TMI Blog2022 (11) TMI 813X X X X Extracts X X X X X X X X Extracts X X X X ..... e with the co-operative bank. When AO has taken one of the permissible view for allowing deduction u/s 80P(2)(d) in respect of interest earned by the assessee on investment made in FDR with Jaipur Central Cooperative Bank Limited, then on the basis of various decisions relied by Ld. A/R (supra), we have no hesitation to hold that reopening is bad in law and thus, this ground of the assessee is allowed. Interest expenditure allocation against the interest receipt for computing the deduction u/s 80P(2)(d) - When interest receipt excluding the interest receipt from JCCB Ltd. is more than the interest expenditure, expenditure on interest cannot be attributed against the interest receipt from JCCB Ltd. In view of above, we are of the view that the decision of ITAT in assessee s own case for AY 2016-17 setting aside the issue to ld. CIT(A) would serve no useful purpose in as much as from the legal and factual position stated above, no interest expenditure can be allocated against the interest receipt from JCCB Ltd. for computing the deduction u/s 80P(2)(d).The AO is therefore directed to verify the above factual position and allow deduction u/s 80P(2)(d) accordingly after making v ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... hat interest expenditure to the extent of Rs. 87,91,593/- is attributable to the interest income of Rs. 1,46,40,834/- earned on FDRs maintained with Jaipur Central Cooperative Bank Ltd. (JCCB), thereby disallowing deduction u/s 80P to this extent. He has further erred in considering the amount of interest income from JCCB at Rs. 1,46,40,834/- instead of Rs. 1,49,40,834/-. 2.1 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 expenditure can be attributed for earning the interest income. ITA. No. 513/JP/2019 (For A.Y 2012-13) 1. The Ld. CIT(A) has erred on facts and in law in upholding the validity of the order passed by AO u/s 147 of IT Act, 1961. 2. The Ld. CIT(A) has erred on facts and in law in holding that interest expenditure to the extent of Rs. 95,12,659/- is attributable to the interest income of Rs. 1,59,92,544/- earned on FDRs maintained with Jaipur Central Cooperative Bank Ltd., thereby disallowing deduction u/s 80P to this extent. 2.1 The ld. CIT(A) has erred on facts and in law in not considerin ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ring the same, deduction u/s 80P was allowed. Even in the reasons recorded for reopening, it is evident that notice u/s 148 has been issued not on the basis of any fresh material coming to the AO but only on the basis of perusal of the case record. Therefore, reopening of the completed assessment without any fresh material, merely on the basis of change of opinion of the AO is without jurisdiction. Reliance in this connection was placed on the following case laws:- 1. CIT Vs. Aroni Commercial Ltd. (2017) 146 DTR 145 (Bom.) (HC) 2. State Bank of India Vs. ACIT Ors. (2018) 172 DTR 401 (Bom.) (HC) 3. Smt. Sarla Gupta Vs. The DCIT IT(IT)A No.5/JP/18 order dt.03.07.2019 (Jaipur) (Trib.) 4. CIT Vs. Central Warehousing Corporation (2015) 371 ITR 81 (Del.) (HC) 5. CIT Vs. Hindustan Zinc Ltd. (2016) 241 Taxman 392 (Raj.) (HC) 6. AshwameghCo.Op. House Soc. Ltd., Vibhag 2 Vs. DCIT (2013) 214 Taxman 4 (Guj.)(HC)(Magz.) 7. CIT vs. Usha International Ltd.(2012) 77 DTR 396 (Del.)(HC)(FB) 8. ACIT Vs. Rolta India Ltd. (2011) 57 DTR 370 (Mum) (TM) 4. The Ld. A/R further contended that AO in the reasons has stated that deduction u/s 80P in respect of interest income receiv ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... f the Circular No. 14 of 2006, dated 28th December,2006 on the Finance Act, 2006 explanatory notes to the provisions related to direct taxes- The cooperative banks are functioning at par with other commercial banks, which do not enjoy any tax benefit. Therefore, section 80P has been amended and a new sub section (4) has been inserted to provide that the provisions of the said section shall not apply in relation to any cooperative bank . . Therefore, it is crystal clear that deduction cannot be claimed in relation to any income received from co-operative banks. Thus income derived from its investments with any other commercial banks is not entitled to claim deduction u/s 80P as well income from interest or dividends derived from its investments with cooperative banks is also not entitled to claim deduction u/s 80P. In view of the above facts and circumstances, I have reason to believe that income amounting to Rs.1,49,40,834/- has escaped assessment within the meaning of provisions of section 147 of the IT Act. The escapement was on account of failure on the part of the assessee to disclose all material facts For AY 2012-13 The assessee e-filed its return of incom ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... reference to Para 3.2 of CIT(A) s order for AY 2011-12 2012-13 and Para 5.2 of CIT(A) s order for AY 2014-15 contended that assessee has sufficient owned funds out of which investment was made in the FDR of Jaipur Central Cooperative Bank Limited, the interest receipt other than from Jaipur Central Cooperative Bank Limited is more than the interest expenditure and the expenditure on interest has been incurred on working capital loan/OD/NDDB loan/Term loan/DCS and such borrowing is much lower than the amount of loan receivable where it is utilized. Thus, it is claimed that on the interest earned on investment made with JCCB Ltd., assessee has not incurred any expenditure on interest payment and therefore, deduction u/s 80P(2)(d) is allowable on the entire interest earned from the investment made with JCCB Ltd. even after considering the decision of Hon ble Rajasthan High Court in case of Rajasthan Rajya Sahakari Upbhokta Sangh Ltd. (1996) 84 Taxman 33. Therefore, it was contended that deduction u/s 80P(2)(d) reduced by ld. CIT(A) by attributing part of interest expenditure against the interest received from JCCB Ltd. is factually incorrect and not as per law. 9. On the other ha ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... .68,88,95,705/- Rs.20,00,00,000/- 2014-15 Rs.99,34,23,097/- Rs.53,29,00,000/- Thus, in view of the decision of Hon ble Supreme Court in case of CIT Vs. Reliance Industries Ltd. (2019) 410 ITR 466 as own funds is much more than the amount invested in FDR made with JCCB Ltd., the presumption is that own funds is used for making investment with JCCB Ltd. We further note that even the interest receipt other than the interest receipt from JCCB Ltd. is more than the interest expenditure tabulated as under:- AY Total interest receipt Interest receipt from JCCB Ltd. Net interest receipt other than JCCB Ltd. Interest expenditure 2011-12 Rs.5,86,88,487/- Rs.1,49,40,834/- Rs.4,37,47,653/- Rs.3,52,41,527/- 2012-13 Rs.8,55,83,902/- Rs.1,59,92,544/- Rs.6,95,91,358/- Rs.5,09,07,200/- 2014-15 Rs.12,69,22,168/- Rs.4,55,27 ..... X X X X Extracts X X X X X X X X Extracts X X X X
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