TMI Blog2020 (7) TMI 715X X X X Extracts X X X X X X X X Extracts X X X X ..... is a broad and larger umbrella under which the co-operative banks do perform. All co-operative societies may not be banks but all co-operative banks are deemed to be co-operative societies. According to banking Regulations Act, a co-operative society bank as the same meaning of the co- operative society. We have also given a thought as to the interest earned by the surplus funds. As per the Income Tax Act, there is no such stipulation or prerequisite as to the nature of the funds. Section 80P(2)(d) of the Act allows whole deduction of an income by way of interest or dividends derived by the co-operative society from its investment with any other co-operative society. This provision does not make any distinction in regard to source of the investment because this section envisages deduction in respect of any income derived by the co-operative society from any investment with a co-operative society. The revenue is not required to look to the nature of the investment whether it was from its surplus funds or otherwise. Referring to cases TOTAGARS CO-OPERATIVE SALE SOCIETY, [ 2017 (1) TMI 1100 - KARNATAKA HIGH COURT] and [ 2010 (2) TMI 3 - SUPREME COURT] we hereby hold that th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ed from business and was taxable under the head income from other sources , which is not eligible for deduction under that section. 2. Without prejudice, that on the facts and circumstances of the case, the CIT(A) erred in holding that the interest income of ₹ 1,82,03,792 received from deposits made with co-operative banks/ societies was eligible not, in the alternate, for deduction under section 80P(2)(d) of the Act. 3. Further without prejudice, on the facts and circumstances of the case, the CIT(A) erred in law in not adjudicating ground of appeal challenging the action of the assessing officer in not allowing deduction of proportionate interest and other expenses, attributable to interest income earned from deposits with cooperative bank/societies, under section 57 of the Act against interest income of ₹ 1,82,03,792 brought to tax under the head income from other sources, without appreciating that similar deduction was upheld by the appellate authorities in the earlier assessment years. 3.1 That on the facts and circumstances of the case, the CIT(A) erred in not appreciating that, if the netting off of proportionate expenses was allowed against inter ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 175,31,351 195,03,420 190,72,615 Total disallowance 15,28,066 14,54,330 6,81,174 Total taxable income 87,99,149 68,38,319 54,12,931 Deduction claimed in return of income - 80P(2)(a)(i) 87,99,149 68,38,319 54,12,931 Tax demand if deduction u/s 80P(2)(a)(i) is restricted to income earned from members only 80,77,256 76,45,770 84,00,520 Alternate claim of deduction considering deduction under section 80P(2)(d) (As per HC order in assessee's own case) 86,62,009 67,59,622 54,00,987 Tax Payale 39,286 21,227 1,430 Total tax payable 61,943 Tax already paid 35,00,000 Table 2 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 2010] 188 taxman 282 . 8. The ld. CIT (A) confirmed the action of the Assessing Officer. Further, the matter travelled upto the Hon ble Jurisdictional High Court of Delhi wherein the Hon ble Court has held that the assessee is not eligible to claim deduction u/s 80P(2)(a)(i) on the interest earned from the fixed deposits made out of the surplus funds. Section u/s 80P(2)(a)(i) reads as under: 80 P. (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, the sums specified in sub- section (2), in computing the total income of the asses see. (2) The sums referred to in sub-section (1) shall be the following, namely :- (a) in the case of a co-operative society engaged in- (i) carrying on the business of banking or providing credit facilities to its members... The whole of amount of profits gains of business attributable to anyone are more of such activities. 9. Since, it has been held by the Hon ble High Court that the assessee is a thrift credit society and its functions ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... perform. All co-operative societies may not be banks but all co-operative banks are deemed to be co-operative societies. According to banking Regulations Act, a co-operative society bank as the same meaning of the co- operative society. 17. Further, we have also given a thought as to the interest earned by the surplus funds. As per the Income Tax Act, there is no such stipulation or prerequisite as to the nature of the funds. So far as the principles of interpretation to a taxing statue is concerned, we derive it from Cape Brandy Syndicate Vs IRC 1 KB 64 as quoted by the Hon ble High Court of Punjab Haryana, Hon ble J Iqbal Singh that 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. 18. Thus, we also find that Section 80P(2)(d) of the Act allows whole deduction of an income by way of interest or dividends derived by the co-operative society from its investment with any other co-operative society. This provision does not make any distinction in r ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ovisions of [ section 38 ]; [(iia) in the case of income in the nature of family pension, a deduction of a sum equal to thirty-three and one- third per cent of such income or [ fifteen] thousand rupees, whichever is less. Explanation.- For the purposes of this clause, family pension means a regular monthly amount payable by the employer to a person belonging to the family of an employee in the event of his death ;] (iii) i) any other expenditure (not being in the nature of capital expenditure) laid out or expended wholly and exclusively for the purpose of making or earning such income; [(iv) in the case of income of the nature referred to in clause (viii) of sub- section (2) of section 56, a deduction of a sum equal to fifty per cent of such income and no deduction shall be allowed under any other clause of this section.] 22. Having heard the arguments, we hereby direct that the Assessing Officer shall allow the expenditure incurred in relation to earning of interest from the commercial banks. 23. In conclusion, a. The assessee being a co-operative society not involved in banking operation is not eligible for deduction u/ s 80P(2)(a)(i). b. The ..... X X X X Extracts X X X X X X X X Extracts X X X X
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