TMI Blog2016 (7) TMI 823X X X X Extracts X X X X X X X X Extracts X X X X ..... ld.AO shall examine the facts in the light of the Tribunal’s order passed in the Asstt.Year 2007-08. - ITA.No.1835/Ahd/2013 - - - Dated:- 11-7-2016 - SHRI RAJPAL YADAV, JUDICIAL MEMBER For The Assessee : Shri Tushar Hemani For The Revenue : Shri Dinesh Singh, Sr.DR ORDER The assessee is in appeal before the Tribunal against the order of the ld.CIT(A), Valsad dated 25.3.2013 passed for the Asstt.Year 2009-10. 2. Grounds of appeal are not in consonance with the Rule 8 of the Income Tax (Appellate Tribunal) Rules, 1963 - they are descriptive and argumentative in nature. In brief the grievance of the assessee is that the ld.CIT(A) has erred in confirming the action of the AO for denying the deduction under section 80P o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tion under section 80P(2) of the Income Tax Act. However, it emerges out that in the present year, the ld.CIT(A) has failed to take cognizance to the order of his predecessor in the Asstt.Year 2007-08. The finding recorded in this assessment year by the ld.CIT(A) reads as under: 5.3 DECISION :- I have considered the observation of the AO in the assessment order as well as the contention raised by the AR of the appellant in the written submission. During the assessment the AO noticed that the appellant is having multiple business activities i.e. both agricultural and non-agricultural. The appellant had claimed ₹ 34,39,8io/- as deduction u/s. 8oP of the Act. In the opinion of the AO, income earned from all sources are not exempt u/ ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ion u/s 8oP(2)(a)(iv) to the tune of ₹ 56,45,467/-. The AO, therefore, disallowed interest expenditure to the extent of nonagricultural/ non-credit facility ratio which has been determined at 3:17 out 6 interest expenditure claimed at ₹ 77,22,1327- and added to the total income of the assessee. In short, the AO worked out income from agricultural and non-agricultural activities in the ratio of 3:17. Further, the AO did not agree with appellant's claim of entire interest income u/s. 8oP of the Act. On the other hand the Id. AR made elaborate submission including some case laws to strengthen his case. It is well settled law that interest derived from Nationalised Bank etc as provided in sec. 8oP of the Act. 5. Before me ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e of building material, petrol pump, departmental store etc. He also noticed that the Assessee carried out mixed activities and of the various activities carried on by Assessee, the profits earned from some of the activities were exempt and some of them were not exempt u/s. 80P of the Act but according to the A.O., Assessee has claimed deduction u/s. 80P on the entire profits. He was of the view that the interest earned by the Assessee from nationalized bank and other activities were not exempt u/s. 80P (2) and therefore the Assessee was issued a show cause notice and asked to justify its claim to which Assessee interalia submitted that it has claimed deduction under 80P of the Act on the income only on the income which is exempt u/s. 80P. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... He observed that when there is uncertainty of matching concept exists or cascading effect cannot be identified, in such case Rule 3 is applied. There was no dispute on item-was not supported by deduction u/s. 80P. In my view, the action of the AO was not supported by valid reasons and corroborated by evidences brought out in records. The appellant has maintained separate sets of books of a/c. for income eligible/non-eligible for deduction u/s.80P. The Id. AR relied upon several judicial decisions in support of his arguments. The invocation of Rule 3 by the AO was arbitrary and unjustified, What is the objectives of the Co- Operative Society is important here. The Society was primarily for the benefits of its Members. With regards the inter ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... O should not have resorted to Rule of 3 to artificially work out Assessee s income. He thus supported the order of ld. CIT(A). 4. We have heard the rival submissions and perused the material on record. In the present case Assessee was undertaking various activities and out of the various activities, profit from some activities were exempt and from some other activities the profit was not exempt u/s 80P and accordingly A.O has re-worked out the amount eligible for deduction u/s. 80P. We find that ld. CIT(A) while deciding the issue in favour of the Assessee has given a finding that Assessee has maintained separate set of books of accounts for income eligible and non-eligible for deduction u/s. 80P and the invocation of Rule 3 by A.O to ..... X X X X Extracts X X X X X X X X Extracts X X X X
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