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

MA 65/JPR/2020

• Counselvise Citation: [2021] 109 COUNSELVISE.COM (IT) 6529 (ITAT-JAIPUR)
• Duration Of Justice: 4 month(s) 20 day(s)
• Appeal Type: Miscellaneous Application
• Pronouncement Date: 21-01-2021
• Appeal Filed By: Department
• Order Result: Allowed
• Bench Allotted: B
• Assessment Year: 2012-2013
• Appeal Filed On: 01-09-2020
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Keywords: Business income; Rule of consistency; Earning of tax free income; Source of fund; Set aside
• Section: 80P; 201; 207; 254(2); 64; 72; 13; 22; 147; 37

Judgement Text

VK;DJ VIHYH; VF/KDJ.K] T;IQJ U;K;IHB] T;IQJ IN THE INCOME TAX APPELLATE TRIBUNAL, JAIPUR BENC HES B JAIPUR JH LAANHI XKSLKBZ] U;KF;D LNL; ,OA JH FOE FLAG ;KNO] YS[KK LNL; DS LE{K BEFORE: SHRI SANDEEP GOSAIN, JM & SHRI VIKRAM SING H YADAV, AM M.A. NOS. 63, 64 & 65/JP/2020 (ARISING OUT OF ITA NOS. 187, 22, 633, 512, 634 & 5 13/JP/2019 ) FU/KZKJ.K O'K Z@ ASSESSMENT YEARS : 2014-15, 2011-12 & 2012-13 DCIT, CIRCLE-06, JAIPUR CUKE VS. M/S JAIPUR ZILA DUGDH UTPADAK SAHKARI SANGH LTD., JAIPUR NEAR GANDHI NAGAR RAILWAY STATION, JAIPUR LFKK;H YS[KK LA-@THVKBZVKJ LA-@ PAN/GIR NO.: AAAAJ0767G VIHYKFKHZ@ APPELLANT IZR;FKHZ@ RESPONDENT JKTLO DH VKSJ LS @ REVENUE BY : SMT. RUNI PAL (ADDL. CIT) FU/KZKFJRH DH VKSJ L S@ ASSESSEE BY : SH. P. C. PARWAL (CA) LQUOKBZ DH RKJH[ K@ DATE OF HEARING : 04/12/2020 MN?KKS'K.KK DH RKJH[ K@ DATE OF PRONOUNCEMENT: 21/01/2021 VKNS'K@ ORDER PER: VIKRAM SINGH YADAV, A.M. THE PRESENT MISCELLANEOUS APPLICATIONS HAVE BEEN FI LED BY THE REVENUE AGAINST THE CONSOLIDATED ORDER PASSED BY TH E TRIBUNAL IN ITA NO. 633/JP/19 & 512/JP/19 FOR A.Y 2011-12 AND 6 34/JP/19 & 513/JP/2019 DATED 02.09.2019 AND SUBSEQUENT ORDER PASSED BY THE TRIBUNAL IN ITA NOS. 187/JP/19 & 22/JP/19 DATED 30. 09.2019 FOR A.Y 2014-15. MA NO. 64/JP/2020 FOR A.Y 2011-12 M.A. NOS. 63, 64 & 65/JP/2020 DCIT, JAIPUR VS. M/S JAIPUR ZILA DUGDH UTPADAK SAHKARI SANGH LTD JAIPUR 2 2. IN THIS REGARD, THE LD. DR SUBMITTED THAT THE D EPARTMENT HAS FILED APPEAL BEFORE THE TRIBUNAL CONTAINING GROUNDS OF AP PEAL (ITA. NO. 633/JP/2019 FOR A.Y 2011-12) AS UNDER:- 'WHETHER IN THE FACTS AND CIRCUMSTANCES OF THE CASE AND IN LAW, THE CIT(A) IS CORRECT IN HOLDING THAT THE INC OME RECEIVED FROM INVESTMENTS MADE WITH JAIPUR CENTRAL CO-OPERA TIVE BANK IS ELIGIBLE FOR DEDUCTION U/S 80-P(2)(D) OF THE I. T ACT, 1961 AND THEREBY JUSTIFIED IN ALLOWING RELIEF OF RS. 1, 49,40,834/-.' 3. IT WAS SUBMITTED THAT THE TRIBUNAL HAS PASSED OR DER DATED 02.09.2019 IN ITA NO.512/JP/2019 (ASSESSEE'S APPEAL ) AND 633/JP/2019 (DEPARTMENT APPEAL) FOR A.Y. 2011-12 IN THE CASE OF M/S. JAIPUR ZILA DUGDH UTPADAK SAHKARI SANGH LTD., JAIPU R, WHICH WAS RECEIVED IN THE OFFICE OF PR. CIT-2, JAIPUR ON 25.1 0.2019. THE TRIBUNAL WHILE DECIDING THE GROUNDS OF THE APPEAL FILED BY T HE DEPARTMENT, IN PARA 14 OF THE ORDER, HAS DECIDED THE ISSUE IN THE COMBINED ORDER FOR AY 2011-12 AND 2012-13 BY HOLDING AS UNDER:- 'IN THE INSTANT CASE FOR THE PURPOSES OF SECTION OF THE ACT, JAIPUR CENTRAL COOPERATIVE BANK LTD SHALL BE TREATE D AS A CO- OPERATIVE SOCIETY. THEREFORE, INTEREST ON FDRS PLAC ED BY THE ASSESSEE SOCIETY WITH SUCH COOPERATIVE SOCIETY SHAL L BE ELIGIBLE FOR DEDUCTION U/S 80P(2)(D) OF THE ACT.' 4. IT WAS FURTHER SUBMITTED THAT IN ASSESSEE'S OWN CASE FOR A.Y. 2016-17 (ITA NO. 1243/JP/2019 DATED 4.03.2020) , THE TRIBUNAL HAS SET ASIDE THE ISSUE OF CALCULATING INTEREST U/S 80P (2)(D) TO THE CIT(A) STATING THAT IT NEEDS TO BE DETERMINED WHETHER THE ASSESSEE HAS M.A. NOS. 63, 64 & 65/JP/2020 DCIT, JAIPUR VS. M/S JAIPUR ZILA DUGDH UTPADAK SAHKARI SANGH LTD JAIPUR 3 INCURRED ANY INTEREST EXPENDITURE IN EARNING THE IN TEREST INCOME. THE TRIBUNAL IN THIS CASE STATED AS UNDER: '14. THE LEGAL PROPOSITION THUS LAID DOWN BY THE HO N'BLE HIGH COURT IS THAT THE INCOME EXEMPTED UNDER SECTION 80P (2) HAS TO BE ARRIVED AT SEPARATELY IN ORDER TO DETERMINE THE INCOME UNDER SECTION 80P(2) AND IT CAN NEVER BE ENVISAGED THAT T HE TOTAL INCOME WHICH HAS BEEN SO RECEIVED COULD BE ALLOWED WITHOUT DEDUCTING THE EXPENDITURE INCURRED IN EARNING THE I NCOME. IN LIGHT OF THE SAME, THE DEDUCTION U/S 80P(2)(D) CAN BE ALLOWED ONLY ON THE NET RECEIPT AFTER DEDUCTING THE EXPENDI TURE INCURRED FOR EARNING EXEMPT INCOME. THEREFORE, IN THE INSTAN CE CASE, IT NEEDS TO BE DETERMINED WHETHER THE ASSESSEE HAS INC URRED ANY INTEREST EXPENDITURE IN EARNING THE INTEREST INCOME .' 5. IT WAS SUBMITTED THAT AS THE TRIBUNAL HAS NOW ES TABLISHED IN ASSESSEE'S OWN CASE FOR A.Y. 2016-17 (ITA NO. 1243/JP/ 2019) THAT THE DEDUCTION U/S 80P(2)(D) CAN BE ALLOWED ONLY ON THE NET RECEIPT AFTER DEDUCTING THE EXPENDITURE INCURRED FOR EARNING EXEM PT INCOME. THIS ISSUE HAS NOT BEEN ADJUDICATED UPON BY THE TRIBUNAL IN ITS DECISION IN THIS INSTANT CASE FOR AY 2011-12, IT IS REQUESTED T HAT THE SAME MAY BE TAKEN UP UNDER SECTION 254(2) OF THE I.T. ACT, 1961 FOR ADJUDICATION BY RECALLING AND MODIFYING THE ORDER DATED 02.09.2019 IN THE CASE OF DCIT, CIRCLE-6, JAIPUR VS. M/S JAIPUR ZILA DUGDH UT PADAK SAHKARI SANGH LTD., JAIPUR, IN ITA NO.512/JP/19 (ASSESSEE'S APPEA L) AND 633/JP/2019(DEPARTMENT APPEAL) FOR A.Y. 2011-12. M.A. NOS. 63, 64 & 65/JP/2020 DCIT, JAIPUR VS. M/S JAIPUR ZILA DUGDH UTPADAK SAHKARI SANGH LTD JAIPUR 4 MA NO. 65/JP/2020 FOR A.Y 2012-13 6. IN THIS REGARD, THE LD. DR SUBMITTED THAT SIMILA R GROUND OF APPEAL HAD BEEN TAKEN BY THE DEPARTMENT IN THIS APPEAL FIL ED BEFORE THE TRIBUNAL (ITA. NO. 634/JP/2019 FOR A.Y 2012-13) AS UNDER:- 'WHETHER IN THE FACTS AND CIRCUMSTANCES OF THE CASE AND IN LAW, THE CIT(A) IS CORRECT IN HOLDING THAT THE INC OME RECEIVED FROM INVESTMENTS MADE WITH JAIPUR CENTRAL CO-OPERA TIVE BANK IS ELIGIBLE FOR DEDUCTION U/S 80-P(2)(D) OF THE 1. T ACT, 1961 AND THEREBY JUSTIFIED IN ALLOWING RELIEF OF RS. 1, 59,92,544/-.' 7. THE TRIBUNAL HAD PASSED ORDER DATED 02.09.2019 I N ITA NO.513/JP/2019 (ASSESSEE'S APPEAL) AND 634/JP/2019 (DEPARTMENT APPEAL) FOR A.Y. 2011-12 IN THE CASE OF M/S. JAIPUR ZILA DUGDH UTPADAK SAHKARI SANGH LTD., JAIPUR, WHICH WAS RECEIVED IN T HE OFFICE OF PR. CIT- 2, JAIPUR ON 25.10.2019. THE TRIBUNAL WHILE DECIDIN G THE GROUNDS OF THE APPEAL FILED BY THE DEPARTMENT, IN PARA 14 OF T HE ORDER, HAS DECIDED THE ISSUE IN THE COMBINED ORDER FOR AY 2011 -12 AND 2012-13 BY HOLDING AS UNDER:- 'IN THE INSTANT CASE FOR THE PURPOSES OF SECTION OF THE ACT, JAIPUR CENTRAL COOPERATIVE BANK LTD SHALL BE TREATED AS A CO-OPERATIVE 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.' 8. ON THE OTHER HAND, IN ASSESSEE'S OWN CASE FOR A.Y. 2016-17 (ITA NO. 1243/JP/2019) THE TRIBUNAL HAS SET ASIDE THE IS SUE OF CALCULATING M.A. NOS. 63, 64 & 65/JP/2020 DCIT, JAIPUR VS. M/S JAIPUR ZILA DUGDH UTPADAK SAHKARI SANGH LTD JAIPUR 5 INTEREST U/S 80P(2)(D) TO THE CIT(A) STATING THAT I T NEEDS TO BE DETERMINED WHETHER THE ASSESSEE HAS INCURRED ANY IN TEREST EXPENDITURE IN EARNING THE INTEREST INCOME. THE TRIBUNAL IN THI S CASE STATED THAT: '14. THE LEGAL PROPOSITION THUS LAID DOWN BY THE H ON'BLE HIGH COURT IS THAT THE INCOME EXEMPTED UNDER SECTION 80P (2) HAS TO BE ARRIVED AT SEPARATELY IN ORDER TO DETERMINE THE INCOME UNDER SECTION 80P(2) AND IT CAN NEVER BE ENVISAGED THAT T HE TOTAL INCOME WHICH HAS BEEN SO RECEIVED COULD BE ALLOWED WITHOUT DEDUCTING THE EXPENDITURE INCURRED IN EARNING THE I NCOME. IN LIGHT OF THE SAME, THE DEDUCTION U/S 80P(2)(D) CAN BE ALLOWED ONLY ON THE NET RECEIPT AFTER DEDUCTING THE EXPENDI TURE INCURRED FOR EARNING EXEMPT INCOME. THEREFORE, IN THE INSTAN CE CASE, IT NEEDS TO BE DETERMINED WHETHER THE ASSESSEE HAS INC URRED ANY INTEREST EXPENDITURE IN EARNING THE INTEREST INCOME .' 9. IN VIEW OF THE ABOVE, IT WAS SUBMITTED THAT AS THE TRIBUNAL HAS NOW ESTABLISHED IN ASSESSEE'S OWN CASE FOR A.Y. 201 6-17 (ITA NO. 1243/JP/2019) THAT THE DEDUCTION U/S 80P(2)(D) CAN BE ALLOWED ONLY ON THE NET RECEIPT AFTER DEDUCTING THE EXPENDITURE INCURRED FOR EARNING EXEMPT INCOME. THIS ISSUE HAS NOT BEEN ADJUDICATED UPON BY THE HONBLE BENCH IN ITS DECISION IN THIS INSTANT CASE FOR AY 2012-13, IT IS REQUESTED THAT THE SAME MAY BE TAKEN UP UNDER SECTI ON 254(2) OF THE I.T. ACT, 1961 FOR ADJUDICATION BY RECALLING AND MO DIFYING THE ORDER DATED 02.09.2019 IN THE CASE OF DCIT, CIRCLE-6, JAI PUR VS. M/S JAIPUR ZILA DUGDH UTPADAK SAHKARI SANGH LTD., JAIPUR, IN I TA NO.513/JP/19 (ASSESSEE'S APPEAL) AND 634/JP/2019(DEPARTMENT APPE AL) FOR A.Y. 2012-13. M.A. NOS. 63, 64 & 65/JP/2020 DCIT, JAIPUR VS. M/S JAIPUR ZILA DUGDH UTPADAK SAHKARI SANGH LTD JAIPUR 6 MA NO. 63/JP/2019 FOR A.Y 2014-15 10. IN THIS REGARD, THE LD. DR SUBMITTED THE DEPART MENT FILED APPEAL BEFORE THE TRIBUNAL CONTAINING GROUNDS OF APPEAL (I TA. NO. 187/JP/2019 FOR A.Y 2014-15) AS UNDER:- GROUND (1): WHETHER ON THE FACTS AND IN CIRCUMSTAN CES OF THE CASE AND IN LAW THE LD. CIT(A) WAS JUSTIFIED IN DE LETING THE ADDITION OF RS. 1,43,24,928/- MADE BY THE AO IN DI SALLOWING CONTRIBUTION MADE TO SPARSH TRUST WITHOUT APPRECIAT ING THE FACT THAT ASSESSEE FAILED TO PROVE DIRECT BUSINESS NEXUS AND IT IS NOT AN ALLOWABLE EXPENDITURE U/S 37(1). GROUND (2): WHETHER IN THE FACTS AND CIRCUMSTANCES OF THE CASE AND IN LAW THE LD. CIT(A) IS CORRECT IN HOLDING THA T THE INCOME RECEIVED FROM INVESTMENTS MADE WITH JAIPUR CENTRAL COOPERATIVE BANK IS ELIGIBLE FOR DEDUCTION U/S 80P(2)(D) OF THE IT ACT, 1961 AND THEREBY JUSTIFIED IN ALLOWING RELIEF OF RS. 2,7 6,34,807/-.' 11. THE TRIBUNAL HAS PASSED ORDER DATED 02.09.2019 IN ITA NO. 22/JP/20 (ASSESSEE'S APPEAL) AND 187/JP/2019(DEPART MENT APPEAL) FOR A.Y. 2014-15 IN THE CASE OF M/S. JAIPUR ZILA DUGDH UTPADAK SAHKARI SANGH LTD., JAIPUR, WHICH WAS RECEIVED IN THE OFFIC E OF PR. CIT-2, JAIPUR ON 25.10.2019. THE TRIBUNAL WHILE DECIDING T HE GROUNDS OF THE APPEAL FILED BY THE DEPARTMENT, HAVE DECIDED THE IS SUE FOLLOWING THE COMBINED ORDER OF THE COORDINATE BENCH FOR AY 2011- 12 AND 2012-13 ALSO WHEREIN IT WAS HELD THAT FOR THE PURPOSES OF S ECTION 80P(2)(D) OF THE ACT, JAIPUR CENTRAL COOPERATIVE BANK LTD SHALL BE TREATED AS A CO- OPERATIVE SOCIETY. THEREFORE, INTEREST ON FDRS PLAC ED BY THE ASSESSEE M.A. NOS. 63, 64 & 65/JP/2020 DCIT, JAIPUR VS. M/S JAIPUR ZILA DUGDH UTPADAK SAHKARI SANGH LTD JAIPUR 7 SOCIETY WITH SUCH COOPERATIVE SOCIETY SHALL BE ELIG IBLE FOR DEDUCTION U/S 80P(2)(D) OF THE ACT. IT FURTHER HELD THAT :- ' WE THUS IN THE BACKDROP OF OUR AFORESAID OBSERVAT IONS 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 THE 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 CL AIM OF 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 SOCIET Y. 18. ANOTHER ISSUE THAT ARISE FOR CONSIDERATION IS W HETHER DEDUCTION U/S 80P(2)(D) SHALL BE ALLOWED ON THE GRO SS INTEREST INCOME ON FDRS OR IT SHOULD BE ALLOWED ON THE NET I NTEREST INCOME CALCULATED AFTER DEDUCTING THE INTEREST EXPE NDITURE ALLOCABLE TO FUNDS PLACED IN FORM OF FDR. THOUGH TH E ASSESSEE HAS CHALLENGED THE FINDINGS OF THE LD CIT(A) TO THE EFFECT THAT IT HAS NOT INCURRED ANY INTEREST EXPENDITURE, WE FI ND THAT THERE IS NO NECESSITY TO EXAMINE THE SAME AS CONCEPTUALLY , THE DEDUCTION UNDER SECTION 80P(2)(D) HAS TO BE ALLOWED ON GROSS AND NOT ON NET INTEREST INCOME AS HELD BY THE HON'B LE GUJARAT M.A. NOS. 63, 64 & 65/JP/2020 DCIT, JAIPUR VS. M/S JAIPUR ZILA DUGDH UTPADAK SAHKARI SANGH LTD JAIPUR 8 HIGH COURT IN CASE OF SURAT VANKAR SAHAKARI SANGH L TD VS ACIT [2016] 72 TAXMANN.COM 169 (GUJ)' 12. IT WAS SUBMITTED THAT IN ASSESSEE'S OWN CASE FO R A.Y. 2016-17 (ITA NO. 1243/JP/2019) THE TRIBUNAL HAS SET ASIDE THE IS SUE OF CALCULATING INTEREST U/S 80P(2)(D) TO THE CIT(A) STATING THAT I T NEEDS TO BE DETERMINED WHETHER THE ASSESSEE HAS INCURRED ANY IN TEREST EXPENDITURE IN EARNING THE INTEREST INCOME. THE TRIBUNAL IN THI S CASE STATED THAT: '14. THE LEGAL PROPOSITION THUS LAID DOWN BY THE H ON'BLE HIGH COURT IS THAT THE INCOME EXEMPTED UNDER SECTION 80P (2) HAS TO BE ARRIVED AT SEPARATELY IN ORDER TO DETERMINE THE INCOME UNDER SECTION 80P(2) AND IT CAN NEVER BE ENVISAGED THAT T HE TOTAL INCOME WHICH HAS BEEN SO RECEIVED COULD BE ALLOWED WITHOUT DEDUCTING THE EXPENDITURE INCURRED IN EARNING THE I NCOME. IN LIGHT OF THE SAME, THE DEDUCTION U/S 80P(2)(D) CAN BE ALLOWED ONLY ON THE NET RECEIPT AFTER DEDUCTING THE EXPENDI TURE INCURRED FOR EARNING EXEMPT INCOME. THEREFORE, IN THE INSTAN CE CASE, IT NEEDS TO BE DETERMINED WHETHER THE ASSESSEE HAS INC URRED ANY INTEREST EXPENDITURE IN EARNING THE INTEREST INCOME .' 13. IN VIEW OF THE ABOVE, AS THE TRIBUNAL HAS NOW E STABLISHED IN ASSESSEE'S OWN CASE FOR A.Y. 2016-17 (ITA NO. 1243/ JP/2019) THAT THE DEDUCTION U/S 80P(2)(D) CAN BE ALLOWED ONLY ON THE NET RECEIPT AFTER DEDUCTING THE EXPENDITURE INCURRED FOR EARNING EXEM PT INCOME. THIS ISSUE HAS NOT BEEN ADJUDICATED UPON BY THE HONBLE B ENCH IN ITS DECISION IN THIS INSTANT CASE FOR AY 2014-15, IT IS REQUESTED THAT THE SAME MAY BE TAKEN UP UNDER SECTION 254(2) OF THE I. T. ACT, 1961 FOR M.A. NOS. 63, 64 & 65/JP/2020 DCIT, JAIPUR VS. M/S JAIPUR ZILA DUGDH UTPADAK SAHKARI SANGH LTD JAIPUR 9 ADJUDICATION BY RECALLING AND MODIFYING THE ORDER D ATED 02.09.2019 IN THE CASE OF DCIT, CIRCLE-6, JAIPUR VS. M/S JAIPUR Z ILA DUGDH UTPADAK SAHKARI SANGH LTD., JAIPUR, IN ITA NO.22/JP/20 (ASS ESSEE'S APPEAL) AND 187/JP/2019(DEPARTMENT APPEAL) FOR A.Y. 2014-15. 14. WE NOW REFER TO THE CONTENTIONS ADVANCED BY TH E LD AR. IN THIS REGARD, THE LD. AR SUBMITTED THAT THE TRIBUNAL HAS DECIDED THE CROSS APPEAL FILED BY THE DEPARTMENT AND THE ASSESSEE FOR AY 2011-12 & 2012- 13 VIDE ORDER DT. 02.09.19 AND FOR AY 2014-15 VIDE ORDER DT. 30.09.2019 WHEREBY THE APPEAL OF THE ASSESSEE WAS ALLOWED AND APPEAL OF THE DEPARTMENT WAS DISMISSED. AGAINST THE DISMISSAL OF DEPARTMENTAL APPEAL, PRESENT MISC. APPLICATION HAS BEEN FILED. IT MAY BE NOTED THAT THE DEPARTMENT HAS FILED APPEAL BEFORE ITAT FOR THESE Y EARS BY TAKING THE FOLLOWING GROUNDS OF APPEAL: ASSTT. YEAR 2011-12: WHETHER IN THE FACTS & CIRCUMSTANCES OF THE CASE AN D IN LAW, THE CIT(A) IS CORRECT IN HOLDING THAT THE INCOME RECEIV ED FROM INVESTMENT MADE WITH JAIPUR CENTRAL CO-OPERATIVE BA NK IS ELIGIBLE FOR DEDUCTION U/S 80P(2)(D) OF THE INCOME TAX ACT, 1961 AND THEREBY JUSTIFIED IN ALLOWING RELIEF OF RS. 1,49,40 ,834/- ASSTT. YEAR 2012-13 WHETHER IN THE FACTS & CIRCUMSTANCES OF THE CASE AN D IN LAW, THE CIT(A) IS CORRECT IN HOLDING THAT THE INCOME RECEIV ED FROM INVESTMENT MADE WITH JAIPUR CENTRAL CO-OPERATIVE BA NK IS ELIGIBLE FOR DEDUCTION U/S 80P(2)(D) OF THE INCOME TAX ACT, 1961 AND THEREBY JUSTIFIED IN ALLOWING RELIEF OF RS. 1,59,92 ,544/- ASSTT. YEAR 2014-15 WHETHER IN THE FACTS & CIRCUMSTANCES OF THE CASE AN D IN LAW, THE CIT(A) IS CORRECT IN HOLDING THAT THE INCOME RECEIV ED FROM M.A. NOS. 63, 64 & 65/JP/2020 DCIT, JAIPUR VS. M/S JAIPUR ZILA DUGDH UTPADAK SAHKARI SANGH LTD JAIPUR 10 INVESTMENT MADE WITH JAIPUR CENTRAL CO-OPERATIVE BA NK IS ELIGIBLE FOR DEDUCTION U/S 80P(2)(D) OF THE INCOME TAX ACT, 1961 AND THEREBY JUSTIFIED IN ALLOWING RELIEF OF RS. 2,76,34 ,807/- 15. IT WAS SUBMITTED THAT THE TRIBUNAL WHILE DECIDI NG THE DEPARTMENT APPEALS IN PARA 14 PAGE 19 OF THE ORDER DT. 02.09.1 9 FOR AY 2011-12 & 2012-13 HELD THAT FOR THE PURPOSE OF 80P(2)(D) OF T HE ACT, JAIPUR CENTRAL CO-OPERATIVE BANK LTD. SHALL BE TREATED AS A CO-OPE RATIVE SOCIETY. THEREFORE, INTEREST ON FDRS PLACED BY THE ASSESSEE SOCIETY WITH SUCH CO- OPERATIVE SOCIETY SHALL BE ELIGIBLE FOR DEDUCTION U /S 80P(2)(D) OF THE ACT. ACCORDINGLY, THE APPEAL OF REVENUE IS DISMISSED. TH EREAFTER, WHILE DECIDING THE APPEAL OF REVENUE FOR AY 2014-15 VIDE ORDER DT. 30.09.2019 IT TOOK NOTE OF THE DECISION OF RAJASTHAN HIGH COUR T IN CASE OF CIT VS. RAJASTHAN RAJYA SAHKARI UPBHOGTA SANGH LTD. 84 TAXM AN 33 IN PARA 2.6, PG 15 OF THE ORDER AND THEREAFTER IN PARA 2.7 BY RE FERRING TO THE ABOVE DECISION OF RAJASTHAN HIGH COURT, FOLLOWED THE DECI SION OF COORDINATE BENCH VIDE ORDER DT. 02.08.2019 (SUPRA) AND DISMISS ED THE APPEAL OF DEPARTMENT. 16. IT MAY BE NOTED THAT LD. CIT(A) WHILE HOLDING T HAT ASSESSEE IS ELIGIBLE FOR DEDUCTION U/S 80(2)(D) IN RESPECT OF I NTEREST RECEIVED ON FDR WITH JAIPRU CENTRAL CO-OPERATIVE BANK HAS HELD THAT INTEREST EXPENDITURE TO CERTAIN EXTENT IS ATTRIBUTABLE TO THE INTEREST I NCOME EARNED ON FDRS MAINTAINED WITH JAIPUR CENTRAL CO-OPERATIVE BANK AN D THEREFORE DEDUCTION U/S 80P(2)(D) WAS DISALLOWED TO THIS EXTE NT. AGAINST THIS FINDING OF THE CIT(A), ASSESSEE FILED AN APPEAL BEF ORE THE TRIBUNAL WHICH WAS ALLOWED IN FAVOUR OF THE ASSESSEE. M.A. NOS. 63, 64 & 65/JP/2020 DCIT, JAIPUR VS. M/S JAIPUR ZILA DUGDH UTPADAK SAHKARI SANGH LTD JAIPUR 11 17. FOR AY 2016-17, THE TRIBUNAL VIDE ORDER DT. 04. 03.2020 WHILE DECIDING THE ASSESSEES APPEAL AT PARA 13 OBSERVED THAT WHETHER DEDUCTION U/S 80P(2)(D) SHOULD BE ALLOWED ON GROSS INTEREST INCOME ON FDR OR NET INTEREST INCOME CALCULATED AFTER DEDUCTI NG THE INTEREST EXPENDITURE, IT HAS RELIED ON THE DECISION OF HONB LE GUJARAT HIGH COURT IN EARLIER YEARS BUT THE DECISION OF RAJASTHAN HIGH CO URT WHICH HAS BEEN BROUGHT TO ITS NOTICE BY LD. CIT WAS NOT CONSIDERED AND THIS BEING THE DECISION OF JURISDICTIONAL HIGH COURT THE SAME IS B INDING ON THE TRIBUNAL. ACCORDINGLY, IN PARA 14 IT HELD THAT DEDUCTION U/S 80P(2)(D) CAN BE ALLOWED ONLY ON THE NET RECEIPT AFTER DEDUCTING THE EXPENDITURE AND ACCORDING SET ASIDE THIS ISSUE TO THE FILE OF LD. C IT(A) TO EXAMINE THE SAME AFRESH. 18. NOW THE DEPARTMENT HAS FILED AN MISC. APPLICATI ON STATING THAT IN AY 2016-17, THE TRIBUNAL HAS SET ASIDE THE ISSUE OF CALCULATING OF ELIGIBLE DEDUCTION OF INTEREST U/S 80P(2)(D) TO THE SOCIETY BY REFERRING PARA 14 OF THE ORDER DT. 04.03.2020 IN ITA NO. 1243/JP/2019 (D EPARTMENTAL APPEAL) WHERE IT WAS HELD THAT DEDUCTION CAN BE ALLOWED ONL Y ON THE NET RECEIPT AFTER DEDUCTING THE EXPENDITURE INCURRED FOR EARNIN G EXEMPT INTEREST INCOME BUT THE SAME IS NOT ADJUDICATED UPON BY THE TRIBUNAL FOR AY 2011-12, 2012-13 & 2014-15 AND THUS THERE IS MIS TAKE APPARENT ON RECORD. 19. IN THIS REGARD, IT WAS SUBMITTED THAT THE ISSUE RAI SED IN THE MISC. APPLICATION FILED BY THE DEPARTMENT IS NOT ARISING FROM THE GROUND TAKEN BY IT BEFORE THE TRIBUNAL IN AS MUCH AS DEPARTMENT HAS FILED THE APPEAL CHALLENGING THE FINDING OF CIT(A) THAT THE ASSESSEE IS ELIGIBLE TO CLAIM DEDUCTION U/S 80P(2)(D) ON THE INCOME RECEIVED FROM INVESTMENT MADE M.A. NOS. 63, 64 & 65/JP/2020 DCIT, JAIPUR VS. M/S JAIPUR ZILA DUGDH UTPADAK SAHKARI SANGH LTD JAIPUR 12 WITH JAIPUR CENTRAL CO-OPERATIVE BANK. THE QUANTUM OF DEDUCTION ALLOWED BY CIT(A) WAS NOT DISPUTED BY THE DEPARTMEN T. IN FACT THE ASSESSEE HAS DISPUTED THE REDUCTION IN THE QUANTUM IN DEDUCTION ALLOWED BY CIT(A). THEREFORE THE MISC. APPLICATION BY THE D EPARTMENT IS NOT ARISING OUT OF THE GROUND OF APPEAL TAKEN BY THE DE PARTMENT BEFORE THE TRIBUNAL AND THUS MISC. APPLICATION FILED BY THE DE PARTMENT HAS NO LOCUS- STANDI AND INFRUCTUOUS. 20. WITHOUT PREJUDICE TO ABOVE, IT WAS SUBMITTED THAT W HILE DECIDING THE APPEAL OF THE ASSESSEE ON THE QUANTUM OF DEDUCT ION ALLOWABLE U/S 80P(2)(D), TRIBUNAL IN AY 2011-12 & 2012-13 AT PARA 18 PG 26 OBSERVED THAT WHETHER DEDUCTION U/S 80P(2)(D) SHALL BE ALLOW ED ON GROSS INTEREST INCOME ON FDR OR ON THE NET INTEREST INCOME CALCULA TED AFTER DEDUCTING THE INTEREST EXPENDITURE ALLOCABLE TO THE FUND PLAC ED IN FORM OF FDR, THERE IS NO NECESSITY TO EXAMINE THE SAME AS CONCEP TUALLY, THE DEDUCTION U/S 80P(2)(D) HAS TO BE ALLOWED ON GROSS AND NOT ON NET INTEREST INCOME AS HELD BY HONBLE GUJRAT HIGH COURT IN CASE OF SUR AT VANKAR SAHKARI SAMITI LTD. VS ACIT (2016) 72 TAXMANN.COM 169. THER EAFTER, THE TRIBUNAL WHILE DECIDING THE APPEAL FOR AY 2014-15 T OOK NOTE OF THE DECISION OF RAJASTHAN HIGH COURT ALSO WHILE FOLLOWI NG ITS EARLIER DECISION. HOWEVER WHILE DECIDING THE APPEAL FOR AY 2016-17 IN ITA NO. 1178/JP/2019 DT. 04.03.2020, TRIBUNAL IN PARA 13 BY RELYING ON THE DECISION OF HONBLE RAJASTHAN HIGH COURT HELD IN PA RA 14 THAT DEDUCTION U/S 80P(2)(D) CAN BE ALLOWED ONLY ON THE NET RECEIP T AFTER DEDUCTING THE EXPENDITURE INCURRED FOR EARNING EXEMPT INCOME. THE REAFTER IN PARA 15, IT WAS OBSERVED THAT THOUGH THE ASSESSEE HAS CLAIMED I T HAS NOT INCURRED ANY INTEREST EXPENDITURE IN EARNING SUCH INTEREST I NCOME BUT THE MATTER M.A. NOS. 63, 64 & 65/JP/2020 DCIT, JAIPUR VS. M/S JAIPUR ZILA DUGDH UTPADAK SAHKARI SANGH LTD JAIPUR 13 REQUIRE FURTHER INFORMATION & VERIFICATION AND THER EFORE IT IS SET ASIDE TO THE FILE OF CIT(A) TO EXAMINE THE AFRESH. 21. IT WAS SUBMITTED THAT IN AY 2011-12, 2012-13 & 2014-15, THE TRIBUNAL HAS ALLOWED THE APPEAL OF ASSESSEE CONSIDE RING THE LATER DECISION OF GUJARAT HIGH COURT DT. 12.07.2016. THE DECISION OF HONBLE RAJASTHAN HIGH COURT DT. 12.01.1995 WAS NOT ON RECO RD WHILE DECIDING THE APPEAL FOR AY 2011-12 & 2012-13 BUT WHILE DECID ING THE APPEAL FOR AY 2014-15 THE SAID DECISION WAS ALSO CONSIDERED. F URTHER IN THE LATER DECISION OF HONBLE GUJARAT HIGH COURT, THE EARLIER DECISION OF HONBLE RAJASTHAN HIGH COURT HAS BEEN REFERRED & CONSIDERED . THUS WHEN THE TRIBUNAL HAS RELIED ON LATER DECISION OF HONBLE GU JARAT HIGH COURT AND IN AY 2014-15 AGAIN RELIED ON THE SAME DECISION EVEN A FTER TAKING NOTE OF THE DECISION OF RAJASTHAN HIGH COURT AND THEREAFTER GIVEN A FINDING ON THE ISSUE, THE SAME CANNOT BE CONSIDERED AS A MISTA KE APPARENT ON RECORD SOLELY FOR THE REASON THAT IN AY 2016-17, TH E TRIBUNAL HAS SET ASIDE THE MATTER TO CIT(A) ON THIS ISSUE. 22. WITHOUT PREJUDICE TO ABOVE, IT WAS SUBMITTED TH AT IN AY 2011-12 & 2012-13, THE ASSESSEE HAS ALSO CHALLENGED THE VALID ITY OF THE ORDER PASSED BY AO U/S 147 OF THE ACT. HOWEVER IN PARA 20 OF THE ORDER, IT IS OBSERVED SINCE THE REVENUE APPEAL IS DISMISSED AND THE GROUND NO. 2 OF THE ASSESSEES CROSS APPEAL IS ALLOWED, LEGAL GROUN D RAISED BY THE ASSESSEE CHALLENGING THE VALIDITY OF THE PROCEEDING U/S 147 HAS BECOME INFRUCTUOUS AND IS DISMISSED. THEREFORE, IN CASE TH E MISC. APPLICATION OF THE DEPARTMENT IS ALLOWED (THOUGH NOT ARISING FROM THE GROUND OF THE DEPARTMENT), THE LEGAL GROUND RAISED BY THE ASSESSE E BE ALSO RECALLED AND DECIDED INDEPENDENTLY. M.A. NOS. 63, 64 & 65/JP/2020 DCIT, JAIPUR VS. M/S JAIPUR ZILA DUGDH UTPADAK SAHKARI SANGH LTD JAIPUR 14 23. IT WAS ACCORDINGLY SUBMITTED THAT FROM THE ABOV E FACTS ON RECORD, MA FILED BY THE DEPARTMENT ON THE GROUND THAT THERE IS A MISTAKE APPARENT ON RECORD IS NOT MAINTAINABLE AND IS ONLY AN APPLICATION TO THE TRIBUNAL FOR REVIEW OF ITS DECISION WHICH IS NOT WI THIN THE SCOPE OF SECTION 254(2) OF THE ACT. RELIANCE IN THIS CONNECTION IS P LACED ON THE FOLLOWING CASES:- CIT VS. MARUTI INSURANCE DISTRIBUTION SERVICES LTD. 2012 ITL 242 (DEL.) (HC) CIT VS. ITAT & ORS. (2007) 293 ITR 118 (DEL.) (HC) EXPRESS NEWSPAPER LTD. VS. DCIT (2010) 320 ITR 12 ( MADRAS) (HC) 24. WE HAVE HEARD THE RIVAL CONTENTIONS AND PURUSED THE MATERIAL AVAILABLE ON RECORD. FOR A.Y 2011-12 AND A.Y 2012- 13 (IN ITA NO. 512,513, 633 & 634/JP/2019 DATED 2.09.2019) , WE REFER TO THE RELEVANT FINDINGS OF THE TRIBUNAL WHICH READ AS UNDER: 18. ANOTHER ISSUE THAT ARISE FOR CONSIDERATION IS WHETHER DEDUCTION U/S 80P(2)(D) SHALL BE ALLOWED ON THE GRO SS INTEREST INCOME ON FDRS OR IT SHOULD BE ALLOWED ON THE NET I NTEREST INCOME CALCULATED AFTER DEDUCTING THE INTEREST EXPENDITURE ALLOCABLE TO FUNDS PLACED IN FORM OF FDR. THOUGH THE ASSESSEE H AS CHALLENGED THE FINDINGS 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 CONCEPTUALLY, THE DEDUCTION UND ER 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: M.A. NOS. 63, 64 & 65/JP/2020 DCIT, JAIPUR VS. M/S JAIPUR ZILA DUGDH UTPADAK SAHKARI SANGH LTD JAIPUR 15 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 DIVIDEND RECEIVED BY THE ASSESSEE FROM CO-OPERATIVE SOCIETIES I.E. BANK IN THIS CASE. THE ASSESSING OFF ICER ALLOWED DEDUCTION U/S 80P(2)(D) TO THE EXTENT OF NET INTERE ST INSTEAD OF GROSS INTEREST AS CLAIMED BY THE ASSESSEE AND DI SALLOWED THE EXCESS CLAIM OF DEDUCTION IN THIS REGARD FOR AL L THE YEARS UNDER CONSIDERATION. THE AMOUNT DISALLOWED BY THE ASSESSING OFFICER AND DEDUCTION GRANTED BY THE ASSE SSING 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. W E FEEL THAT THE DECISIONS CITED BY THE LEARNED ADVOCATE FO R THE ASSESSEE SHALL BE APPLICABLE ON THE FACTS OF THE PR ESENT CASE. IN THE CASE OF K. NANDAKUMAR V. ITO [1993] 204 ITR 856/[1994] 72 TAXMAN 223 (KER.), THE KERALA HIGH CO URT HAS HELD AS UNDER: M.A. NOS. 63, 64 & 65/JP/2020 DCIT, JAIPUR VS. M/S JAIPUR ZILA DUGDH UTPADAK SAHKARI SANGH LTD JAIPUR 16 '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 INCOME OF THAT NATURE. WHAT THE SECTION M EANS IS THAT THE NET INCOME BY WAY OF INTEREST COMPUTED IN THE MANNER PROVIDED BY THE PROVISIONS OF THE ACT SHALL ALONE BE TAKEN INTO ACCOUNT FOR COMPUTING THE BENEFIT. BUT I T MUST BE NOTED THAT PAYMENT OF INTEREST UNDER A LOAN TRANSAC TION INCURRED FOR THE PURPOSE OF DERIVING INCOME FROM BU SINESS IS NOT AN ITEM WHICH ARISES IN THE COMPUTATION OF INTE REST INCOME 'IN ACCORDANCE WITH THE PROVISIONS' OF THE A CT. THE SAID AMOUNT HAS TO BE PAID IRRESPECTIVE OF WHETHER ANY INTEREST INCOME IS OTHERWISE RECEIVED OR NOT. THOUG H THE INTEREST IS PAYABLE TO THE SAME BANK, THE FACT REMA INS THAT THE AMOUNT OF INCOME BY-WAY OF INTEREST IS NOT CALC ULATED UNDER THE PROVISIONS OF THE ACT WITH REFERENCE TO S UCH 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 I NCOME, AND IT IS UNDER THAT HEAD THAT THE INTEREST PAID ON THE LOAN TAKEN FROM THE BANK IS DEDUCTED. THE NET AMOUNT OF INTEREST CONTEMPLATED BY SECTION 80AB SHOULD TAKE IN THE NET AMOUNT ARRIVED AT AFTER MEETING THE EXPENSES DEDUCT IBLE FROM THAT ITEM UNDER THE PROVISIONS OF THE ACT AS E XPLAINED ABOVE. THAT IS NOT THE CASE HERE. THEREFORE, SECTIO N 80AB HAS NO APPLICATION TO THE FACTS OF THESE CASES. THE INTEREST PAID ON THE LOAN TRANSACTIONS HAS TO BE DEDUCTED FR OM THE M.A. NOS. 63, 64 & 65/JP/2020 DCIT, JAIPUR VS. M/S JAIPUR ZILA DUGDH UTPADAK SAHKARI SANGH LTD JAIPUR 17 BUSINESS 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-TAX IN THE REVISION PETI TIONS WHICH THEY FILED. THIS ASPECT OF THE MATTER HAS BEE N 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 HE LD 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 BECAU SE IT IS NOT ESTABLISHED THAT THE ASSESSEE HAD DERIVED THE I NTEREST BY INVESTING ALL THE AMOUNT OF SURPLUS FUNDS. IT IS FU RTHER CONTENDED BY MR. GUPTA THAT THE ASSESSEE HAS PAID I NTEREST TO JALANDHAR CENTRAL CO-OPERATIVE BANK AND HAS ALSO RECEIVED INTEREST FROM THE SAID CO- OPERATIVE BANK, THEREBY SHOWING THAT THE ASSESSEE HAS ON THE AGGREGATE PAID INTEREST TO THE BANK AND, THEREFORE, NO DEDUCTION U NDER SECTION 80P(2)(D) CAN BE ALLOWED. TO APPRECIATE THI S ARGUMENT, WE HAVE TO LOOK TO THE PROVISIONS OF SECT ION 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.' M.A. NOS. 63, 64 & 65/JP/2020 DCIT, JAIPUR VS. M/S JAIPUR ZILA DUGDH UTPADAK SAHKARI SANGH LTD JAIPUR 18 6. SO FAR AS THE PRINCIPLE OF INTERPRETATION APPLIC ABLE TO A TAXING STATUTE IS CONCERNED, WE CAN DO NO BETTER TH AN TO QUOTE THE BY-NOW CLASSIC WORDS OF ROWLATT J., IN CA PE 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 ABOUT A TAX. THERE IS NO PRESUMPTION AS TO A TAX. NOTHING IS TO BE READ IN, NOTHING IS TO BE IMPLIED. ONE CAN ONLY LOOK FAIRLY AT THE 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 GORDHAND AS 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 DISTINCTION IN REGARD TO SOURCE OF THE INVESTMENT B ECAUSE THIS SECTION ENVISAGES DEDUCTION IN RESPECT OF ANY INCOM E DERIVED BY THE CO-OPERATIVE SOCIETY FROM ANY INVEST MENT WITH A CO-OPERATIVE SOCIETY. IT IS IMMATERIAL WHETH ER 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 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 OUT BY LEARNED COUNSEL FOR THE RE VENUE. M.A. NOS. 63, 64 & 65/JP/2020 DCIT, JAIPUR VS. M/S JAIPUR ZILA DUGDH UTPADAK SAHKARI SANGH LTD JAIPUR 19 THE PROVISION DOES NOT INDICATE ANY SUCH ADJUSTMENT IN REGARD TO INTEREST DERIVED FROM THE CO-OPERATIVE SO CIETY FROM ITS INVESTMENT IN ANY OTHER CO-OPERATIVE SOCIETY. T HEREFORE, WE DO NOT AGREE WITH THE ARGUMENT ADVANCED BY LEARN ED COUNSEL FOR THE REVENUE. IN OUR OPINION, THE LEARNE D 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 REC EIVED FROM NAWANSHALN CENTRAL CO-OPERATIVE BANK WITHOUT ADJUST ING 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 PURPOS E FOR WHICH THE ASSESSEE BORROWED MONEY HAD NO CONNECTION WHETHER DIRECT OR INDIRECT WITH THE INCOME WHICH SH E EARNED FROM THE FIXED DEPOSIT AND THAT SHE WAS NOT ENTITLE D TO THE DEDUCTION CLAIMED UNDER SECTION 12(2). THE HIGH COU RT HELD THAT IF AN ASSESSEE HAD NO OPTION EXCEPT TO INCUR A N EXPENDITURE IN ORDER TO MAKE THE EARNING OF AN INCO ME POSSIBLE, THEN UNDOUBTEDLY THE EXERCISE OF THAT OPT ION IS COMPULSORY AND ANY EXPENDITURE INCURRED BY REASON O F THE EXERCISE OF THAT OPTION WOULD COME WITHIN THE AMBIT OF SECTION 12(2) OF THE INDIAN INCOME-TAX ACT BUT WHER E THE OPTION HAS NO CONNECTION WITH THE CARRYING ON OF TH E BUSINESS OR THE EARNING OF THE INCOME AND THE OPTIO N DEPENDS UPON PERSONAL CONSIDERATIONS OR UPON MOTIVE S OF THE ASSESSEE, THAT EXPENDITURE CANNOT POSSIBLY COME WITHIN M.A. NOS. 63, 64 & 65/JP/2020 DCIT, JAIPUR VS. M/S JAIPUR ZILA DUGDH UTPADAK SAHKARI SANGH LTD JAIPUR 20 THE AMBIT OF SECTION 12(2). IN THE PRESENT CASE, TH E LOAN WAS TAKEN FOR BUSINESS PURPOSE MORE PARTICULARLY PURCHA SE OF YARN AND NOT FOR FIXED DEPOSITS. 9. IN VIEW OF THE ABOVE, THE QUESTIONS RAISED IN TH E PRESENT APPEALS ARE ANSWERED IN FAVOUR OF THE ASSESSEE AND AGAINST THE REVENUE. THE ORDER PASSED BY THE TRIBUNAL IS AC CORDINGLY QUASHED AND SET ASIDE. 19. IN LIGHT OF ABOVE DISCUSSION AND RESPECTFULLY FOLLOWING THE DECISIONS REFERRED SUPRA, THE ASSESSEE SOCIETY IS H ELD ELIGIBLE FOR DEDUCTION UNDER SECTION 80P(2)(D) IN CASE OF INTERE ST INCOME OF RS 1,49,40,834 ON FDRS PLACED WITH JAIPUR CENTRAL COOP ERATIVE BANK LTD. 20. IN THE RESULT, THE SOLE GROUND OF REVENUES AP PEAL IS DISMISSED AND GROUND NO. 2 IN ASSESSEES CROSS APPE AL IS ALLOWED. HAVING DECIDED THE MATTER ON MERITS, THE LEGAL GROU ND RAISED BY THE ASSESSEE CHALLENGING THE VALIDITY OF THE PROCEE DINGS U/S 147 HAS BECOME INFRUCTOUS AND IS DISMISSED. 25. FOR A.Y 2014-15 (IN ITA NO. 22 & 187/JP/2019 DATED 30.09.2019), THE RELEVANT FINDINGS OF THE TRIBUNAL READ AS UNDER : 2.5 AT THE OUTSET OF THE HEARING, THE LD. AR OF TH E ASSESSEE SUBMITTED THAT THE GROUND NO. 1 & 1.1 OF THE ASSESS EE AND GROUND NO. 2 OF THE REVENUE RAISED IN THE RESPECTIVE APPEA LS ARE SQUARELY COVERED BY THE DECISION DATED 2.09.2019 OF COORDINA TE BENCH IN ASSESSEES OWN CASE IN ITA NO. 512 & 513/JP/2015 FO R THE ASSESSMENT YEAR 2011-12 AND 2012-13 AND REVENUES A PPEAL IN M.A. NOS. 63, 64 & 65/JP/2020 DCIT, JAIPUR VS. M/S JAIPUR ZILA DUGDH UTPADAK SAHKARI SANGH LTD JAIPUR 21 ITA NO. 633 & 634/JP/2019 FOR THE ASSESSMENT YEAR 2 011-12 AND 2012-13 FOR WHICH THE LD. AR OF THE ASSESSEE RELIED ON PARA 15 TO 20 OF THE TRIBUNAL ORDER. 2.6 DURING THE COURSE OF HEARING, THE LD. DR SUPPOR TED THE ORDER OF THE AO AND ALSO FILED FOLLOWING CASE LAWS TO THI S EFFECT. 1. PCIT VS. TOAGARS COOPERATIVES SALE SOCIETY [201 7] TAXMANN.COM 140 (KARNATAKA) 2. CIT VS. RAJASTHAN RAJYA SAHAKARI UPBHOKTA SANGH LTD [1996] 84 TAXMAN 33 (RAJ). 2.7 WE HAVE HEARD THE RIVAL CONTENTIONS AND PERUSED THE MATERIALS AVAILABLE ON RECORD. THE BENCH HAS ALSO T AKEN INTO CONSIDERATION THE JUDGEMENT CITED BY THE REVENUE AU THORITIES. HOWEVER, THE BENCH NOTED THAT RECENT JUDGMENT ON TH E PARTICULAR ISSUE HAS ALREADY BEEN PRONOUNCED BY THE ITAT COORD INATE BENCH VIDE ITS ORDER DATED 02.8.2019 (TO BE READ AS 2.09. 2019) IN THE ASSESSEES OWN CASE. THEREFORE, RESPECTFULLY FOLLOW ING THE DECISION OF THE ITAT COORDINATE BENCH IN ASSESSEES OWN CASE (SUPRA), ON THE ISSUE IN QUESTION, WE ALLOW THE GROUND NO. 1 AN D 1.1 OF THE ASSESSEE AND DISMISS THE GROUND NO. 2 OF THE REVENU E. 26. FOR A.Y 2016-17 (IN ITA NO. 1178 & 1243/JP/2019 DATED 4.03.2020), THE RELEVANT FINDINGS OF THE TRIBUNAL R EAD AS UNDER: 7. THE AFORESAID DECISION (COORDINATE BENCH DECISI ON FOR A.Y 2011-12 & 2012-13) HAS SINCE BEEN FOLLOWED BY THE C OORDINATE BENCH IN ASSESSEES OWN CASE FOR AY 2014-15. FOLLO WING THE COORDINATE BENCH DECISION IN ASSESSEES OWN CASE FO R EARLIER YEARS AND CONSIDERING THE PRINCIPLE OF CONSISTENCY, WE SE E NO REASON TO M.A. NOS. 63, 64 & 65/JP/2020 DCIT, JAIPUR VS. M/S JAIPUR ZILA DUGDH UTPADAK SAHKARI SANGH LTD JAIPUR 22 DEVIATE FROM THE EARLIER DECISION AND ACCORDINGLY, FOR THE PURPOSES OF SECTION 80P(2)(D) OF THE ACT, JAIPUR CENTRAL COO PERATIVE BANK LTD SHALL BE TREATED AS A CO-OPERATIVE SOCIETY. TH EREFORE, INTEREST ON FDRS PLACED BY THE ASSESSEE SOCIETY WITH SUCH CO OPERATIVE SOCIETY SHALL BE ELIGIBLE FOR DEDUCTION U/S 80P(2)( D) OF THE ACT AND SUCH CLAIM CANNOT BE DENIED BY VIRTUE OF PROVISIONS OF SECTION 80P(4) OF THE ACT. 8. HOWEVER, IN THE AFORESAID DECISION, ON THE RELAT ED ISSUE OF WHETHER DEDUCTION U/S 80P(2)(D) SHOULD BE ALLOWED O N GROSS INTEREST INCOME ON FDR ON OR NET INTEREST INCOME CA LCULATING AFTER DEDUCTING THE INTEREST EXPENDITURE, THE COORDINATE BENCH HAS RELIED ON THE HONBLE GUJARAT HIGH COURT DECISION I N CASE OF SURAT VANKAR SAHAKARI SANGH LTD VS ACIT (SUPRA) AND THE D ECISION OF THE HONBLE RAJSTHAN HIGH COURT IN CASE OF RAJASTHAN RA JYA SAHKARI UPBHOKTA SANGH LTD (SUPRA) WHICH HAS BEEN BROUGHT T O OUR NOTICE BY THE LD. CIT DR WAS NOT CONSIDERED AND BEING THE DECISION OF THE JURISDICTIONAL HIGH COURT, THE SAME IS BINDING ON T HE TRIBUNAL AND THEREFORE, TO THIS EXTENT THE DECISION RENDERED BY THE CO-ORDINATE BENCH FOR EARLIER YEARS STAND DISTINGUISHABLE. IN THE CASE OF RAJASTHAN RAJYA SAHKARI UPBHOKTA SANGH LTD (SUPRA), THE HONBLE RAJASTHAN HIGH COURT HAS HELD AS UNDER:- 3. WE HAVE CONSIDERED THE ARGUMENTS OF THE LEARNED COUNSEL FOR THE REVENUE. THE PROVISIONS OF SECTION 80P CONTEMPLATE THE DEDUCTION OF INCOME OF CO-OPERATIVE SOCIETIES. IT IS PROVIDED UNDER SUB-SECTION (1) THA T WHERE, IN THE CASE OF AN ASSESSEE BEING A CO-OPERATIVE SOCIET Y, THE GROSS TOTAL INCOME INCLUDES ANY INCOME REFERRED TO IN SUB- SECTION (2), THERE SHALL BE DEDUCTED, IN ACCORDANCE WITH AND M.A. NOS. 63, 64 & 65/JP/2020 DCIT, JAIPUR VS. M/S JAIPUR ZILA DUGDH UTPADAK SAHKARI SANGH LTD JAIPUR 23 SUBJECT TO THE PROVISIONS OF THAT SECTION, THE SUMS SPECIFIED IN SUB-SECTION (2) IN COMPUTING THE TOTAL INCOME OF THE ASSESSEE. SUB-SECTION (2)(D) REFERS TO THE SUM IN R ESPECT OF INCOME BY WAY OF INTEREST OR DIVIDENDS DERIVED BY T HE CO- OPERATIVE SOCIETY FROM ITS INVESTMENTS WITH ANY OTH ER CO- OPERATIVE SOCIETY, THE WHOLE OF SUCH INCOME. SO FAR AS DETERMINING THE ELIGIBILITY FOR EXEMPTION IS CONCER NED, IT IS NOT IN DISPUTE THAT THE EXPENSES PERTAIN TO INCOME WHICH IS TAXABLE AND NON-TAXABLE. A COMPOSITE ACCOUNT HAS BE EN MAINTAINED BY THE ASSESSEE AND A SEPARATE ACCOUNT W ITH REGARD TO EXPENDITURE AND INCOME ON BOTH TYPES OF I NCOME HAS NOT BEEN MAINTAINED. IT WAS IN THESE CIRCUMSTAN CES THAT THE ITO HAS DETERMINED THE TOTAL INCOME AFTER APPOR TIONING THE EXPENSES TO BOTH SOURCES OF INCOME. THE WORDS ' TOTAL INCOME' HAVE BEEN DEFINED UNDER SECTION 2(45) OF TH E ACT WHICH MEANS THE TOTAL AMOUNT OF INCOME REFERRED TO IN SECTION 5 OF THE ACT, COMPUTED IN THE MANNER LAID D OWN IN THE ACT. SUB-SECTION (1) OF SECTION 80P ALLOWS THE DEDUCTION FROM THE GROSS TOTAL INCOME. AN ASSESSEE MAY HAVE I NCOME FROM DIFFERENT SOURCES AND THAT INCOME SO COMPUTED WOULD FORM THE TOTAL INCOME. AS PER SECTION 80B(5) THE GR OSS TOTAL INCOME MEANS THE TOTAL INCOME COMPUTED IN ACCORDANC E WITH THE PROVISIONS OF THE ACT BEFORE MAKING ANY DE DUCTION UNDER CHAPTER VI-A. WHEN AN ASSESSEE HAS INCOME FRO M DIFFERENT SOURCES, THE TOTAL INCOME FROM EACH OF SU CH SOURCES HAS TO BE COMPUTED IN ACCORDANCE WITH THE PROVISIONS OF THE ACT AND THE EXPENDITURE INCURRED FOR RECEIVING SUCH INCOME HAS TO BE TAKEN INTO CONSIDER ATION. M.A. NOS. 63, 64 & 65/JP/2020 DCIT, JAIPUR VS. M/S JAIPUR ZILA DUGDH UTPADAK SAHKARI SANGH LTD JAIPUR 24 THE ASSESSEE HAS MAINTAINED A COMPOSITE ACCOUNT OF THE EXPENSES INCURRED FOR EARNING THE TAXABLE AS WELL A S EXEMPTED INCOME AND, THEREFORE, BIFURCATION MADE IN RESPECT OF EXPENDITURE CANNOT BE CONSIDERED TO BE UNJUSTIFIED. THIS MATTER WAS CONSIDERED IN DETAIL I N THE CASE OF KOTA CO-OPERATIVE MARKETING SOCIETY LTD. V. CIT [1994] 207 ITR 608 (RAJ.) , WHEREIN IT HAS BEEN HELD THAT IF A CO- OPERATIVE SOCIETY IS CARRYING ON BUSINESS AND EARNI NG INCOME, PART OF WHICH IS EXEMPTED AND PART OF WHICH IS NOT EXEMPTED, THE PROFITS AND GAINS ATTRIBUTABLE TO THE EXEMPTED ACTIVITY HAS TO BE ARRIVED AT ON THE BASIS OF THE B OOKS OF ACCOUNT MAINTAINED BY THE ASSESSEE. IF SEPARATE BOO KS OR SEPARATE ACCOUNTS OF EXPENDITURE HAVE BEEN MAINTAIN ED FOR THE EXEMPTED AND NON-EXEMPTED ACTIVITIES, THERE IS NO PROBLEM. IF SEPARATE BOOKS OF ACCOUNT HAVE NOT BEEN MAINTAINED AND EXPENSES HAVE BEEN INCURRED JOINTLY FOR EARNING BOTH THE INCOMES THEN SUCH EXPENSES RELATAB LE TO EARN THE NON-EXEMPTED ACTIVITIES MUST BE ESTIMATED. THE INCOME EXEMPTED UNDER SECTION 80P(2) HAS TO BE ARRI VED AT SEPARATELY IN ORDER TO DETERMINE THE INCOME UNDER S ECTION 80P(2) AND IT CAN NEVER BE ENVISAGED THAT THE TOTAL INCOME WHICH HAS BEEN SO RECEIVED COULD BE ALLOWED WITHOUT DEDUCTING THE EXPENDITURE INCURRED IN EARNING THE I NCOME. THE USE OF THE WORDS 'THE WHOLE OF THE AMOUNT OF PR OFITS AND GAINS OF BUSINESS ATTRIBUTABLE TO ANY ONE OR MORE O F SUCH ACTIVITIES' APPEARING AT THE END OF SUB-SECTION (2) OF SECTION 80P COULD BE ONLY FOR SUCH INCOME WHICH IS ATTRIBUT ABLE TO THE ACTIVITIES WHICH ARE EXEMPTED. IN ORDER TO ASCE RTAIN THE M.A. NOS. 63, 64 & 65/JP/2020 DCIT, JAIPUR VS. M/S JAIPUR ZILA DUGDH UTPADAK SAHKARI SANGH LTD JAIPUR 25 REAL PROFIT, THE EXPENSES INCURRED IN EARNING THE S AID INCOME HAS TO BE DEDUCTED. IN THE PRESENT CASE, THE TRIBUN AL HAS FOUND THAT ALLOWING THE DEDUCTION FOR COMMISSION AT 50 PER CENT OF THE RECEIPTS IS JUSTIFIED. THE TRIBUNAL HAS RELIED UPON THE DECISION IN THE CASE OF CLOTH TRADERS (P.) LTD. V. ADDL CIT [1979] 118 ITR 243 (SC) , WHICH WAS OVERRULED BY THE APEX COURT IN THE CASE OF DISTRIBUTORS (BARODA) (P. ) LTD. V. UNION OF INDIA [1985] 155 ITR 120 . FOLLOWING THE DECISION OF THIS COURT IN THE CASE OF CIT V. LOONKA R TOOLS (P.) LTD. [1995] 213 ITR 721 , DBITR APPLICATION NO. 1 OF 1987, DECIDED AT JODHPUR ON 21-7-1994, WE ARE OF THE VIEW THAT THE TRIBUNAL WAS NOT JUSTIFIED IN HOLDING THAT THE ASSESSEE IS ENTITLED TO DEDUCTION UNDER SECTION 80P(2)(D) OF TH E ENTIRE INTEREST AND NOT THE NET RECEIPTS. WE ARE ALSO OF T HE OPINION THAT THE TRIBUNAL WAS NOT JUSTIFIED IN GRANTING THE EXEMPTION OF RS. 2,49,948 TO THE ASSESSEE. 8. THE LEGAL PROPOSITION THUS LAID DOWN BY THE HON BLE HIGH COURT IS THAT T HE INCOME EXEMPTED UNDER SECTION 80P(2) HAS TO BE ARRIVED AT SEPARATELY IN ORDER TO DETERMINE THE INC OME UNDER SECTION 80P(2) AND IT CAN NEVER BE ENVISAGED THAT T HE TOTAL INCOME WHICH HAS BEEN SO RECEIVED COULD BE ALLOWED WITHOUT DEDUCTING THE EXPENDITURE INCURRED IN EARNING THE INCOME. IN LIGHT OF THE SAME, THE DEDUCTION U/S 80P(2)(D) CAN BE ALLOWED ON LY ON THE NET RECEIPT AFTER DEDUCTING THE EXPENDITURE INCURRED FO R EARNING EXEMPT INCOME. THEREFORE, IN THE INSTANT CASE, IT N EEDS TO BE DETERMINED WHETHER THE ASSESSEE HAS INCURRED ANY IN TEREST EXPENDITURE IN EARNING THE INTEREST INCOME. M.A. NOS. 63, 64 & 65/JP/2020 DCIT, JAIPUR VS. M/S JAIPUR ZILA DUGDH UTPADAK SAHKARI SANGH LTD JAIPUR 26 9. IN THIS REGARD, THE LD CIT(A) HAS ALLOCATED THE WHOLE OF THE INTEREST EXPENDITURE OVER THE INTEREST ON FDRS AND TO THE EXTENT OF INTEREST ATTRIBUTABLE TO FDRS PLACED WITH JCCB, THE SAME HAS BEEN REDUCED WHILE WORKING OUT THE NET INTEREST INCOME E LIGIBLE FOR DEDUCTION U/S 80P(2)(D) OF THE ACT. PER CONTRA, TH E CONTENTION OF THE LD AR IS THAT THE ASSESSEE HAS NOT INCURRED ANY INTEREST EXPENDITURE IN EARNING SUCH INTEREST INCOME AND ITS INTEREST FREE FUNDS ARE MUCH MORE THAN THE INVESTMENT IN FDRS PLA CED WITH JCCB AND FURTHER, A PRESUMPTION WOULD ARISE WHERE B OTH INTEREST FREE FUNDS AND INTEREST BEARING FUNDS ARE AVAILABLE , THEN THE INVESTMENT HAS BEEN MADE OUT OF INTEREST FREE FUNDS . IT WAS ACCORDINGLY SUBMITTED THAT SINCE INTEREST FREE FUND S WERE USED FOR PLACING THE FDRS WITH JCCB, NO PART OF INTEREST EXP ENDITURE CAN BE ATTRIBUTED TO EARNING OF SUCH INTEREST INCOME. IN O UR VIEW, WHAT IS RELEVANT TO DETERMINE IS AT THE RELEVANT POINT IN T IME, WHEN THE FDRS WERE PLACED WITH JCCB, WHAT IS THE POSITION OF AVAILABILITY OF FUNDS AND WHETHER AT THAT TIME, INTEREST FREE SURPL US FUNDS WERE AVAILABLE WHICH WERE DEPLOYED IN FORM OF FDRS. HOW EVER, THERE IS NOTHING ON RECORD TO THIS EFFECT. THERE IS NO DISPU TE ON THE LEGAL PROPOSITION THAT WHERE INTEREST FREE FUNDS ARE MORE THAN THE INTEREST BEARING FUNDS, A PRESUMPTION WILL ARISE TH AT INVESTMENT HAS BEEN MADE OUT OF INTEREST FREE FUNDS. HOWEVER, SUCH A PRESUMPTION HAS TO BE TESTED AT THE POINT IN TIME W HEN THE INVESTMENT WAS MADE AND NOT AT THE BEGINNING OR AT THE END OF THE YEAR. IN THE INSTANT CASE, MERELY STATING THAT THE ASSESSEE HAS INTEREST FREE FUNDS BY WAY OF SHARE CAPITAL AND ACC UMULATED PROFITS AT THE YEAREND WILL NOT HELP THE CASE OF THE ASSESS EE AS THE SAME REFLECT THE POSITION SUBSEQUENT TO DEPLOYMENT OF FU NDS IN FDRS M.A. NOS. 63, 64 & 65/JP/2020 DCIT, JAIPUR VS. M/S JAIPUR ZILA DUGDH UTPADAK SAHKARI SANGH LTD JAIPUR 27 WHICH WERE PLACED SOMETIME DURING THE YEAR AND NOT AT THE END OF THE YEAR. FURTHER, WHETHER SUCH INTEREST FREE FUND S AT THE YEAREND ARE LIQUID FUNDS OR ARE REPRESENTED BY FIXED ASSETS AND OTHER CURRENTS. IN CASE, THERE ARE NO LIQUID FUNDS AND A LL THE FUNDS ARE DEPLOYED IN FIXED AND CURRENT ASSETS, THEN THE SAID THEORY OF INTEREST FREE FUNDS DOESNT SUPPORT THE CASE OF THE ASSESSEE. THOUGH THE LD AR HAS SUBMITTED SOME FIGURES, HOWEVE R, WE FIND THAT THE MATTER REQUIRE FURTHER INFORMATION AND VER IFICATION AND IN ABSENCE OF FINDINGS OF THE LOWER AUTHORITIES, FOR T HE LIMITED PURPOSES OF VERIFICATION OF THE AFORESAID CONTENTIO N, THE MATTER IS SET-ASIDE TO THE FILE OF THE LD CIT(A) TO EXAMINE T HE SAME AFRESH. IN THE RESULT, THE RESPECTIVE GROUNDS OF APPEAL ARE DISPOSED OFF. 27. WE THEREFORE FIND THAT THE ISSUE OF QUANTUM OF DEDUCTION U/S 80P(2)(D) I.E, WHETHER THE DEDUCTION TO BE ALLOWED ON GROSS OR NET INTEREST INCOME WAS UNDER CONSIDERATION BY THE TRIB UNAL IN EACH OF THE AFORESAID THREE ASSESSMENT YEARS FOR WHICH MISC. AP PLICATION HAS BEEN FILED BY THE REVENUE. IN EACH OF THESE YEARS, THE REVENUE HAS CHALLENGED THE ELIGIBILITY OF THE ASSESSEE FOR CLAI M OF WHOLE OF THE DEDUCTION U/S 80P(2)(D) WHEREAS THE ASSESSEE IN ITS CROSS APPEAL HAS CHALLENGED THE ACTION OF THE LD CIT(A) IN RESTRICTI NG THE QUANTUM OF DEDUCTION ELIGIBLE FOR DEDUCTION U/S 80P(2)(D) OF T HE ACT. THEREFORE, THE ISSUE RAISED IN THE MISC. APPLICATIONS SO FILED BY REVENUE IS CLEARLY ARISING OUT OF THE GROUNDS TAKEN BY THE REVENUE AS WELL AS THE ASSESSEE BEFORE THE COORDINATE BENCHES AND ORDERS PASSED BY THE COO RDINATE BENCHES. WE THEREFORE DONOT SEE ANY LEGAL INFIRMITY IN TERMS OF RAISING THE SAID ISSUE BY THE REVENUE BEFORE US BY WAY OF PRESENT MI SC. APPLICATIONS. M.A. NOS. 63, 64 & 65/JP/2020 DCIT, JAIPUR VS. M/S JAIPUR ZILA DUGDH UTPADAK SAHKARI SANGH LTD JAIPUR 28 28. FOR A.Y 2011-12 AND A.Y 2012-13, THE COORDINATE BENCH VIDE ITS ORDER DATED 02.09.2019 HAS HELD THAT THERE WAS NO N ECESSITY TO EXAMINE THE ISSUE AS TO WHETHER DEDUCTION U/S 80P(2)(D) SHA LL BE ALLOWED ON THE GROSS INTEREST INCOME ON FDRS OR IT SHOULD BE ALLOW ED ON THE NET INTEREST INCOME AS CONCEPTUALLY 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). THE COORDINATE BE NCH THEREFORE FOLLOWING THE DECISION OF HONBLE GUJARAT HIGH COUR T ALLOWED THE DEDUCTION ON GROSS INTEREST INCOME FOR RESPECTIVE A SSESSMENT YEARS. 29. FOR A.Y 2014-15, THE COORDINATE BENCH FOLLOWED THE AFORESAID DECISION FOR A.Y 2011-12 AND A.Y 2012-13 AND VIDE I TS ORDER DATED 30.09.2019 ALLOWED THE DEDUCTION ON GROSS INTEREST INCOME. IN THIS YEAR, WE FIND THAT THE LD DR BROUGHT TO THE NOTICE OF COO RDINATE BENCH, THE DECISION OF HONBLE RAJASTHAN HIGH COURT IN CASE OF CIT VS RAJASTHAN RAJYA SAHAKARI UPBHOKTA SANGH LTD [1996] 84 TAXMANN 33 (RAJ) AND THE COORDINATE BENCH HELD THAT IT HAS TAKEN INTO CONSID ERATION THE DECISION CITED BY THE REVENUE AUTHORITIES, HOWEVER, GIVEN TH AT COORDINATE BENCH IN ASSESSEES OWN CASE HAS DECIDED THE MATTER RECEN TLY ON 2.09.2019 FOR A.Y 2011-12 AND A.Y 2012-13, IT DECIDED TO FOLLOW T HE EARLIER DECISION AND DECIDED THE MATTER IN FAVOUR OF THE ASSESSEE. 30. FOR A.Y 2016-17, THE COORDINATE BENCH IN ITS OR DER DATED 4.03.2020 HELD THAT IN THE EARLIER DECISIONS SO REN DERED FOR A.Y 2011-12, AY 2012-13 AND A.Y 2014-15, THE COORDINATE BENCHES HAVE RELIED ON THE HONBLE GUJARAT HIGH COURT DECISION IN CASE OF SURA T VANKAR SAHAKARI SANGH LTD VS ACIT (SUPRA) AND THE DECISION OF THE H ONBLE RAJSTHAN HIGH M.A. NOS. 63, 64 & 65/JP/2020 DCIT, JAIPUR VS. M/S JAIPUR ZILA DUGDH UTPADAK SAHKARI SANGH LTD JAIPUR 29 COURT IN CASE OF RAJASTHAN RAJYA SAHKARI UPBHOKTA S ANGH LTD (SUPRA), WHICH HAS BEEN BROUGHT TO ITS NOTICE BY THE LD. CIT DR, WAS NOT CONSIDERED AND BEING THE DECISION OF THE JURISDICTI ONAL HIGH COURT, THE SAME IS BINDING ON THE TRIBUNAL AND THEREFORE, TO T HIS EXTENT THE DECISION RENDERED BY THE CO-ORDINATE BENCH FOR EARLIER YEARS STAND DISTINGUISHABLE. AND FOLLOWING THE DECISION OF THE HONBLE RAJASTHAN HIGH COURT IN CASE OF RAJASTHAN RAJYA SAHKARI UPBHOKTA S ANGH LTD (SUPRA), IT HELD AS UNDER: 14. THE LEGAL PROPOSITION THUS LAID DOWN BY THE HONBLE HIGH COURT IS THAT T HE INCOME EXEMPTED UNDER SECTION 80P(2) HAS TO BE ARRIVED AT SEPARATELY IN ORDER TO DETERMINE THE INC OME UNDER SECTION 80P(2) AND IT CAN NEVER BE ENVISAGED THAT T HE TOTAL INCOME WHICH HAS BEEN SO RECEIVED COULD BE ALLOWED WITHOUT DEDUCTING THE EXPENDITURE INCURRED IN EARNING THE INCOME. IN LIGHT OF THE SAME, THE DEDUCTION U/S 80P(2)(D) CAN BE ALLOWED ON LY ON THE NET RECEIPT AFTER DEDUCTING THE EXPENDITURE INCURRED FO R EARNING EXEMPT INCOME. THEREFORE, IN THE INSTANT CASE, IT N EEDS TO BE DETERMINED WHETHER THE ASSESSEE HAS INCURRED ANY IN TEREST EXPENDITURE IN EARNING THE INTEREST INCOME. 31. WE THEREFORE FIND THAT IN ITS LATEST DECISION RENDERED ON 4.03.2020, THE COORDINATE BENCH HAS FOLLOWED THE DICTUM LAID D OWN BY THE HONBLE JURISDICTIONAL HIGH COURT, HOWEVER, IN EARLIER TWO DECISIONS RENDERED ON 2.09.2019 AS WELL AS 30.09.2019, THE DICTUM LAID DO WN BY THE HONBLE JURISDICTIONAL HIGH COURT HAS NOT BEEN FOLLOWED WHI CH IS CLEARLY A MISTAKE APPARENT FROM RECORD RECTIFIABLE UNDER SECTION 254( 2) OF THE ACT AND REFERENCE CAN BE DRAWN TO THE DECISION OF HONBLE S UPREME COURT IN CASE OF ACIT VS SAURASHTRA KUTCH STOCK EXCHANGE LTD [200 8] 305 ITR M.A. NOS. 63, 64 & 65/JP/2020 DCIT, JAIPUR VS. M/S JAIPUR ZILA DUGDH UTPADAK SAHKARI SANGH LTD JAIPUR 30 227(SC). APPARENTLY, WE FIND THAT IN ITS DECISION RENDERED ON 2.09.2019, THE COORDINATE BENCH HAS FOLLOWED THE DECISION IN C ASE OF ITO VS SHREE KESHORAI PATAN SAHAKARI SUGAR MILL AND THEREIN, THE RE IS REFERENCE OF HONBLE JURISDICTIONAL HIGH COURT DECISION IN CASE OF RAJASTHAN RAJYA SAHKARI UPBHOKTA SANGH LTD (SUPRA) WHICH HAS APPARE NTLY SKIPPED ITS ATTENTION. SIMILARLY, IN CONTEXT OF LATTER DECISIO N RENDERED ON 30.09.2019, WE FIND THAT THE REFERENCE OF COORDINATE BENCH WAS SPECIFICALLY DRAWN BY THE LD DR TO THE DECISION OF HONBLE JURISDICTIONAL HIGH COURT DECISION IN CASE OF RAJASTHAN RAJYA SAHKARI UPBHOKTA SANGH LTD (SUPRA) WHICH HAS BEEN NOTED BY IT BUT APPARENTLY NOT CONSIDERED WHIC H CONSTITUTES A MISTAKE APPARENT FROM RECORD RECTIFIABLE UNDER SECT ION 254(2) OF THE ACT. THE FACT THAT THE DECISION OF HONBLE JURISDICTIONA L HIGH COURT HAS NOT BEEN CONSIDERED IN EARLIER TWO DECISIONS AND HAS BE EN CONSIDERED IN LATTER DECISION RENDERED BY THE COORDINATE BENCH CL EARLY RENDERS THE EARLIER TWO DECISIONS AMENABLE FOR RECTIFICATION U/ S 254(2) OF THE ACT. THE FACT THAT THE COORDINATE BENCHES HAVE FOLLOWED THE SUBSEQUENT DECISION OF THE HONBLE GUJARAT HIGH COURT WHICH HA S IN TURN REFERRED TO THE EARLIER RAJASTHAN HIGH COURT DECISION, TO OUR M IND, WILL NOT CHANGE THE SITUATION AS THE DECISION OF THE HONBLE JURISD ICTIONAL HIGH COURT WILL ALWAYS CARRY THE PRECEDENCE AND NOT FOLLOWING THE S AME WILL BE A BREACH OF JUDICIAL DISCIPLINE FOR THE JAIPUR BENCHES OF TH E TRIBUNAL AND THE ORDERS SO PASSED CLEARLY CALL FOR RECTIFICATION. THEREFOR E, IN OUR CONSIDERED VIEW, THE ORDERS SO PASSED BY THE COORDINATE BENCHES THUS NEED TO BE RECALLED FOR LIMITED PURPOSES OF ADJUDICATION OF THE SAID MA TTER AFRESH TAKING INTO CONSIDERATION THE DECISION RENDERED BY THE HONBLE RAJASTHAN HIGH COURT WAY BACK ON 12.01.1995 MUCH PRIOR TO THE TWO DECISI ONS RENDERED BY THE COORDINATE BENCHES. M.A. NOS. 63, 64 & 65/JP/2020 DCIT, JAIPUR VS. M/S JAIPUR ZILA DUGDH UTPADAK SAHKARI SANGH LTD JAIPUR 31 32. FURTHER, WE AGREE WITH THE CONTENTION ADVANCED BY THE LD AR THAT THE LEGAL ISSUE CHALLENGING THE VALIDITY OF ORDER P ASSED U/S 147 WAS EARLIER DISMISSED AS INFRUCTIOUS FOR A.Y 2011-12 AN D A.Y 2012-13 AS THE MATTER WAS ONLY DECIDED ON MERITS AND THE SAME SHOU LD BE ALSO BE RECALLED AND DECIDED AFRESH. 33. IN THE ENTIRETY OF FACTS AND CIRCUMSTANCES OF T HE CASE, WE HEREBY RECALL THE EARLIER ORDERS SO PASSED BY THE COORDINA TE BENCHES IN ITA NO. 633/JP/19 & 512/JP/19 FOR A.Y 2011-12 AND 6 34/JP/19 & 513/JP/2019 DATED 02.09.2019 AND SUBSEQUENT ORDER PASSED BY THE TRIBUNAL IN ITA NOS. 187/JP/19 & 22/JP/19 DATED 30. 09.2019 FOR A.Y 2014-15 FOR THE LIMITED PURPOSES OF ADJUDICATIO N OF MATTER RELATING TO QUANTUM OF DEDUCTION ELIGIBLE FOR DEDUCTION U/S 80P (2)(D) AS TO WHETHER THE DEDUCTION SHOULD BE ALLOWED ON GROSS INTEREST O R NET INTEREST INCOME AFRESH TAKING INTO CONSIDERATION THE DECISION OF TH E HONBLE JURISDICTIONAL HIGH COURT IN CASE OF RAJASTHAN RAJYA SAHKARI UPBHO KTA SANGH LTD (SUPRA) AS WELL AS ADJUDICATION OF FOLLOWING GROUND S OF APPEAL AFRESH AS RAISED BY THE ASSESSEE IN ITS RESPECTIVE CROSS-APPE ALS: 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 ATT RIBUTABLE TO THE INTEREST INCOME OF RS. 1,46,40,834/- EARNED ON FDRS MAINTAIN ED WITH JAIPUR CENTRAL COOPERATIVE BANK LTD. (JCCB), THEREBY DISAL LOWING DEDUCTION U/S 80P TO THIS EXTENT. HE HAS FURTHER ERRED IN CONSIDE RING THE AMOUNT OF M.A. NOS. 63, 64 & 65/JP/2020 DCIT, JAIPUR VS. M/S JAIPUR ZILA DUGDH UTPADAK SAHKARI SANGH LTD JAIPUR 32 INTEREST INCOME FROM JCCB AT RS. 1,46,40,834/- INST EAD 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 AND BOR ROWED FUNDS HAS BEEN UTILIZED FOR BUSINESS PURPOSE AND THEREFORE, N O INTEREST EXPENDITURE CAN BE ATTRIBUTED FOR EARNING THE INTEREST INCOME. 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 DISAL LOWING 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 AND BOR ROWED FUNDS HAS BEEN UTILIZED FOR BUSINESS PURPOSE AND THEREFORE, N O INTEREST EXPENDITURE CAN BE ATTRIBUTED FOR EARNING THE INTEREST INCOME. ITA. NO. 22/JP/2019 (FOR A.Y 2014-15) 1. THE LD. CIT(A) HAS ERRED ON FACTS AND IN LAW IN HOLDING THAT INTEREST EXPENDITURE TO THE EXTENT OF RS. 1,78,92,8 10/- IS ATTRIBUTABLE TO THE INTEREST INCOME OF RS. 4,55,27,617/- EARNED ON FDRS MAINTAINED WITH JAIPUR CENTRAL COOPERATIVE BANK LTD., THEREBY DISAL LOWING DEDUCTION U/S 80P TO THIS EXTENT. M.A. NOS. 63, 64 & 65/JP/2020 DCIT, JAIPUR VS. M/S JAIPUR ZILA DUGDH UTPADAK SAHKARI SANGH LTD JAIPUR 33 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 AND BOR ROWED FUNDS HAS BEEN UTILIZED FOR BUSINESS PURPOSE AND THEREFORE, N O INTEREST EXPENDITURE CAN BE ATTRIBUTED FOR EARNING THE INTEREST INCOME. IN THE RESULT, MISCELLANEOUS APPLICATIONS SO FILED BY THE REVENUE ARE ALLOWED AND DISPOSED OFF IN LIGHT OF AFORESAID DISCUSSION. ORDER PRONOUNCED IN THE OPEN COURT ON 21/01/2021. SD/- SD/- LANHI XKSLKBZ FOE FLAG ;KNO ( SANDEEP GOSAIN ) (VIKRAM SINGH YADAV) U;KF;D LNL;@ JUDICIAL MEMBER YS[KK LNL;@ ACCOUNTANT MEMBER TK;IQJ@ JAIPUR FNUKAD@ DATED:- 21/01/2021. * GANESH KR. VKNS'K DH IZFRFYFI VXZSFKR@ COPY OF THE ORDER FORWARDED TO: 1. VIHYKFKHZ@ THE APPELLANT- DCIT, CIRCLE-06, JAIPUR 2. IZR;FKHZ@ THE RESPONDENT- M/S JAIPUR ZILA DUGDH UTPADAK SAHKA RI SANGH LTD. 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. 6. XKMZ QKBZY@ GUARD FILE {M.A NOS. 63, 64 & 65/JP/2020} VKNS'KKUQLKJ@ BY ORDER, LGK;D IATHDKJ@ ASST. REGISTRAR