9911796707
TMI Blog2021 (11) TMI 527X X X X Extracts X X X X X X X X Extracts X X X X ..... allowed as deduction U/s 80P which is rightly shown in audited books of accounts. 2. That on facts and in law the learned CIT(A) has grievously erred in confirming the addition of Rs. 1,96,614/- as expenditure on Bhramanvada Talav project started at the fag end of the year. The learned CIT [A] has disallowed the expenditure for want of corresponding income which has been shown in the following accounting year, (your honour has disallowed Rs. 1,99,614/- due to typographical error) 3. That on facts and in law, the learned CIT(A) has erred in disallowing expenditure of Rs. 22,032/- in form of general repairs done to]CB machine for reason of no corresponding income. Such repairs expenditure being due to general wear and tear of machine which is used in work cannot show corresponding income. The disallowance is also mainly because the repairs being carried out by a non-member of the society. The co-operative society consists of illiterate majoor members (labourers) of a small village ca led Chaniyana in Banaskantha District and they cannot be expected to be doing work of repairing JCB machines 4. That on facts and in law, the learned CIT(A) has erred in not a lowing deduction of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e contractee shall forfeit the security deposit. Furthermore, it is not possible for the assessee to participate in the bid invited by the Government for awarding the projects without furnishing the security deposits. Accordingly, the fixed deposits were made with the bank and consequentially interest income was earned by it. As such the interest income is incidental to carry out the activity as provided under section 80P(2)(a)(vi) of the Act. Therefore, the same is eligible for deduction. 4.2. However, the learned CIT(A) disagreed with the contention of the assessee by observing that the interest income does not represent the income from the activity as specified under the provisions of section 80P(2)(a)(vi) of the Act. Accordingly, the learned CIT(A) disallowed the same and enhanced the total income of the assessee. 5. Being aggrieved by the order of learned CIT(A) the assessee is in appeal before us. 6. The learned AR before us filed a paper book running from pages 1 to 21 and submitted that the interest income was earned by the assessee on the security deposit made with the bank in the course of the business activities. The interest income was accepted by the Revenue as inco ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... iew of the fact that the interest income had direct nexuses with the activity of the assessee. What has been stated under sub-section 2 of section 80P of the Act is that whole of the amount of profit and gains of business attributable to any one or more of such activities which is eligible for deduction. The term has been used the business profit attributable to such activities. The word attributable is wide enough to cover those profits with respect to the events which have direct nexuses with the activity of the collective disposal of the labour. 8.3. The provisions of sub-section 1 of section 80P of the Act provides certain benefits to the co-operative societies. Likewise sub-section 2 of section 80P of the Act puts the restriction on the activities which are eligible for deduction of profit to the co-operative societies. The last para of clause (a) of sub-section 2 of section 80P of the Act uses the expression 'attributable to' which indicates the profit attributable to such activity. The word attributable is wider term than the expression 'derived from'. This has been held in the series of judgments of the Hon'ble Courts. But for the sake of brevity, we no ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... AR that the impugned issue is tax neutral exercise. 13. On the other hand, the learned DR vehemently supported the order of the authorities below. 14. We have heard the rival contentions of both the parties and perused the materials available on record. Admittedly, it seems to us that the entire exercise for upholding the disallowance of the expenses or allowing the expenses as deduction is tax neutral for the 2 reasons. Firstly, if the disallowances made then the corresponding income of the assessee will be enhanced which will be eligible for deduction under section 80P(2)(a)(vi) of the Act. 14.1. Secondly, if the expense is disallowed in the year under consideration then the same shall be allowed as deduction in the subsequent year in which the corresponding income was recognized in the books of accounts. In other words, the income of the current year will get increased by the amount of disallowance whereas the income of the subsequent year will get decreased by the impugned amount. The tax rate of the assessee in the year under consideration viz a viz in the subsequent year is uniform. Thus, there will not be any impact on the revenue except the difference of time in identif ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tions of both the parties and perused the materials available on record. From the preceding discussion we find that the assessee owns certain machineries known as JCB machines which are reflecting in the balance sheet of the assessee as on 31st March 2010. It was contended by the assessee that it has incurred certain expenses on the repairs and maintenance of such JCB machines. However, the learned CIT(A) did not allow the deduction of the expenses on the reasoning that there was no corresponding income shown by the assessee in the books of accounts. In our considered view the finding of the learned CIT(A) is not tenable for the reason that the JCB repairing expenses were not incurred against any project wherefrom some income was expected to arise. These expenses have been incurred by the assessee in a routine manner as wear and tear expenses. As such, there was no necessity for the income to accrue to the assessee against such expenses. Accordingly, we disagree with the finding of the learned CIT(A). Accordingly, the ground of appeal of the assessee is allowed. 21. The next issue raised by the assessee is that the learned CIT(A) erred in not allowing the deduction of the expenses ..... X X X X Extracts X X X X X X X X Extracts X X X X
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