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2017 (9) TMI 1910 - AT - Income TaxEntitlement to deduction u/s. 80P(2)(a)(i) on jewel loans extended to members - claim for deduction on interest income on jewel loans - HELD THAT:- The assessee, in the garb of claiming deduction u/s. 80P(2)(a)(i), is seeking deduction qua other, non-eligible income, since already assessed and brought to tax. True, the AO has, while giving appeal affect, apportioned the general expenses on only interest income under reference, i.e., on jewel and other loans falling u/s. 80P(2)(a)(i). That, however, would make no difference to the net assessable (or total) income under the Act as interest income on the other (marketing) division has already been allowed deduction u/s. 80P(2)(a)(iii) on gross income basis. In fact, this is itself debatable as the said interest (for marketing the products) would equally be deductible u/s. 80P(2)(a)(i) – which he allows for the first time, as the provision makes no distinction with reference to the purpose for which the loan/credit is extended by a cooperative society to its member. We observe no infirmity, both in principle and in effect, in the AO’s working for the two years under reference. AO, in the first instance, had rejected the assessee’s claim for deduction u/s. 80P(2)(a)(i) at the threshold, i.e., on the ground of it being ineligible. That is, regarded it as not qualifying for deduction. The question of the quantum of deduction or its determination did not arise for consideration. The claim being held valid, he has allowed the same on the basis of the underlying facts and figures. It is only at this stage that he was called upon to, and has, accordingly, allowed deduction, which is to be at the correct amount. We have examined the algorithm of the assessee’s working to find it to be in accordance with the fundamental principle of only the net income being assessable and, further, of only the relevant income as included in the GTI being eligible for deduction. Merely because the same works to a figure lower than that claimed by the assessee, is, by itself, no ground for regarding the same as erroneous. The assessee’s working, after all, cannot be considered as sacrosanct. Deduction could only be of the income included in the GTI, so that the assessee’s claim, made on the basis of gross interest income, is without basis in law as well as on facts. This has led to its claim u/s. 80P(1) exceeding the GTI. Further, no infirmity or fallacy in the AO’s working has either been found by us or pointed out by the assessee at any stage. The AO has not exceeded his jurisdiction. Why, the Apex Court in The Citizen Co-operative Society Ltd. [2017 (8) TMI 536 - SUPREME COURT] also made light of the inclusion of associate members, which aspect/s though cannot be considered in appeal giving effect proceedings or the appellate proceedings arising there-from. AO’s working is accordingly confirmed. The assessee, as it transpires, by not taking the proportionate expenses into account, is seeking to claim deduction u/s. 80P on other, assessable income. As regards the assessee’s COs, the same were not pressed and, besides, there is no estoppel against law (also refer: C.K.Gangadharan & Anr. v. CIT [2008 (7) TMI 10 - SUPREME COURT]. We, accordingly, have no hesitation in, setting aside the impugned order, restoring that of the AO.
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