AZMER ZILA DUGDH UTPADAK SAHKARI SANGH LTD., Ajmer V. PR. COMMISSIONER OF INCOME TAX, Ajmer

ITA 90/JPR/2019

• Counselvise Citation: [2019] 115 COUNSELVISE.COM (IT) 5491 (ITAT-JAIPUR)
• Duration Of Justice: 7 month(s) 5 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 30-08-2019
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: B
• Assessment Year: 2014-2015
• Appeal Filed On: 24-01-2019
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: BK GUPTA
• Keywords: Business income; Search and seizure; Assessment record; Co-operative Credit Society; Set aside
• Section: 143(3); 80P; 37; 263

Judgement Text

VK;DJ VIHYH; VF/KDJ.K] T;IQJ U;K;IHB] T;IQJ IN THE INCOME TAX APPELLATE TRIBUNAL, JAIPUR BENC H B JAIPUR JH FOT; IKY JKO] U;KF;D LNL; ,OA JH FOE FLAG ;KNO] YS[KK LNL; DS LE{K BEFORE: SHRI VIJAY PAL RAO, JM & SHRI VIKRA M SINGH YADAV, AM VK;DJ VIHY LA- @ ITA NO. 90/JP/2019 FU/KZKJ.K O'K Z @ ASSESSMENT YEAR :2014-15 AJMER ZILA DUGH UTPADAK SAHKARI SANGH LTD. OPP. HMT, BEAWAR ROAD, AJMER (RAJ.) 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 : SHRI SUNIL PORWAL (CA) & SHRI A SHOK GUPTA (CA) JKTLO DH VKSJ LS @ REVENUE BY : SHRI B. K. GUPTA (CIT) LQUOKBZ DH RKJH[ K@ DATE OF HEARING : 30/05/2019 MN?KKS'K.KK DH RKJH[ K@ DATE OF PRONOUNCEMENT: 28/08/2019 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 01.11.2018 PASSED U/S 263 OF THE ACT W HEREIN THE ASSESSEE HAS TAKEN THE FOLLOWING GROUNDS OF APPEAL:- UNDER THE FACTS & CIRCUMSTANCES OF CASE THE LD. CI T, AJMER HAS ERRED IN CONFIRMING THE ISSUE OF:- 1) THAT THE INITIATION OF PROCEEDINGS U/S 263 OF INCOM E TAX ACT, 1961 IS BAD IN LAW AND IS VOID ABINITIO AND IS REQUESTED TO BE QUASHED. 2) DENIAL OF CLAIM U/S 80(P)(2)(D) IS BAD IN LAW. 3) CONSIDERING THE SOCIETY AS COVERED BY PROVISION OF SECTION 80(P)(4) IS ALSO BAD IN LAW. 4) ANY OTHER MATTER WITH THE PRIOR PERMISSION OF CHAIR . ITA NO. 90/JP/2019 AJMER ZILA DUGDH UTPADAK SAHKARI SANGH LTD., AJMER VS. P R. CIT, AJMER 2 2. BRIEFLY STATED, THE FACTS OF THE CASE ARE THAT T HE ASSESSEE IS A CO-OPERATIVE SOCIETY ENGAGED IN THE PROCESSING AND MANUFACTURING OF MILK PRODUCTS E.G. MILK GHEE, MILK POWDER ETC. IT FILED ITS RETURN OF INCOME ON 11.10.2014 DECLARING TOTAL INCOME OF RS. 1,36,14,62 0/- WHEREIN IT CLAIMED DEDUCTION U/S 80P AMOUNTING TO RS. 29,01,553/-. THE REAFTER, THE ASSESSING OFFICER PASSED THE ASSESSMENT ORDER U/S 143(3) DATE D 27.12.2016 WHEREIN THE RETURNED INCOME WAS ACCEPTED. 3. THE LD. PR. CIT, AJMER SUBSEQUENTLY EXAMINED THE ASSESSMENT RECORDS AND IT WAS NOTICED BY HIM THAT OUT OF TOTAL DEDUCTI ON OF RS. 29,01,553/- CLAIMED BY THE ASSESSEE U/S 80P OF THE ACT, AN AMOUNT OF RS . 28,01,553/- RELATES TO INTEREST RECEIVED FROM AJMER CENTRAL CO-OPERATIVE B ANK LTD. AS PER LD. PR. CIT, THE ASSESSEE WAS NOT ELIGIBLE FOR DEDUCTION AS IT H AS NOT SATISFIED THE CONDITIONS LAID DOWN U/S 80P(2)(D) OF THE ACT AS AJMER CO-OPER ATIVE BANK LTD. IS NOT A CO- OPERATIVE SOCIETY AS PROVIDED U/S 80P(2)(D) OF THE ACT. ACCORDINGLY, A SHOW CAUSE WAS ISSUED TO THE ASSESSEE ON 18.09.2018 AND AFTER CONSIDERING THE SUBMISSIONS OF THE ASSESSEE, IT WAS HELD BY THE LD. PR. CIT, AJMER THAT THE ASSESSMENT ORDER PASSED U/S 143(3) DATED 27.12.2016 IS ERRONEOUS AND PREJUDICIAL TO THE INTEREST OF THE REVENUE AND MATT ER WAS SET ASIDE TO THE FILE OF THE ASSESSING OFFICER TO EXAMINE THE CLAIM OF THE A SSESSEE AFRESH AFTER CARRYING OUT NECESSARY ENQUIRIES AND GIVING OPPORTUNITY OF B EING HEARD TO THE ASSESSEE. 4. AS PER LD. PR. CIT, AJMER CENTRAL CO-OPERATIVE B ANK LTD. IS NOT A CO- OPERATIVE SOCIETY AS PROVIDED U/S 80P(2)(D) OF THE ACT. IT WAS FURTHER HELD BY THE LD. PR. CIT, AJMER THAT INTERPRETATION OF SECTI ON 80P(4) AS MADE BY THE ASSESSEE IS MISCONCEIVED AS THE SAID SECTION ONLY S AYS THAT THE PROVISIONS OF SECTION SHALL NOT BE APPLIED IN RELATION TO ANY CO- OPERATIVE BANK OTHER THAN A PRIMARY AGRICULTURAL CREDIT SOCIETY OR PRIMARY CO-O PERATIVE AGRICULTURAL & RURAL DEVELOPMENT BANK. IT WAS FURTHER HELD BY THE LD. PR . CIT THAT THE ASSESSING ITA NO. 90/JP/2019 AJMER ZILA DUGDH UTPADAK SAHKARI SANGH LTD., AJMER VS. P R. CIT, AJMER 3 OFFICER HAS NOT MADE ANY ENQUIRIES OR VERIFICATION WHICH SHOULD HAVE BEEN MADE DURING THE COURSE OF ASSESSMENT PROCEEDINGS AS FAR AS THE CLAIM OF THE ASSESSEE U/S 80P(2)(D) OF THE ACT IS CONCERNED. IT WAS ACCORDINGLY HELD THAT THE ASSESSMENT ORDER WAS ERRONEOUS AND PREJUDICIAL TO T HE INTEREST OF THE REVENUE. AGAINST THE SAID ORDER OF THE LD. PR. CIT, AJMER, T HE ASSESSEE IS NOW IN APPEAL BEFORE US. 5. DURING THE COURSE OF HEARING, THE LD. AR SUBMIT TED THAT THE ORDER PASSED BY THE ASSESSING OFFICER IS NOT ERRONEOUS IN NATURE SINCE THE LAW IS VERY CLEAR AND OUR REFERENCE WAS DRAWN TO THE PROVISIONS OF SE CTION 80P(2)(D) OF THE ACT WHICH PROVIDES THAT IN RESPECT OF ANY INCOME BY WAY OF INTEREST OR DIVIDEND DERIVED BY THE CO-OPERATIVE SOCIETY FROM ITS INVEST MENTS WITH ANY OTHER CO- OPERATIVE SOCIETY, THE WHOLE OF SUCH INCOME SHALL B E DEDUCTED. IT WAS SUBMITTED THAT SECTION 80P(2)(D) IS VERY CLEAR AND ONLY REQUIREMENT IS THAT THE INTEREST ON INVESTMENTS SHOULD BE FROM ANY OTHER CO -OPERATIVE SOCIETY AND IN THE INSTANT CASE, AJMER CENTRAL CO-OPERATIVE BANK L TD. IS A CO-OPERATIVE SOCIETY FIRST AND EVEN THOUGH IT IS DOING THE BANKING BUSIN ESS, FOR THE PURPOSES OF SECTION 80P(2)(D) OF THE ACT, IT HAS TO BE CONSIDER ED AS A CO-OPERATIVE SOCIETY. IT WAS FURTHER SUBMITTED THAT LD. PR. CIT WAS WRONG IN APPLY THE PROVISIONS OF SECTION 80(P)(4) OF THE ACT TO THE ASSESSEE AS THE SAID SUB-SECTION HAS TO BE READ IN THE CONTEXT OF DEDUCTION WHICH CAN BE CLAIM ED BY ANY CO-OPERATIVE BANK. HOWEVER, AS FAR AS THE ASSESSEE IS CONCERNED, IT IS A CO-OPERATIVE SOCIETY AND THE DEDUCTION PROVISIONS WHICH HAVE TO BE READ IS LIMITED TO SECTION 80P(2)(D) OF THE ACT. IN SUPPORT, RELIANCE WAS PLAC ED ON THE CO-ORDINATE BENCH DECISION IN CASE OF BHILWARA ZILA DUGDH UTPADAK SAH AKARI SANGH LTD., BHILWARA IN ITA NO. 437/JODH/2017 DATED 31.10.2018. IT WAS A CCORDINGLY SUBMITTED THAT ONCE IT IS A SETTLED LAW AND THERE IS NO DEBATE, TH E VIEW TAKEN BY THE ASSESSING OFFICER CANNOT BE CONSIDERED AS ERRONEOUS OR PREJUD ICIAL TO THE INTEREST OF THE REVENUE. THEREFORE, THE LD. PR. CIT HAS ERRED IN EX ERCISING HIS JURISDICTION U/S ITA NO. 90/JP/2019 AJMER ZILA DUGDH UTPADAK SAHKARI SANGH LTD., AJMER VS. P R. CIT, AJMER 4 263 OF THE ACT. IT WAS FURTHER SUBMITTED THAT THE P RINCIPLE OF CONSISTENCY SHOULD BE FOLLOWED AND THE COMMISSIONER CANNOT TAKE RECOUR SE TO REVISIONAL POWERS U/S 263 ON FUNDAMENTAL ASPECTS OF A TRANSACTION ON WHICH A VIEW HAD BEEN TAKEN AND WAS ACCEPTED BY REVENUE FOR SEVERAL PRECE DING YEARS AS HELD BY THE HONBLE DELHI HIGH COURT IN CASE OF CIT VS. ESCORTS LTD. (2011) 198 TAXMAN 324/9 TAXMANN.COM 22 (DELHI). IT WAS FURTHER SUBMIT TED THAT EVEN WHERE TWO VIEWS ARE POSSIBLE, THE REVISION IS NOT PERMISSIBLE AND THE RELIANCE WAS PLACED ON THE HONBLE SUPREME COURT DECISION IN CASE OF CI T VS. GREENWORLD CORPORATION (2009) 181 TAXMAN 111(SC) AND DECISION OF THE HONBLE KARNATAKA HIGH COURT IN CASE OF CIT VS. GOKULDAS EXPORTS (201 1) 333 ITR 214 (KAR.). 6. PER CONTRA, THE LD. PR CIT/DR HAS VEHEMENTLY ARG UED THE MATTER AND RELIED ON THE FINDINGS OF THE LD. PR. CIT. OUR REFE RENCE WAS DRAWN TO THE ORDER OF THE ASSESSING OFFICER PASSED U/S 143(3) OF THE A CT AND IT WAS SUBMITTED THAT THE ISSUE REGARDING CLAIM FOR DEDUCTION U/S 80P HAS NOT BEEN EXAMINED BY THE ASSESSING OFFICER AT ALL. IT WAS FURTHER SUBMITTED THAT THERE IS NOTHING ON RECORD WHICH HAS BEEN BROUGHT BY THE LD. AR IN TERMS OF AN Y DISCUSSIONS OR QUESTIONS RAISED BY THE ASSESSING OFFICER OR EXAMINATION BY H IM DURING THE COURSE OF ASSESSMENT PROCEEDINGS SO AS FAR AS CLAIM OF THE AS SESSEE U/S 80P(2)(D) OF THE ACT IS CONCERNED. IT WAS ACCORDINGLY SUBMITTED THAT WHERE THE ISSUE HAS NOT BEEN EXAMINED BY THE ASSESSING OFFICER, THE ORDER P ASSED BY THE ASSESSING OFFICER IS ERRONEOUS AND PREJUDICIAL TO THE INTERES T OF THE REVENUE. IT WAS FURTHER SUBMITTED THAT THE CLAIM OF THE ASSESSEE U/ S 80P(2)(D) OF THE ACT IS NOT PERMISSIBLE IN LIGHT OF THE HONBLE KARNATAKA HIGH COURT DECISION IN CASE OF PR. CIT VS. TOTAGARS CO-OPERATIVE SALE SOCIETY [2017] 8 3 TAXMANN.COM 140 (KARNATAKA). 7. WE HAVE HEARD THE RIVAL CONTENTIONS AND PERUSED THE MATERIAL AVAILABLE ON RECORD. THE ISSUE UNDER CONSIDERATION IS WHETHER THE INTEREST INCOME ON ITA NO. 90/JP/2019 AJMER ZILA DUGDH UTPADAK SAHKARI SANGH LTD., AJMER VS. P R. CIT, AJMER 5 FDRS PLACED BY THE ASSESSEE COOPERATIVE SOCIETY WIT H AJMER CENTRAL COOPERATIVE BANK LTD IS ELIGIBLE 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 T O 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 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 SAHAKARI SUGAR MILL (ITA NO. 418 & 419/JP/2017 ORDER DATED 31.01.2018) 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 PROVISION IS ANY INCOME BY WAY OF INTEREST OR DIVIDEND DERIVED BY THE COOPERATIVE SOCIETY FROM IT S INVESTMENT WITH ANY OTHER COOPERATIVE SOCIETY, THE WHOLE OF SUCH INCOME IS AL LOWABLE FOR DEDUCTION U/S 80P(1). THEREFORE, THERE IS NO CONDITION FOR THE AS SESSEE SOCIETY TO ENGAGED IN THE ACTIVITY OF PROVIDE CREDITS TO THE MEMBERS OR B ANKING BUSINESS FOR AVAILING ITA NO. 90/JP/2019 AJMER ZILA DUGDH UTPADAK SAHKARI SANGH LTD., AJMER VS. P R. CIT, AJMER 6 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 SUCH COOPERATI VE 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), AFTER CONSIDERING THE DECISION OF THE HONBLE SUPREME COURT IN CASE OF TOTAGARS CO-OPERATIVE SAL E SOCIETY LTD. VS. ITO (SUPRA) HAS CONSIDERED AND DECIDED THIS ISSUE IN PA RA 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 FOLLOWING THE DECISION IN THE CASE OF SANDRA SAMRUDDIHI CO- OPERATIVE HOUSING SOCIETY LTD. (SUPRA) WHICH WAS PA SSED 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 TOTAGAR'S CO-OPERATIVE SALE SOC IETY LTD V/S ITAT (SUPRA) THE HON'BLE SUPREME COURT WHILE INTERPRETING 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 WOULD BE ASSESSABLE UNDER THE HEAD 'INCOME FROM OTH ER SOURCES' WHERE THE CO-OPERATIVE SOCIETY IS ENGAGED IN CARRYING ON BUSINESS OF BANKI NG OR PROVIDING CREDIT FACILITIES TO ITS MEMBERS AND CONSEQUENTLY NO DEDUCTION IS ALLOWABLE U/S 80P(2)(A)(I) OF THE ACT. WHEREAS IN THE CASE BEFORE US THE ISSUE IS WHETHER A CO-OPE RATIVE SOCIETY WHICH HAS 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 RESPECT OF INCOME BY WAY OF INTEREST OR DIVIDEND ON INVESTMENTS MADE WITH OT HER 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-SECTION (2), THERE SHALL BE DEDUCTED, IN ACCORDANCE ITA NO. 90/JP/2019 AJMER ZILA DUGDH UTPADAK SAHKARI SANGH LTD., AJMER VS. P R. CIT, AJMER 7 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 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. (D) IN RESPECT OF ANY INCOME BY WAY OF INTEREST OR DIVIDENDS DERIVED BY THE COOPERATIVE SOCIETY FROM ITS INVESTMENTS WITH ANY OTHER CO-OPER ATIVE 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 RESPE CT OF PROFITS AND GAIN OF BUSINESS IN CASE OF THE CO-OPERATIVE SOCIETY CARRYING ON BUSINE SS OF BANKING OR PROVIDING CREDIT FACILITIES TO ITS MEMBERS IF THE SAID INCOME IS ASS ESSABLE 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 DED UCTION U/S 80P(2)(D)(I) IN RESPECT OF ITS INCOME ASSESSABLE AS BUSINESS INCOME AND NOT AS INC OME FROM OTHER SOURCES IF IT CARRIES ON BUSINESS OF THE BANKING OR PROVIDING CREDIT FACI LITIES TO ITS 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 FOR PROVIDING CRE DIT FACILITIES TO ITS MEMBERS AND THE HEAD UNDER WHICH THE INCOME IS ASSESSABLE IS NOT MA TERIAL 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 COURT IN THE CASE OF TOTAGAR'S CO- OPERATIVE SALE SOCIETY LTD.(SUPRA) HELD THAT A SOCI ETY HAS SURPLUS FUNDS WHICH ARE ITA NO. 90/JP/2019 AJMER ZILA DUGDH UTPADAK SAHKARI SANGH LTD., AJMER VS. P R. CIT, AJMER 8 INVESTED IN SHORT TERM DEPOSITS WHERE THE SOCIETY I S ENGAGED IN THE BUSINESS OF BANKING OR PROVIDING CREDIT FACULTIES TO ITS MEMBERS IN THA T CASE THE SAID INCOME FROM SHORT TERM DEPOSITS SHALL BE TREATED AND ASSESSED AS INCOME FR OM OTHER SOURCES AND DEDUCTION U/S 80(P)(2)(A)(0 WOULD NOT BE AVAILABLE MEANING THEREB Y THAT DEDUCTION U/S 80(P)(2)(A)(0 IS AVAILABLE ONLY IN RESPECT OF INCOME WHICH IS ASS ESSABLE AS BUSINESS INCOME AND NOT AS INCOME FROM OTHER SOURCES. WHEREAS IN DISTINCTION T O THIS , THE PROVISIONS OF SECTION 80(P)(2)(D) OF THE ACT PROVIDES FOR DEDUCTION IN RE SPECT OF INCOME OF A COOP SOCIETY BY WAY OF INTEREST OR DIVIDEND FROM ITS INVESTMENTS WI TH OTHER COOP. SOCIETY IF SUCH INCOME IS INCLUDED IN THE GROSS TOTAL INCOME OF THE SUCH COOP SOCIETY. IN VIEW 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 ASSESSE E IS ALLOWED 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 VIKRAY SANGH LTD. (SUPRA) BY FOLLOWING THE DECISION OF HONBLE GUJARAT HIGH COURT IN THE C ASE 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 APPLICABLE ON TH E 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 INCOME O F THAT NATURE AS COMPUTED IN ACCORDANCE WITH THE PROVISIONS OF THE A CT SHALL ALONE BE DEEMED TO BE THE AMOUNT OF INCOME OF THAT NATURE. W HAT THE SECTION MEANS IS THAT THE NET INCOME BY WAY OF INTEREST COM PUTED IN THE MANNER PROVIDED BY THE PROVISIONS OF THE ACT SHALL ALONE B E TAKEN INTO ACCOUNT FOR ITA NO. 90/JP/2019 AJMER ZILA DUGDH UTPADAK SAHKARI SANGH LTD., AJMER VS. P R. CIT, AJMER 9 COMPUTING THE BENEFIT. BUT IT MUST BE NOTED THAT PA YMENT OF INTEREST UNDER A LOAN TRANSACTION INCURRED FOR THE PURPOSE OF DERI VING INCOME FROM BUSINESS IS NOT AN ITEM WHICH ARISES IN THE COMPUTA TION OF INTEREST INCOME 'IN ACCORDANCE WITH THE PROVISIONS' OF THE ACT. THE SAID AMOUNT HAS TO BE PAID IRRESPECTIVE OF WHETHER ANY INTEREST INCOME IS OTHERWISE RECEIVED OR NOT. THOUGH THE INTEREST IS PAYABLE TO THE SAME BAN K, THE FACT REMAINS THAT THE AMOUNT OF INCOME BY-WAY OF INTEREST IS NOT CALC ULATED UNDER THE PROVISIONS OF THE ACT WITH REFERENCE TO SUCH OUTGOI NGS WHICH FALL UNDER DIFFERENT HEADS. THE ASSESSEE IS ENTITLED TO DEDUCT ION UNDER SECTION 37 OF ALL EXPENDITURE INCURRED FOR THE PURPOSE OF DERIVIN G THE BUSINESS INCOME, AND IT IS UNDER THAT HEAD THAT THE INTEREST PAID ON THE LOAN TAKEN FROM THE BANK IS DEDUCTED. THE NET AMOUNT OF INTEREST CONTEM PLATED 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. 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 FIXED DE POSITS. THE ASSESSEES WERE THEREFORE RIGHT IN THE SUBMISSIONS WHICH THEY MADE BEFORE THE COMMISSIONER OF INCOME-TAX IN THE REVISION PETITION S WHICH THEY FILED. THIS ASPECT OF THE MATTER HAS BEEN OVERLOOKED BY THE COM MISSIONER 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 NOT EST ABLISHED THAT THE ASSESSEE HAD DERIVED THE INTEREST BY INVESTING ALL THE AMOUN T OF SURPLUS FUNDS. IT IS ITA NO. 90/JP/2019 AJMER ZILA DUGDH UTPADAK SAHKARI SANGH LTD., AJMER VS. P R. CIT, AJMER 10 FURTHER CONTENDED BY MR. GUPTA THAT THE ASSESSEE HA S PAID INTEREST TO JALANDHAR CENTRAL CO-OPERATIVE BANK AND HAS ALSO RE CEIVED INTEREST FROM THE SAID CO- OPERATIVE BANK, THEREBY SHOWING THAT T HE ASSESSEE HAS ON THE AGGREGATE PAID INTEREST TO THE BANK AND, THEREFORE, NO DEDUCTION UNDER SECTION 80P(2)(D) CAN BE ALLOWED. TO APPRECIATE THI S 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 INVEST MENTS 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 QUOTE THE BY -NOW CLASSIC WORDS OF ROWLATT J., IN CAPE BRANDY SYNDICATE V. IRC [1921] 1 KB 64, 71 : '...IN A TAXING ACT, ONE HAS TO LOOK MERELY AT WHAT IS CLEARLY SAID. THERE IS NO ROOM FOR ANY INTENDMENT. THERE IS NO EQUITY ABOU T A TAX. THERE IS NO PRESUMPTION AS TO A TAX. NOTHING IS TO BE READ IN, NOTHING IS TO BE IMPLIED. ONE CAN ONLY LOOK FAIRLY AT THE LANGUAGE USED,' 7. THE PRINCIPLE LAID DOWN BY ROWLATT J., HAS ALSO 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 CO LLECTOR 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 THE CO-OPER ATIVE SOCIETY FROM ITS INVESTMENT WITH ANY OTHER CO-OPERATIVE SOCIETY. THI S PROVISION DOES NOT MAKE ANY DISTINCTION IN REGARD TO SOURCE OF THE INV ESTMENT BECAUSE THIS SECTION ENVISAGES DEDUCTION IN RESPECT OF ANY INCOM E DERIVED BY THE CO- OPERATIVE SOCIETY FROM ANY INVESTMENT WITH A CO-OPE RATIVE SOCIETY. IT IS ITA NO. 90/JP/2019 AJMER ZILA DUGDH UTPADAK SAHKARI SANGH LTD., AJMER VS. P R. CIT, AJMER 11 IMMATERIAL WHETHER ANY INTEREST PAID TO THE CO- OPE RATIVE 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 NOT SPEAK OF ANY ADJUSTMENT AS SOUGHT TO BE MADE OUT BY LEARNED COUNSEL FOR THE RE VENUE. THE PROVISION DOES NOT INDICATE ANY SUCH ADJUSTMENT IN REGARD TO INTEREST DERIVED FROM THE CO-OPERATIVE 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, TH E LEARNED 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. 4,00,9 19 ON ACCOUNT 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 ASS ESSEE.' 8.2 MOREOVER, THE BOMBAY HIGH COURT IN THE CASE OF BAI BHURIBEN LALLUBHAI (SUPRA) HAS HELD THAT THE PURPOSE FOR WHICH THE ASS ESSEE BORROWED MONEY HAD NO CONNECTION WHETHER DIRECT OR INDIRECT WITH T HE INCOME WHICH SHE EARNED FROM THE FIXED DEPOSIT AND THAT SHE WAS NOT ENTITLED TO THE DEDUCTION CLAIMED UNDER SECTION 12(2). THE HIGH COU RT HELD THAT IF AN ASSESSEE HAD NO OPTION EXCEPT TO INCUR AN EXPENDITU RE IN ORDER TO MAKE THE EARNING OF AN INCOME POSSIBLE, THEN UNDOUBTEDLY THE EXERCISE OF THAT OPTION IS COMPULSORY AND ANY EXPENDITURE INCURRED BY REASO N OF THE EXERCISE OF THAT OPTION WOULD COME WITHIN THE AMBIT OF SECTION 12(2) OF THE INDIAN INCOME-TAX ACT BUT WHERE THE OPTION HAS NO CONNECTI ON WITH THE CARRYING ON OF THE BUSINESS OR THE EARNING OF THE INCOME AND THE OPTION 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 BUSINESS PURPO SE MORE PARTICULARLY PURCHASE OF YARN AND NOT FOR FIXED DEPOSITS. ITA NO. 90/JP/2019 AJMER ZILA DUGDH UTPADAK SAHKARI SANGH LTD., AJMER VS. P R. CIT, AJMER 12 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 S ET 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 LIMIT ED ONE, NAMELY WHETHER FOR THE PURPOSE OF SECTION 80P(2)(D) OF THE ACT, A CO-O PERATIVE BANK SHOULD BE CONSIDERED AS A CO-OPERATIVE SOCIETY OR NOT? FOR, I F A CO-OPERATIVE BANK IS CONSIDERED TO BE A CO-OPERATIVE SOCIETY, THEN ANY I NTEREST EARNED BY THE CO- OPERATIVE SOCIETY FROM A CO-OPERATIVE BANK WOULD NE CESSARILY 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 ISSU E HAS BEEN DECIDED BY THE ITAT ITSELF IN DIFFERENT CASES. MOREOVER THE WORD ' CO-OPERATIVE SOCIETY' ARE THE WORDS OF A LARGE EXTENT, AND DENOTES A GENUS, WHERE AS THE WORD 'CO-OPERATIVE BANK' IS A WORD OF LIMITED EXTENT, WHICH MERELY DEM ARCATES AND IDENTIFIES A PARTICULAR SPECIES OF THE GENUS CO-OPERATIVE SOCIET IES. CO-OPERATIVE SOCIETY 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 THE GEN US WOULD NECESSARILY BE 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'. ITA NO. 90/JP/2019 AJMER ZILA DUGDH UTPADAK SAHKARI SANGH LTD., AJMER VS. P R. CIT, AJMER 13 10. ADMITTEDLY, THE INTEREST WHICH THE ASSESSEE RES PONDENT HAD EARNED WAS FROM A CO-OPERATIVE SOCIETY BANK. THEREFORE, ACCORD ING TO SEC. 80P(2)(D) OF THE I.T. ACT, THE SAID AMOUNT OF INTEREST EARNED FR OM A CO-OPERATIVE SOCIETY BANK WOULD BE DEDUCTABLE FROM THE GROSS INCOME OF T HE CO-OPERATIVE SOCIETY IN ORDER TO ASSESS ITS TOTAL INCOME. THEREFORE, THE AS SESSING OFFICER WAS NOT JUSTIFIED IN DENYING THE SAID DEDUCTION TO THE ASSE SSEE 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 INTERPRETATION, AND THE DE DUCTION, WHICH WOULD BE APPLICABLE UNDER SECTION 80P(2)(A)(I) OF THE I.T. A CT. FOR, IN THE PRESENT CASE THE INTERPRETATION THAT IS REQUIRED IS OF SECTION 8 0P(2)(D) OF THE I.T. ACT AND NOT SECTION 80P(2)(A)(I) OF THE I.T. ACT. THEREFORE, TH E SAID JUDGMENT IS INAPPLICABLE TO THE PRESENT CASE. THUS, NEITHER OF THE TWO SUBST ANTIAL QUESTIONS OF LAW CANVASSED BY THE LEARNED COUNSEL FOR THE REVENUE EV EN ARISE IN THE PRESENT CASE. 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 TH E EXTENT OF THE ALLOWING THE CLAIM OF THE ASSESSEE U/S 80P(2)(D) IN RESPECT OF I NTEREST INCOME FROM DEPOSITS/FDRS WITH THE CO-OPERATIVE BANKS. 9. IN THE INSTANCE CASE, THERE IS NO DISPUTE THAT A JMER CENTRAL COOPERATIVE BANK LTD IS A CO-OPERATIVE SOCIETY. THEREFORE, 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. THEREFORE, INTEREST ON FDRS PLACED BY THE ASSESSEE SOCIETY WITH SUCH COOPERATIVE SOCIETY SHALL BE ELIG IBLE FOR DEDUCTION U/S 80P(2)(D) OF THE ACT. ITA NO. 90/JP/2019 AJMER ZILA DUGDH UTPADAK SAHKARI SANGH LTD., AJMER VS. P R. CIT, AJMER 14 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 ASSESSE E 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 CR EDIT SOCIETY OR A PRIMARY CO-OPERATIVE AGRICULTURAL AND RURAL DEVELOP MENT 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 DEPOSIT S PLACED WITH BARODA RAJASTHAN KSHETRIYA GRAMIN BANK WHICH WAS HELD AS R URAL BANK AND NOT A CO- OPERATIVE SOCIETY BY THE ASSESSING OFFICER AND BY I NVOKING PROVISIONS OF SECTION 80P(4), THE DEDUCTION WAS DENIED TO THE ASSESSEE. THE COORDINATE BENCH HAS HELD THAT THAT THE ASSESSEE WHICH IS CLAIMING DEDUC TION IS THE CO-OPERATIVE SOCIETY AND NOT THE REGIONAL RURAL BANK AND BARODA RAJASTHAN KSHETRIYA GRAMIN BANK WHICH WAS SET UP UNDER THE PROVISIONS O F REGIONAL RURAL BANK ACT, SECTION 22 OF THE SAID ACT DEEM A REGIONAL RUR AL BANK TO BE A CO-OPERATIVE SOCIETY AND THUS HAS ALLOWED THE DEDUCTION TO THE A SSESSEE 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 WAS S ET UP UNDER THE PROVISIONS OF UNDER THE PROVISIONS OF REGIONAL RURA L BANK ACT. SECTION 22 OF THE REGIONAL RURAL BANK ACT PROVIDES THAT REGIONAL RURA L BANK TO BE DEEMED TO BE A CO-OPERATIVE SOCIETY FOR PURPOSE OF THE INCOME-TA X ACT, 1961. IN OUR CONSIDERED VIEW THE CIRCULAR OF CBDT CANNOT OVERRID E THE PROVISIONS OF THE ACT OF PARLIAMENT. EVEN THE CAREFUL READING OF THE CIRC ULAR NO. 6 OF CBDT MAKE IT ITA NO. 90/JP/2019 AJMER ZILA DUGDH UTPADAK SAHKARI SANGH LTD., AJMER VS. P R. CIT, AJMER 15 CLEAR THAT EXEMPTION IS WITHDRAWN WITH RESPECT TO R EGIONAL RURAL BANKS ARE NOT ELIGIBLE FOR DEDUCTION UNDER SECTION 80P OF THE INC OME-TAX ACT, 1961 FROM THE ASSESSMENT YEAR 2007-08 ONWARDS, AND NOT THE CO-OPE RATIVE SOCIETIES. THE ASSESSEE BEFORE 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 SOCIETY THE ASSESSEE IS ENTITLED FOR THE EXEMPTION ON THE INTER EST EARNED ON THE DEPOSITS. IN THE RESULT THE GROUND NO. 1 & 2 OF THE APPEAL AR E ALLOWED. 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 EXAMIN E SIMILAR CONTENTION WHEREIN THE LATTER DECISION OF THE HONB LE KARNATAKA HIGH COURT IN CASE OF TOTAGARS CO-OPERATIVE SALE SOCIETY (SUPRA), RELIED UPON BY THE LD CIT DR WAS ALSO CONSIDERED. IT WAS HELD BY THE CO-ORDI NATE BENCH THAT THOUGH THE CO-OPERATIVE BANK PURSUANT TO THE INSERTION OF SUB- SECTION (4) OF SEC. 80P WOULD NO MORE BE ENTITLED FOR CLAIM OF DEDUCTION UN DER SEC. 80P OF THE ACT, HOWEVER, AS A CO-OPERATIVE BANK CONTINUES TO BE A C O-OPERATIVE SOCIETY REGISTERED UNDER THE CO-OPERATIVE SOCIETIES ACT, 19 12 (2 OF 1912), OR UNDER ANY OTHER LAW FOR THE TIME BEING ENFORCED IN ANY STATE FOR THE REGISTRATION OF CO- OPERATIVE SOCIETIES, THEREFORE, THE INTEREST INCOME DERIVED BY A CO-OPERATIVE SOCIETY FROM ITS INVESTMENTS HELD WITH A CO-OPERATI VE BANK, WOULD BE ENTITLED FOR CLAIM OF DEDUCTION UNDER SEC.80P(2)(D) OF THE A CT. WE SEE NO REASON TO DEVIATE FROM THE SAME AND AGREE WITH THE SAID 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 AUTHORITIES 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 IN TEREST INCOME EARNED ITA NO. 90/JP/2019 AJMER ZILA DUGDH UTPADAK SAHKARI SANGH LTD., AJMER VS. P R. CIT, AJMER 16 FROM THE INVESTMENTS MADE WITH THE CO-OPERATIVE BAN KS 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-SECT ION (4) OF SEC. 80P, AS HAD BEEN MADE AVAILABLE ON THE STATUTE BY THE LE GISLATURE VIDE THE FINANCE ACT 2006, WITH EFFECT FROM 01.04.2007. WE F IND THAT THE LOWER AUTHORITIES HAD TAKEN A VIEW THAT PURSUANT TO INSER TION OF SUB-SECTION (4) OF SEC. 80P, THE ASSESSEE WOULD NO MORE BE ENTITLED FOR CLAIM OF DEDUCTION UNDER SEC. 80P(2)(D) OF THE INTEREST INCO ME EARNED ON THE AMOUNTS PARKED AS INVESTMENTS WITH CO-OPERATIVE BAN KS, OTHER THAN A PRIMARY AGRICULTURAL CREDIT SOCIETY OR A PRIMARY CO -OPERATIVE AGRICULTURAL AND RURAL DEVELOPMENT BANK. WE FIND THAT THE LOWER AUTHORITIES HAD OBSERVED THAT AS THE CO-OPERATIVE BANK WITH WHICH T HE SURPLUS FUNDS OF THE ASSESSEE WERE PARKED AS INVESTMENTS, WERE NEITH ER PRIMARY AGRICULTURAL CREDIT SOCIETY NOR A PRIMARY CO-OPERAT IVE AGRICULTURAL AND RURAL DEVELOPMENT BANK, THEREFORE, THE INTEREST INC OME EARNED ON SUCH INVESTMENTS WOULD NOT BE ENTITLED FOR CLAIM OF DEDU CTION UNDER SEC. 80P(2)(D) OF THE ACT. 7. WE HAVE DELIBERATED AT LENGTH ON THE ISSUE UNDER C ONSIDERATION AND ARE UNABLE TO PERSUADE OURSELVES TO BE IN AGREEMENT WITH THE VIEW TAKEN BY THE LOWER AUTHORITIES. BEFORE PROCEEDING FURTHER , WE MAY HEREIN REPRODUCE THE RELEVANT EXTRACT OF THE SAID STATUTOR Y 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 ACCORDANCE WITH AND SUB JECT TO THE PROVISIONS ITA NO. 90/JP/2019 AJMER ZILA DUGDH UTPADAK SAHKARI SANGH LTD., AJMER VS. P R. CIT, AJMER 17 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) TO (C)** ** ** (D) IN RESPECT OF ANY INCOME BY WAY OF INTEREST OR DIVIDENDS DERIVED BY THE CO-OPERATIVE SOCIETY FROM ITS INVESTMENTS WITH ANY OTHER CO-OPERATIVE SOCIETY, THE WHOLE OF SUCH INCOME;' 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 COMPUTING THE TOTAL I NCOME OF THE ASSESSEE. WE MAY HEREIN OBSERVE, THAT WHAT IS RELEVANT FOR CL AIM OF DEDUCTION UNDER SEC. 80P(2)(D) IS THAT THE INTEREST INCOME SH OULD HAVE BEEN DERIVED FROM THE INVESTMENTS MADE BY THE ASSESSEE C O-OPERATIVE SOCIETY WITH ANY OTHER COOPERATIVE SOCIETY. WE THOUGH ARE I N AGREEMENT WITH 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 PRI MARY AGRICULTURAL CREDIT SOCIETY OR A PRIMARY CO-OPERATIVE 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 C O-OPERATIVE SOCIETY UNDER SEC. 80P(2)(D) IN RESPECT OF THE INTEREST INC OME ON THEIR INVESTMENTS PARKED WITH A CO-OPERATIVE BANK. WE HAV E GIVEN A THOUGHTFUL CONSIDERATION TO THE ISSUE BEFORE US AND ARE OF THE CONSIDERED VIEW THAT AS LONG AS IT IS PROVED THAT THE INTEREST INCOME IS BEING DERIVED BY A CO-OPERATIVE SOCIETY FROM ITS INVESTMENTS MADE WITH ANY OTHER CO- ITA NO. 90/JP/2019 AJMER ZILA DUGDH UTPADAK SAHKARI SANGH LTD., AJMER VS. P R. CIT, AJMER 18 OPERATIVE SOCIETY, THE CLAIM OF DEDUCTION UNDER THE AFORESAID STATUTORY PROVISION, VIZ. SEC. 80P(2)(D) WOULD BE DULY AVAILA BLE. WE MAY HEREIN OBSERVE THAT THE TERM 'CO-OPERATIVE SOCIETY' HAD BE EN 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 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 O F THE ACT, BUT HOWEVER, AS A CO-OPERATIVE BANK CONTINUES TO BE A C O-OPERATIVE SOCIETY REGISTERED UNDER THE CO-OPERATIVE SOCIETIES ACT, 19 12 (2 OF 1912), OR UNDER ANY OTHER LAW FOR THE TIME BEING ENFORCED IN ANY STATE FOR THE REGISTRATION OF CO-OPERATIVE SOCIETIES, THEREFORE, 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. 8. WE SHALL NOW ADVERT TO THE JUDICIAL PRONOUNCEMENTS THAT HAD BEEN RELIED UPON BY THE AUTHORIZED REPRESENTATIVES FOR B OTH THE PARTIES AND THE LOWER AUTHORITIES. WE FIND THAT THE ISSUE THAT A CO-OPERATIVE SOCIETY WOULD BE ENTITLED FOR CLAIM OF DEDUCTION UNDER SEC. 80P(2)(D) FOR THE INTEREST INCOME DERIVED FROM ITS INVESTMENTS HELD W ITH A COOPERATIVE BANK IS COVERED IN FAVOUR OF THE ASSESSEE IN THE FO LLOWING 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). ITA NO. 90/JP/2019 AJMER ZILA DUGDH UTPADAK SAHKARI SANGH LTD., AJMER VS. P R. CIT, AJMER 19 WE FURTHER FIND THAT THE HON'BLE HIGH COURT OF KARN ATAKA IN THE CASE OF TOTAGARS COOPERATIVE SALE SOCIETY(SUPRA) AND HON 'BLE HIGH COURT OF GUJARAT IN THE CASE OF STATE BANK OF INDIA (SUPRA), HAD ALSO HELD THAT THE INTEREST INCOME EARNED BY THE ASSESSEE ON ITS INVES TMENTS HELD WITH A CO-OPERATIVE BANK WOULD BE ELIGIBLE FOR CLAIM OF DE DUCTION UNDER SEC. 80P(2)(D) OF THE ACT. STILL FURTHER, WE FIND THAT T HE 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 B EHIND ENACTMENT OF SUB-SECTION (4) OF SEC. 80P WAS TO PROVIDE THAT THE CO-OPERATIVE BANKS WHICH ARE 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 THE 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-OPERATIVE SALE SOCIETY 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 SOCIETY TOWARDS DEDUC TION UNDER SEC. 80P(2)(D) ON THE INTEREST INCOME ON THE INVESTMENTS PARKED WITH A CO- OPERATIVE BANK. WE FURTHER FIND THAT THE RELIANCE P LACE BY THE LD. D.R ON THE ORDER OF THE ITAT 'F' BENCH, MUMBAI IN THE CASE OF VAIBHAV COOPERATIVE CREDIT SOCIETY (SUPRA) IS ALSO DISTINGU ISHABLE ON FACTS. WE FIND THAT THE SAID ORDER WAS PASSED BY THE TRIBUNAL IN CONTEXT OF ADJUDICATION OF THE ENTITLEMENT OF THE ASSESSEE CO- OPERATIVE BANK TOWARDS CLAIM OF DEDUCTION UNDER SEC.80P(2)(A)(I) O F THE ACT. 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 ARE AFRAID TH AT THE RELIANCE PLACED BY THE LD. D.R ON THE AFORESAID ORDER OF THE TRIBUN AL BEING DISTINGUISHABLE ON FACTS, THUS, WOULD BE OF NO ASSI STANCE FOR ADJUDICATION ITA NO. 90/JP/2019 AJMER ZILA DUGDH UTPADAK SAHKARI SANGH LTD., AJMER VS. P R. CIT, AJMER 20 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 CA SE OF SHRI SAI DATTA 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 OFFICE R 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 CO URT 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 WHICH IS IN FAVOUR OF THE ASSESSEE IS TO BE PREFERRED AS AGAINS T THAT TAKEN AGAINST HIM. THUS, TAKING SUPPORT FROM THE AFORESAID JUDICI AL PRONOUNCEMENT OF THE HON'BLE HIGH COURT OF JURISDICTION, WE RESPECTF ULLY FOLLOW THE VIEW TAKEN BY THE HON'BLE HIGH COURT OF KARNATAKA IN THE CASE OF TOTAGARS COOPERATIVE SALE SOCIETY(SUPRA) AND HON'BLE HIGH CO URT OF GUJARAT IN THE CASE OF STATE BANK OF INDIA (SUPRA), WHEREIN IT WAS OBSERVED THAT THE INTEREST INCOME EARNED BY A CO-OPERATIVE SOCIETY ON ITS INVESTMENTS HELD WITH A CO-OPERATIVE BANK WOULD BE ELIGIBLE FOR CLAI M OF DEDUCTION UNDER SEC.80P(2)(D) OF THE ACT. 9. WE THUS IN THE BACKDROP OF OUR AFORESAID OBSERVATI ONS ARE UNABLE TO PERSUADE OURSELVES TO BE IN AGREEMENT WITH THE VIEW TAKEN BY THE LOWER AUTHORITIES THAT THE ASSESSEE WOULD NOT BE ENTITLED FOR CLAIM OF DEDUCTION UNDER SEC. 80P(2)(D), IN RESPECT OF THE INTEREST IN COME ON THE INVESTMENTS MADE WITH THE CO-OPERATIVE BANK. WE THU S SET ASIDE THE ORDER OF THE LOWER AUTHORITIES AND CONCLUDE THAT TH E INTEREST INCOME OF ITA NO. 90/JP/2019 AJMER ZILA DUGDH UTPADAK SAHKARI SANGH LTD., AJMER VS. P R. CIT, AJMER 21 RS. 27,48,553/-EARNED BY THE ASSESSEE ON THE INVEST MENTS HELD WITH THE CO-OPERATIVE BANK WOULD BE ENTITLED FOR CLAIM OF DE DUCTION 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) CAN NOT BE DENIED TO THE ASSESSEE SOCIETY AS THE DEPOSITS HAVE BEEN PLACED B Y THE ASSESSEE CO- OPERATIVE SOCIETY WITH AJMER CENTRAL CO-OPERATIVE B ANK LTD WHICH IS REGISTERED AS A CO-OPERATIVE SOCIETY AND RETAINS THE SAME CHAR ACTER 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 RELATING TO DED UCTION SO CLAIMED BY THE ASSESSEE, THE ORDER PASSED BY THE ASSESSING OFFICER WHEREIN HE HAS ALLOWED THE DEDUCTION U/S 80(P)(2)(D) ON INTEREST ON FDRS PLACE D WITH AJMER CENTRAL CO- OPERATIVE BANK LTD CANNOT BE HELD AS ERRONEOUS IN V IEW OF THE AFORESAID DISCUSSION WHEREIN THERE CANNOT BE ANY DISPUTE REGA RDING 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 I S SET-ASIDE AND MATTER IS DECIDED IN FAVOUR OF THE ASSESSEE. IN THE RESULT, APPEAL OF THE ASSESSEE IS ALLOWED. ORDER PRONOUNCED IN THE OPEN COURT ON 28/08/2019. SD/- SD/- FOT; IKY JKO FOE FLAG ;KNO (VIJAY PAL RAO) (VIKRAM SINGH YADAV) U;KF;D LNL;@ JUDICIAL MEMBER YS[KK LNL;@ ACCOUNTANT MEMBER TK;IQJ@ JAIPUR ITA NO. 90/JP/2019 AJMER ZILA DUGDH UTPADAK SAHKARI SANGH LTD., AJMER VS. P R. CIT, AJMER 22 FNUKAD@ DATED:- 28/08/2019 * 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. 90/JP/2019} VKNS'KKUQLKJ@ BY ORDER, LGK;D IATHDKJ@ ASST. REGISTRAR