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

ITA 512/JPR/2019

• Counselvise Citation: [2019] 116 COUNSELVISE.COM (IT) 0348 (ITAT-JAIPUR)
• Duration Of Justice: 4 month(s) 20 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 02-09-2019
• Appeal Filed By: Assessee
• Order Result: Dismissed
• Bench Allotted: B
• Assessment Year: 2011-2012
• Appeal Filed On: 12-04-2019
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Department Lawyers: KARNI DAN
• Keywords: Business income; Search and seizure; Set aside
• Section: 143(3); 80P; 201; 147; 148; 37; 56

Judgement Text

VK;DJ VIHYH; VF/KDJ.K] T;IQJ U;K;IHB] T;IQJ IN THE INCOME TAX APPELLATE TRIBUNAL, JAIPUR BENCH B JAIPUR JH FOT; IKWY JKO] U;KF;D LNL; ,OA JH FOE FLAG ;KNO] YS[KK LNL; DS LE{K BEFORE: SHRI VIJAY PAL RAO, JM & SHRI VIKRAM SINGH YADAV, AM VK;DJ VIHY LA-@ ITA. NO. 512 & 513/JP/2019 FU/KZKJ.K O'K Z@ ASSESSMENT YEARS : 2011-12 & 2012-13 M/S JAIPUR ZILA DUGDH UTPADAK SAHAKARI SANGH LTD., JAIPUR DIARY, NEAR GANDHI NAGAR RAILWAY STATION, JAIPUR CUKE VS. DCIT CIRCLE-06 JAIPUR LFKK;H YS[KK LA-@THVKBZVKJ LA-@ PAN/GIR NO.: AAAAJ0767G VIHYKFKHZ@ APPELLANT IZR;FKHZ@ RESPONDENT VK;DJ VIHY LA-@ ITA. NO. 633 & 634/JP/2019 FU/KZKJ.K O'K Z@ ASSESSMENT YEARS : 2011-12 & 2012-13 DEPUTY COMMISSIONER OF INCOME-TAX, CIRCLE-6, JAIPUR CUKE VS. M/S JAIPUR ZILA DUGDH UTPADAK SAHAKARI SANGH LTD., JAIPUR DIARY, NEAR GANDHI NAGAR RAILWAY STATION, JAIPUR LFKK;H YS[KK LA-@THVKBZVKJ LA-@ PAN/GIR NO.: AAAAJ0767G VIHYKFKHZ@ APPELLANT IZR;FKHZ@ RESPONDENT FU/KZKFJRH DH VKSJ L S@ ASSESSEE BY : SHRI P. C. PARWAL (CA) JKTLO DH VKSJ LS @ REVENUE BY : SHRI KARNI DAN (JCIT) LQUOKBZ DH RKJH[ K@ DATE OF HEARING : 06/08/2019 MN?KKS'K.KK DH RKJH[ K@ DATE OF PRONOUNCEMENT : 02/09/2019 VKNS'K@ ORDER PER: VIKRAM SINGH YADAV, A.M. THESE ARE CROSS APPEALS FILED BY THE ASSESSEE AND THE REVENUE AGAINST THE RESPECTIVE ORDERS OF LD. CIT(A)-2, JAIP UR DATED 27.02.2019 ITA NO. 512, 633,513 & 634/JP/2019 M/S JAIPUR ZILA DUGDH UTPADAK SAHAKARI SANGH LTD., JAIPUR VS. DCIT, JAIPUR 2 FOR AY 2011-12 AND AY 2012-13 WHEREIN THE RESPECTIV E GROUNDS OF APPEAL ARE AS UNDER:- ITA. NO. 512/JP/2019 (FOR A.Y 2011-12) 1. THE LD. CIT(A) HAS ERRED ON FACTS AND IN LAW IN UPHOLDING VALIDITY OF ORDER PASSED BY AO U/S 147 OF IT ACT, 1961. 2. THE LD. CIT(A) HAS ERRED ON FACTS AND IN LAW IN HOLDING THAT INTEREST EXPENDITURE TO THE EXTENT OF RS. 87,91,593 /- IS ATTRIBUTABLE TO THE INTEREST INCOME OF RS. 1,46,40,834/- EARNED ON FDRS MAINTAINED WITH JAIPUR CENTRAL COOPERATIVE BANK LTD. (JCCB), T HEREBY DISALLOWING DEDUCTION U/S 80P TO THIS EXTENT. HE HAS FURTHER ER RED IN CONSIDERING THE AMOUNT OF INTEREST INCOME FROM JCCB AT RS. 1,46,40, 834/- INSTEAD OF RS. 1,49,40,834/-. 2.1 THE LD. CIT(A) HAS ERRED ON FACTS AND IN LAW IN NOT CONSIDERING THAT INVESTMENT IN FDRS IS MADE OUT OF OWN FUNDS AN D BORROWED FUNDS HAS BEEN UTILIZED FOR BUSINESS PURPOSE AND THEREFOR E, NO INTEREST EXPENDITURE CAN BE ATTRIBUTED FOR EARNING THE INTER EST INCOME. ITA. NO. 633/JP/2019 (FOR A.Y 2011-12) WHETHER IN THE FACTS AND CIRCUMSTANCES OF THE CAS E AND IN LAW, THE CIT(A) IS CORRECT IN HOLDING THAT THE INCOME RECEIV ED FROM INVESTMENTS MADE WITH JAIPUR CENTRAL CO-OPERATIVE BANK IS ELIGI BLE FOR DEDUCTION U/S 80-P(2)(D) OF THE I.T. ACT, 1961 AND THEREBY JUSTIF IED IN ALLOWING RELIEF OF RS. 1,49,40,834/-. ITA NO. 512, 633,513 & 634/JP/2019 M/S JAIPUR ZILA DUGDH UTPADAK SAHAKARI SANGH LTD., JAIPUR VS. DCIT, JAIPUR 3 ITA. NO. 513/JP/2019 (FOR A.Y 2012-13) 1. THE LD. CIT(A) HAS ERRED ON FACTS AND IN LAW IN UPHOLDING THE VALIDITY OF THE ORDER PASSED BY AO U/S 147 OF IT AC T, 1961. 2. THE LD. CIT(A) HAS ERRED ON FACTS AND IN LAW IN HOLDING THAT INTEREST EXPENDITURE TO THE EXTENT OF RS. 95,12,659 /- IS ATTRIBUTABLE TO THE INTEREST INCOME OF RS. 1,59,92,544/- EARNED ON FDRS MAINTAINED WITH JAIPUR CENTRAL COOPERATIVE BANK LTD., THEREBY DISALLOWING DEDUCTION U/S 80P TO THIS EXTENT. 2.1 THE LD. CIT(A) HAS ERRED ON FACTS AND IN LAW IN NOT CONSIDERING THAT INVESTMENT IN FDRS IS MADE OUT OF OWN FUNDS AN D BORROWED FUNDS HAS BEEN UTILIZED FOR BUSINESS PURPOSE AND THEREFOR E, NO INTEREST EXPENDITURE CAN BE ATTRIBUTED FOR EARNING THE INTER EST INCOME. ITA. NO. 634/JP/2019 (FOR A.Y 2012-13) WHETHER IN THE FACTS AND CIRCUMSTANCES OF THE CASE AND IN LAW, THE CIT(A) IS CORRECT IN HOLDING THAT THE INCOME RECEIV ED FROM INVESTMENTS MADE WITH JAIPUR CENTRAL CO-OPERATIVE BANK IS ELIGI BLE FOR DEDUCTION U/S 80-P(2)(D) OF THE I.T. ACT, 1961 AND THEREBY JUSTIF IED IN ALLOWING RELIEF OF RS. 1,59,92,544/-. 2. SINCE COMMON ISSUES ARE INVOLVED, ALL THESE APPE ALS WERE HEARD TOGETHER AND ARE BEING DISPOSED OFF BY THIS CONSOLI DATED ORDER. 3. WITH THE CONSENT OF BOTH THE PARTIES, THE MATTER PERTAINING TO AY 2011-12 IS TAKEN UP FOR THE PURPOSES OF PRESENT DISCUSSION. BRIEFLY STATED, THE FACTS OF CASE ARE THAT THE ASSESSEE IS A COOPERATIVE SOCIETY ENGAGED IN THE BUSINESS OF PROCUREMENT OF MILK, PRO CESSING IT TO PREPARE MILK PRODUCTS AND SALE THEREOF. IT FILED IT S RETURN OF INCOME ON ITA NO. 512, 633,513 & 634/JP/2019 M/S JAIPUR ZILA DUGDH UTPADAK SAHAKARI SANGH LTD., JAIPUR VS. DCIT, JAIPUR 4 29.09.2011 DECLARING TOTAL INCOME OF RS. 3,60,25,83 0/-. THE ASSESSMENT WAS COMPLETED U/S 143(3) ON 06.12.2014 AT TOTAL INC OME OF RS.4,55,67,387/-. SUBSEQUENTLY, THE ASSESSMENT WAS REOPENED BY ISSUANCE OF NOTICE U/S 148 AND REASSESSMENT WAS COM PLETED U/S 147 R/W 143(3) DISALLOWING THE CLAIM U/S 80P(2)(D) OF R S 1,49,40,834 AND ASSESSED AT A TOTAL INCOME OF RS 5,09,66,660. ON A PPEAL, THE LD CIT(A) ALLOWED THE CLAIM U/S 80P(2)(D), HOWEVER, RESTRICTE D THE QUANTUM OF CLAIM TO RS 58,49,241. AGAINST THE SAID FINDINGS O F THE LD CIT(A), BOTH THE ASSESSEE AND THE REVENUE ARE IN APPEAL BEFORE U S. 4. DURING THE YEAR UNDER CONSIDERATION, THE ASSESSE E RECEIVED INTEREST OF RS.1,49,40,834/- ON FDRS PLACED WITH TH E JAIPUR CENTRAL COOPERATIVE BANK ON WHICH DEDUCTION U/S 80P WAS CLA IMED. THE AO REFERRING TO THE DECISION OF HONBLE SUPREME COURT IN CASE OF TOTGARS COOPERATIVE SALES SOCIETY LTD. VS. ITO HELD THAT IF A SOCIETY IS REGULARLY EARNING INTEREST ON FUNDS (NOT REQUIRED IMMEDIATELY FOR BUSINESS PURPOSES), SUCH INTEREST INCOME IS TAXABLE U/S 56 U NDER THE HEAD INCOME FROM OTHER SOURCES AND NOT ELIGIBLE FOR DE DUCTION U/S 80P. FURTHER THE DEDUCTION U/S 80P(2)(D) IS AVAILABLE ON INTEREST OR DIVIDEND DERIVED FROM ITS INVESTMENT MADE IN CO-OPERATIVE SO CIETY AND NOT AVAILABLE IF INTEREST IS RECEIVED FROM INVESTMENT M ADE IN CO-OPERATIVE BANK DRAWING SUPPORT FROM THE PROVISIONS OF SECTION 80P(4) OF THE ACT. ACCORDINGLY, THE AO DISALLOWED THE CLAIM OF DEDUCTI ON U/S 80P AT RS.1,49,40,834/-. 5. ON APPEAL, THE LD. CIT(A) HELD THAT JAIPUR CENT RAL COOPERATIVE BANK IS A COOPERATIVE SOCIETY. THE ASSESSEE IS ALSO A COOPERATIVE SOCIETY. THUS, DEDUCTION U/S 80P(2)(D) IS ADMISSIBL E TO THE ASSESSEE IN RESPECT OF INCOME BY WAY OF INTEREST OR DIVIDEND DE RIVED BY THE ASSESSEE (COOPERATIVE SOCIETY) FROM ITS INVESTMENT WITH ANY OTHER ITA NO. 512, 633,513 & 634/JP/2019 M/S JAIPUR ZILA DUGDH UTPADAK SAHAKARI SANGH LTD., JAIPUR VS. DCIT, JAIPUR 5 COOPERATIVE SOCIETY (JAIPUR CENTRAL COOPERATIVE BAN K). HOWEVER, SHE HELD THAT THE TOTAL INTEREST INCOME OF THE ASSESSEE IS RS.5,86,88,487/- AGAINST WHICH TOTAL INTEREST EXPENDITURE IS RS.3,52 ,41,527/-. THEREFORE, THE INTEREST EXPENDITURE ATTRIBUTABLE TO THE INTERE ST INCOME OF RS.1,46,40,834/- FROM JCCB WOULD BE RS.87,91,593/- (RS.3,52,41,527*RS.1,46,40,834/ RS.5,86,88,487). TH US, THE NET INTEREST INCOME FROM JCCB WOULD BE RS.58,49,241/- ( RS.1,46,40,834- RS.87,91,593). ACCORDINGLY, THE AO WAS DIRECTED TO ALLOW DEDUCTION OF RS.58,49,241/- U/S 80P(2)(D). 6. DURING THE COURSE OF HEARING, THE LD. AR SUBMITT ED THAT DURING THE YEAR, THE ASSESSEE HAS RECEIVED INTEREST INCOME ON FDRS AMOUNTING TO RS.1,49,40,834/- FROM JAIPUR CENTRAL C O-OPERATIVE BANK LTD. IT IS A BANK REGISTERED UNDER THE RAJASTHAN C O-OPERATIVE SOCIETY ACT, 2001. THUS, INTEREST INCOME CLAIMED AS DEDUCT ION U/S 80P OF THE ACT IS AVAILABLE TO THE ASSESSEE AS THE JAIPUR CENT RAL CO-OPERATIVE BANK LTD. IS A CO-OPERATIVE SOCIETY. THE LD. CIT(A) HAS THEREFORE, RIGHTLY HELD THAT DEDUCTION U/S 80P(2)(D) IS AVAILABLE TO THE AS SESSEE IN RESPECT OF INTEREST RECEIVED FROM ANOTHER COOPERATIVE SOCIETY. RELIANCE IN THIS CONNECTION IS PLACED ON THE DECISION OF ITAT, JAIPU R BENCH IN CASE OF ITO VS. SHREE KESHORAI PATAN SAHAKARI SUGAR MILL (ITA NO. 418 & 419/JP/2017 ORDER DATED 31.01.2018). IN THIS CASE, THE ASSESSEE IS A CO-OPERATIVE SUGAR MILL. IT CLAIMED DEDUCTION U/S 8 0P(2) & 80P(2)(D) IN RESPECT OF INTEREST OF RS.2,65,43,870/- ON FIXED DE POSITS WITH CO- OPERATIVE BANKS. THE AO DISALLOWED THE DEDUCTIONS H OLDING THAT ASSESSEE IS NOT CARRYING OUT BANKING BUSINESS NOR T HE INCOME IS DERIVED FROM PROVIDING ANY CREDIT FACILITIES TO ITS MEMBERS . THE LD. CIT(A) ALLOWED CLAIM OF DEDUCTION U/S 80P IN RESPECT OF EN TIRE AMOUNT. THE LD. ITA NO. 512, 633,513 & 634/JP/2019 M/S JAIPUR ZILA DUGDH UTPADAK SAHAKARI SANGH LTD., JAIPUR VS. DCIT, JAIPUR 6 D/R SUBMITTED THAT ASSESSEE HAS EARNED INCOME ON AC COUNT OF INTEREST ON FDR WITH CO-OPERATIVE BANK AND NOT ON THE AMOUNT DEPOSITED WITH OTHER CO-OPERATIVE SOCIETIES AND THEREFORE, DEDUCTI ON U/S 80P(2)(D) IS NOT AVAILABLE. IT WAS HELD THAT THE ONLY CONDITION FOR AVAILING DEDUCTION U/S 80P(2)(D) IS THAT INCOME IS BY WAY OF INTEREST OR DIVIDEND DERIVED BY CO-OPERATIVE SOCIETY FROM ITS INVESTMENT WITH ANY O THER CO-OPERATIVE SOCIETY. CO-OPERATIVE BANK IS TO BE TREATED AS CO-O PERATIVE SOCIETY FOR THE PURPOSE OF INTEREST INCOME ON INVESTMENT IN SUC H CO-OPERATIVE BANK. HENCE, ASSESSEE IS ELIGIBLE FOR DEDUCTION U/S 80P(2)(D) IN RESPECT OF THE INTEREST INCOME FROM INVESTMENT MADE WITH TH E CO-OPERATIVE BANK. IN VIEW OF ABOVE, GROUND OF THE DEPARTMENT BE DISMISSED. 7. IT WAS FURTHER SUBMITTED THAT THE LD. CIT(A) AFT ER HOLDING THAT ASSESSEE IS ENTITLED TO DEDUCTION U/S 80P(2)(D) IN RESPECT OF INTEREST RECEIVED ON FDR MADE WITH JCCB OBSERVED THAT ASSESS EE HAS INCURRED TOTAL INTEREST EXPENDITURE OF RS.3,52,41,527/- AND THEREFORE, INTEREST EXPENDITURE ATTRIBUTABLE TO THE INTEREST INCOME OF RS.1,46,40,834/- FROM JCCB WOULD BE RS.87,91,593/- AND THUS, DISALLOWED T HE CLAIM U/S 80P(2)(D) TO THAT EXTENT. 8. IN THIS REGARD, IT WAS SUBMITTED THAT ASSESSEE H AS EARNED INTEREST OF RS. 1,49,40,834/- ON FDRS IN JAIPUR CENTRAL COOP ERATIVE BANK AND NOT RS.1,46,40,834/- AS STATED BY LD. CIT(A). FURTH ER, THE ASSESSEE HAS NOT INCURRED ANY INTEREST EXPENDITURE IN EARNING TH E INTEREST INCOME ON FDR WITH JAIPUR CENTRAL CO-OPERATIVE BANK. THIS IS BECAUSE ASSESSEE HAS INVESTED ITS OWN FUNDS FOR MAKING INVESTMENT IN FDR WHICH IS EVIDENT FROM THE FACT THAT ASSESSEE HAS INTEREST FR EE FUNDS OF RS.49,97,82,216/- AS ON 31.03.2011 AGAINST INVESTME NT IN FDR OF ITA NO. 512, 633,513 & 634/JP/2019 M/S JAIPUR ZILA DUGDH UTPADAK SAHAKARI SANGH LTD., JAIPUR VS. DCIT, JAIPUR 7 RS.97.48 CR., OUT OF WHICH INVESTMENT IN FDR WITH J CCB IS RS. 20 CR. AS PER THE FOLLOWING DETAILS:- SHARE CAPITAL RS.36,92,54,756/- ACCUMULATED PROFITS RS. 7,95,17,731/- PROFITS FOR THE YEAR RS. 5,10,09,729/- -------------------- RS.49,97,82,216/- THUS, INTEREST FREE FUND IS MUCH MORE THAN THE INVE STMENT IN FDR WITH JCCB. IT IS A SETTLED LAW THAT IF BOTH INTEREST FR EE FUNDS AND INTEREST BEARING FUNDS ARE AVAILABLE, THEN PRESUMPTION WOULD ARISE THAT INVESTMENTS WOULD BE OUT OF THE INTEREST FREE FUNDS GENERATED OR AVAILABLE WITH THE COMPANY, IF THE INTEREST FREE FU NDS WERE SUFFICIENT TO MEET THE INVESTMENTS. THE HONBLE SUPREME COURT IN CASE OF CIT VS. RELIANCE INDUSTRIES LTD. (2019) 175 DTR 1 HAS HELD TRIBUNAL HAVING FOUND THAT THE INTEREST FREE FUNDS AVAILABLE TO THE ASSESSEE WERE SUFFICIENT TO MEET ITS INVESTMENT, IT COULD BE PRES UMED THAT FUNDS WERE GIVEN TO SUBSIDIARIES OUT OF INTEREST FREE FUNDS AN D THEREFORE, INTEREST REFERABLE TO FUNDS GIVEN TO SUBSIDIARIES IS ALLOWAB LE AS DEDUCTION UNDER SEC. 36(1)(III) . HENCE, THE OBSERVATION OF LD. CIT(A) THAT ASSESSE E HAS INCURRED INTEREST EXPENDITURE OF RS.87,91,593/- TO EARN THE INTEREST INCOME OF RS.1,49,40,834/- FROM JCCB IS INCORRECT. 9. IT WAS FURTHER SUBMITTED THAT THE POSITION OF TH E INTEREST EXPENDITURE INCURRED AND INTEREST INCOME EARNED AS REFLECTED IN THE PROFIT & LOSS ACCOUNT ARE AS UNDER:- INTEREST INCOME - INTEREST ON FDR - INTEREST ON OTHERS 5,79,17,121/ - 7,71,366/- TOTAL INTEREST INCOME 5,86,88,487/- 5,86,88,487/- INTEREST EXPENDITURE - INTEREST ON OD - INTEREST ON DCS 97,93,342/- 25,46,774/- ITA NO. 512, 633,513 & 634/JP/2019 M/S JAIPUR ZILA DUGDH UTPADAK SAHAKARI SANGH LTD., JAIPUR VS. DCIT, JAIPUR 8 - INTEREST ON TL - INTEREST ON WC 46,10,444/- 1,82,90,967/- TOTAL INTEREST EXPENDITURE 3,52,41,527/ - 3,52,41,527/ - NET INTEREST INCOME 2,34,46,960/- LESS: INTEREST RECEIVED ON FDR WITH JCCB 1,49,40,834/- NET INTEREST INCOME OTHER THAN INTEREST FROM JCCB 85,06,126/- FROM THE ABOVE TABLE, IT CAN BE NOTED THAT EVEN IF INTEREST FROM JCCB IS EXCLUDED, THE NET INTEREST INCOME DECLARED BY THE A SSESSEE IS RS.85,06,126/-. THUS, WHEN EXPENDITURE ON INTEREST IS LOWER THAN THE INTEREST INCOME EARNED ON FDRS, NO PART OF INTEREST EXPENDITURE CAN BE ATTRIBUTED TO THE EARNING OF THE INTEREST INCOME. 10. IT WAS FURTHER SUBMITTED THAT EVEN OTHERWISE AL SO, INTEREST EXPENDITURE IS INCURRED ON THE LOAN TAKEN FOR WORKI NG CAPITAL AND FIXED ASSETS. THE INVESTMENT IN THESE ASSETS ARE MUCH MOR E THAN THE LOAN TAKEN AS EVIDENT FROM THE FOLLOWING TABLE :- LOAN TAKEN -WORKING CAPITAL LOAN -OVER DRAFT -NDDB LOAN -DCS 60,00,00,000/- 19,95,06,124/- 7,62,72,875/- 16,55,40,001/- TOTAL LOAN 104,13,19,000/- 104,13,19,000/- INVESTMENT IN STOCK AND DEBTORS -SUNDRY DEBTORS -STOCK IN TRADE 59,44,28,770/- 68,52,81,030/- TOTAL INVESTMENT IN STOCK AND DEBTORS 127,97,09,800/- 127,97,09,800/- THUS, THE ENTIRE BORROWED FUNDS ARE UTILISED FOR TH E PURPOSE FOR WHICH IT IS TAKEN AND THEREFORE, NO PART OF INTERES T EXPENDITURE CAN BE ATTRIBUTED TO EARNING OF THE INTEREST INCOME. ITA NO. 512, 633,513 & 634/JP/2019 M/S JAIPUR ZILA DUGDH UTPADAK SAHAKARI SANGH LTD., JAIPUR VS. DCIT, JAIPUR 9 IN VIEW OF ABOVE, IT WAS SUBMITTED THAT THE AO BE D IRECTED TO ALLOW DEDUCTION U/S 80P(2)(D) AS CLAIMED BY THE ASSESSEE BY DISMISSING THE GROUND OF THE DEPARTMENT AND ALLOWING THE GROUN D OF THE ASSESSEE. 11. THE LD DR WAS HEARD WHO HAS VEHEMENTLY ARGUED T HE MATTER AND SUPPORTED THE FINDINGS OF THE LOWER AUTHORITIES. H E TOOK US THROUGH THE FINDINGS OF THE AO AND THE LD CIT(A) WHICH WE HAVE ALREADY TAKEN NOTE OF AND HENCE, NOT REPEATED FOR SAKE OF BREVITY. 12. 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 COOP ERATIVE SOCIETY WITH JAIPUR CENTRAL COOPERATIVE BANK LTD IS ELIGIBL E FOR DEDUCTION U/S 80P(2)(D) OF THE ACT WHICH READS AS UNDER: 80P. (1) WHERE, IN THE CASE OF AN ASSESSEE BEING A CO-O PERATIVE 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 SPECIFIED IN SUB-SECTION (2), IN COMPUTING THE TOTAL INCOME OF THE ASSESSEE. (2) THE SUMS REFERRED TO IN SUB-SECTION (1) SHALL B E THE FOLLOWING, NAMELY : (A) .. (B) .. (C) .. (D) IN RESPECT OF ANY INCOME BY WAY OF INTEREST OR DIVI DENDS DERIVED ITA NO. 512, 633,513 & 634/JP/2019 M/S JAIPUR ZILA DUGDH UTPADAK SAHAKARI SANGH LTD., JAIPUR VS. DCIT, JAIPUR 10 BY THE CO- OPERATIVE SOCIETY FROM ITS INVESTMENTS WITH ANY OTH ER CO-OPERATIVE SOCIETY, THE WHOLE OF SUCH INCOME. 13. THE AFORESAID PROVISIONS HAVE BEEN EXAMINED AT LENGTH BY THIS BENCH IN CASE OF ITO VS. SHREE KESHORAI PATAN SAHAKARI SUGAR MILL (SUPRA) AND THE 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 PRO VISION IS ANY INCOME BY WAY OF INTEREST OR DIVIDEND DERIVED BY THE COOPE RATIVE SOCIETY FROM ITS INVESTMENT WITH ANY OTHER COOPERATIVE SOCIETY, THE WHOLE OF SUCH INCOME IS ALLOWABLE FOR DEDUCTION U/S 80P(1). THERE FORE, THERE IS NO CONDITION FOR THE ASSESSEE SOCIETY TO ENGAGED IN TH E ACTIVITY OF PROVIDE CREDITS TO THE MEMBERS OR BANKING BUSINESS FOR AVAI LING THE DEDUCTION U/S 80P(2)(D) READ WITH SECTION 80P(1) OF THE ACT. AS REGARDS THE COOPERATIVE BANK SHALL BE TREATED AS COOPERATIVE SO CIETIES FOR THE PURPOSE OF THE INTEREST INCOME ON INVESTMENT IN SUC H COOPERATIVE BANK U/S 80P(2)(D) THE MUMBAI BENCH OF THIS TRIBUNAL IN CASE OF LANDS END CO-OPERATIVE HOUSING SOCIETY LTD. VS. ITO(SUPRA), A FTER CONSIDERING THE DECISION OF THE HONBLE SUPREME COURT IN CASE OF TO TAGARS CO-OPERATIVE SALE SOCIETY LTD. VS. ITO (SUPRA) HAS CONSIDERED AN D DECIDED THIS ISSUE IN PARA 8.3 AS UNDER:- 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 FO LLOWING THE DECISION IN THE CASE OF SANDRA SAMRUDDIHI CO-OPERATIVE HOUSING SOCI ETY LTD. (SUPRA) WHICH WAS PASSED ON THE BASIS OF THE DECISION PASSED BY THE H ON'BLE SUPREME COURT IN THE ITA NO. 512, 633,513 & 634/JP/2019 M/S JAIPUR ZILA DUGDH UTPADAK SAHAKARI SANGH LTD., JAIPUR VS. DCIT, JAIPUR 11 CASE OF TOTAGAR'S CO-OPERATIVE SALE SOCIETY LTD. IN THE CASE OF TOTAGAR'S CO- OPERATIVE SALE SOCIETY LTD V/S ITAT (SUPRA) THE HON 'BLE SUPREME COURT WHILE INTERPRETING THE SECTION 80P(2)(A)(0 OF THE ACT HEL D THAT SURPLUS FUNDS NOT IMMEDIATELY REQUIRED IN THE BUSINESS AND INVESTED I N THE SHORT TERM DEPOSIT WOULD BE ASSESSABLE UNDER THE HEAD 'INCOME FROM OTHER SOU RCES' WHERE THE CO- OPERATIVE SOCIETY IS ENGAGED IN CARRYING ON BUSINES S OF BANKING OR PROVIDING CREDIT FACILITIES TO ITS MEMBERS AND CONSEQUENTLY NO DEDUC TION IS ALLOWABLE U/S 80P(2)(A)(I) OF THE ACT. WHEREAS IN THE CASE BEFORE US THE ISSUE IS WHETHER A CO- OPERATIVE SOCIETY WHICH HAS DERIVED INCOME ON INVES TMENT WITH COOPERATIVE BANKS IS ENTITLED TO DEDUCTION U/S 80P(2)(D). THE PROVISI ONS OF SECTION 80P(2)(D) OF THE ACT PROVIDE DEDUCTION IN RESPECT OF INCOME BY WAY O F INTEREST OR DIVIDEND ON INVESTMENTS MADE WITH OTHER COOPERATIVE SOCIETY. FO R THE PURPOSES OF BETTER PROPER UNDERSTANDING OF THESE TWO PROVISIONS THE RE LEVANT 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 PRO VISIONS OF THIS SECTION, THE SUMS SPECIFIED IN SUB-SECTION (2), IN COMPUTING THE TOTAL INCOME OF THE ASSESSEE. 2. THE SUMS REFERRED TO IN SUB-SECTION (1) SHALL BE 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 THE AMOUNT OF PROFITS AND GAINS OF BUS INESS ATTRIBUTABLE TO ANY ONE OR MORE OF MUCH ATTRIBUTES. ITA NO. 512, 633,513 & 634/JP/2019 M/S JAIPUR ZILA DUGDH UTPADAK SAHAKARI SANGH LTD., JAIPUR VS. DCIT, JAIPUR 12 (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 RESPECT 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 DE DUCTION IN RESPECT OF INCOME BY WAY INTEREST AND DIVIDEND DERIVED BY ASSESSEE FR OM ITS INVESTMENTS WITH OTHER COOPERATIVE SOCIETY. THUS IT IS AMPLY CLEAR T HAT 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 SOURCE S IF IT CARRIES ON BUSINESS OF THE BANKING OR PROVIDING CREDIT FACILITIES TO IT S MEMBERS AND HAS INCOME ASSESSABLE UNDER THE HEAD BUSINESS WHEREAS FOR CLAI MING U/S 80P(2)(D) IT MUST HAVE INCOME OF INTEREST AND DIVIDEND ON INVESTMENTS WITH OTHER CO-OPERATIVE SOCIETY MAY OR MAY NOT BE ENGAGED IN THE BANKING FO R PROVIDING CREDIT FACILITIES TO ITS MEMBERS AND THE HEAD UNDER WHICH THE INCOME IS ASSESSABLE IS NOT MATERIAL FOR THE CLAIM OF DEDUCTION UNDER THIS SECT ION. NOW WILL EVALUATE THE ASSESSEE'S CASE IN THE LIGHT OF THE DECISION OF THE HON'BLE SUPREME COURT. THE HONBLE SUPREME COURT IN THE CASE OF TOTAGAR'S CO-OP ERATIVE SALE SOCIETY LTD.(SUPRA) HELD THAT A SOCIETY HAS SURPLUS FUNDS W HICH ARE INVESTED IN SHORT TERM DEPOSITS WHERE THE SOCIETY IS ENGAGED IN THE B USINESS OF BANKING OR PROVIDING CREDIT FACULTIES TO ITS MEMBERS IN THAT C ASE THE SAID INCOME FROM SHORT TERM DEPOSITS SHALL BE TREATED AND ASSESSED AS INCO ME FROM OTHER SOURCES AND DEDUCTION U/S 80(P)(2)(A)(0 WOULD NOT BE AVAILABLE MEANING THEREBY THAT DEDUCTION U/S 80(P)(2)(A)(0 IS AVAILABLE ONLY IN RE SPECT 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 ITA NO. 512, 633,513 & 634/JP/2019 M/S JAIPUR ZILA DUGDH UTPADAK SAHAKARI SANGH LTD., JAIPUR VS. DCIT, JAIPUR 13 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 VIE W THESE FACTS AND CIRCUMSTANCES WE ARE OF THE CONSIDERED VIEW THAT TH E ASSESSEE IS ENTITLED 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 ALLOWED BY REVERSING THE ORDER OF THE CIT(A). THE AO IS DIRECT LY 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 GUJARA T HIGH COURT IN THE CASE OF SURAT VANKAR SAHAKARI SANGH LTD. VS. ACIT, 72 TAXMANN.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 PROVISION S OF THE ACT SHALL ALONE BE DEEMED TO BE THE AMOUNT OF INCOME OF THAT NATURE. WHAT THE SECTION MEANS IS THAT THE NET INCOME BY WA Y OF INTEREST COMPUTED IN THE MANNER PROVIDED BY THE PROVISIONS O F THE ACT SHALL ALONE BE TAKEN INTO ACCOUNT FOR COMPUTING THE BENEF IT. BUT IT MUST BE NOTED THAT PAYMENT OF INTEREST UNDER A LOAN TRAN SACTION INCURRED FOR THE PURPOSE OF DERIVING INCOME FROM BUSINESS IS NOT AN ITEM WHICH ARISES IN THE COMPUTATION OF INTEREST INCOME 'IN ACCORDANCE ITA NO. 512, 633,513 & 634/JP/2019 M/S JAIPUR ZILA DUGDH UTPADAK SAHAKARI SANGH LTD., JAIPUR VS. DCIT, JAIPUR 14 WITH THE PROVISIONS' OF THE ACT. THE SAID AMOUNT HA S TO BE PAID IRRESPECTIVE OF WHETHER ANY INTEREST INCOME IS OTHE RWISE RECEIVED OR NOT. THOUGH THE INTEREST IS PAYABLE TO THE SAME BAN K, THE FACT REMAINS THAT THE AMOUNT OF INCOME BY-WAY OF INTERES T IS NOT CALCULATED UNDER THE PROVISIONS OF THE ACT WITH REF ERENCE TO SUCH OUTGOINGS WHICH FALL UNDER DIFFERENT HEADS. THE ASS ESSEE IS ENTITLED TO DEDUCTION UNDER SECTION 37 OF ALL EXPENDITURE IN CURRED FOR THE PURPOSE OF DERIVING THE BUSINESS INCOME, AND IT IS UNDER THAT HEAD THAT THE INTEREST PAID ON THE LOAN TAKEN FROM THE B ANK IS DEDUCTED. THE NET AMOUNT OF INTEREST CONTEMPLATED BY SECTION 80AB SHOULD TAKE IN THE NET AMOUNT ARRIVED AT AFTER MEETING THE EXPENSES DEDUCTIBLE FROM THAT ITEM UNDER THE PROVISIONS OF T HE ACT AS EXPLAINED ABOVE. THAT IS NOT THE CASE HERE. THEREFO RE, SECTION 80AB HAS NO APPLICATION TO THE FACTS OF THESE CASES. THE INTEREST PAID ON THE LOAN TRANSACTIONS HAS TO BE DEDUCTED FROM THE B USINESS INCOME, AND NOT FROM THE INTEREST RECEIVED FROM THE BANK ON THE FIXED DEPOSITS. THE ASSESSEES WERE THEREFORE RIGHT IN THE SUBMISSIONS WHICH THEY MADE BEFORE THE COMMISSIONER OF INCOME-T AX IN THE REVISION PETITIONS WHICH THEY FILED. THIS ASPECT OF THE MATTER HAS BEEN OVERLOOKED 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: '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 N OT ESTABLISHED THAT THE ASSESSEE HAD DERIVED THE INTEREST BY INVES TING ALL THE AMOUNT OF SURPLUS FUNDS. IT IS FURTHER CONTENDED BY MR. GUPTA THAT ITA NO. 512, 633,513 & 634/JP/2019 M/S JAIPUR ZILA DUGDH UTPADAK SAHAKARI SANGH LTD., JAIPUR VS. DCIT, JAIPUR 15 THE ASSESSEE HAS PAID INTEREST TO JALANDHAR CENTRAL CO-OPERATIVE BANK AND HAS ALSO RECEIVED INTEREST FROM THE SAID C O- OPERATIVE BANK, THEREBY SHOWING THAT THE ASSESSEE HAS ON THE AGGREGATE PAID INTEREST TO THE BANK AND, THEREFORE, NO DEDUCTION U NDER SECTION 80P(2)(D) CAN BE ALLOWED. TO APPRECIATE THIS ARGUME NT, WE HAVE TO LOOK TO THE PROVISIONS 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 INVESTMENTS WITH ANY OTHER CO- OPERATIVE SOCIETY, THE WHOLE OF SUCH INCOME.' 6. SO FAR AS THE PRINCIPLE OF INTERPRETATION APPLIC ABLE TO A TAXING STATUTE IS CONCERNED, WE CAN DO NO BETTER THAN TO Q UOTE THE BY-NOW CLASSIC WORDS OF ROWLATT J., IN CAPE BRANDY SYNDICA TE V. IRC [1921] 1 KB 64, 71 : '...IN A TAXING ACT, ONE HAS TO LOOK MERELY AT WHAT IS CLEARLY SAID. THERE IS NO ROOM FOR ANY INTENDMENT. THERE IS NO EQ UITY ABOUT A TAX. THERE IS NO PRESUMPTION AS TO A TAX. NOTHING I S TO BE READ IN, NOTHING IS TO BE IMPLIED. ONE CAN ONLY LOOK FAIRLY AT THE LANGUAGE USED,' 7. THE PRINCIPLE LAID DOWN BY ROWLATT J., HAS ALSO BEEN TIME AND AGAIN APPROVED AND APPLIED BY THE SUPREME COURT IN DIFFERENT CASES INCLUDING THE ONE, HANSRAJ GORDHANDAS V. H. H. DAVE , ASSISTANT COLLECTOR OF CENTRAL EXCISE AND CUSTOMS, AIR 1970 S C 755, 759. 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 T O SOURCE OF THE ITA NO. 512, 633,513 & 634/JP/2019 M/S JAIPUR ZILA DUGDH UTPADAK SAHAKARI SANGH LTD., JAIPUR VS. DCIT, JAIPUR 16 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 IMMAT ERIAL WHETHER ANY INTEREST PAID TO THE CO- OPERATIVE SOCIETY EXCEEDS THE INTEREST RECEIVED FROM THE BANK ON INVESTMENTS. THE REVENUE IS NOT REQUIRED TO LOOK TO THE NATURE OF THE INVESTMENT WH ETHER IT WAS FROM ITS SURPLUS FUNDS OR OTHERWISE. THE ACT DOES N OT SPEAK OF ANY ADJUSTMENT AS SOUGHT TO BE MADE OUT BY LEARNED COUN SEL FOR THE REVENUE. THE PROVISION DOES NOT INDICATE ANY SUCH A DJUSTMENT IN REGARD TO INTEREST DERIVED FROM THE CO-OPERATIVE SO CIETY FROM ITS INVESTMENT IN ANY OTHER CO-OPERATIVE SOCIETY. THERE FORE, WE DO NOT AGREE WITH THE ARGUMENT ADVANCED BY LEARNED COUNSEL FOR THE REVENUE. IN OUR OPINION, THE LEARNED TRIBUNAL WAS R IGHT IN LAW IN ALLOWING DEDUCTION UNDER SECTION 80P(2)(D) OF THE I NCOME- TAX ACT, 1961. IN RESPECT OF INTEREST OF RS. 4,00,919 ON ACC OUNT OF INTEREST 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.' 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 SEC TION 12(2). THE HIGH COURT HELD THAT IF AN ASSESSEE HAD NO OPTION E XCEPT TO INCUR AN EXPENDITURE IN ORDER TO MAKE THE EARNING OF AN INCO ME POSSIBLE, THEN UNDOUBTEDLY THE EXERCISE OF THAT OPTION IS COM PULSORY AND ANY EXPENDITURE INCURRED BY REASON OF THE EXERCISE OF T HAT OPTION WOULD ITA NO. 512, 633,513 & 634/JP/2019 M/S JAIPUR ZILA DUGDH UTPADAK SAHAKARI SANGH LTD., JAIPUR VS. DCIT, JAIPUR 17 COME WITHIN THE AMBIT OF SECTION 12(2) OF THE INDIA N INCOME-TAX ACT BUT WHERE THE OPTION HAS NO CONNECTION WITH THE CARRYING ON OF THE BUSINESS OR THE EARNING OF THE INCOME AND THE O PTION DEPENDS UPON PERSONAL CONSIDERATIONS OR UPON MOTIVES OF THE ASSESSEE, THAT EXPENDITURE CANNOT POSSIBLY COME WITHIN THE AMBIT O F SECTION 12(2). IN THE PRESENT CASE, THE LOAN WAS TAKEN FOR BUSINES S PURPOSE MORE PARTICULARLY PURCHASE OF YARN AND NOT FOR FIXED DEP OSITS. 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 QUA SHED 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 UNDE R 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, WHEREAS THE WORD 'CO-OPERATIVE BANK' IS A WO RD OF LIMITED ITA NO. 512, 633,513 & 634/JP/2019 M/S JAIPUR ZILA DUGDH UTPADAK SAHAKARI SANGH LTD., JAIPUR VS. DCIT, JAIPUR 18 EXTENT, WHICH MERELY DEMARCATES AND IDENTIFIES A PA RTICULAR SPECIES OF THE GENUS CO-OPERATIVE SOCIETIES. CO-OPERATIVE SOCI ETY CAN BE OF DIFFERENT NATURE, AND CAN BE INVOLVED IN DIFFERENT ACTIVITIES; THE CO- OPERATIVE SOCIETY BANK IS MERELY A VARIETY OF THE C O-OPERATIVE SOCIETIES. THUS THE CO-OPERATIVE BANK WHICH IS A SPECIES OF TH E GENUS WOULD NECESSARILY BE COVERED BY THE WORD 'CO-OPERATIVE SO CIETY'. 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 C O-OPERATIVE SOCIETY BANK WOULD BE INCLUDED IN THE WORDS 'CO-OPERATIVE S OCIETY'. 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 TOT AL INCOME. 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 REQUIRED 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 P RESENT CASE. ITA NO. 512, 633,513 & 634/JP/2019 M/S JAIPUR ZILA DUGDH UTPADAK SAHAKARI SANGH LTD., JAIPUR VS. DCIT, JAIPUR 19 6.4 THUS, THE HONBLE HIGH COURT HAS HELD THAT THE CO-OPERATIVE BANK IS CONSIDERED TO A COOPERATIVE SOCIETY FOR THE PURP OSE OF SECTION 80P(2)(D). ACCORDINGLY, IN VIEW OF THE DECISIONS AS CITED (SUPRA), WE DO NOT FIND ANY ERROR OR ILLEGALITY IN THE ORDERS OF T HE 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-O PERATIVE BANKS. 14. THEREFORE, IN LIGHT OF THE AFORESAID DECISION, IN THE INSTANT CASE, FOR THE PURPOSES OF SECTION 80P(2)(D) OF THE ACT, J AIPUR CENTRAL COOPERATIVE BANK LTD SHALL BE TREATED AS A CO-OPERA TIVE SOCIETY. THEREFORE, INTEREST ON FDRS PLACED BY THE ASSESSEE SOCIETY WITH SUCH COOPERATIVE SOCIETY SHALL BE ELIGIBLE FOR DEDUCTION U/S 80P(2)(D) OF THE ACT. 15. NOW, COMING TO A RELATED ISSUE AS TO WHETHER B Y VIRTUE OF PROVISIONS OF SECTION 80P(4) OF THE ACT, THE CLAIM OF THE ASSESSEE UNDER SECTION 80(P)(2)(D) CAN BE DENIED TO THE ASSESSEE S OCIETY. 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 AGRICULT URAL CREDIT SOCIETY OR A PRIMARY CO-OPERATIVE AGRICULTURAL AND RURAL DEVELOPMENT BANK. 16. THE COORDINATE BENCH IN CASE OF KALIANDAS UDYOG BHAVAN PREMISES CO-OP SOCIETY LTD. VS INCOME-TAX OFFICER-2 1(2)(1), MUMBAI [2018] 94 TAXMANN.COM 15 HAD AN OCCASION TO EXAMIN E SIMILAR CONTENTION AND IT WAS HELD THAT THOUGH THE CO-OPERATIVE BANK PURSUANT TO THE INSERTION OF SUB-SECTION (4) OF SEC . 80P WOULD NO MORE ITA NO. 512, 633,513 & 634/JP/2019 M/S JAIPUR ZILA DUGDH UTPADAK SAHAKARI SANGH LTD., JAIPUR VS. DCIT, JAIPUR 20 BE ENTITLED FOR CLAIM OF DEDUCTION UNDER SEC. 80P O F THE ACT, HOWEVER, AS A CO-OPERATIVE BANK CONTINUES TO BE A CO-OPERATI VE SOCIETY REGISTERED UNDER THE CO-OPERATIVE SOCIETIES ACT, 1912 (2 OF 19 12), OR UNDER ANY OTHER LAW FOR THE TIME BEING ENFORCED IN ANY STATE FOR THE REGISTRATION OF CO-OPERATIVE SOCIETIES, THEREFORE, THE INTEREST INC OME DERIVED BY A CO- OPERATIVE SOCIETY FROM ITS INVESTMENTS HELD WITH A CO-OPERATIVE BANK, WOULD BE ENTITLED FOR CLAIM OF DEDUCTION UNDER SEC. 80P(2)(D) OF THE ACT. WE SEE NO REASON TO DEVIATE FROM THE SAME AND AGREE WITH THE AFORESAID VIEW TAKEN BY THE CO-ORDINATE BENCH AND. THE RELEVANT FINDINGS OF THE CO-ORDINATE BENCH READ AS UNDER: 6. WE HAVE HEARD THE AUTHORISED REPRESENTATIVES FOR B OTH THE PARTIES, PERUSED THE ORDERS OF THE LOWER AUTHORITIE S AND THE MATERIAL AVAILABLE ON RECORD. WE FIND THAT OUR INDU LGENCE IN THE PRESENT APPEAL HAS BEEN SOUGHT TO ADJUDICATE AS TO WHETHER THE CLAIM OF THE ASSESSEE FOR DEDUCTION UNDER SECTION 8 0P(2)(D), IN RESPECT OF INTEREST INCOME EARNED FROM THE INVESTME NTS MADE WITH THE CO-OPERATIVE BANKS IS IN ORDER OR NOT. WE FIND THAT THE ISSUE INVOLVED IN THE PRESENT APPEAL HINGES AROUND THE ADJUDICATION OF THE SCOPE AND GAMUT OF SUB-SECTION (4) OF SEC. 80P, AS HAD BEEN MADE AVAILABLE ON THE STATUTE BY T HE LEGISLATURE VIDE THE FINANCE ACT 2006, WITH EFFECT FROM 01.04.2 007. WE FIND THAT THE LOWER AUTHORITIES HAD TAKEN A VIEW THAT PU RSUANT TO INSERTION OF SUB-SECTION (4) OF SEC. 80P, THE ASSES SEE WOULD NO MORE BE ENTITLED FOR CLAIM OF DEDUCTION UNDER SEC. 80P(2)(D) OF THE INTEREST INCOME EARNED ON THE AMOUNTS PARKED AS INVESTMENTS WITH CO-OPERATIVE BANKS, OTHER THAN A P RIMARY AGRICULTURAL CREDIT SOCIETY OR A PRIMARY CO-OPERATI VE AGRICULTURAL AND RURAL DEVELOPMENT BANK. WE FIND THAT THE LOWER AUTHORITIES ITA NO. 512, 633,513 & 634/JP/2019 M/S JAIPUR ZILA DUGDH UTPADAK SAHAKARI SANGH LTD., JAIPUR VS. DCIT, JAIPUR 21 HAD OBSERVED THAT AS THE CO-OPERATIVE BANK WITH WHI CH THE SURPLUS FUNDS OF THE ASSESSEE WERE PARKED AS INVEST MENTS, 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 WOUL D NOT 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 AGREEMENT WITH THE VIEW TAKEN BY THE LOWER AUTHORIT IES. BEFORE PROCEEDING FURTHER, WE MAY HEREIN REPRODUCE THE REL EVANT EXTRACT OF THE SAID STATUTORY PROVISION, VIZ. SEC. 80P(2)(D ), AS THE SAME WOULD HAVE 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 ACCORD ANCE WITH AND SUBJECT TO THE PROVISIONS OF THIS 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 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 INVEST MENTS WITH ANY OTHER CO-OPERATIVE SOCIETY, THE WHOLE OF SUCH INCOM E;' ITA NO. 512, 633,513 & 634/JP/2019 M/S JAIPUR ZILA DUGDH UTPADAK SAHAKARI SANGH LTD., JAIPUR VS. DCIT, JAIPUR 22 THUS, FROM A PERUSAL OF THE AFORESAID SEC. 80P(2)(D ) IT CAN SAFELY BE GATHERED THAT INCOME BY WAY OF INTEREST INCOME D ERIVED 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 MORE BE APPLICABLE IN RELATION TO ANY CO-OPERATIVE BANK, OTHER THAN A PRIMARY AGRICULTURAL CREDIT SOCIETY OR A PRIMARY CO -OPERATIVE AGRICULTURAL AND RURAL DEVELOPMENT BANK, BUT HOWEVE R, 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 RESPECT OF THE INTEREST INCOME ON THEIR INVESTME NTS PARKED WITH A CO-OPERATIVE BANK. WE HAVE GIVEN A THOUGHTFUL CON SIDERATION TO THE ISSUE BEFORE US AND ARE OF THE CONSIDERED VIEW THAT AS LONG AS IT IS PROVED THAT THE INTEREST INCOME IS BEING DERI VED BY A CO- OPERATIVE SOCIETY FROM ITS INVESTMENTS MADE WITH AN Y OTHER CO- OPERATIVE SOCIETY, THE CLAIM OF DEDUCTION UNDER THE AFORESAID STATUTORY PROVISION, VIZ. SEC. 80P(2)(D) WOULD BE D ULY AVAILABLE. WE MAY HEREIN OBSERVE THAT THE TERM 'CO-OPERATIVE S OCIETY' 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, 19 12 (2 OF 1912), ITA NO. 512, 633,513 & 634/JP/2019 M/S JAIPUR ZILA DUGDH UTPADAK SAHAKARI SANGH LTD., JAIPUR VS. DCIT, JAIPUR 23 OR UNDER ANY OTHER LAW FOR THE TIME BEING IN FORCE IN ANY STATE 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 TI ME BEING ENFORCED IN ANY STATE FOR THE REGISTRATION OF CO-OP ERATIVE SOCIETIES, THEREFORE, THE INTEREST INCOME DERIVED BY A CO-OPER ATIVE SOCIETY FROM ITS INVESTMENTS HELD WITH A CO-OPERATIVE BANK, WOULD BE ENTITLED FOR CLAIM OF DEDUCTION UNDER SEC.80P(2)(D) OF THE ACT. 8. WE SHALL NOW ADVERT TO THE JUDICIAL PRONOUNCEMENTS 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 DEDUCTION UNDER SEC. 80P(2)(D) FOR THE INTEREST INCOME DERIVE D 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) AN D HON'BLE HIGH COURT OF GUJARAT IN THE CASE OF STATE BANK OF INDIA (SUPRA), ITA NO. 512, 633,513 & 634/JP/2019 M/S JAIPUR ZILA DUGDH UTPADAK SAHAKARI SANGH LTD., JAIPUR VS. DCIT, JAIPUR 24 HAD ALSO HELD THAT THE INTEREST INCOME EARNED BY TH E ASSESSEE ON ITS INVESTMENTS HELD WITH A CO-OPERATIVE BANK WOULD BE ELIGIBLE FOR CLAIM OF DEDUCTION UNDER SEC. 80P(2)(D) OF THE ACT. STILL FURTHER, WE FIND THAT THE CBDT CIRCULAR NO. 14, DAT ED 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 ARE FUNCTIONING AT PAR WITH O THER BANKS WOULD NO MORE BE ENTITLED FOR CLAIM OF DEDUCTION UN DER SEC. 80P(4) OF THE ACT. WE ARE OF THE CONSIDERED VIEW TH AT THE RELIANCE PLACED BY THE CIT (A) ON THE JUDGMENT OF THE HON'BL E SUPREME COURT IN THE CASE OF TOTGARS CO-OPERATIVE SALE SOCI ETY LTD. (SUPRA) BEING DISTINGUISHABLE ON FACTS, THUS, HAD WRONGLY BEEN RELIED UPON BY HIM. THE ADJUDICATION BY THE HO N'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 THE ITAT 'F' BENCH, MUMBAI IN THE CASE OF VAIBHAV COOPERATIVE CR EDIT SOCIETY (SUPRA) IS ALSO DISTINGUISHABLE ON FACTS. W E FIND THAT THE SAID ORDER WAS PASSED BY THE TRIBUNAL IN CONTEXT OF ADJUDICATION OF THE ENTITLEMENT OF THE ASSESSEE CO-OPERATIVE BAN K TOWARDS CLAIM OF DEDUCTION UNDER SEC.80P(2)(A)(I) OF THE AC T. WE FIND THAT IT WAS IN THE BACKDROP OF THE AFORESAID FACTS THAT THE TRIBUNAL AFTER CARRYING OUT A CONJOINT READING OF SEC. 80P(2 )(A)(I) R.W. SEC. 80P(4) HAD ADJUDICATED THE ISSUE BEFORE THEM. WE AR E AFRAID THAT THE RELIANCE PLACED BY THE LD. D.R ON THE AFORESAID ORDER OF THE ITA NO. 512, 633,513 & 634/JP/2019 M/S JAIPUR ZILA DUGDH UTPADAK SAHAKARI SANGH LTD., JAIPUR VS. DCIT, JAIPUR 25 TRIBUNAL BEING DISTINGUISHABLE ON FACTS, THUS, WOUL D BE OF NO ASSISTANCE FOR ADJUDICATION OF THE ISSUE BEFORE US. STILL FURTHER, THE RELIANCE PLACED BY THE LD. D.R ON THE ORDER OF THE ITAT 'SMC' BENCH, MUMBAI IN THE CASE OF SHRI SAI DATTA CO-OPER ATIVE CREDIT SOCIETY LTD. (SUPRA), WOULD ALSO NOT BE OF ANY ASSI STANCE, FOR THE REASON THAT IN THE SAID MATTER THE TRIBUNAL HAD SET ASIDE THE ISSUE TO THE FILE OF THE ASSESSING OFFICER FOR FRESH EXAM INATION. THAT AS REGARDS THE RELIANCE PLACED BY THE LD. D.R ON THE J UDGMENT OF THE HON'BLE HIGH COURT OF KARNATAKA IN THE CASE OF TOTA GARS CO- OPERATIVE SALE SOCIETY (SUPRA), THE HIGH COURT HAD CONCLUDED THAT A CO-OPERATIVE SOCIETY WOULD NOT BE ENTITLED TO CLA IM 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, T HEN A VIEW WHICH IS IN FAVOUR OF THE ASSESSEE IS TO BE PREFERRED AS AGAINST THAT TAKEN AGAINST HIM. THUS, TAKING SUPPORT FROM THE AF ORESAID JUDICIAL PRONOUNCEMENT OF THE HON'BLE HIGH COURT OF JURISDICTION, WE RESPECTFULLY FOLLOW THE VIEW TAKEN BY THE HON'BL E HIGH COURT OF KARNATAKA IN THE CASE OF TOTAGARS COOPERATIVE SA LE SOCIETY(SUPRA) AND HON'BLE HIGH COURT OF GUJARAT IN THE CASE OF STATE BANK OF INDIA (SUPRA), WHEREIN IT WAS OBSE RVED THAT THE INTEREST INCOME EARNED BY A CO-OPERATIVE SOCIETY ON ITS INVESTMENTS HELD WITH A CO-OPERATIVE BANK WOULD BE ELIGIBLE FOR CLAIM OF DEDUCTION UNDER SEC.80P(2)(D) OF THE ACT. ITA NO. 512, 633,513 & 634/JP/2019 M/S JAIPUR ZILA DUGDH UTPADAK SAHAKARI SANGH LTD., JAIPUR VS. DCIT, JAIPUR 26 9. WE THUS IN THE BACKDROP OF OUR AFORESAID OBSERVATI ONS ARE UNABLE TO PERSUADE OURSELVES TO BE IN AGREEMENT WIT H THE VIEW TAKEN BY THE LOWER AUTHORITIES THAT THE ASSESSEE WO ULD NOT BE ENTITLED FOR CLAIM OF DEDUCTION UNDER SEC. 80P(2)(D ), IN RESPECT OF THE INTEREST INCOME ON THE INVESTMENTS MADE WITH TH E CO- OPERATIVE BANK. WE THUS SET ASIDE THE ORDER OF THE LOWER AUTHORITIES AND CONCLUDE THAT THE INTEREST INCOME O F RS. 27,48,553/-EARNED BY THE ASSESSEE ON THE INVESTMENT S HELD WITH THE CO-OPERATIVE BANK WOULD BE ENTITLED FOR CLAIM O F DEDUCTION UNDER SEC. 80P(2)(D). 17. IN LIGHT OF ABOVE, BY VIRTUE OF PROVISIONS OF S ECTION 80P(4) OF THE ACT, THE CLAIM OF THE ASSESSEE UNDER SECTION 80(P)( 2)(D) CANNOT BE DENIED TO THE ASSESSEE SOCIETY. 18. ANOTHER ISSUE THAT ARISE FOR CONSIDERATION IS WHETHER DEDUCTION U/S 80P(2)(D) SHALL BE ALLOWED ON THE GROSS INTERES T INCOME ON FDRS OR IT SHOULD BE ALLOWED ON THE NET INTEREST INCOME CAL CULATED AFTER DEDUCTING THE INTEREST EXPENDITURE ALLOCABLE TO FUN DS PLACED IN FORM OF FDR. THOUGH THE ASSESSEE HAS CHALLENGED THE FINDIN GS OF THE LD CIT(A) TO THE EFFECT THAT IT HAS NOT INCURRED ANY INTEREST EXPENDITURE, WE FIND THAT THERE IS NO NECESSITY TO EXAMINE THE SAME AS C ONCEPTUALLY, THE DEDUCTION UNDER SECTION 80P(2)(D) HAS TO BE ALLOWED ON GROSS AND NOT ON NET INTEREST INCOME AS HELD BY THE HONBLE GUJARAT HIGH COURT IN CASE OF SURAT VANKAR SAHAKARI SANGH LTD VS ACIT [2016] 72 TAXMANN.COM 169 (GUJ) WHEREIN IT WAS HELD AS UNDER: 3. IN ALL THE FOUR APPEALS, THE COMMON ISSUE IS GR ANT OF NET DEDUCTION U/S 80P(2)(D) OF THE ACT, IN RESPECT OF I NTEREST AND ITA NO. 512, 633,513 & 634/JP/2019 M/S JAIPUR ZILA DUGDH UTPADAK SAHAKARI SANGH LTD., JAIPUR VS. DCIT, JAIPUR 27 DIVIDEND RECEIVED BY THE ASSESSEE FROM CO-OPERATIVE SOCIETIES I.E. BANK IN THIS CASE. THE ASSESSING OFFICER ALLOWED DE DUCTION U/S 80P(2)(D) TO THE EXTENT OF NET INTEREST INSTEAD OF GROSS INTEREST AS CLAIMED BY THE ASSESSEE AND DISALLOWED THE EXCESS C LAIM OF DEDUCTION IN THIS REGARD FOR ALL THE YEARS UNDER CO NSIDERATION. THE AMOUNT DISALLOWED BY THE ASSESSING OFFICER AND DEDU CTION GRANTED BY THE ASSESSING OFFICER IS TABULARIZED AND RECORDED AS UNDER: PARTICULAR ASSESSMENT YEARS 1991-92 1992-93 1993-94 1994-95 DIVIDEND - FROM CO- OP SOCIETIES 9743 48000 3491 42674 INTEREST (AS SHOWN IN THE RETURN OF INCOME) 1022699 1214259 1220756 902765 DEDUCTION U/S 80P(2)(D) OF THE ACT AS PER RETURN 1027719 1045298 1223026 943736 DISALLOWED BY ASSESSING OFFICER 477863 640219 641273 76116 DEDUCTION GRANTED U/S 80P(2)(D) OF THE ACT BY ASSESSING OFFICER 549856 405079 581753 867618 8. WE HAVE CONSIDERED THE DECISIONS CITED BY LEARNE D ADVOCATE FOR THE ASSESSEE AS WELL AS THE REVENUE. WE FEEL TH AT THE DECISIONS CITED BY THE LEARNED ADVOCATE FOR THE ASS ESSEE SHALL BE APPLICABLE ON THE FACTS OF THE PRESENT CASE. IN THE CASE OF K. NANDAKUMAR V. ITO [1993] 204 ITR 856/[1994] 72 TAXM AN 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 AMOU NT OF INCOME OF THAT NATURE AS COMPUTED IN ACCORDANCE WIT H THE PROVISIONS OF THE ACT SHALL ALONE BE DEEMED TO BE T HE AMOUNT OF ITA NO. 512, 633,513 & 634/JP/2019 M/S JAIPUR ZILA DUGDH UTPADAK SAHAKARI SANGH LTD., JAIPUR VS. DCIT, JAIPUR 28 INCOME OF THAT NATURE. WHAT THE SECTION MEANS IS TH AT THE NET INCOME BY WAY OF INTEREST COMPUTED IN THE MANNER PR OVIDED BY THE PROVISIONS OF THE ACT SHALL ALONE BE TAKEN INTO ACCOUNT FOR COMPUTING THE BENEFIT. BUT IT MUST BE NOTED THAT PA YMENT OF INTEREST UNDER A LOAN TRANSACTION INCURRED FOR THE PURPOSE OF DERIVING INCOME FROM BUSINESS IS NOT AN ITEM WHICH ARISES IN THE COMPUTATION OF INTEREST INCOME 'IN ACCORDANCE WITH THE PROVISIONS' OF THE ACT. THE SAID AMOUNT HAS TO BE P AID IRRESPECTIVE OF WHETHER ANY INTEREST INCOME IS OTHE RWISE RECEIVED OR NOT. THOUGH THE INTEREST IS PAYABLE TO THE SAME BANK, THE FACT REMAINS THAT THE AMOUNT OF INCOME BY-WAY OF INTERES T IS NOT CALCULATED UNDER THE PROVISIONS OF THE ACT WITH REF ERENCE TO SUCH OUTGOINGS WHICH FALL UNDER DIFFERENT HEADS. THE ASS ESSEE IS ENTITLED TO DEDUCTION UNDER SECTION 37 OF ALL EXPEN DITURE INCURRED FOR THE PURPOSE OF DERIVING THE BUSINESS INCOME, AN D 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 MEETING THE EXPENSES DEDUCTIBLE FROM THAT ITEM UNDER THE PROVIS IONS OF THE ACT AS EXPLAINED ABOVE. THAT IS NOT THE CASE HERE. THEREFORE, SECTION 80AB HAS NO APPLICATION TO THE FACTS OF THE SE CASES. THE INTEREST PAID ON THE LOAN TRANSACTIONS HAS TO BE DE DUCTED FROM THE BUSINESS INCOME, AND NOT FROM THE INTEREST RECE IVED FROM THE BANK ON THE FIXED DEPOSITS. THE ASSESSEES WERE THER EFORE RIGHT IN THE SUBMISSIONS WHICH THEY MADE BEFORE THE COMMISSI ONER OF INCOME-TAX IN THE REVISION PETITIONS WHICH THEY FIL ED. THIS ASPECT OF THE MATTER HAS BEEN OVERLOOKED BY THE COMMISSION ER IN PASSING THE ORDER, EXHIBIT P-5.' ITA NO. 512, 633,513 & 634/JP/2019 M/S JAIPUR ZILA DUGDH UTPADAK SAHAKARI SANGH LTD., JAIPUR VS. DCIT, JAIPUR 29 8.1 SIMILARLY, IN THE CASE OF DOABA CO-OPERATIVE SU GAR MILLS LTD (SUPRA), THE PUNJAB & HARYANA HIGH COURT HAS HE LD AS UNDER: '5. THE CONTENTION OF MR. GUPTA, LEARNED COUNSEL AP PEARING FOR THE REVENUE, IS THAT THE TRIBUNAL WAS WRONG IN ALLO WING DEDUCTION UNDER SECTION 80P(2) (D) OF THE ACT BECAU SE IT IS NOT ESTABLISHED THAT THE ASSESSEE HAD DERIVED THE INTER EST BY INVESTING ALL THE AMOUNT OF SURPLUS FUNDS. IT IS FU RTHER CONTENDED BY MR. GUPTA THAT THE ASSESSEE HAS PAID INTEREST TO JALANDHAR CENTRAL CO-OPERATIVE BANK AND HAS ALSO RECEIVED INT EREST FROM THE SAID CO- OPERATIVE BANK, THEREBY SHOWING THAT THE A SSESSEE HAS ON THE AGGREGATE PAID INTEREST TO THE BANK AND, THE REFORE, NO DEDUCTION UNDER SECTION 80P(2)(D) CAN BE ALLOWED. T O APPRECIATE THIS ARGUMENT, WE HAVE TO LOOK TO THE PROVISIONS 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 INVESTMENTS WITH ANY OTHER CO- OPERATIVE SOCIETY, T HE WHOLE OF SUCH INCOME.' 6. SO FAR AS THE PRINCIPLE OF INTERPRETATION APPLIC ABLE TO A TAXING STATUTE IS CONCERNED, WE CAN DO NO BETTER THAN TO Q UOTE THE BY- NOW CLASSIC WORDS OF ROWLATT J., IN CAPE BRANDY SYNDICATE V. IRC [1921] 1 KB 64, 71 : '...IN A TAXING ACT, ONE HAS TO LOOK MERELY AT WHAT IS CLEARLY SAID. THERE IS NO ROOM FOR ANY INTENDMENT. THERE IS NO EQ UITY ABOUT A TAX. THERE IS NO PRESUMPTION AS TO A TAX. NOTHING I S TO BE READ IN, NOTHING IS TO BE IMPLIED. ONE CAN ONLY LOOK FAIRLY AT THE LANGUAGE USED,' ITA NO. 512, 633,513 & 634/JP/2019 M/S JAIPUR ZILA DUGDH UTPADAK SAHAKARI SANGH LTD., JAIPUR VS. DCIT, JAIPUR 30 7. THE PRINCIPLE LAID DOWN BY ROWLATT J., HAS ALSO BEEN TIME AND AGAIN APPROVED AND APPLIED BY THE SUPREME COURT IN DIFFERENT CASES INCLUDING THE ONE, HANSRAJ GORDHANDAS V. H. H . DAVE, ASSISTANT COLLECTOR OF CENTRAL EXCISE AND CUSTOMS, AIR 1970 SC 755, 759. 8. SECTION 80P(2)(D) OF THE ACT ALLOWS WHOLE DEDUCT ION OF AN INCOME BY WAY OF INTEREST OR DIVIDENDS DERIVED BY T HE CO- OPERATIVE SOCIETY FROM ITS INVESTMENT WITH ANY OTHE R CO-OPERATIVE SOCIETY. THIS PROVISION DOES NOT MAKE ANY DISTINCTI ON IN REGARD TO SOURCE OF THE INVESTMENT BECAUSE THIS SECTION ENVIS AGES DEDUCTION IN RESPECT OF ANY INCOME DERIVED BY THE C O-OPERATIVE SOCIETY FROM ANY INVESTMENT WITH A CO-OPERATIVE SOC IETY. IT IS IMMATERIAL WHETHER ANY INTEREST PAID TO THE CO- OPE RATIVE SOCIETY EXCEEDS THE INTEREST RECEIVED FROM THE BANK ON INVE STMENTS. THE REVENUE IS NOT REQUIRED TO LOOK TO THE NATURE OF TH E INVESTMENT WHETHER IT WAS FROM ITS SURPLUS FUNDS OR OTHERWISE. THE ACT DOES NOT SPEAK OF ANY ADJUSTMENT AS SOUGHT TO BE MADE OU T BY LEARNED COUNSEL FOR THE REVENUE. THE PROVISION DOES NOT INDICATE ANY SUCH ADJUSTMENT IN REGARD TO INTEREST DERIVED F ROM THE CO- OPERATIVE SOCIETY FROM ITS INVESTMENT IN ANY OTHER CO-OPERATIVE SOCIETY. THEREFORE, WE DO NOT AGREE WITH THE ARGUME NT ADVANCED BY LEARNED COUNSEL FOR THE REVENUE. IN OUR OPINION, THE LEARNED TRIBUNAL WAS RIGHT IN LAW IN ALLOWING DEDUCTION UND ER SECTION 80P(2)(D) OF THE INCOME- TAX ACT, 1961. IN RESPECT OF INTEREST OF RS. 4,00,919 ON ACCOUNT OF INTEREST RECEIVED FROM N AWANSHALN CENTRAL CO-OPERATIVE BANK WITHOUT ADJUSTING THE INT EREST PAID TO THE HANK. THEREFORE, THE REFERENCE IS ANSWERED AGAI NST THE REVENUE IN THE AFFIRMATIVE AND IN FAVOUR OF THE ASS ESSEE.' ITA NO. 512, 633,513 & 634/JP/2019 M/S JAIPUR ZILA DUGDH UTPADAK SAHAKARI SANGH LTD., JAIPUR VS. DCIT, JAIPUR 31 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 D IRECT OR INDIRECT WITH THE INCOME WHICH SHE EARNED FROM THE FIXED DEPOSIT AND THAT SHE WAS NOT ENTITLED TO THE DEDUCTION CLAI MED UNDER SECTION 12(2). THE HIGH COURT HELD THAT IF AN ASSES SEE HAD NO OPTION EXCEPT TO INCUR AN EXPENDITURE IN ORDER TO M AKE THE EARNING OF AN INCOME POSSIBLE, THEN UNDOUBTEDLY THE EXERCISE OF THAT OPTION IS COMPULSORY AND ANY EXPENDITURE INCUR RED BY REASON OF THE EXERCISE OF THAT OPTION WOULD COME WITHIN TH E AMBIT OF SECTION 12(2) OF THE INDIAN INCOME-TAX ACT BUT WHER E THE OPTION HAS NO CONNECTION WITH THE CARRYING ON OF THE BUSIN ESS OR THE EARNING OF THE INCOME AND THE OPTION DEPENDS UPON P ERSONAL CONSIDERATIONS OR UPON MOTIVES OF THE ASSESSEE, THA T EXPENDITURE CANNOT POSSIBLY COME WITHIN THE AMBIT OF SECTION 12 (2). IN THE PRESENT CASE, THE LOAN WAS TAKEN FOR BUSINESS PURPO SE MORE PARTICULARLY PURCHASE OF YARN AND NOT FOR FIXED DEP OSITS. 9. IN VIEW OF THE ABOVE, THE QUESTIONS RAISED IN TH E PRESENT APPEALS ARE ANSWERED IN FAVOUR OF THE ASSESSEE AND AGAINST THE REVENUE. THE ORDER PASSED BY THE TRIBUNAL IS ACCORD INGLY QUASHED AND SET ASIDE. 19. IN LIGHT OF ABOVE DISCUSSION AND RESPECTFULLY FOLLOWING THE DECISIONS REFERRED SUPRA, THE ASSESSEE SOCIETY IS HELD ELIGIB LE FOR DEDUCTION UNDER SECTION 80P(2)(D) IN CASE OF INTEREST INCOME OF RS 1,49,40,834 ON FDRS PLACED WITH JAIPUR CENTRAL COOPERATIVE BANK LTD. ITA NO. 512, 633,513 & 634/JP/2019 M/S JAIPUR ZILA DUGDH UTPADAK SAHAKARI SANGH LTD., JAIPUR VS. DCIT, JAIPUR 32 20. IN THE RESULT, THE SOLE GROUND OF REVENUES AP PEAL IS DISMISSED AND GROUND NO. 2 IN ASSESSEES CROSS APPEAL IS ALLO WED. HAVING DECIDED THE MATTER ON MERITS, THE LEGAL GROUND RAISED BY TH E ASSESSEE CHALLENGING THE VALIDITY OF THE PROCEEDINGS U/S 147 HAS BECOME INFRUCTOUS AND IS DISMISSED. 21. IN ITA NO. 513/JP/2019 AND 634/JP/19 FOR AY 201 2-13, ADMITTEDLY AND UNDISPUTEDLY, THE FACTS AND CIRCUMST ANCES OF THE CASE ARE EXACTLY IDENTICAL TO FACTS AND CIRCUMSTANCES OF THE CASE IN 512/JP/2019 AND 633/JP/19, OUR FINDINGS AND DIRECTI ONS CONTAINED THEREIN SHALL APPLY MUTATIS MUTANDIS TO THESE APPEALS. 22. IN THE RESULT, THE MATTER FOR BOTH YEARS IS DEC IDED IN FAVOUR OF THE ASSESSEE AND AGAINST THE REVENUE AND THE RESPECTIVE APPEALS ARE DISPOSED OFF IN LIGHT OF ABOVE FINDINGS AND DIRECTI ONS. ORDER PRONOUNCED IN THE OPEN COURT ON 02/09/2019 SD/- SD/- FOT; IKWY JKO FOE FLAG ;KNO (VIJAY PAL RAO) (VIKRAM SINGH YADAV) U;KF;D LNL;@ JUDICIAL MEMBER YS[KK LNL;@ ACCOUNTANT MEMBER TK;IQJ@ JAIPUR FNUKAD@ DATED:- 02/09/2019 * GANESH KR. VKNS'K DH IZFRFYFI VXZSFKR@ COPY OF THE ORDER FORWARDED TO: 1. VIHYKFKHZ@ THE APPELLANT- M/S JAIPUR ZILA DUGDH UTPADAK SAHAKA RI SANGH LTD., JAIPUR 2. IZR;FKHZ@ THE RESPONDENT- DCIT, CIRCLE-06, JAIPUR 3. VK;DJ VK;QDR@ CIT 4. VK;DJ VK;QDR@ CIT(A) 5. FOHKKXH; IZFRFUF/K] VK;DJ VIHYH; VF/KDJ.K] T;IQJ@ DR, ITAT, JAIPUR. ITA NO. 512, 633,513 & 634/JP/2019 M/S JAIPUR ZILA DUGDH UTPADAK SAHAKARI SANGH LTD., JAIPUR VS. DCIT, JAIPUR 33 6. XKMZ QKBZY@ GUARD FILE { ITA NO. 512, 633,513 & 634/JP/2019 } VKNS'KKUQLKJ@ BY ORDER, LGK;D IATHDKJ@ ASST. REGISTRAR