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TMI Blog2016 (7) TMI 823X X X X Extracts X X X X X X X X Extracts X X X X ..... ion of the AO for denying the deduction under section 80P of the Income Tax Act, 1961 of a sum of Rs. 16,22,570/-. 3. Brief facts of the case are that the assessee, a cooperative society, has filed its return of income on 7.9.2009 declaring total income at NIL. It has claimed deduction under section 80P of the Income Tax Act of Rs. 34,39,810/-. There is no dispute with regard to the fact that the assessee is a multiITA purpose cooperative society dealing mainly in marketing agriculture products grown by its members and other allied activities over the last 62 years. The ld.AO has basically denied deduction under section 80P(2) of a sum of Rs. 8,87,420/- which represented interest income mainly from FDRs. with nationalized banks. He further ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... all sources are not exempt u/s. 8oP and therefore, he recomputed the taxable and nontaxable income by apportioning the turnover to the expenditure incurred. Thereby the AO worked out a ratio of 3:17 as agricultural vs non-agricultural activities income. Further, the AO observed that while computing the total income of the society after netting of the interest income and interest expenses, credited the surplus interest to the P&L a/c. and in the computation of income, it claims entire interest income as deduction u/s. 8oP(2) of the Act. Thus, the deduction u/s. 8oP was claimed twice. But since, the deposit received are used for all activities including non-agricultural and other than credit facilities and towards administrative expens ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... " 5. Before me, the ld.counsel for the assessee, at the very outset submitted that the issue in dispute is squarely covered by the order of the ITAT in the Asstt.Year 2007-08 wherein the Tribunal has upheld the order of the ld.CIT(A). He placed on record copy of the Tribunal's order passed in ITA No.3171/Ahd/2011. The ld.counsel for the assessee further contended that the assessee has not made any claim under section 80P(2) of the Income Tax Act with regard to profit arising to it from trading of agriculture products not grown by members. The ld.DR, on the other hand, contended that this aspect does not discernible in the order of the AO. According to the AO, the accounts are mixed, and therefore, he has worked out a pro-rata turnover of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... /s. 80P. The submission of the Assessee was not found acceptable to the A.O in view of the fact that Assessee was keeping mix accounting records for all the activities and thus it was difficult to decide the net profit earned from agricultural activities and non-agricultural activities. He thereafter on the basis of ratio of agricultural and non-agricultural income, applied Rule of 3 basis, for working out the eligible deduction u/s. 80P and restricted the claim of Assessee. Aggrieved by the order of A.O., Assessee carried the matter before ld. CIT(A) who after considering the submissions of the Assessee deleted the addition by holding as under:- DECISION : I have carefully gone though the submissions made before me by the Ld. A.R of the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rom SBI and IDBI Banks, the appellant has clearly stated that such income accumulation was out of multiple activities done with the Banks. I have also perused the computation of income submitted by the appellant and found no anomaly therein. The AO has not brought on record what he means by Rule 3 and how that is applicable in this case. In the interest of revenue and fairness to the appellant what is to be worked out is the correct application of law to the fact and circumstances of the case. In this case, in my view, the dispute was the chargeability of income. The AO, instead of bringing on record which specific income was not exempted, applied an unknown formula Rule 3 which not correct. In this circumstances, the AO is directed to dele ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... arbitrary and unjustified. He has also noted that A.O has not brought on record what he meant by Rule 3 and how it was applicable to the case. He has further noted that A.O has applied an unknown formula of Rule 3 which was not correct. Before us, Revenue has not brought any material on record to controvert the findings of ld. CIT(A). In view of the aforesaid facts, we find no reason to interfere with the order of ld. CIT(A) and thus the grounds of Revenue are dismissed. 7. A perusal of the above would indicate that the ld.CIT(A) in the Asstt.Year 2007-08 was of the view that deduction under section 80P would not be admissible on the profit arisen to the assessee on trading of nonagriculture items, either sold to its members or non-membe ..... X X X X Extracts X X X X X X X X Extracts X X X X
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