TMI Blog2020 (10) TMI 1193X X X X Extracts X X X X X X X X Extracts X X X X ..... ay Joshi For the Revenue : Ms. Kavita P. Kaushik (Sr. DR) ORDER PER AMARJIT SINGH, JM: The assessee has filed the above mentioned appeals against the different order passed by the Commissioner of Income Tax (Appeals) -26 28, Mumbai [hereinafter referred to as the CIT(A) ] relevant to the A.Ys. 2010-11 2012-13. ITA. NO.3583/Mum/2014 2. The assessee has filed the present appeal against the order dated 24.02.2014 passed by the Commissioner of Income Tax (Appeals) -26, Mumbai [hereinafter referred to as the CIT(A) ] relevant to the A.Y.2010-11. 3. The assessee has raised the following grounds: - I On the facts and circumstances of the case and in law the learned Commissioner of Income - tax (Appeals) - 26, Mumbai [Id. CIT (A) ] erred in not allowing exemption to the Appellant in respect of interest income of ₹ 86.53 lacs earned from providing credit facilities to its members on the principal of mutuality. 1.2 While doing so, the Id. CIT (A) erred in: (i) Basing his action only on surmises, suspicion and conjecture; (ii) Taking into account irrelevant and extraneous considerations: and (iii) Ignoring the thet that th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... er to save part of their income in a safe convenient way, etc. The paid up capital of the Pathepdhi was ₹ 6,63,45,850/- as on 31.03.2010. The loans given and investments made are of ₹ 10,51,95,000/- and ₹ 2,00,70,433/- respectively as on 31.03.2010. The gross total income was in sum of ₹ 85,63,511/-. The assessee claimed the deduction u/s 80P(2)(a)(i) of the Income tax Act, 1961 at ₹ 85,63,511/-. In support of the claim of deduction under Chapter VI-A, the assessee submitted letter dated 16.11.2012 i.e. a Registered Credit Co-operative Society with limited liability since 12th March, 1960 which was collecting contribution from its members towards share capital from their salaries and does not accept any deposits and or loans from any pension for its transaction and activities. The society was availing overdraft facility against its own deposits from the Bombay Mercantile Co-operative Bank Ltd. and paid interest on the same. The assessee by virtue of letter dated 21.11.2012 also stated that the society was eligible for deduction u/s 80P(2)(a)(i) as the society was not a Cooperative Bank as defined under Part V of the Banking Regulation Act, 1949 a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... stion. The issue is in connection with the disallowance of interest income of ₹ 16.74 lacs earned by the appellant on the deposits kept with Bombay Mercantile Co-operative Bank Ltd and Maharashtra State Co-operative Bank Ltd in view of the provisions u/s 80P(2) (d) of the Act. This issue has discussed and decided by the Hon ble ITAT Delhi Bench in the case of ACIT Vs. M/s. Jawala Cooperative Urban Thrift Credit Society Ltd. (supra). The relevant finding is hereby reproduced as under.:- 6. At the outset, Ld. D.R. submitted that income of interest and dividend was not eligible for deduction u/s 80P2(a)(i) of the I. T. Act, 1961 as the said section provides the deduction for cooperative societies to claim deduction on whole of the amount of profit and gain of business but the assessee has earned this income from its fixed deposits which is taxable under Section 56 of the Act. In this respect, our attention was invited to relevant provisions of Section 80P. It was further submitted that the assessee was not eligible for deduction u/s 80P(2)(d) also as the fixed deposit was not placed with a cooperative society. It was submitted that Ld. CIT(A) has passed a non speaking ord ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... . Without prejudice to the above, it was submitted that besides eligible u/s 80P(2)(d) assessee was also eligible under section 80P(2)(i) as income from funds kept as short term funds is deemed to have accrued as profits and gain of business attributable to the activities of assessee and reliance in this respect was placed on the case law of Dhan Laxmi Credit Cooperative Society Ltd. vs ITO in I.T.A. No. 2342 wherein under similar circumstances, the deduction u/s 80P(2)(i) was allowed after taking into account the case law of Totgar s Society as decided by Hon'ble Supreme Court. The Ld. A.R. also referred to Section 80P(4) and submitted that benefit of Section 80P has been taken away from 01.04.2007 from cooperative banks but the assessee was not a cooperative bank but was a cooperative society and therefore, was eligible for deduction under that section. 9. We have heard rival parties and have gone through the material placed on record. We find that total income earned by the assessee included income on fixed deposits placed with Bombay Mercantile Bank, interest income from a scheduled bank and dividend income from Delhi Cooperative Bank. From the certificate as placed at pape ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... has earned interest. Therefore, whether this interest is attributable to the business of providing credit facilities to its members, is the question. In this regard, it is necessary to notice the relevant provision of law i.e., Section 80P(2)(a)(i): Deduction in respect of income of co-operative societies: 80P (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 assessee. (2) The sums referred to in sub-section (1) shall be the following, namely: the whole of the amount of profits and gains of business attributable to any one or more of such activities. 7. The word 'attributable' used in the said section is of great importance. The Apex Court had an occasion to consider the meaning of the word 'attributable' as supposed to derive from its use in various other provisions of the statute in the case of Cambay Electric Supply Industrial Co. Ltd. v. CIT [1978] 113 ITR 84 (SC) as under: ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ed is the amount of profits and gains of business attributable to the activity of carrying on the business of banking or providing credit facilities to its members by a co-operative society and is liable to be deducted from the gross total income under Section 80P of the Act. 9. In this context when we look at the judgment of the Apex Court in the case of M/s. Totgars Co-operative Sale Society Ltd., on which reliance is placed, the Supreme Court was dealing with a case where the assessee- Co-operative Society, apart from providing credit facilities to the members, was also in the business of marketing of agricultural produce grown by its members. The sale consideration received from marketing agricultural produce of its members was retained in many cases. The said retained amount which was payable to its members from whom produce was bought, was invested in a short-term deposit/security. Such an amount which was retained by the assessee - Society was a liability and it was shown in the balance sheet on the liability side. Therefore, to that extent, such interest income cannot be said to be attributable either to the activity mentioned in Section 80P(2)(a)(i) of the Act or unde ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... years, he should have been granted for the relevant assessment years also. 7.1 It is required to be noted that the Tribunal has not challenged the decision of the Tribunal rendered in the case of Petlad Taluka Purchase and Sales Union Ltd. (supra) and thereby has accepted the same. The Apex Court in the case of Kaumudini Narayan Dalal (supra) has already held that it was not open to the revenue to accept the earlier judgement in the case of one assessee and challenge its correctness without just cause in the case of other assessees. Similarly, the Tribunal failed to appreciate that the point was otherwise covered in favour of the assessee by the decision of the Ahmedabad Bench of the Tribunal in the case of Petlad Taluka Purchase and Sales Union Ltd. (Supra) and even the revenue's Reference Application against the said decision was rejected. The Revenue has not challenged the said order further thereby accepting the same. Even on the said ground, the contention of the assessee is required to be accepted. 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 f ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ribunal was wrong in allowing deduction under Section 80P(2) (d) of the Act because it is not established that the assessee had derived the interest by investing all the amount of surplus funds. It is further contended by Mr. Gupta that the assessee has 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 intendmen ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... lsory and any expenditure incurred by reason of the exercise of that option would come within the ambit of section 12(2) of the Indian Income-Tax Act but where the option has no connection with the carrying on of the business 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. 9. Taking into account all the facts and circumstances and also considering this fact that the similar issue was involved in the above cited judgment, therefore, we are of the considered view that the assessee is entitled for the deduction u/s 80P(2)(d) in respect of the interest income of ₹ 16.74 lacs earned by the appellant on the deposits kept with Bombay Mercantile Co-operative Bank Ltd and Maharashtra State Co-operative Bank Ltd. Acco ..... X X X X Extracts X X X X X X X X Extracts X X X X
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