G CREDIT FACILITIES TO ITS MEMBERS. THE WHOLE OF THE AMOUNT OF PROFITS AND GAINS OF BUS INESS ATTRIBUTABLE TO ANY ONE OR MORE OF MUCH ATTRIBUTES. (D) IN RESPECT OF ANY INCOME BY WAY OF INTEREST OR DIVIDENDS DERIVED BY THE CO- OPERATIVE SOCIETY FROM ITS INVESTMENTS WITH ANY OTH ER CO-OPERATIVE SOCIETY, THE WHOLE OF SUCH INCOME.' FROM THE CLOSE PERUSAL OF THE PROVISIONS OF U/S 80P (2)(A)(I) AND 80P(2)(D) IT IS CLEAR THAT THE FORMER DEALS WITH DEDUCTION IN RE SPECT OF PROFITS AND GAIN OF BUSINESS IN CASE OF THE CO-OPERATIVE SOCIETY CARRYI NG ON BUSINESS OF BANKING OR PROVIDING CREDIT FACILITIES TO ITS MEMBERS IF THE S AID INCOME IS ASSESSABLE AS INCOME FROM BUSINESS WHEREAS LATTER PROVIDES FOR DEDUCTION IN RESPECT OF INCOME BY WAY INTEREST AND DIVIDEND DERIVED BY ASSESSEE FROM ITS INVESTMENTS WITH OTHER COOPERATIVE SOCIETY. THUS IT IS AMPLY CLEAR THAT A COOPERATIVE SOCIETY CAN ONLY AVAIL DEDUCTION U/S 80P(2)(D)(I) IN RESPECT OF ITS INCOME ASSESSABLE AS BUSINESS INCOME AND NOT AS INCOME FROM OTHER SOURCES IF IT CARRIES ON BUSINESS OF THE BANKING OR PROVIDING CREDIT FACILITIES TO ITS MEMBERS AND HAS INCOME ASSESSABLE UNDER THE HEAD BUSINESS WHEREAS FOR CLAIMING U/S 80P(2)(D) IT MUST HAVE INCOME OF INTEREST AND DIVIDEND ON INVESTMENTS WITH OTHER CO-OPERATIVE SOC IETY MAY OR MAY NOT BE ENGAGED IN THE BANKING FOR PROVIDING CREDIT FACILIT IES TO ITS MEMBERS AND THE HEAD UNDER WHICH THE INCOME IS ASSESSABLE IS NOT MATERIA L FOR THE CLAIM OF DEDUCTION UNDER THIS SECTION. NOW WILL EVALUATE THE ASSESSEE' S CASE IN THE LIGHT OF THE DECISION OF THE HON'BLE SUPREME COURT. THE HONBLE SUPREME CO URT IN THE CASE OF TOTAGAR'S CO-OPERATIVE SALE SOCIETY LTD.(SUPRA) HELD THAT A S OCIETY HAS SURPLUS FUNDS WHICH ARE INVESTED IN SHORT TERM DEPOSITS WHERE THE SOCIE TY IS ENGAGED IN THE BUSINESS OF BANKING OR PROVIDING CREDIT FACULTIES TO ITS MEMBER S IN THAT CASE THE SAID INCOME FROM SHORT TERM DEPOSITS SHALL BE TREATED AND ASSES SED AS INCOME FROM OTHER ITA NO. 285/JP/2020 AJMER ZILA DUGDH UTPADAK SAHKARI SANGH LTD, AJMER VS. PR. CIT, AJMER 8 SOURCES AND DEDUCTION U/S 80(P)(2)(A)(0 WOULD NOT B E AVAILABLE MEANING THEREBY THAT DEDUCTION U/S 80(P)(2)(A)(0 IS AVAILABLE ONLY IN RESPECT OF INCOME WHICH IS ASSESSABLE AS BUSINESS INCOME AND NOT AS INCOME FRO M OTHER SOURCES. WHEREAS IN DISTINCTION TO THIS , THE PROVISIONS OF SECTION 80( P)(2)(D) OF THE ACT PROVIDES FOR DEDUCTION IN RESPECT OF INCOME OF A COOP SOCIETY BY WAY OF INTEREST OR DIVIDEND FROM ITS INVESTMENTS WITH OTHER COOP. SOCIETY IF SU CH INCOME IS INCLUDED IN THE GROSS TOTAL INCOME OF THE SUCH COOP SOCIETY. IN VIEW THES E FACTS AND CIRCUMSTANCES WE ARE OF THE CONSIDERED VIEW THAT THE ASSESSEE IS ENT ITLED TO THE DEDUCTION OF RS. 14,88,107/-IN RESPECT OF INTEREST RECEIVED/DERIVED BY IT ON DEPOSITS WITH COOP. BANKS AND THEREFORE THE APPEAL OF THE ASSESSEE IS A LLOWED BY REVERSING THE ORDER OF THE CIT(A). THE AO IS DIRECTLY ACCORDINGLY. 6.2 WE FURTHER NOTE THAT THE HONBLE JURISDICTIONAL HIGH COURT IN THE CASE OF CIT VS. RAJASTHAN RAJYA SAHAKARI KRAY VIKRA Y SANGH LTD. (SUPRA) BY FOLLOWING THE DECISION OF HONBLE GUJARAT HIGH C OURT IN THE CASE OF SURAT VANKAR SAHAKARI SANGH LTD. VS. ACIT, 72 TAXMA NN.COM 169 HAS HELD IN AS UNDER:- 8. WE HAVE CONSIDERED THE DECISIONS CITED BY LEARNED A DVOCATE FOR THE ASSESSEE AS WELL AS THE REVENUE. WE FEEL THAT THE D ECISIONS CITED BY THE LEARNED ADVOCATE FOR THE ASSESSEE SHALL BE APPLICAB LE ON THE FACTS OF THE PRESENT CASE. IN THE CASE OF K. NANDAKUMAR V. ITO [1993] 204 ITR 856/[1994] 72 TAXMAN 223 (KER.) , THE KERALA HIGH COURT HAS HELD AS UNDER: '4. THE EFFECT OF SECTION 80AB IS THAT, FOR THE PUR POSE OF COMPUTING THE DEDUCTION UNDER SECTION 80L, THE AMOUNT OF INCO ME OF THAT NATURE AS COMPUTED IN ACCORDANCE WITH THE PROVISIONS OF TH E ACT SHALL ALONE BE DEEMED TO BE THE AMOUNT OF INCOME OF THAT NATURE . WHAT THE SECTION MEANS IS THAT THE NET INCOME BY WAY OF INTE REST COMPUTED IN ITA NO. 285/JP/2020 AJMER ZILA DUGDH UTPADAK SAHKARI SANGH LTD, AJMER VS. PR. CIT, AJMER 9 THE MANNER PROVIDED BY THE PROVISIONS OF THE ACT SH ALL ALONE BE TAKEN INTO ACCOUNT FOR COMPUTING THE BENEFIT. BUT IT MUST BE NOTED THAT PAYMENT OF INTEREST UNDER A LOAN TRANSACTION INCURR ED FOR THE PURPOSE OF DERIVING INCOME FROM BUSINESS IS NOT AN ITEM WHI CH ARISES IN THE COMPUTATION OF INTEREST INCOME 'IN ACCORDANCE WITH THE PROVISIONS' OF THE ACT. THE SAID AMOUNT HAS TO BE PAID IRRESPECTIV E OF WHETHER ANY INTEREST INCOME IS OTHERWISE RECEIVED OR NOT. THOUG H THE INTEREST IS PAYABLE TO THE SAME BANK, THE FACT REMAINS THAT THE AMOUNT OF INCOME BY-WAY OF INTEREST IS NOT CALCULATED UNDER THE PROV ISIONS OF THE ACT WITH REFERENCE TO SUCH OUTGOINGS WHICH FALL UNDER D IFFERENT HEADS. THE ASSESSEE IS ENTITLED TO DEDUCTION UNDER SECTION 37 OF ALL EXPENDITURE 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 CONTEMPLATE D BY SECTION 80AB SHOULD TAKE IN THE NET AMOUNT ARRIVED AT AFTER MEET ING THE EXPENSES DEDUCTIBLE FROM THAT ITEM UNDER THE PROVISIONS OF T HE ACT AS EXPLAINED ABOVE. THAT IS NOT THE CASE HERE. THEREFORE, SECTIO N 80AB HAS NO APPLICATION TO THE FACTS OF THESE CASES. THE INTERE ST PAID ON THE LOAN TRANSACTIONS HAS TO BE DEDUCTED FROM THE BUSINESS I NCOME, AND NOT FROM THE INTEREST RECEIVED FROM THE BANK ON THE FIX ED DEPOSITS. THE ASSESSEES WERE THEREFORE RIGHT IN THE SUBMISSIONS W HICH THEY MADE BEFORE THE COMMISSIONER OF INCOME-TAX IN THE REVISI ON PETITIONS WHICH THEY FILED. THIS ASPECT OF THE MATTER HAS BEEN OVER LOOKED BY THE COMMISSIONER IN PASSING THE ORDER, EXHIBIT P-5.' 8.1 SIMILARLY, IN THE CASE OF DOABA CO-OPERATIVE SU GAR MILLS LTD (SUPRA), THE PUNJAB & HARYANA HIGH COURT HAS HELD AS UNDER: ITA NO. 285/JP/2020 AJMER ZILA DUGDH UTPADAK SAHKARI SANGH LTD, AJMER VS. PR. CIT, AJMER 10 '5. THE CONTENTION OF MR. GUPTA, LEARNED COUNSEL AP PEARING FOR THE REVENUE, IS THAT THE TRIBUNAL WAS WRONG IN ALLOWING DEDUCTION UNDER SECTION 80P(2) (D) OF THE ACT BECAUSE IT IS NOT EST ABLISHED 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 INTERES T 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 PR OVISIONS OF SECTION 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 INT EREST OR DIVIDENDS DERIVED BY THE CO-OPERATIVE SOCIETY FROM ITS INVEST MENTS WITH ANY OTHER CO- OPERATIVE SOCIETY, THE WHOLE OF SUCH INCO ME.' 6. SO FAR AS THE PRINCIPLE OF INTERPRETATION APPLIC ABLE TO A TAXING STATUTE IS CONCERNED, WE CAN DO NO BETTER THAN TO QUOTE THE BY-NOW CLASSIC WORDS OF ROWLATT J., IN CAPE BRANDY SYNDICATE V. IR C [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. THERE IS NO EQ UITY 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 L ANGUAGE USED,' 7. THE PRINCIPLE LAID DOWN BY ROWLATT J., HAS ALSO BEEN TIME AND AGAIN APPROVED AND APPLIED BY THE SUPREME COURT IN DIFFER ENT CASES INCLUDING THE ONE, HANSRAJ GORDHANDAS V. H. H. DAVE , ASSISTANT COLLECTOR OF CENTRAL EXCISE AND CUSTOMS, AIR 1970 S C 755, 759. ITA NO. 285/JP/2020 AJMER ZILA DUGDH UTPADAK SAHKARI SANGH LTD, AJMER VS. PR. CIT, AJMER 11 8. SECTION 80P(2)(D) OF THE ACT ALLOWS WHOLE DEDUCT ION OF AN INCOME BY WAY OF INTEREST OR DIVIDENDS DERIVED BY THE CO-O PERATIVE SOCIETY FROM ITS INVESTMENT WITH ANY OTHER CO-OPERATIVE SOC IETY. THIS PROVISION DOES NOT MAKE ANY DISTINCTION IN REGARD TO SOURCE O F THE INVESTMENT 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. IT IS IMMATERIAL WHETHER ANY INT EREST PAID TO THE CO- OPERATIVE SOCIETY EXCEEDS THE INTEREST RECEIVED FRO M 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 ADJUSTMENT AS SOUGHT TO BE MA DE 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-OPERATI VE SOCIETY. THEREFORE, WE DO NOT AGREE WITH THE ARGUMENT ADVANC ED BY LEARNED COUNSEL FOR THE REVENUE. IN OUR OPINION, THE LEARNE D TRIBUNAL WAS RIGHT IN LAW IN ALLOWING DEDUCTION UNDER SECTION 80 P(2)(D) OF THE INCOME- TAX ACT, 1961. IN RESPECT OF INTEREST OF RS . 4,00,919 ON ACCOUNT OF INTEREST RECEIVED FROM NAWANSHALN CENTRA L CO-OPERATIVE BANK WITHOUT ADJUSTING THE INTEREST PAID TO THE HAN K. THEREFORE, THE REFERENCE IS ANSWERED AGAINST THE REVENUE IN THE AF FIRMATIVE 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 WHI CH 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 IN CUR AN EXPENDITURE ITA NO. 285/JP/2020 AJMER ZILA DUGDH UTPADAK SAHKARI SANGH LTD, AJMER VS. PR. CIT, AJMER 12 IN ORDER TO MAKE THE EARNING OF AN INCOME POSSIBLE, THEN UNDOUBTEDLY THE EXERCISE OF THAT OPTION IS COMPULSORY AND ANY E XPENDITURE 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 W HERE THE OPTION HAS NO CONNECTION WITH THE CARRYING ON OF THE BUSIN ESS OR THE EARNING OF THE INCOME AND THE OPTION DEPENDS UPON PERSONAL CONSIDERATIONS OR UPON MOTIVES OF THE ASSESSEE, THAT EXPENDITURE CANN OT POSSIBLY COME WITHIN THE AMBIT OF SECTION 12(2). IN THE PRESENT C ASE, THE LOAN WAS TAKEN FOR BUSINESS PURPOSE MORE PARTICULARLY PURCHA SE OF YARN AND NOT FOR FIXED DEPOSITS. 9. IN VIEW OF THE ABOVE, THE QUESTIONS RAISED IN THE P RESENT APPEALS ARE ANSWERED IN FAVOUR OF THE ASSESSEE AND AGAINST THE REVENUE. THE ORDER PASSED BY THE TRIBUNAL IS ACCORDINGLY QUASHED AND SET ASIDE. 6. FURTHER THE HONBLE KARNATAKA HIGH COURT IN CASE OF PCIT AND ANOTHER VS. TOTAGARS CO-OPERATIVE SALE SOCIETY 392 ITR 0074 AS RELIED UPON BY THE LD. AR OF THE ASSESSEE AS HELD IN PARA 7 TO 11 AS UNDER:- 7. HOWEVER, THE CONTENTION BEING TAKEN BY THE LEAR NED COUNSEL IS UNTENABLE. FOR THE ISSUE THAT WAS BEFORE THE ITAT, WAS A LIMITED ONE, NAMELY WHETHER FOR THE PURPOSE OF SECTION 80P(2)(D) OF THE ACT, A CO- OPERATIVE BANK SHOULD BE CONSIDERED AS A CO-OPERATI VE SOCIETY OR NOT? FOR, IF A CO-OPERATIVE BANK IS CONSIDERED TO BE A C O-OPERATIVE SOCIETY, THEN ANY INTEREST EARNED BY THE CO-OPERATIVE SOCIET Y FROM A CO-OPERATIVE BANK WOULD NECESSARILY BE DEDUCTABLE UNDER SECTION 80P(1) OF THE ACT. 8. THE ISSUE WHETHER A CO-OPERATIVE BANK IS CONSIDE RED TO BE A CO- OPERATIVE SOCIETY IS NO LONGER RES INTEGRA. FOR THE SAID ISSUE HAS BEEN DECIDED BY THE ITAT ITSELF IN DIFFERENT CASES. MORE OVER THE WORD 'CO- OPERATIVE SOCIETY' ARE THE WORDS OF A LARGE EXTENT, AND DENOTES A GENUS, ITA NO. 285/JP/2020 AJMER ZILA DUGDH UTPADAK SAHKARI SANGH LTD, AJMER VS. PR. CIT, AJMER 13 WHEREAS THE WORD 'CO-OPERATIVE BANK' IS A WORD OF L IMITED EXTENT, WHICH MERELY DEMARCATES AND IDENTIFIES A PARTICULAR SPECI ES OF THE GENUS CO- OPERATIVE SOCIETIES. CO-OPERATIVE SOCIETY CAN BE OF DIFFERENT NATURE, AND CAN BE INVOLVED IN DIFFERENT ACTIVITIES; THE CO-OPE RATIVE SOCIETY BANK IS MERELY A VARIETY OF THE CO-OPERATIVE SOCIETIES. THU S THE CO-OPERATIVE BANK WHICH IS A SPECIES OF THE GENUS WOULD NECESSARILY B E COVERED BY THE WORD 'CO-OPERATIVE SOCIETY'. 9. FURTHERMORE, EVEN ACCORDING TO SECTION 56(I)(CCV ) OF THE BANKING REGULATIONS ACT, 1949, DEFINES A PRIMARY CO-OPERATI VE SOCIETY BANK AS THE MEANING OF CO-OPERATIVE SOCIETY. THEREFORE, A CO-OP ERATIVE SOCIETY BANK WOULD BE INCLUDED IN THE WORDS 'CO-OPERATIVE SOCIET Y'. 10. ADMITTEDLY, THE INTEREST WHICH THE ASSESSEE RES PONDENT HAD EARNED WAS FROM A CO-OPERATIVE SOCIETY BANK. THEREFORE, AC CORDING TO SEC. 80P(2)(D) OF THE I.T. ACT, THE SAID AMOUNT OF INTER EST EARNED FROM A CO- OPERATIVE SOCIETY BANK WOULD BE DEDUCTABLE FROM THE GROSS INCOME OF THE CO-OPERATIVE SOCIETY IN ORDER TO ASSESS ITS TOTAL I NCOME. THEREFORE, THE ASSESSING OFFICER WAS NOT JUSTIFIED IN DENYING THE SAID DEDUCTION TO THE ASSESSEE RESPONDENT. 11. THE LEARNED COUNSEL HAS RELIED ON THE CASE OF T OTGARS CO-OPERATIVE SALE SOCIETY LTD. V. ITO [2010] 322 ITR 283/188 TAXMAN 282 (SC) . HOWEVER, THE SAID CASE DEALT WITH THE INTERPRETATIO N, AND THE DEDUCTION, WHICH WOULD BE APPLICABLE UNDER SECTION 80P(2)(A)(I ) OF THE I.T. ACT. FOR, IN THE PRESENT CASE THE INTERPRETATION THAT IS REQU IRED IS OF SECTION 80P(2)(D) OF THE I.T. ACT AND NOT SECTION 80P(2)(A) (I) OF THE I.T. ACT. THEREFORE, THE SAID JUDGMENT IS INAPPLICABLE TO THE PRESENT CASE. THUS, NEITHER OF THE TWO SUBSTANTIAL QUESTIONS OF LAW CAN VASSED BY THE LEARNED COUNSEL FOR THE REVENUE EVEN ARISE IN THE PRESENT C ASE. ITA NO. 285/JP/2020 AJMER ZILA DUGDH UTPADAK SAHKARI SANGH LTD, AJMER VS. PR. CIT, AJMER 14 6.4 THUS, THE HONBLE HIGH COURT HAS HELD THAT THE CO-OPERATIVE BANK IS CONSIDERED TO A COOPERATIVE SOCIETY FOR THE PURPOSE OF SECTION 80P(2)(D). ACCORDINGLY, IN VIEW OF THE DECISIONS AS CITED (SUP RA), WE DO NOT FIND ANY ERROR OR ILLEGALITY IN THE ORDERS OF THE LD. CIT(A) TO THE EXTENT OF THE ALLOWING THE CLAIM OF THE ASSESSEE U/S 80P(2)(D) IN RESPECT OF INTEREST INCOME FROM DEPOSITS/FDRS WITH THE CO-OPERATIVE BAN KS. 9. IN THE INSTANCE CASE, THERE IS NO DISPUTE THAT A JMER CENTRAL COOPERATIVE BANK LTD IS A CO-OPERATIVE SOCIETY. TH EREFORE, IN LIGHT OF THE AFORESAID DISCUSSIONS, FOR THE PURPOSES OF SECTION 80P(2)(D) OF THE ACT, IT SHALL BE TREATED AS A CO-OPERATIVE SOCIETY. THEREF ORE, INTEREST ON FDRS PLACED BY THE ASSESSEE SOCIETY WITH SUCH COOPERATIV E SOCIETY SHALL BE ELIGIBLE FOR DEDUCTION U/S 80P(2)(D) OF THE ACT. 10. 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 ASSE SSEE UNDER SECTION 80(P)(2)(D) CAN BE DENIED TO THE ASSESSEE SOCIETY. THE RELEVANT PROVISIONS OF SECTION 80P(4) READS AS UNDER: (4) THE PROVISIONS OF THIS SECTION SHALL NOT APPLY IN RELATION TO ANY CO-OPERATIVE BANK OTHER THAN A PRIMARY AGRICULTURAL CREDIT SOCIETY OR A PRIMARY CO-OPERATIVE AGRICULTURAL AND RURAL DEVEL OPMENT BANK. 11. IN CASE OF BHILWARA ZILA DUGDH UTPADAK SAHAKARI SANGH LTD., BHILWARA (SUPRA), THE ISSUE UNDER CONSIDERATION WAS ALLOWABILITY OF DEDUCTION U/S 80P(2)(D) IN THE CONTEXT OF INTEREST ON DEPOSITS PLACED WITH BARODA RAJASTHAN KSHETRIYA GRAMIN BANK WHICH WAS HE LD AS RURAL BANK AND NOT A CO-OPERATIVE SOCIETY BY THE ASSESSING OFF ICER AND BY INVOKING PROVISIONS OF SECTION 80P(4), THE DEDUCTION WAS DEN IED TO THE ASSESSEE. ITA NO. 285/JP/2020 AJMER ZILA DUGDH UTPADAK SAHKARI SANGH LTD, AJMER VS. PR. CIT, AJMER 15 THE COORDINATE BENCH HAS HELD THAT THAT THE ASSESSE E WHICH IS CLAIMING DEDUCTION IS THE CO-OPERATIVE SOCIETY AND NOT THE R EGIONAL RURAL BANK AND BARODA RAJASTHAN KSHETRIYA GRAMIN BANK WHICH WAS SE T UP UNDER THE PROVISIONS OF REGIONAL RURAL BANK ACT, SECTION 22 O F THE SAID ACT DEEM A REGIONAL RURAL BANK TO BE A CO-OPERATIVE SOCIETY AN D THUS HAS ALLOWED THE DEDUCTION TO THE ASSESSEE U/S 80P(2)(D) OF THE ACT. THE RELEVANT FINDINGS READ AS UNDER: 7. WE HAVE ALSO PERUSED THE VARIOUS PROVISIONS OF REGIONAL RURAL BANK ACT 1976. BARODA RAJASTHAN KSHETRIYA GRAMINA BANK W AS SET UP UNDER THE PROVISIONS OF UNDER THE PROVISIONS OF REGIONAL RURA L BANK ACT. SECTION 22 OF THE REGIONAL RURAL BANK ACT PROVIDES THAT REGION AL RURAL BANK TO BE DEEMED TO BE A CO-OPERATIVE SOCIETY FOR PURPOSE OF THE INCOME-TAX ACT, 1961. IN OUR CONSIDERED VIEW THE CIRCULAR OF CBDT C ANNOT OVERRIDE THE PROVISIONS OF THE ACT OF PARLIAMENT. EVEN THE CAREF UL READING OF THE CIRCULAR NO. 6 OF CBDT MAKE IT CLEAR THAT EXEMPTION IS WITHD RAWN WITH RESPECT TO REGIONAL RURAL BANKS ARE NOT ELIGIBLE FOR DEDUCTION UNDER SECTION 80P OF THE INCOME-TAX ACT, 1961 FROM THE ASSESSMENT YEAR 2 007-08 ONWARDS, AND NOT THE CO-OPERATIVE SOCIETIES. THE ASSESSEE BE FORE US IS THE CO- OPERATIVE SOCIETY AND NOT THE REGIONAL RURAL BANK. THEREFORE, CONSIDERING THE PROVISIONS OF SECTION 22 OF REGIONAL RURAL BANK ACT, WHEREIN THE STATUS OF THE BANKS ESTABLISHED ARE OF THE CO-OPERATIVE SO CIETY THE ASSESSEE IS ENTITLED FOR THE EXEMPTION ON THE INTEREST EARNED O N THE DEPOSITS. IN THE RESULT THE GROUND NO. 1 & 2 OF THE APPEAL ARE ALLOW ED. 12. IN ANOTHER CASE, THE COORDINATE BENCH IN CASE O F KALIANDAS UDYOG BHAVAN PREMISES CO-OP SOCIETY LTD. VS INCOME-TAX OF FICER-21(2)(1), MUMBAI [2018] 94 TAXMANN.COM 15 HAD AN OCCASION TO EXAMINE SIMILAR CONTENTION WHEREIN THE LATTER DECISION OF THE HONB LE KARNATAKA HIGH COURT ITA NO. 285/JP/2020 AJMER ZILA DUGDH UTPADAK SAHKARI SANGH LTD, AJMER VS. PR. CIT, AJMER 16 IN CASE OF TOTAGARS CO-OPERATIVE SALE SOCIETY (SUPR A), RELIED UPON BY THE LD CIT DR WAS ALSO CONSIDERED. IT WAS HELD BY THE CO-ORDINATE BENCH THAT THOUGH THE CO-OPERATIVE BANK PURSUANT TO THE INSERT ION OF SUB-SECTION (4) OF SEC. 80P WOULD NO MORE BE ENTITLED FOR CLAIM OF DEDUCTION UNDER SEC. 80P OF THE ACT, HOWEVER, AS A CO-OPERATIVE BANK CON TINUES TO BE A CO- OPERATIVE SOCIETY REGISTERED UNDER THE CO-OPERATIVE SOCIETIES ACT, 1912 (2 OF 1912), OR UNDER ANY OTHER LAW FOR THE TIME BEING ENFORCED IN ANY STATE FOR THE REGISTRATION OF CO-OPERATIVE SOCIETIES, THE REFORE, THE INTEREST INCOME DERIVED BY A CO-OPERATIVE SOCIETY FROM ITS INVESTME NTS HELD WITH A CO- OPERATIVE BANK, WOULD BE ENTITLED FOR CLAIM OF DEDU CTION UNDER SEC.80P(2)(D) OF THE ACT. WE SEE NO REASON TO DEVIA TE FROM THE SAME AND AGREE WITH THE SAID VIEW TAKEN BY THE CO-ORDINATE B ENCH AND THE RELEVANT FINDINGS OF THE CO-ORDINATE BENCH READ AS UNDER: 6. WE HAVE HEARD THE AUTHORISED REPRESENTATIVES FO R BOTH THE PARTIES, PERUSED THE ORDERS OF THE LOWER AUTHORITIE S AND THE MATERIAL AVAILABLE ON RECORD. WE FIND THAT OUR INDULGENCE IN THE PRESENT APPEAL HAS BEEN SOUGHT TO ADJUDICATE AS TO WHETHER THE CLAIM OF THE ASSESSEE FOR DEDUCTION UNDER SECTION 80P(2)(D), IN RESPECT OF INTEREST INCOME EARNED FROM THE INVESTMENTS MADE WI TH THE CO- OPERATIVE BANKS IS IN ORDER OR NOT. WE FIND THAT TH E ISSUE INVOLVED IN THE PRESENT APPEAL HINGES AROUND THE ADJUDICATION O F THE SCOPE AND GAMUT OF SUB-SECTION (4) OF SEC. 80P, AS HAD BEEN M ADE AVAILABLE ON THE STATUTE BY THE LEGISLATURE VIDE THE FINANCE ACT 2006, WITH EFFECT FROM 01.04.2007. WE FIND THAT THE LOWER AUTH ORITIES HAD TAKEN A VIEW THAT PURSUANT TO INSERTION OF SUB-SECTION (4 ) OF SEC. 80P, THE ASSESSEE WOULD NO MORE BE ENTITLED FOR CLAIM OF DED UCTION UNDER SEC. 80P(2)(D) OF THE INTEREST INCOME EARNED ON THE AMOUNTS PARKED AS INVESTMENTS WITH CO-OPERATIVE BANKS, OTHE R THAN A ITA NO. 285/JP/2020 AJMER ZILA DUGDH UTPADAK SAHKARI SANGH LTD, AJMER VS. PR. CIT, AJMER 17 PRIMARY AGRICULTURAL CREDIT SOCIETY OR A PRIMARY CO -OPERATIVE AGRICULTURAL AND RURAL DEVELOPMENT BANK. WE FIND TH AT THE LOWER AUTHORITIES HAD OBSERVED THAT AS THE CO-OPERATIVE B ANK WITH WHICH THE SURPLUS FUNDS OF THE ASSESSEE WERE PARKED AS IN VESTMENTS, WERE NEITHER PRIMARY AGRICULTURAL CREDIT SOCIETY NOR A P RIMARY CO- OPERATIVE AGRICULTURAL AND RURAL DEVELOPMENT BANK, THEREFORE, THE INTEREST INCOME EARNED ON SUCH INVESTMENTS WOULD NO T BE ENTITLED FOR CLAIM OF DEDUCTION 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 AGREE MENT WITH THE VIEW TAKEN BY THE LOWER AUTHORITIES. BEFORE PROCEED ING FURTHER, WE MAY HEREIN REPRODUCE THE RELEVANT EXTRACT OF THE SA ID STATUTORY PROVISION, VIZ. SEC. 80P(2)(D), AS THE SAME WOULD H AVE A STRONG BEARING ON 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 DEDUCTED, IN ACCORDANCE WITH AND SUBJECT TO THE PROVISIONS OF THIS SECTION, THE SUMS SPECIFI ED 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 DIVIDENDS DERIVED BY THE CO-OPERATIVE SOCIETY FROM ITS INVESTMENTS WI TH ANY OTHER CO- OPERATIVE SOCIETY, THE WHOLE OF SUCH INCOME;' ITA NO. 285/JP/2020 AJMER ZILA DUGDH UTPADAK SAHKARI SANGH LTD, AJMER VS. PR. CIT, AJMER 18 THUS, FROM A PERUSAL OF THE AFORESAID SEC. 80P(2)(D ) IT CAN SAFELY BE GATHERED THAT INCOME BY WAY OF INTEREST INCOME DERI VED BY AN ASSESSEE CO-OPERATIVE SOCIETY FROM ITS INVESTMENTS HELD WITH ANY OTHER COOPERATIVE SOCIETY, SHALL BE DEDUCTED IN COM PUTING THE TOTAL INCOME OF THE ASSESSEE. WE MAY HEREIN OBSERVE, THAT WHAT IS RELEVANT FOR CLAIM OF DEDUCTION UNDER SEC. 80P(2)(D ) IS THAT THE INTEREST INCOME SHOULD HAVE BEEN DERIVED FROM THE I NVESTMENTS MADE BY THE ASSESSEE CO-OPERATIVE SOCIETY WITH ANY OTHER COOPERATIVE SOCIETY. WE THOUGH ARE IN AGREEMENT WIT H THE OBSERVATIONS OF THE LOWER AUTHORITIES THAT WITH THE INSERTION OF SUB- SECTION (4) OF SEC. 80P, VIDE THE FINANCE ACT, 2006 , WITH EFFECT FROM 01.04.2007, THE PROVISIONS OF SEC. 80P WOULD NO MOR E BE APPLICABLE IN RELATION TO ANY CO-OPERATIVE BANK, OTHER THAN A PRIMARY AGRICULTURAL CREDIT SOCIETY OR A PRIMARY CO-OPERATI VE AGRICULTURAL AND RURAL DEVELOPMENT BANK, BUT HOWEVER, ARE UNABLE TO SUBSCRIBE TO THEIR VIEW THAT THE SAME SHALL ALSO JEOPARDISE THE CLAIM OF DEDUCTION 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 CONSIDERATION TO T HE ISSUE BEFORE US AND ARE OF THE CONSIDERED VIEW THAT AS LONG AS I T IS PROVED THAT THE INTEREST INCOME IS BEING DERIVED BY A CO-OPERAT IVE SOCIETY FROM ITS INVESTMENTS MADE WITH ANY OTHER CO-OPERATIVE SO CIETY, THE CLAIM OF DEDUCTION UNDER THE AFORESAID STATUTORY PROVISIO N, VIZ. SEC. 80P(2)(D) WOULD BE DULY AVAILABLE. WE MAY HEREIN OB SERVE THAT THE TERM 'CO-OPERATIVE SOCIETY' HAD BEEN DEFINED 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, 1912 (2 OF 19 12), OR UNDER ITA NO. 285/JP/2020 AJMER ZILA DUGDH UTPADAK SAHKARI SANGH LTD, AJMER VS. PR. CIT, AJMER 19 ANY OTHER LAW FOR THE TIME BEING IN FORCE IN ANY ST ATE FOR THE REGISTRATION OF CO-OPERATIVE SOCIETIES;' WE ARE OF THE CONSIDERED VIEW, THAT THOUGH THE CO-O PERATIVE BANK PURSUANT TO THE INSERTION OF SUB-SECTION (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 SOCIETY REGISTERED UNDER THE CO-OPERATIVE SOCIETIES ACT, 1912 (2 OF 1912), OR UNDER ANY OTHER LAW FOR THE TIME BEING EN FORCED IN ANY STATE FOR THE REGISTRATION OF CO-OPERATIVE SOCIETIE S, THEREFORE, THE INTEREST INCOME DERIVED BY A CO-OPERATIVE SOCIETY F ROM ITS INVESTMENTS HELD WITH A CO-OPERATIVE BANK, WOULD BE ENTITLED FOR CLAIM OF DEDUCTION UNDER SEC.80P(2)(D) OF THE ACT. 8. WE SHALL NOW ADVERT TO THE JUDICIAL PRONOUNCEMEN TS THAT HAD BEEN RELIED UPON BY THE AUTHORIZED REPRESENTATIVES FOR BOTH THE PARTIES AND THE LOWER AUTHORITIES. WE FIND THAT THE ISSUE THAT A CO- OPERATIVE SOCIETY WOULD BE ENTITLED FOR CLAIM OF DE DUCTION 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 FOLLOWING 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 (SUPR A), HAD ALSO HELD THAT THE INTEREST INCOME EARNED BY THE ASSESSEE ON ITS INVESTMENTS HELD WITH A CO-OPERATIVE BANK WOULD BE ELIGIBLE FOR CLAIM OF ITA NO. 285/JP/2020 AJMER ZILA DUGDH UTPADAK SAHKARI SANGH LTD, AJMER VS. PR. CIT, AJMER 20 DEDUCTION UNDER SEC. 80P(2)(D) OF THE ACT. STILL FU RTHER, WE FIND THAT THE CBDT CIRCULAR NO. 14, DATED 28.12.2006, AS HAD BEEN RELIED UPON BY THE LD. A.R, ALSO MAKES IT CLEAR BEYOND ANY SCOPE OF DOUBT, THAT THE PURPOSE BEHIND ENACTMENT OF SUB-SECTION (4 ) OF SEC. 80P WAS TO PROVIDE THAT THE CO-OPERATIVE BANKS WHICH AR E FUNCTIONING AT PAR WITH OTHER BANKS WOULD NO MORE BE ENTITLED FOR CLAIM OF DEDUCTION UNDER SEC. 80P(4) OF THE ACT. WE ARE OF T HE CONSIDERED VIEW THAT THE RELIANCE PLACED BY THE CIT (A) ON THE JUDGMENT OF THE HON'BLE SUPREME COURT IN THE CASE OF TOTGARS CO-OPE RATIVE SALE SOCIETY LTD. (SUPRA) BEING DISTINGUISHABLE ON FACTS , THUS, HAD WRONGLY BEEN RELIED UPON BY HIM. THE ADJUDICATION B Y THE HON'BLE APEX COURT IN THE AFORESAID CASE WAS IN CONTEXT OF SEC. 80P(2)(A)(I), AND NOT ON THE ENTITLEMENT OF A CO-OPERATIVE SOCIET Y TOWARDS DEDUCTION UNDER SEC. 80P(2)(D) ON THE INTEREST INCO ME ON THE INVESTMENTS PARKED WITH A CO-OPERATIVE BANK. WE FUR THER FIND THAT THE RELIANCE PLACE BY THE LD. D.R ON THE ORDER OF T HE ITAT 'F' BENCH, MUMBAI IN THE CASE OF VAIBHAV COOPERATIVE CREDIT SO CIETY (SUPRA) IS ALSO DISTINGUISHABLE ON FACTS. WE FIND THAT THE SAI D ORDER WAS PASSED BY THE TRIBUNAL IN CONTEXT OF ADJUDICATION OF THE E NTITLEMENT OF THE ASSESSEE CO-OPERATIVE BANK TOWARDS CLAIM OF DEDUCTI ON UNDER SEC.80P(2)(A)(I) OF THE ACT. WE FIND THAT IT WAS IN THE BACKDROP OF THE AFORESAID FACTS THAT THE TRIBUNAL AFTER CARRYIN G OUT A CONJOINT READING OF SEC. 80P(2)(A)(I) R.W. SEC. 80P(4) HAD A DJUDICATED THE ISSUE BEFORE THEM. WE ARE AFRAID THAT THE RELIANCE PLACED BY THE LD. D.R ON THE AFORESAID ORDER OF THE TRIBUNAL BEING DI STINGUISHABLE ON FACTS, THUS, WOULD BE OF NO ASSISTANCE FOR ADJUDICA TION OF THE ISSUE BEFORE US. STILL FURTHER, THE RELIANCE PLACED BY TH E LD. D.R ON THE ORDER OF THE ITAT 'SMC' BENCH, MUMBAI IN THE CASE O F SHRI SAI DATTA ITA NO. 285/JP/2020 AJMER ZILA DUGDH UTPADAK SAHKARI SANGH LTD, AJMER VS. PR. CIT, AJMER 21 CO-OPERATIVE CREDIT SOCIETY LTD. (SUPRA), WOULD ALS O NOT BE OF ANY ASSISTANCE, FOR THE REASON THAT IN THE SAID MATTER THE TRIBUNAL HAD SET ASIDE THE ISSUE TO THE FILE OF THE ASSESSING OF FICER 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 CASE 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 COURT'S, THEN A VIEW WHI CH IS IN FAVOUR OF THE ASSESSEE IS TO BE PREFERRED AS AGAINST THAT TAK EN AGAINST HIM. THUS, TAKING SUPPORT FROM THE AFORESAID JUDICIAL PR ONOUNCEMENT OF THE HON'BLE HIGH COURT OF JURISDICTION, WE RESPECTF ULLY FOLLOW THE VIEW TAKEN BY THE HON'BLE HIGH COURT OF KARNATAKA I N THE CASE OF TOTAGARS COOPERATIVE SALE SOCIETY(SUPRA) AND HON 'BLE HIGH COURT OF GUJARAT IN THE CASE OF STATE BANK OF INDIA (SUPR A), WHEREIN IT WAS OBSERVED THAT THE INTEREST INCOME EARNED BY A CO-OP ERATIVE SOCIETY ON ITS INVESTMENTS HELD WITH A CO-OPERATIVE BANK WO ULD BE ELIGIBLE FOR CLAIM OF DEDUCTION UNDER SEC.80P(2)(D) OF THE A CT. 9. WE THUS IN THE BACKDROP OF OUR AFORESAID OBSERVA TIONS ARE UNABLE TO PERSUADE OURSELVES TO BE IN AGREEMENT WITH THE V IEW TAKEN BY THE LOWER AUTHORITIES THAT THE ASSESSEE WOULD NOT B E ENTITLED FOR CLAIM OF DEDUCTION UNDER SEC. 80P(2)(D), IN RESPECT OF THE INTEREST INCOME ON THE INVESTMENTS MADE WITH THE CO-OPERATIV E BANK. WE THUS SET ASIDE THE ORDER OF THE LOWER AUTHORITIES A ND CONCLUDE THAT ITA NO. 285/JP/2020 AJMER ZILA DUGDH UTPADAK SAHKARI SANGH LTD, AJMER VS. PR. CIT, AJMER 22 THE INTEREST INCOME OF RS. 27,48,553/-EARNED BY THE ASSESSEE ON THE INVESTMENTS HELD WITH THE CO-OPERATIVE BANK WOULD B E ENTITLED FOR CLAIM OF DEDUCTION UNDER SEC. 80P(2)(D). 12. 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 SOCIETY AS THE DEPOSITS HAVE BEEN P LACED BY THE ASSESSEE CO-OPERATIVE SOCIETY WITH AJMER CENTRAL CO-OPERATIV E BANK LTD WHICH IS REGISTERED AS A CO-OPERATIVE SOCIETY AND RETAINS TH E SAME CHARACTER EVEN THOUGH IT IS CARRYING ON THE BANKING BUSINESS. 13. WE ARE THEREFORE OF THE CONSIDERED VIEW THAT EV EN THOUGH THE ASSESSING OFFICER HAS NOT EXAMINED THE MATTER RELAT ING TO DEDUCTION SO CLAIMED BY THE ASSESSEE, THE ORDER PASSED BY THE AS SESSING OFFICER WHEREIN HE HAS ALLOWED THE DEDUCTION U/S 80(P)(2)(D ) ON INTEREST ON FDRS PLACED WITH AJMER CENTRAL CO-OPERATIVE BANK LTD CAN NOT BE HELD AS ERRONEOUS IN VIEW OF THE AFORESAID DISCUSSION WHERE IN THERE CANNOT BE ANY DISPUTE REGARDING CLAIM OF THE DEDUCTION U/S 80(P)( 2)(D) OF THE ACT. IN LIGHT OF THE SAME, THE IMPUGNED ORDER PASSED BY THE LD PR CIT PASSED U/S 263 OF THE ACT IS SET-ASIDE AND MATTER IS DECIDED I N FAVOUR OF THE ASSESSEE. 5. REGARDING SPECIFIC PROVISIONS AGAINST LIABILITY WHICH WERE CONSIDERED AS GENERAL PROVISIONS/CONTINGENT LIABILITY FOR RS. 1,23,40,930.00 BY THE LD PR. CIT, THE LD. AR SUBMITTED THAT ASSESSEE HAS ADO PTED MERCANTILE SYSTEM OF ACCOUNTING DURING THE YEAR AND HAS CLAIMED FOLLO WING PROVISIONS AS PER DETAILS BELOW:- ITA NO. 285/JP/2020 AJMER ZILA DUGDH UTPADAK SAHKARI SANGH LTD, AJMER VS. PR. CIT, AJMER 23 SR. NO. PARTICULAR AMOUNT REMARKS 1 AUDIT FEE 5,00,000/- 2 CESS 51,00,000/- ALLOWABLE ON PAYMENT BASIS 3 REPAIRS & MAINTENANCE 4,05,600/- 4 LEAVE ENCASHMENT 50,00,000/- ALLOWABLE ON PAYMENT BASIS 5 MILK DCS 7,00,000/- 6 PACKING MATERIAL 5,00,000/- 7 TA & OTHER WITH BOB 1,35,330/- 6. IT WAS SUBMITTED THAT SINCE THESE ARE SPECIFIC P ROVISIONS FOR LIABILITIES BASED ON MERCANTILE SYSTEM OF ACCOUNTIN G FOLLOWED BY ASSESSEE & INCOME TAX PERMITS SUCH SPECIFIC PROVISIONS ON C RYSTALIZED BASIS ON ACCOUNTING SYSTEM FOLLOWED. THE ACCOUNTING SYSTEM A S ADOPTED & DISCLOSED ACCOUNTING POLICIES WAS NEVER REJECTED/DE NIED. EVEN NOTICE U/SEC. 148 DO NOT DENY THIS FACT. THE LD PCIT HAS S IMPLY DENIED TO ACCEPT THE FACT FOR NON AVAILABILITY OF PROPER LEDGERS & OTHER REQUISITE DETAILS ON ASSESSMENT RECORDS. THE ANALYSIS OF THESE PROVISION S ARE AS UNDER: SR.NO. PARTICULARS AMOUNT AMOUNT BIFURCATION DATE OF PAYMENT REMARKS 1 AUDIT FEES 500000 463936 14/09/2012 TO CO - OPERATIVE DEPARTMENT AS PER RULES 36064 31/03/2013 500000 ITA NO. 285/JP/2020 AJMER ZILA DUGDH UTPADAK SAHKARI SANGH LTD, AJMER VS. PR. CIT, AJMER 24 2 CESS 5100000 2000000 14/06/2012 TO RCDF 2760845 22/06/2012 339155 18/09/2012 5100000 3 REPAIRS AND MAINTENANCE 405600 148040 06/06/2012 LIABILITY INCURRED PRIOR TO 31/3/12 190400 03/09/2012 75290 22/09/2012 413730 4 LEAVE ENCASHMENT 5000000 5000000 17/09/2012 FOR STAFF 5000000 5 MILK DCS 700000 700000 24/05/2012 INCENTIVES TO MILK DEPOSIT 700000 6 PACKING MATERIAL 500000 500000 22/09/2012 BILL NO.169 DATED 9/1/11(THE VALUE THEREOF IS INCLUDED IN STOCK) 500000 7 TA & OTHERS WITH BOB 135330 33800 19/09/2012 STAFF BILLS 8400 12/11/2012 8400 16/1 1/2012 16800 19/11/2012 8400 12/02/2013 51400 31/03/2013 13674 31/03/2013 140874 7. IT WAS SUBMITTED THAT THESE ARE SPECIFIC PROVIS IONS BASED ON MERCANTILE SYSTEM OF ACCOUNTING AND COMPLETE PROO F OF PAYMENTS / DISCHARGE OF LIABILITY ON OR BEFORE DUE DATE RECEIP TS WERE FILED BEFORE A.O. DURING ASSESSMENT PROCEEDINGS U/SEC. 143(3) / 147 O F ACT. EVEN FORM 3CD U/SEC. 44AB AUDIT REPORT CONTAIN THESE DETAILS & NE VER DENIED BY A.O. THUS SAME CANNOT BE DISALLOWED OR WRONGLY ALLOWED B Y A.O. IT WAS ITA NO. 285/JP/2020 AJMER ZILA DUGDH UTPADAK SAHKARI SANGH LTD, AJMER VS. PR. CIT, AJMER 25 SUBMITTED THAT SECTION 37(1) SPECIFICALLY ALLOWED & PROVIDES THAT IF A BUSINESS LIABILITY HAS DEFINITELY ARISE IN AN ACCOU NTING YEAR, THE DEDUCTION IS TO BE ALLOWED IRRESPECTIVE THAT THE LIABILITY MA Y HAVE TO BE QUANTIFIED AND DISCHARGED AT A FUTURE DATE. 8. REGARDING PAYMENT OF BONUS RS. 13,00,000 CONSIDE RED DISALLOWABLE U/SEC. 43B, IT WAS SUBMITTED THAT AS PER AOS ORDER U/SEC. 143(3) OF ACT, THE SAME HAS ALREADY BEEN CONSIDERED DISALLOWED I N TERMS OF SECTION 43B OF ACT AND THEREFORE, THE ORDER SO PASSED BY TH E AO CANNOT BE HELD AS ERRONEOUS IN SO FAR AS PREJUDICIAL TO THE INTEREST OF REVENUE. 9. PER CONTRA, THE LD. CIT/DR HAS RELIED ON THE ORD ER AND FINDING OF THE LD. CIT AND OUR REFERENCE WAS DRAWN TO THE RELE VANT FINDINGS WHICH READ AS UNDER:- 7. REGARDING THE CLAIM OF VARIOUS PROVISIONS, THE ASSESSEE HAS SUBMITTED THAT THE SECTION 37(1) OF THE ACT ALLOWED THE BUSINESS LIABILITY WHICH HAS ARISEN IN AN ACCOUNTING YEAR AN D THE DEDUCTION IS TO BE ALLOWED IRRESPECTIVE THAT THE LIABILITY, MAY HAV E TO BE QUANTIFIED AND DISCHARGED AT A FUTURE DATE. THE ASSESSEE \ ALSO FURNISHED A CHART WITH REMARKS SHOWING ANALYSIS OF SPECIFIC PROVISIONS FOR OUTSTANDING LIABILITY AS ON 31.03.2012. THE REPLY AS WELL AS THE CHART FU RNISHED BY THE ASSESSEE, HAS BEEN PERUSED AND IT HAS BEEN OBSERVED THAT THE ALLOWABILITY OF EXPENSES ON ACCOUNT OF THESE PROVIS IONS IS NOT CLEAR DUE TO NON-AVAILABILITY OF PROPER LEDGERS AND OTHER REQ UISITE DETAILS ON ASSESSMENT RECORD. THE AO HAS NOT VERIFIED THE ISSU E WHETHER THE BUSINESS LIABILITIES REGARDING THESE PROVISIONS WER E ACTUALLY RAISED AND ASCERTAINED DURING THE YEAR UNDER CONSIDERATION OR NOT. THEREFORE, THE ITA NO. 285/JP/2020 AJMER ZILA DUGDH UTPADAK SAHKARI SANGH LTD, AJMER VS. PR. CIT, AJMER 26 ASSESSMENT ORDER PASSED BY THE AO IS CONSIDERED AS ERRONEOUS IN SO FAR AS IT IS PREJUDICIAL TO THE INTEREST OF THE REVENUE. 8. THE ASSESSEE HAD CLAIMED DEDUCTION U/S 80P(2)(D) OF THE I.T. ACT, 1961 OF RS. 46,09,729/- BEING INTEREST RECEIVED FRO M CO-OPERATIVE SOCIETIES WHICH WERE NOT ACTUALLY COOPERATIVE SOCIE TIES BUT COOPERATIVE BANK. IN THIS CASE, THE CONDITIONS LAID DOWN BY SEC TION 80P(2)(D) HAD NOT BEEN SATISFIED AS THE INTEREST INCOME WERE RECE IVED FROM THE AJMER CENTRAL COOPERATIVE BANK LTD. WHICH IS NOT THE CO-O PERATIVE SOCIETY AS PROVIDED U/S 80P(2)(D) OF THE I.T. ACT, 1961. 8.1 MOREOVER, THE INTERPRETATION OF SEC. 80(P)(4) O F I.T. ACT, 1961 BY THE ASSESSEE IS MISCONCEIVED AS THE SAID SECTION ON LY SAYS THAT THE PROVISIONS OF THIS SECTION SHALL NOT APPLY IN RELAT ION TO ANY CO-OPERATIVE BANK OTHER THAN A PRIMARY AGRICULTURAL CREDIT SOCIE TY OR A PRIMARY CO- OPERATIVE AGRICULTURAL AND RURAL DEVELOPMENT BANK. 8.2. FURTHER, IT IS NOT THE CASE OF REGIONAL RURAL BANK WHEREIN VIDE CBDT CIRCULAR NO. 6/2010 [F.NO. 173(3)/44/2009-IT (A-1)] DATED 20.09.2010, THE REGIONAL RURAL BANKS ARE NOT ELIGIBLE FOR DEDUC TION UNDER SECTION 80P OF THE 1.T. ACT, 1961 FROM THE A.Y. 2007-08 ONWARDS AND ALSO THE CIRCULAR NO. 319 DATED 11.1.1982 DEEMING ANY REGIONAL RURAL BANK TO BE CO- OPERATIVE SOCIETY STANDS WITHDRAWN FOR APPLICATION W.E.F. ASSESSMENT YEAR 2007-08. 8.3 ALSO, AS PER CLAUSE 22.2 OF CIRCULAR NO. 14/200 6 DATED 28.12.2006 ON FINANCE ACT, 2006 EXPLANATORY NOTES ON PROVISI ONS RELATING TO DIRECT TAXES, IT HAS BEEN EXPLAINED THAT THE COOPER ATIVE BANKS ARE ITA NO. 285/JP/2020 AJMER ZILA DUGDH UTPADAK SAHKARI SANGH LTD, AJMER VS. PR. CIT, AJMER 27 FUNCTIONING AT PAR WITH OTHER COMMERCIAL BANKS, WHI CH DO NOT ENJOY ANY TAX BENEFIT. THEREFORE, SECTION 80P HAS BEEN AMENDE D AND A NEW SUB- SECTION (4) HAS BEEN INSERTED TO PROVIDE THAT THE P ROVISIONS OF THE SAID SECTION SHALL NOT APPLY IN RELATION TO ANY CO-OPERA TIVE BANK OTHER THAN A PRIMARY AGRICULTURAL CREDIT SOCIETY OR A PRIMARY CO -OPERATIVE AGRICULTURAL AND RURAL-DEVELOPMENT BANK. 8.4. THE ASSESSEE RELIED UPON THE DECISION OF THE H ON'BLE ITAT, JODHPUR IN THE CASE OF M/S BHILWARA ZILA DUGDH UTPA DAK SAHAKARI SANGH LTD. IN ITA NO. 437/JODH/2017 DATED 31.10.2018 FOR AY 2014-15 WHEREBY THE TRIBUNAL HAS ALLOWED THE CLAIM U/S 80P( 2)(D) OF THE I.T. ACT, 1961. THE DECISION OF THE TRIBUNAL WAS NOT ACC EPTED BY THE REVENUE AND FURTHER APPEAL WAS PREFERRED BEFORE THE HON'BLE HIGH COURT, JODHPUR AND THE HON'BIE HIGH COURT VIDE ITS ORDER DATED 13.08.2019 IN DBIT APPEAL NO. 2/2019 DISMISSED THE APPEAL OF THE REVENUE, AGAINST WHICH THE SLP HAS BEEN RECOMMENDED TO BE FILED BEFORE THE HON'BLE SUPREME COURT. 8.5 SIMILARLY, THE ASSESSEE RELIED UPON THE DECISIO N OF THE HON'BLE ITAT, JAIPUR TAKEN IN THE CASE OF ASSESSEE ITSELF IN ITA NO. 90/JP/2019 DATED 28.08.2019 FOR AY 2014-15 WHEREBY THE TRIBUNAL HAS ALLOWED THE APPEAL OF THE ASSESSEE ON THE ISSUE OF CLAIM U/S 80P(2)(D) OF THE I.T. ACT, 1961. THE DECISION OF THE TRIBUNAL HAS NOT BEEN ACCEPTED BY THE REVENUE AND FURTHER APPEAL HAS BEEN PREFERRED BEFORE THE HONBL E HIGH COURT, JAIPUR. 9. ON THE ISSUE OF PROVISION OF BONUS, THE ASSESSEE HAS SUBMITTED THAT THE SAME HAS ALREADY BEEN CONSIDERED DISALLOWE D IN TERMS OF SECTION 43B OF THE ACT AND PROVISION MADE OF RS. 15 ,00,000/- (F.Y. ITA NO. 285/JP/2020 AJMER ZILA DUGDH UTPADAK SAHKARI SANGH LTD, AJMER VS. PR. CIT, AJMER 28 2010-11) PAID DURING THE YEAR AND DISALLOWED IN A.Y . 2011-12, HAS BEEN CONSIDERED U/S 43B OF THE ACT. THE EXPLANATION OF THE ASSESSEE IS NOT VERIFIABLE AT THIS STAGE AS DURING THE COURS E OF ASSESSMENT PROCEEDINGS, THE ASSESSEE HAD FURNISHED THE LEDGER OF BONUS EX- GRATIA AND PRODUCTIVITY INCENTIVES AND THE PAYMENT OF THIS PROVISION OF BONUS OF RS. 13,00,000/- IS NOT CLEAR FROM THE L EDGERS. 10. IN VIEW OF ABOVE DISCUSSION, THE ASSESSMENT ORD ER PASSED BY THE AO IS ERRONEOUS IN SO FAR AS PREJUDICIAL TO THE INT EREST OF THE REVENUE, HENCE, THE SAME IS SET ASIDE TO THE FILE OF THE AO TO THE AFORESAID EXTENT FOR MAKING AFRESH ORDER AFTER CARRYING OUT E NQUIRIES IN THE MANNER AS ABOVE AND AFTER GIVING OPPORTUNITY OF BEI NG HEARD TO THE ASSESSEE. 10. WE HAVE HEARD THE RIVAL SUBMISSIONS AND PURSUED THE MATERIAL AVAILABLE ON RECORD. FIRSTLY, REGARDING THE CLAIM O F DEDUCTION U/S 80(P)(2)(D), ADMITTEDLY, THE MATTER IS COVERED IN F AVOUR OF THE ASSESSEE IN ITS OWN CASE FOR AY 2014-15 BY THE DECISION OF THE COORDINATE BENCH IN ITA NO. 90/JP/2019 DATED 28.08.2019 WHEREIN THE TRI BUNAL HAS ALLOWED THE APPEAL OF THE ASSESSEE ON THE ISSUE OF CLAIM U/ S 80P(2)(D) OF THE ACT. THE FACT THAT THE DECISION OF THE TRIBUNAL HAS NOT BEEN ACCEPTED BY THE REVENUE AND FURTHER APPEAL HAS BEEN PREFERRED BEFOR E THE HONBLE RAJASTHAN HIGH COURT CANNOT BE A BASIS TO HOLD THAT THE ORDER SO PASSED BY THE AO ALLOWING SUCH DEDUCTION IS ERRONEOUS IN S O FAR AS PREJUDICIAL TO THE INTEREST OF REVENUE AND THEREFORE, THE FINDINGS OF THE LD PR.CIT TO THIS EXTENT ARE SET-ASIDE. ITA NO. 285/JP/2020 AJMER ZILA DUGDH UTPADAK SAHKARI SANGH LTD, AJMER VS. PR. CIT, AJMER 29 11. SECONDLY, REGARDING THE CLAIM OF VARIOUS PR OVISIONS, THE ASSESSEE HAS SUBMITTED THAT THESE RELATES TO LIABILITIES WHI CH HAVE CRYSTALLIZED DURING THE YEAR THOUGH THE PAYMENT HAVE BEEN MADE IN THE S UBSEQUENT FINANCIAL YEAR AND THUS ARE ALLOWABLE BUSINESS EXPENSE. THE A SSESSEE HAS ALSO FURNISHED A CHART WITH REMARKS SHOWING ANALYSIS OF SPECIFIC PROVISIONS FOR OUTSTANDING LIABILITY AS ON 31.03.2012 AND DATE OF SUBSEQUENT PAYMENT. THE REASON WHY THE SAME WAS NOT FOUND ACCEPTABLE TO LD PR CIT WAS THAT DUE TO NON-AVAILABILITY OF PROPER LEDGERS AND OTHER REQUISITE DETAILS ON ASSESSMENT RECORD, THE SAME CANNOT BE VERIFIED AND EVEN THE AO HAS NOT VERIFIED THE ISSUE WHETHER THE BUSINESS LIABILITIES REGARDING THESE PROVISIONS WERE ACTUALLY RAISED AND ASCERTAINED DUR ING THE YEAR UNDER CONSIDERATION OR NOT. PER CONTRA, THE LD AR SUBMITT ED THAT THE REQUISITE DETAILS ARE AVAILABLE AS PER THE TAX AUDIT REPORT A ND OUR REFERENCE WAS DRAWN TO TAX AUDIT REPORT AVAILABLE AS APB PAGE 42 AS WELL AS DETAILS OF INVOICES/PAYMENTS SUBMITTED DURING THE COURSE OF HE ARING. IT WAS FURTHER SUBMITTED THAT COMPLETE PROOF OF PAYMENTS/DISCHARGE OF LIABILITY WERE FILED BEFORE THE AO DURING THE ASSESSMENT PROCEEDINGS AND THEREFORE, WHERE THE MATTER HAS BEEN EXAMINED BY THE AO, THE ORDER S O PASSED BY THE AO CANNOT BE HELD AS ERRONEOUS AND PREJUDICIAL IN NATU RE. WE HAVE GIVEN A CAREFUL CONSIDERATION TO RIVAL CONTENTIONS AND FIND THAT THOUGH THE DETAILS OF VARIOUS PROVISIONS AND SUBSEQUENT PAYMENTS FIND MENTION IN ONE OF THE ANNEXURES TO THE TAX AUDIT REPORT, HOWEVER, THE CON TEXT OF SUCH DETAILS AVAILABLE AS ANNEXURE TO THE TAX AUDIT REPORT IS NO T CLEAR AND THERE IS NOTHING IN LAW THAT THE AO CANNOT CALL FOR SUCH DET AILS AND SEEK TO EXAMINE THE SAME WHERE THE SAME FIND MENTION IN THE TAX AUDIT REPORT. THERE IS NOTHING ON RECORD THAT THESE DETAILS HAVE BEEN CALLED FOR AND EXAMINED BY THE AO DURING THE ASSESSMENT PROCEEDING S AND ARE AVAILABLE ON RECORD AS SO CONTENDED BY THE LD AR AND IN ABSEN CE OF SUCH ITA NO. 285/JP/2020 AJMER ZILA DUGDH UTPADAK SAHKARI SANGH LTD, AJMER VS. PR. CIT, AJMER 30 EXAMINATION AND RELEVANT MATERIAL ON RECORD, THE AS SESSMENT ORDER PASSED BY THE AO IS RIGHTLY CONSIDERED AS ERRONEOUS IN SO FAR AS IT IS PREJUDICIAL TO THE INTEREST OF THE REVENUE AND THE FINDINGS OF THE LD PCIT ARE UPHELD IN THIS REGARD. 12. THIRDLY, REGARDING THE ISSUE OF PROVISION OF BONUS OF RS 13,00,000, THE ASSESSEE HAS SUBMITTED THAT THE SAME HAS ALREAD Y BEEN CONSIDERED DISALLOWED IN ITS COMPUTATION OF INCOME IN TERMS OF SECTION 43B OF THE ACT AND WHICH HAS BEEN ACCEPTED BY THE AO WHILE COM PLETING THE ASSESSMENT PROCEEDINGS. WE HAVE GONE THROUGH THE C OMPUTATION OF INCOME AVAILABLE AS APB PAGE 15 AND FIND THE CONTEN TION SO ADVANCED BY THE ASSESSEE AS CORRECT AS AN AMOUNT OF RS 13,00,00 0/- TOWARDS BONUS HAS BEEN SUO-MOTO DISALLOWED BY THE ASSESSEE WHILE COMPUTING ITS INCOME UNDER THE HEAD BUSINESS INCOME. THEREFORE , THE ORDER SO PASSED BY THE AO ACCEPTING THE SUO-MOTO DISALLOWANC E OF SUCH PROVISION FOR BONUS CANNOT BY ANY STRETCH OF IMAGINATION BE H ELD TO BE ERRONEOUS AND PREJUDICIAL IN NATURE AND HENCE, THE FINDINGS O F THE LD CIT TO THIS EXTENT ARE SET-ASIDE. 13. IN LIGHT OF AFORESAID DISCUSSIONS, THE ORDER SO PASSED BY THE LD PR.CIT IS HEREBY MODIFIED TO EXCLUDE THE EXAMINATIO N OF MATTER RELATING TO CLAIM OF DEDUCTION U/S 80(P)(2)(D) AND PROVISION OF BONUS AND IS SUSTAINED TO THE EXTENT OF EXAMINATION OF ALLOWABIL ITY OF VARIOUS PROVISIONS AS PER LAW AFTER PROVIDING REASONABLE OP PORTUNITY TO THE ASSESSEE. IN THE RESULT, THE APPEAL OF THE ASSESSEE IS PARTLY ALLOWED. ITA NO. 285/JP/2020 AJMER ZILA DUGDH UTPADAK SAHKARI SANGH LTD, AJMER VS. PR. CIT, AJMER 31 ORDER PRONOUNCED IN THE OPEN COURT ON 01/03/2021. SD/- SD/- LANHI XKSLKBZ FOE FLAG ;KNO ( SANDEEP GOSAIN ) (VIKRAM SINGH YADAV) U;KF;D LNL;@ JUDICIAL MEMBER YS[KK LNL;@ ACCOUNTANT MEMBER TK;IQJ@ JAIPUR FNUKAD@ DATED:- 01/03/2021 * GANESH KR. VKNS'K DH IZFRFYFI VXZSFKR@ COPY OF THE ORDER FORWARDED TO: 1. VIHYKFKHZ@ THE APPELLANT- AJMER ZILA DUGDH UTPADAK SAHKARI SAN GH LTD, AJMER 2. IZR;FKHZ@ THE RESPONDENT- PR. CIT, AJMER 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. 285/JP/2020} VKNS'KKUQLKJ@ BY ORDER, LGK;D IATHDKJ@ ASST. REGISTRAR