TMI Blog2019 (9) TMI 1338X X X X Extracts X X X X X X X X Extracts X X X X ..... of the assessee by the earlier decisions of the Co-ordinate Benches in assessee s own case. Respectfully following the earlier decisions of the Coordinate Benches, the contribution made by the assessee to SPARSH Trust is accordingly allowed as an eligible business expenditure under section 37(1) - Decided in favour of assessee. - ITA No. 22/JP/2019, ITA No. 187/JP/2019 - - - Dated:- 30-9-2019 - Shri Sandeep Gosain, JM And Shri Vikram Singh Yadav, AM For the Assessee : Shri P.C. Parwal, CA For the Revenue : Shri B.K. Gupta, (CIT) ORDER PER: SANDEEP GOSAIN, J.M. Both these appeals are the cross appeals filed against the order of CIT(A), Ajmer dated 20.11.2018 for the assessment year 2014-15 wherein the respective parties have raised following grounds. ITA No. 22/JP/2019 Assessee 1. The ld. CIT(A) has erred on facts and in law in holding that interest expenditure to the extent of ₹ 1,78,92,810/-is attributable to the interest income of ₹ 4,55,27,617/- earned on FDRs maintained with Jaipur Cooperative Bank Ltd., thereby disallowing deduction u/s 80P to this extent. 1.1 The ld. CIT(A) has erred on facts and in law ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Ltd., thereby disallowing deduction u/s 80P to this extent. 1.1 The ld. CIT(A) has erred on facts and in law in not considering that investment in FDRs is made out of own funds and borrowed funds has been utilized for business purpose and therefore, no interest can be attributed for earning the interest income. 2. Whether in the facts and circumstances of the case and in law the ld. CIT(A) is correct in holding that the income received from investments made with Jaipur Central Cooperative Bank is eligible for deduction u/s 80P(2)(d) of the I.T. Act, 1961 and thereby justified in allowing relief of ₹ 2,76,34,807/-. 2.5 At the outset of the hearing, the ld.AR of the assessee submitted that the Ground No. 1 1.1. of the assessee and Ground No. 2 of the Revenue raised in the respective appeals are squarely covered by the decision dated 2-09-2019 of Coordinate Bench in assessee's own case in ITA No.512 513/JP/2015 for the Assessment Year 2011-12- and 2012-13 and Revenue s appeal in ITA No. 633 634/JP/2019 for the Assessment Year 2011-12 and 2012-13 for which the ld.AR of the assessee relied on para 15 to 20 of the tribunal order as under:- 15. N ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ents with co- operative banks, other than a Primary Agricultural Credit Society or a Primary Co-operative Agricultural and Rural Development Bank. We find that the lower authorities had observed that as the co-operative bank with which the surplus funds of the assessee were parked as investments, were neither Primary Agricultural Credit Society nor a Primary Co-operative Agricultural and Rural Development Bank, therefore, the interest income earned on such investments would not be entitled for claim of deduction under Sec. 80P(2)(d) of the Act. 7. We have deliberated at length on the issue under consideration and are unable to persuade ourselves to be in agreement with the view taken by the lower authorities. Before proceeding further, we may herein reproduce the relevant extract of the said statutory provision, viz. Sec. 80P(2)(d), as the same would have a strong bearing on the adjudication of the issue before us. 80P(2)(d) (1) Where in the case of an assessee being a co-operative society, the gross total income includes any income referred to in sub-section (2), there shall be deducted, in accordance with and subject to the provisions of this section, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... sertion of Sub-section (4) of Sec. 80P would no more be entitled for claim of deduction under Sec. 80P of the Act, but however, as a cooperative bank continues to be a co-operative society registered under the Co-operative Societies Act, 1912 (2 of 1912), or under any other law for the time being enforced in any state for the registration of co-operative societies, therefore, the interest income derived by a co-operative society from its investments held with a co-operative bank, would be entitled for claim of deduction under Sec.80P(2)(d) of the Act. 8. We shall now advert to the judicial pronouncements that had been relied upon by the authorized representatives for both the parties and the lower authorities. We find that the issue that a co-operative society would be entitled for claim of deduction under Sec. 80P(2)(d) for the interest income derived from its investments held with a cooperative bank is covered in favour of the assessee in the following cases: (i) Land and Cooperative Housing Society Ltd. (supra) (ii) Sea Green Cooperative Housing and Society Ltd. (supra) (iii) Marwanjee Cama Park Cooperative Housing Society Ltd. (supra). We furt ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... for fresh examination. That as regards the reliance placed by the ld. D.R on the judgment of the Hon'ble High Court of Karnataka in the case of Totagars co-operative Sale Society (supra), the High Court had concluded that a co-operative society would not be entitled to claim of deduction under Sec. 80P(2)(d). We however find that as held by the Hon'ble High Court of Bombay in the case of K. Subramanian v. Siemens India Ltd. [1983] 15 Taxman 594/[1985] 156 ITR 11 (Bom), where there is a conflict between the decisions of non-jurisdictional High Court's, then a view which is in favour of the assessee is to be preferred as against that taken against him. Thus, taking support from the aforesaid judicial pronouncement of the Hon'ble High Court of jurisdiction, we respectfully follow the view taken by the Hon'ble High Court of Karnataka in the case of Totagars Cooperative Sale Society(supra) and Hon'ble High Court of Gujarat in the case of State Bank Of India (supra), wherein it was observed that the interest income earned by a co-operative society on its investments held with a co-operative bank would be eligible for claim of deduction under Sec.80P(2)(d) of the A ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 48000 3491 42674 Interest (As shown in the return of income) 1022699 1214259 1220756 902765 Deduction u/s 80P(2)(d) of the Act as per return 1027719 1045298 1223026 943736 Disallowed by Assessing Officer 477863 640219 641273 76116 Deduction granted u/s 80P(2)(d) of the Act by Assessing Officer 549856 405079 581753 867618 8. We have considered the decisions cited by learned advocate for the assessee as well as the revenue. We feel that the decisions cited by the learned advocate for the assessee shall be applicable on the facts of the present case. In the case of K. Nandakumar v. ITO [1993] 204 ITR 856/[1994] 72 Taxman 223 (Ker.), the Kerala High Court has held as under: '4. The effect of Section 80AB is that, for the purpose of co ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... paid interest to Jalandhar Central Co-operative Bank and has also received interest from the said co- operative bank, thereby showing that the assessee has on the aggregate paid interest to the bank and, therefore, no deduction under Section 80P(2)(d) can be allowed. To appreciate this argument, we have to look to the provisions of Section 80P(2)(d) of the Act, For facility of reference, it is reproduced as under : 80P. (2)(d) in respect of any income by way of interest or dividends derived by the co-operative society from its investments with any other co- operative society, the whole of such income. 6. So far as the principle of interpretation applicable to a taxing statute is concerned, we can do no better than to quote the by-now classic words of Rowlatt J., in Cape Brandy Syndicate v. IRC [1921] 1 KB 64, 71 : ...In a taxing Act, one has to look merely at what is clearly said. There is no room for any intendment. There is no equity about a tax. There is no presumption as to a tax. Nothing is to be read in, nothing is to be implied. One can only look fairly at the language used, 7. The principle laid down by Rowlatt J., has also been time a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... usiness or the earning of the income and the option depends upon personal considerations or upon motives of the assessee, that expenditure cannot possibly come within the ambit of Section 12(2). In the present case, the loan was taken for business purpose more particularly purchase of yarn and not for fixed deposits. 9. In view of the above, the questions raised in the present appeals are answered in favour of the assessee and against the revenue. The order passed by the Tribunal is accordingly quashed and set aside. 19. In light of above discussion and respectfully following the decisions referred supra, the assessee society is held eligible for deduction under section 80P(2)(d) in case of interest income of ₹ 1,49,40,834 on FDRs placed with Jaipur Central Cooperative Bank Ltd. 20. In the result, the sole ground of Revenue s appeal is dismissed and ground no. 2 in assessee s cross appeal is allowed. Having decided the matter on merits, the legal ground raised by the assessee challenging the validity of the proceedings u/s 147 has become infructous and is dismissed. 2.6 During the course of hearing, the ld. DR supported the order of the AO and al ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... get better quality and quantity of milk. The assessee has contributed @ ₹ 0.05 per litre of milk procured to its trust for the purpose of incurring expenditure for better quality of milk. An agenda note was prepared which clearly states that the purpose of contribution is for medical and health facility of the animals of the milk producers at the District level. The contribution made by assessee to trust is thus directly linked with the procurement of better quality, hygienic and more quantity of the milk. It is in the interest of the assessee that the milk animals at the village level from where it procures the milk are healthy and for this purpose, SPARSH Trust incurred expenditure in providing vaternity care, regular treatment, emergency care, preventive care, breed improvement through A.I. uninterrupted supply of nutritional supplement etc. Therefore, in our considered view, contribution made by assessee to this trust is an expenditure incurred wholly and exclusively for the purpose of business which is allowable u/s 37(1). From the income and expenditure account of the trust, it can be noted that it has incurred an expenditure in pursuance of its objectives and a ..... X X X X Extracts X X X X X X X X Extracts X X X X
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