The Lunawada Taluka Primary School Teachers Co. Op. Credit Soc. Ltd., Mahisagar V. The ITO, Ward-2, Godhara

MA 139/AHD/2020

• Counselvise Citation: [2021] 107 COUNSELVISE.COM (IT) 4313 (ITAT-AHMEDABAD)
• Duration Of Justice: 1 year(s) 2 month(s) 15 day(s)
• Appeal Type: Miscellaneous Application
• Pronouncement Date: 05-10-2021
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: A
• Assessment Year: 2013-2014
• Appeal Filed On: 20-07-2020
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: PURSHOTTAM KUMAR
• Keywords: Set aside
• Section: 254(2); 72; 12

Judgement Text

, - IN THE INCOME TAX APPELLATE TRIBUNAL AHMEDABAD BENCH A BEFORE SHRI RAJPAL YADAV, HONBLE VICE-PRESIDENT AND SHRI WASEEM AHMED HONBLE ACCOUNTANT MEMBER MISC.APPLICATION NO.139 AND 141/AHD/2020 IN ITA NO.97 AND 2019/AHD/2017 ASSTT.YEAR 2013-14 AND 2014-15 THE LUNAWADA TALUKA PRIMARY SCHOOL TEACHERS CO-OP. CREDIT SOCIETY LTD. AT PARAMA, LUNAWADA 389 230 JULLA MAHISAGAR. PAN : AAAAT 2876 N VS. ITO, WARD - 2 PANCHMAHAL CIRCLE GODHRA. MISC. APPLICATION NO.140/AHD/2020 IN ITA NO.2018/AHD/2017 / ASSTT. YEAR: 2014-15 M/S.VIR TRANSPO R T OPERATOR CO - OP. CREDIT AND SERVICES SOCIETY GODHRA ROAD, LIMDI, TAL. JHALOD DIST. DAHOD 389 180. PAN : AAAAS 2228 K VS. ITO, WARD - 2 DAHOD. ( APPLICANT ) ( RESPONENT ) ASSESSEE BY : MS.URVASHI SHODHAN, AR REVENUE BY : SHRI PURSHOTTAM KUMAR, SR.DR / DATE OF HEARING : 01/10/2020 / DATE OF PRONOUNCEMENT: 5/10/2020 / O R D E R PER RAJPAL YADAV, VICE-PRESIDENT PRESENT THREE MISC. APPLICATIONS ARE DIRECTED AT TH E INSTANCE OF THE ASSESSEES POINTING OUT APPARENT ERROR IN THE ORDER OF THE TRIBUNAL DATED MA NO.139, 141 AND 40/AHD/2020 2 9.1.2020 PASSED IN ITA NOS.2018/AHD/2019 FOR THE AS STT.YEAR 2014-15 IN THE CASE OF VIR TRANSPORT OPERATORS CO-OP. CREDIT SERV ICE SOCIETY LTD., AND ITA NO.2019 AND 97/AHD/2017 FOR THE ASSTT.YEARS 2014-15 AND 2013-14 IN THE CASE OF THE LUNAWADA TALUKA PRIMARY SCHOOL TEACHERS CO-OP CREDIT SOCIETY LTD. ALL THESE MAS. ARE DISPOSED OF BY THIS COMMON ORDER. 2. IN THE MA IT HAS BEEN PLEADED THAT THESE APPEALS HAVE BEEN DECIDED BY THE TRIBUNAL ON 9.1.2020. THE TRIBUNAL HAS ALLOWED THE APPEALS FOR STATISTICAL PURPOSE AND DIRECTED THE AO TO GRANT DEDUCTION UNDE R SECTION 80P(2)(D) OF THE INCOME TAX ACT, 1961 OF THE INTEREST INCOME EARNED FROM CO-OPERATIVE SOCIETIES. THE FINDING RECORDED BY THE TRIBUNAL I N PARA 7 AND 8 READ AS UNDER: 7. ON DUE CONSIDERATION OF THE ABOVE FACTS AND CIR CUMSTANCES, WE ARE OF THE VIEW THAT AS FAR AS THE ISSUE REGARDING ADMISSIBILITY OF DEDUCTION OF INTEREST INCOME FROM SCHEDULED BANK UN DER SECTION 80P(2)(A)(I) IS CONCERNED THIS HAS BEEN SETTLED BY THE HONBLE JURISDICTIONAL HIGH COURT IN THE CASE OF STATE BANK OF INDIA (SUPRA), AND THE ASSESSEE IS NOT ENTITLED FOR SUCH DEDUCTION . THIS PROPOSITION WAS NOT EVEN DISPUTED BY THE LD.COUNSEL FOR THE ASS ESSEE. ONLY THING WHICH REQUIRES TO BE DONE IS RE-DETERMINATION OR QU ANTIFICATION OF AMOUNT WHICH IS TO BE DISALLOWED OUT OF INTEREST IN COME FROM THE SCHEDULED BANK. THE LD.AO SHALL WORK OUT THE NET I NTEREST INCOME FROM THE DEPOSITS WITH SCHEDULED BANK, AND THEREAFTER EX CLUDE THAT AMOUNT FROM THE COMPUTATION OF DEDUCTION CLAIMED UNDER SEC TION 80P(2)(A)(I) OF THE ACT. AS FAR AS INTEREST INCOME FROM COOPERA TIVE BANK/SOCIETY IS CONCERNED IN VIEW OF THE DECISION OF CO-ORDINATE BE NCH, SUCH INCOME WILL QUALIFY FOR GRANT OF DEDUCTION UNDER SECTION 8 0P(2)(D) OF THE ACT. THE LD.AO SHALL WORK OUT NET AMOUNT OF SUCH INTERES T INCOME, AND THEREAFTER GRANT DEDUCTION UNDER SECTION 80(2)(D) O F THE ACT. 3. THE LD.COUNSEL FOR THE ASSESSEE CONTENDED THAT T HE TRIBUNAL HAS DIRECTED THE AO TO COMPUTE NET INTEREST INCOME FROM THE COOP ERATIVE SOCIETIES, AND THEREAFTER GRANT DEDUCTION UNDER SECTION 80P(2)(D) OF THE ACT. THIS DIRECTION IS NOT CORRECT IN VIEW OF LATEST DECISION OF HONBL E GUJARAT HIGH COURT. ACCORDINGLY, SHE PUT RELIANCE UPON THE FOLLOWING DE CISIONS: MA NO.139, 141 AND 40/AHD/2020 3 1. DOABA CO-OP. SUGAR MILLS LTD., 230 ITR 774 (P&H); 2. SURAT VANKAR SAHAKARI SANGH LTD., 72 TAXMANN.COM 16 9; 3. SURENDRANGAR DISTRICT CO-OP MILK PRODUCERS UNION LT D., 179 ITD 690; 4. JAIPUR ZILA DUGDH UTPADAK SAHAKARI SANGH LTD. ITA N OS.512 & 513/JP/2019; 5. BARDOLI VIBHAG GRAM VIKAS CO-OP. CREDIT SOCIETY LTD ., 189 ITD 601; 4. ACCORDING TO THE LD.COUNSEL FOR THE ASSESSEE EXP RESSION WHOLE OF SUCH INCOME HAS BEEN EMPLOYED IN SECTION 80P(2)(D), AND THEREFORE, FOR THE PURPOSE OF COMPUTING DEDUCTION ADMISSIBLE UNDER SEC TION 80P(2)(D) OF THE ACT, INCOME WHICH IS TO BE EXCLUDED IS THE GROSS IN COME OF INTEREST MENTIONED IN SECTION 80P(2)(D) OF THE ACT. THUS, THE AO HAS TO COMPUTE GROSS INTEREST INCOME WHICH IS TO BE EXCLUDED FROM THE INCOME OF T HE ASSESSEE UNDER SECTION 80P(2)(D) OF THE ACT. 5. ON THE OTHER HAND, THE LD.DR CONTENDED THAT THE TRIBUNAL HAS EXAMINED THE ISSUE ELABORATELY, AND THERE IS NO APPARENT ERR OR. 6. WE HAVE DULY CONSIDERED RIVAL CONTENTIONS AND GO NE THROUGH THE RECORD. THE POWER OF RECTIFICATION UNDER SECTION 254(2) OF THE INCOME TAX ACT CAN BE EXERCISED ONLY WHEN THE MISTAKE, WHICH I S SOUGHT TO BE RECTIFIED, IS AN OBVIOUS PATENT MISTAKE, WHICH IS APPARENT FROM T HE RECORD AND NOT A MISTAKE, WHICH IS REQUIRED TO BE ESTABLISHED BY ARG UMENTS AND LONG DRAWN PROCESS OF REASONING ON POINTS, ON WHICH THERE MAY CONCEIVABLY BE TWO OPINIONS. THE HONBLE GUJARAT HIGH COURT IN THE CAS E OF SURAT VANKAR SAHAKARI SANGH LTD., (SUPRA) HAS CONSIDERED AN IDEN TICAL ISSUE. ONE OF THE QUESTIONS FORMULATED BY THE HONBLE COURT IN TAX AP PEAL NO.93 TO 96 OF 2008 READ AS UNDER: MA NO.139, 141 AND 40/AHD/2020 4 WHETHER ASSESSEE-COOPERATIVE SOCIETY WAS ENTITLED UNDER SECTION 80P(2)(D) OF THE ENTIRE INTEREST OF RS.9,01,062/- R ECEIVED BY IT FROM THE CO-OPERATIVE BANK ? IN PARAGRAPH-3 THE HONBLE COURT HAS NOTICED THE F ACTS 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 INTEREST AND DI VIDEND RECEIVED BY THE ASSESSEE FROM CO-OPERATIVE SOCIETIES I.E. BANK IN T HIS CASE. THE ASSESSING OFFICER ALLOWED DEDUCTION U/S 80P(2)(D) TO THE EXTE NT OF NET INTEREST INSTEAD OF GROSS INTEREST AS CLAIMED BY THE ASSESSEE AND DI SALLOWED THE EXCESS CLAIM OF DEDUCTION IN THIS REGARD FOR ALL THE YEARS UNDER CONSIDERATION. THE AMOUNT DISALLOWED BY THE ASSESSING OFFICER AND DEDUCTION G RANTED BY THE ASSESSING OFFICER IS TABULARIZED AND RECORDED AS UNDER: 7. HONBLE COURT THEREAFTER PUT RELIANCE UPON THE D ECISION OF HONBLE PUNJAB & HARYANA HIGH COURTS DECISION AND HELD THA T GROSS INTEREST INCOME IS TO BE GRANTED AS DEDUCTION UNDER SECTION 80P(2)( D) OF THE ACT. THE FINDING RECORDED BY THE HONBLE COURT READS AS UNDER: 8.1 SIMILARLY, IN THE CASE OF DOABA CO-OPERATIVE SUGAR 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 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 INCO ME.' 6. SO FAR AS THE PRINCIPLE OF INTERPRETATION APPLIC ABLE TO A TAXING STATUTE IS CONCERNED, WE CAN DO NO BETTER THAN TO QUOTE THE BY -NOW CLASSIC WORDS OF ROWLATT J., IN CAPE BRANDY SYNDICATE V. 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 MA NO.139, 141 AND 40/AHD/2020 5 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-OPERATIV E 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 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 OTH ER CO-OPERATIVE SOCIETY. THEREFORE, WE DO NOT AGREE WITH THE ARGUMENT ADVANC ED BY LEARNED COUNSEL FOR THE REVENUE. IN OUR OPINION, THE LEARNED TRIBUN AL WAS RIGHT 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 ACCOUNT OF I NTEREST RECEIVED FROM NAWANSHALN CENTRAL CO-OPERATIVE BANK WITHOUT ADJUST ING THE INTEREST PAID TO THE HANK. THEREFORE, THE REFERENCE IS ANSWERED A GAINST 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 T HE INCOME WHICH SHE EARNED FROM THE FIXED DEPOSIT AND THAT SHE WAS NOT ENTITLE D TO THE DEDUCTION CLAIMED UNDER SECTION 12(2). THE HIGH COURT HELD THAT IF AN ASSES SEE HAD NO OPTION EXCEPT TO INCUR AN EXPENDITURE IN ORDER TO MAKE THE EARNING O F AN INCOME POSSIBLE, THEN UNDOUBTEDLY THE EXERCISE OF THAT OPTION IS COMPULSO RY AND ANY EXPENDITURE INCURRED BY REASON OF THE EXERCISE OF THAT OPTION WOULD COME WITHIN THE AMBIT OF SECTION 12(2) OF THE INDIAN INCOME-TAX ACT BUT WHERE THE OP TION HAS NO CONNECTION WITH THE CARRYING ON OF THE BUSINESS OR THE EARNING OF THE I NCOME AND THE OPTION DEPENDS UPON PERSONAL CONSIDERATIONS OR UPON MOTIVES OF THE ASSESSEE, THAT EXPENDITURE CANNOT POSSIBLY COME WITHIN THE AMBIT OF SECTION 12 (2). IN THE PRESENT CASE, THE LOAN WAS TAKEN FOR BUSINESS PURPOSE MORE PARTICULAR LY PURCHASE OF YARN AND NOT FOR FIXED DEPOSITS. 9. IN VIEW OF THE ABOVE, THE QUESTIONS RAISED IN THE P RESENT APPEALS ARE ANSWERED IN FAVOUR OF THE ASSESSEE AND AGAINST THE REVENUE. THE ORDER PASSED BY THE TRIBUNAL IS ACCORDINGLY QUASHED AND SET ASIDE. MA NO.139, 141 AND 40/AHD/2020 6 8. WE FIND THAT IN VIEW OF THE DECISION OF HONBLE JURISDICTIONAL HIGH COURT, THE TRIBUNAL HAS COMMITTED AN ERROR WHICH IS APPARENT ONE BY DIRECTING THE AO TO COMPUTE ONLY NET INTEREST INCOME FOR THE PURPOSE OF SECTION 80P(2)(D) OF THE ACT. THE GROSS INCOME IS TO BE CO NSIDERED FOR DEDUCTION UNDER SECTION 80P(2)(D) OF THE ACT. IN VIEW OF THE ABOVE DECISION OF THE HONBLE HIGH COURT, WE EXPUNGE THE WORDS NET INTE REST USED BY US IN THE FINDING EXTRACTED (SUPRA) AND IN ITS PLACE EXPRESSI ON GROSS INTEREST INCOME IS TO BE READ IN THE ORDER OF THE TRIBUNAL. IN OTHER WORDS, THE LD.AO WOULD GRANT DEDUCTION UNDER SECTION 80P(2)(D) OF THE ACT OF WHO LE INTEREST INCOME I.E. GROSS INTEREST INCOME. WITH THE ABOVE OBSERVATIONS AND FINDING, THESE MAS. ARE ALLOWED AND IMPUGNED ORDER OF THE TRIBUNAL IS R EVISED TO THAT EXTENT. 9. IN THE RESULT, ALL MAS. ARE ALLOWED. ORDER PRONOUNCED IN THE COURT ON 5 TH OCTOBER, 2021 AT AHMEDABAD. SD/- SD/- (WASEEM AHMED ) ACCOUNTANT MEMBER (RAJPAL YADAV) VICE-PRESIDENT