TMI Blog2013 (9) TMI 164X X X X Extracts X X X X X X X X Extracts X X X X ..... 06-07 - in the assessee’s case, interest expenses were incurred for acquiring debenture, deposit with member society, Fix Deposit of member society, employee saving accounts , interest on over draft facilitate from bank and bank commission, which was claimed by the appellant u/s. 80P(2)(d)(a)(i) - Therefore, it is held that appellant had not incurred any expenditure on the earning of the dividend and interest from other co-operative society as this investment was made long back. No new investment had been made by the appellant during the year under consideration - Decided against Revenue. - ITA Nos.367 & 3386/Ahd/2010 & ITA Nos.1739/Ahd/2011 - - - Dated:- 2-8-2013 - D K Tyagi and T R Meena, JJ. For the Appellant : Shri T Sankar, Sr. DR For the Respondent : Shri Mitesh Modi, AR ORDER:- PER : T R Meena These three appeals are filed by the Revenue which have emanated from the orders of CIT(A)-V, Surat, dated 23.10.2009 for A.Y. 2006-07, dated 15.09.2010 for A.Y. 2007-08 dated 15.03.2010 for A.Y. 2008-09. These three appeals were heard together and are being disposed of by way of this common order because facts are common in all appeals and for the sake of conve ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n the form of interest expenses as well as deduction on such income. 5. On the facts and in the circumstances of the case and in law, the ld. CIT(A) has erred in holding that there can be income without incurring expenses. 6. On the facts and in the circumstances of the case and in law, the ld. CIT(A) has erred in deleting the addition made after disallowing the excess depreciation of Rs.2,95,924/- despite the fact that the concerned items were electrical goods not computer parts/peripherals, therefore liable for depreciation @ 10% not 60% as claimed by the assessee. Grounds of ITA No.1739/Ahd/2011 (A.Y. 08-09) [1] On the facts and in the circumstances of the case and in Law the CIT(A) has erred in deleting the addition of Rs.2,15,30,155/- made by the A.O. on account of disallowance U/s.80AB of the Act. [2] On the facts and in the circumstances of the case and in Law the CIT(A) has erred in deleting the addition of Rs.14,20,334/- made by the A.O. on account of insurance expenses. [3] On the facts and in the circumstances of the case and in law, the CIT(A) ought to have upheld the order of the assessing officer. 2. Ground no.1 2 in A.Y. 06-07, ground ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ply and also he relied upon following decisions: i. Distributors (Baroda) P. Ltd. vs. Union of India Ors. (1985) 155 ITR 120 (SC) ii. CIT vs. Shri Digvijay Cement Co. Ltd. (1986) 138 ITR 45 (Guj) iii. CIT vs. Maganlal Chhaganlal (P) Ltd. (1999) 236 ITR 456 (Bom) iv. Williamson Financial Services Ltd. vs. CIT Anr. (2007) 295 ITR 372 (Gau) and held that claim deduction u/s. 80P(2)(d) is available on net after deducting the interest expenses on the investment. Thus, he allowed the deduction u/s. 80P(2)(d) at Rs. 81,13,880/- in A.Y. 06-07. In A.Y. 07-08, the ld. A.O. also applied the Section 14A and Rule 8D on exempt income disallowed interest u/s. 14A at Rs. 19,08,803/- and under chapter VIA at Rs.1,75,41,509/-. The ld. A.O. also applied Section 80AB on it. He also relied upon same case laws which were relied upon in A.Y. 06-07. The similar findings given by the A.O. for A.Y. 08-09 and difference u/s. 80P/80AB was also made at Rs.1,15,30,155/-. 3. Being aggrieved by the order of the A.O., the assessee carried the matter before the CIT(A) who had allowed the appeal in all the years. The operative portion in A.Y. 2006-07 is as under: 6. I have perused t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... en receiving interest and dividend which have been claimed as deduction u/s. 80P(2)(d). It is not a case where this income has been derived out of investments made during the year for which the assessee has incurred any expenditure directly or indirectly. An analysis of interest expenses would show that the same has been incurred by way of interest paid to members' societies savings accounts, members societies FD account, bank commission and interest and debentures to members of the societies and towards over drafts facilities from banks. It is evident from the details of interest expenses filed that there is no direct or indirect nexus between such expenses arid interest and dividend earned from investments made with other cooperative societies. The assessing officer should have examined the facts to find the existence of such linkage if any. The prorate allocation of interest expenses resulting in part disallowance of deduction has been done without examining the issue in details or appreciating the facts in its correct prospective. Therefore, the deduction claimed by the appellant is in order and in absence of any expenses directly or indirectly correlated to such income part d ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Ltd. [1992] 42 ITD 442 (Ahmedabd) (SMC) on interest paid late payment of purchase whether adjustable against the interest income earned by the society held no . ii. Punjab State Federation of Co.op Housing Building Societies Ltd. vs. ITO (1982) 2 ITD 617 (Chd.), whether interest received on saving bank deposit that another co-operative society for qualify for deduction as income from investment as contemplated in Section 80P(2)(d) held Yes . iii. CIT vs. Anakapalli Co-operative Marketing Society (1988) 40 Taxman 127 (AP), whether amount deductible u/s.80P in respect of a co-operative society is gross total income attributable to activities of the nature defined u/s.80P, viz., gross total income as defined in Section 80(B)(5) held Yes . iv. CIT vs. Haryana Co-operative Sugar Mills Ltd. [1989] 180 ITR 631 (Punj. Har.), deposit with co-operative bank for short, period and interest earned on it is qualified for deduction u/s. 80P(2)(d). v. CIT vs. KRIBHCO [2012] 349 ITR 618 (Delhi), disallowance of expenditure incurred in earning of non taxable income difference between exemption and special deduction. Section 14A is not applicable in case of special deduction ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... not acceptable. The appellant had given all the details before the A.O. on which ld. A.O. concluded otherwise. The balance sheet as well as p l account were available in all the years that the A.O. gave these figures on which the ld. CIT(A) relied upon, had taken from either balance sheet or p l account. Thus, there is no additional evidence submitted by the appellant before the CIT(A) in A.Y. 2006-07. We dismiss the appeal on ground no.1 in A.Y. 06-07. Further the A.O. considered Hon ble Supreme Court decision in Distributors (baroda) P. Ltd. vs. Union of India [1985] 155 ITR 120 (SC), wherein, it was held that deduction u/s.80M is to be calculated with reference to amount on dividend computed in accordance with the provisions of the Act and forming on the gross total income and not with reference to full amount of dividend received by the assessee. The Hon ble Supreme Court decision is squarely applicable on deduction under any Section in Chapter VIA and is to be allowed on the net income. However, in the assessee s case, interest expenses were incurred for acquiring debenture, deposit with member society, Fix Deposit of member society, employee saving accounts , interest on over ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... O. on account of Insurance Expenses. The A.O. found that the assessee had claimed prepaid insurance expenses of Rs.14,20,334/- on the basis of bill issued by the insurance company, which was not found by the A.O. relevant to the assessment year under consideration. Thus, he made addition of Rs.14,20,334/-. 9. The CIT(A) allowed the appeal by observing that the liability to pay the insurance premium is not fixed for every year and this is accounted as and when the notice of payment is received. He, after relying various cases referred at page no.11 of his order. The ld. Sr. D.R. reiterated the fact as and relied upon the order of the A.O., whereas ld. Counsel for the appellant argued that the insurance company had raised the bill every year and claimed these expenses repeatedly and consistently as per their bills. Accordingly, the expenses are accounted for. The expenditures had been crystallized during the year and had claimed by the assessee consistently on the basis of bills issued by the Insurance Company in preceding years and subsequent years. Thus, no interference is required in the order of CIT(A). We uphold the order of the CIT(A). 10. In the result, Revenue s appeals i ..... X X X X Extracts X X X X X X X X Extracts X X X X
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