TaxTMI 
TaxTMI 
2016 (7) TMI 1217
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.... matters were admitted by this Court for consideration of the following substantial question of law: TAX APPEAL No. 93 OF 2008 Whether the assessee co-operative society was entitled under sec. 80P(2)(d) of the entire interest of Rs. 10,17,976/- received by it from the cooperative Bank? TAX APPEAL No. 94 OF 2008 Whether the assessee co-operative society was entitled under sec. 80P(2)(d) of the entire interest of Rs. 9,97,298/- received by it from the cooperative Bank? TAX APPEAL No. 95 OF 2008 Whether the assessee co-operative society was entitled under sec. 80P(2)(d) of the entire interest of Rs. 12,19,538/- received by it from the cooperative Bank? TAX APPEAL No. 96 OF 2008 Whether the assessee co-operative society was entitled under sec. 80P(2)(d) of the entire interest of Rs. 9,01,062/- received by it from the cooperative Bank? 3. In all the four appeals, the common issue is grant of net deduction u/s 80P(2)(d) of the Act, in respect of interest and dividend received by the assessee from co-operative societies i.e. bank in this case. The Assessing Officer allowed deduction u/s 80P(2)(d) to the extent of net interest instead of gross interest as claimed....
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....at it was not open to the revenue to accept the earlier judgment in the case of one assesee and challenge its correctness without just cause in the case of the other assessees. 6. Mr. Sudhir Mehta, learned advocate appearing for the revenue has drawn the attention of this Court to the observations made by the Tribunal and contended that the same being just and proper does not call for any interference by this Court. He has drawn the attention of this court to the deductions granted by the Assessing Officer and submitted that the funds were borrowed for business purpose and therefore the assessee cannot get benefit of both the sections. He has relied upon the decisions in the following cases: (I) Sabarkantha Zilla Kharid V. Sangh Ltd. vs. Commissioner of Income tax reported in 203 ITR 1027: (II) Commissioner of Income Tax vs. Surat District Cooperative Milk Producers' Union Ltd reported in [1995] 211 ITR 726 (Guj) (III) Commissioner of Income tax vs. Rajasthan Rajya Sahkari Upbhokta Sangh Ltd reported in [1995] 215 ITR 448 (Raj) (IV) Commissioner of Income - tax - I, Lucknow vs. U.P. Co-operative Sugar Factories reported in [2013] 37 taxmann.co....
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....n the case of K. Nandakumar (supra), the Kerala High Court has held as under: "4. The effect of Section 80AB is that, for the purpose of computing the deduction under Section 80L, the amount of income of that nature as computed in accordance with the provisions of the Act shall alone be deemed to be the amount of income of that nature. What the section means is that the net income by way of interest computed in the manner provided by the provisions of the Act shall alone be taken into account for computing the benefit. But it must be noted that payment of interest under a loan transaction incurred for the purpose of deriving income from business is not an item which arises in the computation of interest income "in accordance with the provisions" of the Act. The said amount has to be paid irrespective of whether any interest income is otherwise received or not. Though the interest is payable to the same bank, the fact remains that the amount of income by-way of interest is not calculated under the provisions of the Act with reference to such outgoings which fall under different heads. The assessee is entitled to deduction under Section 37 of all expenditure incurred for the....
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....One can only look fairly at the language used," 7. The principle laid down by Rowlatt J., has also been time and again approved and applied by the Supreme Court in different cases including the one, Hansraj Gordhandas v. H. H. Dave, Assistant Collector of Central Excise and Customs, AIR 1970 SC 755, 759. 8. 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. It is immaterial whether any interest paid to the cooperative society exceeds the interest received from the bank on investments. The Revenue is not required to look to the nature of the investment whether it was from its surplus funds or otherwise. The Act does not speak of any adjustment as sought to be made out by learned counsel for the Revenue. The provision does not indicate any such adjustment in regard to interest derived from the co-operative so....