TMI Blog2018 (11) TMI 1918X X X X Extracts X X X X X X X X Extracts X X X X ..... ndependent of the first limb, it includes a provident fund established under a scheme framed under the Employees' Provident Fund Act, 1952. The condition of recognition of the fund by the Chief Commissioner or Commissioner as stipulated in the first limb is consciously absent in the second limb which clearly depicts that such recognition is not a condition precedent for a provident fund established under a scheme framed under the Employees' Provident Fund Act. 1952 to be a recognized provident fund within the meaning of section 2(38) - We, therefore, observe that Section 2 (38) of the Act, itself specifically provides a Provident Fund established under a Scheme framed under the Employees' Provident Fund Act, 1952 to be a recognized Provident fund there is no reason for the claim of the assessee to be denied. In view of this matter, respectfully following the above decision and decision cited therein of Hon`ble High Courts, this grounds of appeal is allowed in favour of the assessee. Addition of interest received from other than co-operative societies and thereby not granting the proportionate deduction of expenses as claimed by the assessee - HELD THAT:- We fi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... at recognized Provident Fund is an inclusive definition and the second condition of Provident Fund established under a scheme framed under the Employees Provident Fund Act, 1952 is independent from the first condition of recognition of the fund by the CCIT as lays down under section 2 (38) of the Act. Therefore, claim of deduction under section 36(1)(iv) of the Act under the scheme framed under Employees Provident Fund or approved by the Commissioner under the Act is allowable. The learned counsel for the assessee further, placed reliance in the case of M/s. Voxiva India Pvt. Ltd. v. ITO ward 17 (4) New Delhi [I.T.A.No. 3448/Del/2016 dtd. 27.04.2017]. 6. Per contra, the learned Departmental Representative (the ld. D.R.) relied on the order of lower authorities. 7. We have heard the rival submissions and perused the relevant material on record. We find that the Co-ordinate Bench of del Tribunal in the case of Voxiva India Pvt. Ltd., New Delhi v. ITO, New Delhi on 27 April, 2017 has held as follows. 7. It was argued by the ld. counsel for the assessee that the from above explanation and sections quoted above it is evident that definition of 'recognized provident fund ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Commissioner or the Commissioner in accordance with the rules contained in Part A of the Fourth Schedule is said to be a recognized provident fund as per the first limb of the definition given in section 2(38). Further, as per the second limb of the definition, a recognized provident fund also includes a ITA No. 3448/Del/2016 provident fund established under a scheme framed under the Employees' Provident Fund Act, 1952. The definition given in section 2(38) thus is an inclusive definition and as per the second limb of the said definition which is independent of the first limb, it includes a provident fund established under a scheme framed under the Employees' Provident Fund Act, 1952. It is pertinent to note here that the condition of recognition of the fund by the Chief Commissioner or Commissioner as stipulated in the first limb is consciously absent in the second limb which clearly depicts that such recognition is not a condition precedent for a provident fund established under a scheme framed under the Employees' Provident Fund Act. 1952 to be a recognized provident fund within the meaning of section 2(38), We, therefore, find no merit in the contention raised ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s in the assessment order, it was not even noted that the Trust of the assessee Bank was a Trust established under a Scheme framed under the Employees' Provident Fund Act, 1952. 9. Once Section 2 (38) of the Act, as above, itself specifically provides a Provident Fund established under a Scheme framed under the Employees' Provident Fund Act, 1952 to be a recognized Provident fund there is no reason for the claim of the assessee to be denied and we find the Ld. CIT (A) to have correctly rectified the error committed by the Assessing Officer. 10. In the facts and circumstances of the case and the decisions relied upon hereinabove, the contribution made by the assessee is treated as contribution made to the recognized provident fund and accordingly deduction is allowable. Reliance placed by the ld. DR on the decision of the Hon'ble Delhi High Court in the case of Sony India [P] Ltd Vs. CIT reported in [2006] 285 ITR 213 [DEL] is on different facts where the issue before the Hon'ble High Court was not with respect to the two limbs of the decision u/s 2(38) of the Act and accordingly, this decision in the case of Sony India [P] Ltd Vs. CIT is not applicable in the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Rs.2,11,183 after deducting proportionate interest expenses Rs. 50,053 in the original return. However, in the revised computation of income under the head income from other source, the assessee has offered interest income at Rs. 3,43,524 and claimed proportionate interest expenses at Rs. 65,819 @ 19.16%. Thus, net interest income of Rs. 2,77,205 was offered to tax as against original interest income of Rs. 2,11,183. However, the AO has computed disallowance of interest income at Rs. 3,43,524 and on the basis of his computation of income from original return of income in which the assessee has already offered interest income of Rs.2,11,183. Hence, addition of interest income was made twice. Further, the AO has denied the proportionate expenses claimed against interest income. 11. Being aggrieved, the assessee filed an appeal before the ld. CIT (A). However, CIT (A) was of the view that the appellant has accepted interest income of Rs. 3,43,524 is taxable income as income from other source and not as business income. Thus, the appellant unconditionally accepted the applicability of ratio of Totagars Co-operative Sales Society Ltd. v. ITO 322 ITR 283 (SC) that income is taxable a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... eliance in the case of The Kabilpore Peoples Co-operative Society Ltd. v. ITO Ward-2 Navsari [I.T.A.No. 806/Ahd/2015 dtd. 21.01.2017 (Ahmedabad Trib)] and Shree Dhansobhavak Co-operative Credit Society Ltd. v. ITO Ward- 5 [I.T.A.No. 3375/Ahd/2016 dtd. 28.08.2018] has submitted that only net interest income is taxable hence, deduction of proportionate interest expenses should have been allowed by the Ld. CIT (A). 13. The ld. Sr. DR supported the order of lower authorities. 14. We have heard the rival submissions and perused the relevant material on record. We find that that CIT (A) viewed that interest expenses has been claimed against business income and same stands allowed is not logical as the said business income is exempt under section 80P of the Act. Therefore, on the logic of disallowance of interest expenses u/s. 14A as against exempt income the expenses for income from other source as shown under the head interest income is also required to be allowed. We find that Co-ordinate Benches of Tribunal in the case of The Kabilpore Peoples Co-operative Society Ltd. v. ITO Ward-2 Navsari [I.T.A.No. 806/Ahd/2015 dtd. 21.01.2017 (Ahmedabad Trib)] and Shree Dhansobhavak Co-ope ..... 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