TMI Blog2023 (12) TMI 209X X X X Extracts X X X X X X X X Extracts X X X X ..... er the order issued under the repealed Act still persisted. HELD THAT:- CIT found that an identical plea taken in Sri Gopal Gram Seva Sahakari Mandali Ltd. [ 2014 (12) TMI 766 - GUJARAT HIGH COURT] directed the AO to examine the allowability of assessee s claim to deduction under section 80P of the Act, holding that the assessee did not continue to enjoy the exemption by virtue of order issued under the 1922 Act. Copy of the order was placed before us, and we have noted that identical plea of the assessee of continuing to enjoy the benefit of the order issued under the 1922 Act by virtue of section 297 (k)(l) of the 1961 Act was rejected by the Hon ble High Court, and the Hon ble Court had directed the AO to examine the assessee s eligibility to claim deduction under section 80P(2) of the Act, 1961 Act. The ld.counsel for the assessee agreed with the same but at the same time has countered by stating that the Hon ble Apex Court in the case of Maharao Bhim Singh of Kota Vs. CIT [ 2016 (12) TMI 418 - SUPREME COURT] had reversed this proposition of law laid down by the jurisdictional High Court holding that the exemption allowed under the order issued under 1922 Act persisted and ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... For the Revenue : Shri Shramdeep Sinha, ld.CIT-DR ORDER PER ANNAPURNA GUPTA, ACCOUNTANT MEMBER Present appeal has been filed by the assessee against order passed by the ld.Pr.Commissioner of Income Tax-III, Rajkot [hereinafter referred to as Ld.Pr.CIT by exercising his power under section 263 of the Income Tax Act, 1961 ( the Act for short) dated 18.2.2019 pertaining to the Asst.Year2014-15. 2. The grounds raised in the appeal read as under: 1) On the facts and in the circumstances of the case, the order passed by the learned Pr.C.I.T. u/s. 263 of the l.T. Act is ab initio void being bad in law. 2) On the facts and in the circumstances of the case, the learned Pr.C.I.T. erred in setting aside the assessment order dated 26th December, 2016 and directing the Assessing Officer to pass a fresh assessment order. 3) On the facts and in the circumstances of the case the learned Pr.C.I.T. erred in not considering the facts that the societies registered before enactment of Income Tax Act 1961, having special relief as per SRO 998 and SRO 1800 with exemption from Income Tax. 4) On the facts and in the circumstances of the case, the learned Pr.C.I.T ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... eductions from income from house property income chargeable under the head Income from house property' shall, subject to the provisions of sub-section (2), be computed after making the following deductions, namely: a). A sum equal to thirty percent of the annual value; b). Where the property has been acquired, constructed, repaired, renewed or reconstructed with borrowed capital, the amount of any interest payable on such capital: 2.2 The legislature has used the word 'namely' therein and this shows that the head of expenditure where for deduction can be claimed are exhaustive. If a particular type of expenditure is not specifically provided to be deductible, deduction, therefore, cannot be claimed from out of the annual value. Neither section 23 nor section 24 provides for the deduction of the expenses incurred towards the expenditure/repairing expenditure. Therefore, only the expenditure specified in section 24 can be allowed as deduction from the annual value while computing income from house property. This issue has been specifically considered by the Hon'ble Delhi High Court in the case of H. G. Gupta Sons in which the Hon'ble High Court he ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tion from income of Co-operative banks as per the provision of section 80P of the IT Act, has been withdrawn by way of insertion of section 80P(4) of the IT Act, 1961 w.e.f. 01/04/2007 which read as under: The provisions of this section shall not apply in relation to any co-operative bank other than a primary agricultural credit society or a primary cooperative agricultural land and rural development bank Therefore, regarding claim of deduction u/s. 80P(2)(d) of the Act, it is submitted that Section 80P(2)(d) of the Act specifically exempts interest earned from funds invested in Co-operative Societies. Hence, the interest income received from any bank, not being a co-operative society, by the assesses has to be assessed as Income from Other Sources and it is not eligible for deduction under section 80P(2)(a)(i)/80P(2)(d) of the Act. The issue of taxability of interest earned from surplus funds decided by the Hon'ble Supreme Court in the case of Totgars' Co-operative Sale Society Ltd. v/s. ITO [2010] 322ITR 283/188 Taxman 282, wherein it was held that the assesses being co-operative society is engaged in providing credit facilities to its members of marketing agr ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ssee s income was exempt from income tax; that the said order/notification not being withdrawn after the repeal of the 1992 Act and its substitution with the Income Tax Act, 1961,it still remained effective and in force by virtue of section 297(2)(k)/(l) of the Act. 5. He relied on the decision of the ITAT in its own case on an identical issue in ITA No.3861/Ahd/1993 for Asst.Year 1989-90, pointing out that it was categorically held that benefit of exemption vide aforestated notification of incomes of cooperative societies of Part-B States continued to remain effective in the absence of any order rescinding the aforesaid notification. The ld.Pr.CIT however dismissed this contention of the assessee, noting that, on a similar issue Hon ble Gujarat High Court in the case of Sri Gopal Gram Seva Sahakari Mandali Ltd., vide IT reference No.16 of 2003 had rejected identical contention made before it ,answering the issue in favour of the Revenue and issuing directions to the ITO to decide the case under section 80P(2) of the Act. His finding in this regard at para-6 of the order is as under: 6. It is seen that on a similar issue, the Hon'ble High Court of Gujarat vide IT R ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... all relevant aspects of the case, the A.O. shall pass a speaking order. 7. Before us, the ld.counsel for the assessee reiterated the contentions made before the ld.Pr.CIT which briefly put were to the effect that the assessee-society was a registered cooperative housing society of Part-B State i.e. State of Saurashtra, registered prior to 1.4.1950 and in terms of provisions of section 60A of the 1922 Income Tax Act an order had been issued granting concession to Part-B States, which included exemption to incomes earned by the cooperative societies registered therein. Our attention was drawn to the copy of the relevant order placed before at PB page No. 19-29. Thereafter, it was pointed out that section 297 of the Income Tax 1961 ,which substituted the repealed 1922 Act, was pari-materia to section 6 of the General Clauses Act, dealing with effect of repeal and providing for continuation of proceedings initiated under the 1922 Act, in 1961 Act. He pointed out that as per section 297(2)(l) any concession granted in 1922 Act by way of order or notification would continue in 1961 Act until rescinded by a notification, and thereafter he stated that since there is no separate order ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the bona fide annual value of the residential palace of the Ruler of a State which is situate within the State and is declared by the Central Government as his inalienable ancestral property would be exempt from payment of Income-tax. While deciding in above case, Hon'ble Supreme Court referred to the SRO 998 widely known as the, The Part B States (Taxation Concessions) Order, 1950, and referred to the Paragraph No. 15 for the exemptions available to the various class of people, where in that Part B States (Taxation Concessions) Order, 1950 at Sr (iv) of Paragraph No. 15 was amended through SRO 1800 Dated: 14-11-1951 and exemption to co -operative societies granted. In the above referred decision, Hon'ble Supreme Court referred to the above order, itself clarifies that the said order still in force and it is not withdrawn and benefit under that concession order is granted by Hon'ble Supreme Court. Therefore, your honour's assessee would like to submit most humbly that, being issued on the same Notification and Sr (iii) of Paragraph 15 is still in existence, then Sr (iv) would also to be in existence, where Sr (iii) deals with annual value of the palace of rule ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... essee did not continue to enjoy the exemption by virtue of order issued under the 1922 Act. Copy of the order was placed before us, and we have noted that identical plea of the assessee of continuing to enjoy the benefit of the order issued under the 1922 Act by virtue of section 297 (k)(l) of the 1961 Act was rejected by the Hon ble High Court, and the Hon ble Court had directed the AO to examine the assessee s eligibility to claim deduction under section 80P(2) of the Act, 1961 Act. The ld.counsel for the assessee agreed with the same but at the same time has countered by stating that the Hon ble Apex Court in the case of Maharao Bhim Singh of Kota Vs. CIT (supra) had reversed this proposition of law laid down by the jurisdictional High Court holding that the exemption allowed under the order issued under 1922 Act persisted and applied even under 1961 Act. 13. We have gone through the order of the Hon ble Apex Court in the said case, and we find that it is entirely distinguishable on facts, and the Hon ble Apex Court has not laid down any such proposition that the order issued under the 1922 Act granting exemption to incomes earned in Part-B States would continue to subsist ev ..... X X X X Extracts X X X X X X X X Extracts X X X X
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