TMI Blog2011 (1) TMI 1404X X X X Extracts X X X X X X X X Extracts X X X X ..... f the Assessing Officer. 2.1. The assessee is a Co-operative Credit Society engaged in the banking activity. As per the return, a deduction u/s.80P of the I.T.Act of ₹ 5,85,94,515/- was claimed. The bifurcation of the same was as follows:- interest received from the co-op.bank 3,71,91,552/- Dividend received from the co-op.bank 90,375/- Interest on loan and advances to members u/s.80P(2)(a)(i) 2,12,62,588/- Basic deduction u/s.80P(2)(c) 50,000/- 5,85,94,515/- 2.2. On the basis of above calculation, the Assessing Officer has raised an objection that why the deduction u/s.80P of the I.T.Act was claimed on gross amount. The Assessing Officer has also discussed the provisions of section 80B(5) of the I.T.Act so as to inform the definition of gross total income to the assessee. Thereafter, he has mentioned that the gross total income before allowing the claim of deduction u/s.80P, was only at ₹ 1,11,99,966/- which could be taken into account for the comp ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... (2) (a)(i) 2,12,62,588/- 5,85,44,515/- Less : Expenses wholly and Exclusively pertains for Earning the above mentioned income Provided in the section 80B(5) and Discussed above 4,91,47,302/- Eligible profit for deduction u/s.80P 93,97,213/- Calculation of deduction u/s.80P 100% of eligible income 93,97,213/- 2. 3. The result of the above two calculation was that as against the claim of deduction u/s.80P of ₹ 1,11,99,966/-, the Assessing Officer has allowed the deduction only of ₹ 93,97,213/-, therefore, the balance of ₹ 17,46,753/- was assessed in the hands of the assessee as per the following calculation:- Gross total income before allowing deduction under chapter VI As per return of income Rs.1,11,99,966/- Less i) Deduction u/s.80 G 50% of (11,000 + 1,01,000) ₹ 56,000/- ii) Deduction u/s.80P as ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ed CIT(Appeals) has not been correctly understood while raising this ground. In fact, the Learned CIT(Appeals) has held, as noted above, that the two resources of income; i.e. Income-tax Refund of ₹ 6,30,820/- and the income under the head Other Income of ₹ 5,32,624/- totalling to ₹ 11,63,444/- were not admissible for deduction u/s.80P(2) of the I.T.Act. The ground which is very much general in nature without specifying the defect in the order of Learned CIT(Appeals) therefore has no substance. The two additions which were affirmed by the Learned CIT(Appeals) are as follows:- (i) Interest of Refund ₹ 6,30,820/- (ii) Other Income ₹ 5,32,624/- Total . Rs.11,63,444/- These two additions have been contested by the assessee which shall be dealt with in the following paragraph. 5. As far as the question of reducing the addition from ₹ 94,53,213/- to ₹ 11,63,444/-, it is apparent from the above calculation that the Assessing Officer has never made an addition of ₹ 94,53,213/- but he has assesse ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... espect of Income-tax refund of ₹ 6,30,820/- and other income of ₹ 5,32,624/-. 7.1. This ground of the assessee has raised two questions; one is in respect of claim of deduction u/s.80P of the I.T.Act pertaining to income-tax refund and the other question is in respect of claim of deduction u/s.80P of the I.T.Act pertaining to other income of ₹ 5,32,624/-, the details of which are as follows:- (i) By Penalty Interest ₹ 4,58,217.00 (ii) By Lockers Rent ₹ 59,550.00 (iii) By Share Transfer Fee ₹ 374.00 (iv) By Late Fee ₹ 583.00 (v) By Insurance Refund ₹ 8,900.00 (vi) By Rajdut Sale Profit ₹ 5,000.00 7.2. First, we shall deal with the admissibility of claim of income-tax refund whether allowable u/s.80P of the I.T.Act or not. An argument was that tax at source was deducted which had a direct nexus with the banking business of the assessee. In support, the Learned Authorised Representative of the Assessee Mr.M.K.Patel has placed reliance on the decision of ITAT Ahmedabad Special Bench in the case of Surat District Co-operative Bank Ltd. Ors vs. ITO Ors. reported as [2003]85 ITD 01 (Ahd)[SB]. 8. We h ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... beyond the scope of the provisions of section 80P(2) of the I.T.Act. We, therefore, hold that the Assessing Officer has rightly disallowed the claim. This part of the ground is consequently dismissed. 8.3. Next is the question of admissibility of other income as listed hereinabove. The receipts from locker rent, share transfer fee, Insurance re-fund, etc. can be held as admissible for deduction u/s.80P of the I.T.Act because these are already held by several Courts as eligible income for grant of deduction. 8.4. Now we are left with an amount of ₹ 4,58,217/- in respect of penalty interest. The Assessing Officer as well as the Learned CIT(Appeals) have not examined the exact nature of the penalty which was imposed on the assessee and why the assessee has then earned interest thereon. In the absence of any such finding being not given by the authorities below, we deem it proper to restore this part of the ground back to the Assessing Officer so that he can investigate whether the interest on penalty had any nexus with the banking activity of the assessee. 8.5. Finally, we are left only with an amount of ₹ 5,000/- earned on sale of Motor Cycle. We are of the vie ..... X X X X Extracts X X X X X X X X Extracts X X X X
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