TaxTMI 
TaxTMI 
TaxTMI 
2018 (8) TMI 1855
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..... 2,04,08,629/- on account of disallowance U/s.14A(3) despite the fact that assessee has not claimed any expenditure incurred for earning of income. 3. On the facts and in the circumstances of the case and in law, the Ld.CIT(A) ought to have upheld the order of the assessing officer." 3. The assessee is The Surat District Co-operative Milk Producers Union Ltd. (SDCMPUL) is a co-operative organisation registered under the Bombay Societies Act 1952. The assessee is in the business of procuring the milk, producing the milk manufacturing products and distribution of milk in surat district. The Assessing Officer (AO) noticed that the assessee has claimed deduction u/s.80P(2)(d) of the Income Tax Act under the following heads. i) Interest Income from co-operative banks Rs. 1,67,97,785/-. ii) Dividend income received during the year Rs. 58,61,754/- total claimed u/s.80P(2)(d) Rs. 2,26,59,539/-. 4. The assessee has claimed in expenditure incurred for earning the above income which is not part of his total income. The AO referred the provisions of section 14A read with Rule 8D and asked to show cause as to why disallowance u/s.14A of the Act as per Rule 8D should not be m....
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....e long back from the year 1951 - 1952 and 2002-03 out of own funds of the appellant society shown year to year in other words, the income by way of dividend or interest earned during the year, and eligible for deduction u/s.80P(2)(d) of the Act has not been resulted out of investments made during the year neither by making any direct or indirect expenditure for earning such income. During the year under consideration, the assessee has claimed deduction u/s.80P(2)(d) of Rs. 58,61,754/- being dividend income and Rs. 1,67,97,758/- being interest income from deposits with the Surat District Co-Operative Bank Ltd. The appellant has cited various case laws as noted by the CIT(A) in the appellate order. After going through the same, the ld.CIT(A) observed that there is clear distinction between the exempt income u/s.10 and the deduction allowable under chapter VI-A . The AO has failed to understand the distinction between the exempt income which covered by chapter 3 of the Act being not shown part of total income and the deduction under chapter VI-A which are available from gross total income as computed in the manner laid down in the Act. It is undisputed fact that interest and dividend ....
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....he Revenue has filed appeal before this Tribunal. 7. The ld.Senior Departmental Representative supported the orders of the Assessing Officer and submitted that the AO has elaborately discussed the reasons for not accepting the contention of the assessee. The assessee has not claimed any expenditure incurred for earning for earning the dividend income which is not part of the total income. Section 14A does not speak of income which is exempt from taxation. On the other hand, it speaks of income which is not included in the total income. The ld.CIT(A) has not appreciated the fact that the total income is defined u/s.2(45) of the Act and there is distinction between the gross total income and the total income. The gross total income is defined u/s.80AB of the Act to mean that the income as computed in accordance with the provisions of the Act before making any deductions under chapter VI-A. 8. On the other hand, total income means the total amount of income referred to in section 5 computed in the manner laid down in the Act. Since the deduction u/s.80P is made out of the Gross Total Income, the quantum of deduction is not included in the total income as defined u/s.2(45), t....
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....e members of the society, which falls within the ambit of the provisions of section 80P (2)(a)(i) of the Act whereas in the case of Punjab State Co-operative Milk Producers Federation Ltd. advances made by the assessee to its member co-operative societies for the purpose of procurement of milk etc., in the course of its business and the same has been treated as investment for the deduction u/s.80P(2)(d) instead of 80P 2(a)(i) of the Act. Thus, facts are distinguishable, hence the AO has erroneously applied the said judgment. It was further submitted that CIT(A) has fully allowed deduction u/s.80P(2)(d) in the succeeding year i.e. assessment year 2011-12, 2013-14. It was also submitted that the Department has lawfully accepted and allowed the deduction claim u/s.80P(2)(d) of the Act while passing regular assessment u/s.143(3) dated 07.12.2016 for the assessment year 2014-15. 10. We have considered the rival submissions and perused the material on record. It is seen that the assessee society had earned income by way of dividend and interest from investment made with other co-operative societies as provided in section 71 of Gujarat Co-operative Societies Act. This investment h....
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....nder: Section 80P(2)(a)(i)- Carrying on the business of banking or providing credit facilities to its members. Section 80P(2)(d)- In respect of any income by way interest or dividends derived by the cooperative society from its investments with any other co-operative society, the whole of such income. After considering the factual as well as legal position on this issue, the appellant had not incurred any expenditure on the earning of the dividend and interest from other co-operative society as this investment was made long back. No new investment had been made by the appellant during the year under consideration. Thus, we confirm the order of the CIT(A) in all the years." 11. In the light of above, it is seen that the issue under consideration is covered by decision of Tribunal in the appellants own case. The ld.AR placed reliance in the case of CIT vs Kribhco [2012] 349 ITR 618 (Del) wherein it was held that no disallowance can be made u/s.14A in respect of income on which deduction is allowed u/s.80P. Section 14A is no applicable in case of special deduction given under chapter VI-A. It has been further relied that in the case of Punjab State Federation Co-operative H....