TaxTMI 
TaxTMI 
TaxTMI 
2025 (7) TMI 664
X X X X Extracts X X X X
X X X X Extracts X X X X
....ction claimed under section 80P(2)(d) of the IT Act, 1961. The learned A.O. failed to appreciate the facts that the said disallowance is uncalled and unwanted. Further, CIT (Appeals) has erred in dismissing the appeal by upholding the addition made by learned A.O. amounting to Rs. 1,39,41,995/- and by not considering the appellant's submission where it was clearly mentioned the appellant's own favorable case-law held by CIT(A)-5 Vadodara for A.Y. 2011- 12 to 2013-14 and further Hon'ble ITAT Ahmedabad dismissed the appeals of Revenue on this issue. Thus, such addition is unjustified both in law and in fact and it is respectfully requested to be deleted. 2. The learned A.O. has erred on the facts of the case as well as in law, by disallowing the claim of Rs. 2,99,698/- in respect of deduction claimed u/s 80P(2)(a)(iv) of the IT Act, 1961. The learned A.O. failed to appreciate the facts that the said disallowance is uncalled and unwanted. Further, CIT (Appeals) has erred in dismissing the appeal by upholding the addition made by learned A.O. amounting to Rs. 2,99,698/- and by not considering the appellant's submission where it was clearly mentioned the appellant's own favorable case....
X X X X Extracts X X X X
X X X X Extracts X X X X
....the assessee relates to denial of deduction of interest and dividend income claimed by the assessee in terms of provisions of section 80P(2)(d) of the Act amounting to Rs. 1,39,41,995. The ground so raised is reproduced above. 6. A perusal of the order of the authorities below reveals that the AO noted the assessee to have claimed deduction of gross amount of dividend and interest income earned from investment made in cooperative society as per the provisions of section 80P(2)(d) of the Act, and the AO held that the assessee was eligible to claim deduction of only the net income earned by way of dividend and interest income. Noting that the assessee had incurred interest expenses on deposits taken from cooperative societies amounting to Rs. 1,49,78,840/-, which he found to be much more than the amount of income earned by way of investments in the form of interest and dividend amounting in all to Rs. 1,39,41,995/-,he disallowed the entire deduction claimed by the assessee, by netting of the interest expenses against the said income. The ld.CIT(A) confirmed the order of the AO. 7. The contention of the ld.counsel for the assessee before us, was that the order passed by the ld.CIT(A....
X X X X Extracts X X X X
X X X X Extracts X X X X
....ome earned in a Miscellneous Application filed by the assessee finding the mistake to be apparent from record in view of the decision of the jurisdictional High court in this regard. Our attention was drawn to the order of the ITAT in MA 139-141/Ahd/2017 dated 05/10/2020 as under: "2. In the MA it has been pleaded that these appeals have been decided by the Tribunal on 9.1.2020. The Tribunal has allowed the appeals for statistical purpose and directed the AO to grant deduction under section 80P(2)(d) of the Income Tax Act, 1961 of the interest income earned from co-operative societies. The finding recorded by the Tribunal in Para 7 and 8 read as under: "7. On due consideration of the above facts and circumstances, we are of the view that as far as the issue regarding admissibility of deduction of interest income from scheduled bank under section 80P(2)(a)(i) is concerned this has been settled by the Hon'ble Jurisdictional High Court in the case of State Bank of India (supra), and the assessee is not entitled for such deduction. This proposition was not even disputed by the ld.counsel for the assessee. Only thing which requires to be done is re-determination or quantification of....
X X X X Extracts X X X X
X X X X Extracts X X X X
....case of Surat Vankar Sahakari Sangh Ltd., (supra) has considered an identical issue. One of the questions formulated by the Hon'ble Court in Tax Appeal No.93 to 96 of 2008 read as under: "Whether assessee-cooperative society was entitled under section 80P(2)(d) of the entire interest of Rs. 9,01,062/- received by it from the co-operative bank ? In paragraph-3 the Hon'ble Court has noticed the facts as under: "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 cooperative 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 by the assessee and disallowed the excess claim of deduction in this regard for all the years under consideration. The amount disallowed by the Assessing Officer and deduction granted by the Assessing Officer is tabularized and recorded as under": 7. Hon'ble Court thereafter put reliance upon the decision of Hon'ble Punjab & Haryana High Court's decision and held that gross interest income is to be granted as deduction under section 80P(2)(d) of....
X X X X Extracts X X X X
X X X X Extracts X X X X
....ive 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 society from its investment in any other co-operative society. Therefore, we do not agree with the argument advanced by learned counsel for the Revenue. In our opinion, the learned Tribunal was right in law in allowing deduction under Section 80P(2)(d) of the Income- tax Act, 1961. in respect of interest of Rs. 4,00,919 on account of interest received from Nawanshaln Central Cooperative Bank without adjusting the interest paid to the hank. Therefore, the reference is answered against the Revenue in the affirmative and in favour of the assessee.' 8.2 Moreover, the Bombay High Court in the case of Bai Bhuriben Lallubhai (supra) has held that the purpose for which the assessee borrowed money had no connection whether direct or indirect with the income which she earned from the fixed depos....
X X X X Extracts X X X X
X X X X Extracts X X X X
....igh Court, Gujarat(The jurisdictional High Court with respect to the appellant in the present appeal)through common judgment dated 03.09.1975. The operative paragraph of the said judgment is being excerpted hereunder: In the light of the above discussion, we answer question No.(1) as reframed by is in Income-tax Reference No. 100 of 1974, in the affirmative and against the assessee. We answer question No.(2) in the negative and against the assessee. In Income-tax Reference No. 24 of 1974, we answer the question No.(1) as reframed by us in the affirmative and against the assessee; question No.(2) in the negative and against the assessee. In Income-tax Reference No. 139 of 1974, we answer the question referred to us in the affirmative, that is, in favour of the revenue and against the assessee. The assessee will pay the costs of the reference in each of these three cases to the Commissioner of Income-tax. 5.8 The aforesaid judgment of Hon'ble High Court, Gujarat was challenged by the appellant M/s Sabarkanta Zilla Khariod Veehan Sangh Ltd before the Hon'ble Supreme Court in CIVIL APPEALS NOS. 793-95(NT) OF 1977 [Sabarkantha Zilla Kharid V. Sangh Ltd. vs Commissioner of Income-Tax....
X X X X Extracts X X X X
X X X X Extracts X X X X
....of section 80P(2)(d) of the Act, on net basis. Undisputedly, the ITAT in the case of the assessee itself, in the preceding year has categorically held the entitlement of claim of deduction under section 80P(2)(d) of the Act on gross basis and the ITAT has placed reliance while holding so on the decision of the jurisdictional High Court in the case of Surat Vankar Sahakari Sang Ltd. Vs. CIT(supra). Having said so, the ld.CIT(A) has not followed the decision of the ITAT in the case of assessee itself stating that the Hon'ble Apex Court in the case of Sabarkanta Zilla Kharid Veehan Sangh Ltd.Vs. CIT (supra) has held otherwise. 12. We have gone through the decision of the Hon'ble Apex Court in the case of Sabarkanta Zilla Kharid Veehan Sangh Ltd.Vs. CIT (supra), and we find that the same is distinguishable on facts. In the said case, the Hon'ble Apex Court was seized with the issue of claim of deduction of profits from business carried out by the cooperative society under section 80P of the Act, and the issue was, whether the assessee is entitled to deduction on the gross profits or the net profits, to which, the Hon'ble Apex Court held that entitlement to deduction of profits from bu....
X X X X Extracts X X X X
X X X X Extracts X X X X
....Act was disallowed. 17. The contention of the ld.counsel for the assessee before us that this issue had arisen in the case of the assessee in the preceding year wherein the ITAT held that indirect expenses at the rate of 20% of the GP to be allocated and deduction for claim of profits be restricted accordingly. The ld.counsel for the assessee pointed out that this issue was dealt with in the case of the assessee by the ITAT in its order passed in ITA No.3283 and 3282/Ahd/2016 dated 30.4.2019 at para 3 to 5 of its order as under: "3. The assessee engaged in the business of milk processing, production of milk products and cattle feed, filed its return of income for A.Y. 2013-14 on 27.09.2013 declaring total income at Rs. 4,81,36,780/-. Upon scrutiny notice u/s 143(2) dated 04.09.2014 was served upon the assessee. It appears that the total turnover shown by the assessee was of Rs. 685,45,67,034/-. The gross receipt under the head "other sources" was shown at Rs. 7,90,09,413/-, net profit whereof was of Rs. 3,98,33,142/-. After certain adjustments and claim of deduction u/s 80P of the Act at Rs. 88,15,734/-, the total return was at Rs. 4,81,36,780/-. During the course of assessment ....
X X X X Extracts X X X X
X X X X Extracts X X X X
.... indirect expenses attributable to such activity and disallowed the entire claim of deduction under Section 80(P)(2)(iv) in spite of furnishing trading account on the seed selling unit by the assessee. It further appears that the Assessing Officer estimated such expenses at 40% of the gross profit for A.Y. 2011-12 in assessee's own case which was further upheld by the Learned CIT(A) and following the decision of the predecessor, the Learned CIT(A) directed the Assessing Officer to allocate indirect expenses at 40% of gross profit and to allow deduction u/s 80(P)(2)(iv) of the Act on the balance amount. It is a fact that additional expenditure except transportation allocation along with milk vehicles no expenditure seems to be incurred by the assessee as it appears from the records before us. If that be so then the allocation of indirect expenses at 40% of gross profit does not seem reasonable taking into consideration the entire aspect of the matter. We, therefore, restrict the said allocation of indirect expenses at 20% of the gross profit. The Learned AO is, therefore, directed to allow deduction u/s 80(P)(2)(iv) of the Act on the balance amount. Hence assessee's this ground of a....
X X X X Extracts X X X X
X X X X Extracts X X X X
....owing expenses incurred for the purpose of earning exempt income; that the said section does not applicable for disallowing expenses incurred for earning incomes which are claimed as deductible under Chapter VIA of the Act. Our attention was drawn to the order of the ITAT in the case of the assessee in ITA No.3283 and 3282/Ahd/2016 dated 30.4.2019, page no.12 wherein the ITAT after referring to the judgment passed by the jurisdictional High Court in the case of Banaskantha Dist. Co-op. Milk Producers' Union Ltd. (supra) and the decision of Hon'ble Delhi High Court in the case of CIT Vs. Kribhco, 349 ITR 618 it was held as under: "...Since section 14A is applicable for the expenditure incurred to earned exempt income and not to the income deductible under chapter VIA of the Act respectfully relying upon the said judgment, we find no justification in disallowing the claim of deduction of Rs. 7,98,033/- u/s 14A of the Act r.w.r. 8D of the Rule in the case of the assessee before us. In that view of the matter such disallowance is deleted. Hence assessee's ground of appeal is allowed." 24. The ld.DR, though vehemently supported the order of the ld.CIT(A), was unable to dislodge the c....
X X X X Extracts X X X X
X X X X Extracts X X X X
.... law and on facts in invoking the provisions of section 14 A of the act and also erred in applying the rule 8 D and thereby disallowing Rs. 20,81,984/-. The learned A.O. has failed to appreciate the facts that investments to earn the exempt income have been made out of appellant's own sufficient funds and have not been made out of the borrowed funds. Further, CIT (Appeals) has erred in dismissing the appeal by upholding the addition made by learned A.O. amounting to Rs. 20,81,984/- and by not considering the appellant's submission where it was clearly mentioned the appellant's own favorable case-law held by Hon'ble ITAT Ahmedabad for A.Y. 2011-12 to 2013-14 on this issue. Such addition is unjustified both in law and in fact and it is respectfully requested to be deleted. 4. The Appellant requests leave to add to alter amend substitute or delete all or any of the grounds of appeal at or before the time of hearing." 29. We also take up the appeal of the assessee for Asst.Year 2022- 23 in ITA No.417/Ahd/2025. The grounds raised are as under: "1) The learned A.O. has erred on the facts of the case as well as in law, by disallowing the claim of Rs. 68,33,529/- in respect of deducti....