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Income Tax Appellate Tribunal, DELHI BENCH ‘E’, NEW DELHI
Before: Sh. Bhavnesh SainiDr. B. R. R. Kumar
Per Dr. B. R. R. Kumar, Accountant Member:
These appeals have been filed by the assessee against the orders of the ld. CIT(A)-18, New Delhi dated 17.05.2018 and 18.05.2018.
Since, the issues involved in all these appeals are common, they were heard together.
In following grounds have been raised by the assessee:
1. The learned CIT(A) has erred on facts and in law in upholding the impugned order of the learned assessing officer which is contrary to law, passed ITA Nos. 4833, 4834 & 2 4835/Del/2018 MTNL Employees Co-op Thrift & Credit Society Ltd. without application of mind and without complying with the procedure and rules, is against equity and justice and facts of the assessee and material on record.
2. The appellant denies his liability to tax as upheld by the learned CIT(A) and determined and computed by the learned assessing officer and the manner in which it has been so determined or computed.
3. The learned CIT(Appeals) has erred in law and on facts in sustaining the impugned additions of interest of Rs.3,83,278/- earned from Cooperative Bank' and Commercial Bank by treating the same under the head of Income from other sources.”
During the course of hearing, the ld. Counsel for the assessee at the very outset stated that the issue is squarely covered in assessee’s favour vide order dated 27.07.2020 in ITA No.6935/Del/2018 and ITA No. 2036/Del/2019 for the assessment years 2012-13, 2013-14 and 2014-15.
The ld. Sr. DR although supported the order of the AO but could not controvert the aforesaid contention of the ld. Counsel for the assessee.
We have considered the submissions of both the parties and perused the material available on the record. In the present case, it is noticed that an identical issue having similar facts was a subject matter of the assessee’s appeal in ITA No.6935/Del/2018 and ITA No. 2036/Del/2019, the relevant findings have been given in paras 14 to 23 which read as under: , 4834 & 3 4835/Del/2018 MTNL Employees Co-op Thrift & Credit Society Ltd. “14. Heard the arguments of both the parties and perused the material available on record.
Having decided the matter in the issue of Section 80P(2)(a)(i), the claim of the assessee for deduction u/s 80P(2)(d) is viewed de novo.
We have given a thought to consider whether the co-operative bank wherein the assessee made deposits out of this surplus fund be considered as a co-operative society, for if a co-operative bank is considered to be a co-operative society than only the interest earned by the assessee on the deposits would be eligible for deduction u/s 80P(2)(d). We find that co-operative society is a broad and larger umbrella under which the co-operative banks do perform. All co-operative societies may not be banks but all co-operative banks are deemed to be co- operative societies. According to banking Regulations Act, a co-operative society bank as the same meaning of the co-operative society.
Further, we have also given a thought as to the interest earned by the surplus funds. As per the Income Tax Act, there is no such stipulation or prerequisite as to the nature of the funds. So far as the principles of interpretation to a taxing statue is concerned, we derive it from Cape Brandy Syndicate Vs IRC 1 KB 64 as quoted by the Hon’ble High Court of Punjab & Haryana, Hon’ble J Iqbal Singh that “In a taxing Act, one has to look merely at what is clearly said. There is no room for any intendment. There is no equity about a tax. There is no presumption as to a tax. Nothing is to be read in, nothing is to be implied. One can only look fairly at the language used.“ 4834 & 4 4835/Del/2018 MTNL Employees Co-op Thrift & Credit Society Ltd.
Thus, we also find that Section 80P(2)(d) of the Act allows whole deduction of an income by way of interest or dividends derived by the co-operative society from its investment with any other co-operative society. This provision does not make any distinction in regard to source of the investment because this section envisages deduction in respect of any income derived by the co- operative society from any investment with a co-operative society. The revenue is not required to look to the nature of the investment whether it was from its surplus funds or otherwise.
We have also considered the case of Totgars Co- operative Sale Society Ltd. 322 ITR 283 relied upon by the ld. DR and find that the Hon’ble Supreme Court has deliberated on the issue of deduction u/s 80P(2)(a)(i) but not on Section 80P(2)(d). We also observed that in the case of Totgars Co-operative Sale Society Ltd. itself the Hon’ble High Court of Karnataka has allowed the claim of deduction u/s 80P(2)(d) vide order dated 05.01.2017.
Hence, keeping in view the provisions of the Act and the judgments of the Hon’ble High Court and Supreme Court in the case of Totgars Co-operative Sale Society Ltd., we hereby hold that the assessee is eligible for deduction u/s 80P(2)(d) on the income earned by the way of interest from the co-operative societies.
Expenditure - u/s 57:
The assessee has taken a plea that the expenditure incurred in earning of interest from the commercial banks be allowed while computing the taxable income. The provision of Section 57 reads as under:
“Section 57: The income chargeable under the head "Income from other sources" shall be computed after making the following deductions, namely:— 4834 & 5 4835/Del/2018 MTNL Employees Co-op Thrift & Credit Society Ltd. (i) in the case of [dividends, 94[other than dividends referred to in section 115-O,]] [or interest on securities], any reasonable sum paid by way of commission or remuneration to a banker or any other person for the purpose of realising such dividend [or interest] on behalf of the assessee; [(ia) in the case of income of the nature referred to in sub-clause (x) of clause (24) of section 2 which is chargeable to income-tax under the head "Income from other sources", deductions, so far as may be, in accordance with the provisions of clause (va) of sub- section (1) of section 36 ;] (ii) in the case of income of the nature referred to in clauses (ii) and (iii) of sub-section (2) of section 56, deductions, so far as may be, in accordance with the provisions of sub-clause (ii) of clause (a) and clause (c) of section 30, section 31 and [sub-sections (1) [***] and (2)] of section 32 and subject to the provisions of [section 38]; [(iia) in the case of income in the na ture of family pension, a deduction of a sum equal to thirty-three and one-third per cent of such income or [fifteen] thousand rupees, whichever is less.
Explanation.—For the purposes of this clause, "family pension" means a regular monthly amount payable by the employer to a person belonging to the family of an employee in the event of his death ;] (iii) any other expenditure (not being in the nature of capital expenditure) laid out or expended wholly and exclusively for the purpose of making or earning such income; [(iv) in the case of income of the nature referred to in clause (viii) of sub-section (2) of section 56, a 4834 & 6 4835/Del/2018 MTNL Employees Co-op Thrift & Credit Society Ltd. deduction of a sum equal to fifty per cent of such income and no deduction shall be allowed under any other clause of this section.]”
Having heard the arguments, we hereby direct that the Assessing Officer shall allow the expenditure incurred in relation to earning of interest from the commercial banks.
In conclusion, a. The assessee being a co-operative society not involved in banking operation is not eligible for deduction u/s 80P(2)(a)(i). b. The assessee being a co-operative society is eligible for deduction u/s 80P(2)(d) on the interest earned from other co-operative societies. c. The assessee is eligible for the expenditure u/s 57 incurred in earning the interest income which is taxable under the head “income from other sources” as per Section 56.”
Hence, in the absence of any material change on the facts of the issue the, addition is hereby deleted.
In the result, all the appeals of the assessee are allowed. Order Pronounced in the Open Court on 31/05/2021.