The Bharuch District Co. Op. Milk Producers' Union Ltd., Bharuch v. The Pr. CIT-3, Vadodara

ITA 370/AHD/2020 | 2014-2015
Pronouncement Date: 31-08-2021 | Result: Partly Allowed

Appeal Details

RSA Number 37020514 RSA 2020
Assessee PAN AAAAT1470A
Bench Ahmedabad
Appeal Number ITA 370/AHD/2020
Duration Of Justice 1 year(s) 2 month(s) 4 day(s)
Appellant The Bharuch District Co. Op. Milk Producers' Union Ltd., Bharuch
Respondent The Pr. CIT-3, Vadodara
Appeal Type Income Tax Appeal
Pronouncement Date 31-08-2021
Appeal Filed By Assessee
Order Result Partly Allowed
Bench Allotted C
Tribunal Order Date 31-08-2021
Last Hearing Date 28-07-2021
First Hearing Date 28-07-2021
Assessment Year 2014-2015
Appeal Filed On 26-06-2020
Judgment Text
IN THE INCOME TAX APPELLATE TRIBUNAL AHMEDABAD C BENCH (CONDUCTED THROUGH VIRTUAL COURT) BEFORE: SHRI AMARJIT SINGH ACCOUNTANT MEMBER AND MS. MADHUMITA ROY JUDICIAL MEMBER THE BHARUCH DISTRICT CO- OP MILK PRODUCERS UNION LTD. PAN: AAAAT1470A (APPELLANT) VS PRINCIPAL COMMISSIONER OF INCOME TAX-3 VADODARA (RESPONDENT) REVENUE BY: SHRI O.P. SHARMA CIT-D.R. ASSESSEE BY: SHRI HARDIK VORA A.R. DATE OF HEARING : 28-07-2021 DATE OF PRONOUNCEMENT : 31-08-2021 /ORDER PER : AMARJIT SINGH ACCOUNTANT MEMBER:- THIS ASSESSEES APPEAL FOR A.Y. 2014-15 ARISES FRO M ORDER OF THE PRINCIPAL CIT-3 VADODARA DATED 11-05-2020 IN PR OCEEDINGS UNDER SECTION 263 OF THE INCOME TAX ACT 1961; IN SHORT THE ACT . 2. THE ASSESSEE HAS RAISED FOLLOWING GROUNDS OF APP EAL:- 1. ON THE FACTS AND CIRCUMSTANCES OF THE CASE AS WELL AS LAW ON THE SUBJECT THE REVISION ORDER PASSED BY THE LEARNED PRINCIPAL COMMISSIONER OF INCOME TAX U/S 263 OF THE ACT FOR ASSESSMENT YEAR 2014-15 IS ERRONEOUS CONTRARY TO L AW EQUITY FACTS AND CIRCUMSTANCES OF THE PRESENT CASE AND THE MATERIALS AVAILABLE ON RECORD. ITA NO. 370/AHD/2020 ASSESSMENT YEAR 2014-15 I.T.A NO. 370/AHD/2020 A.Y. 2014-15 PAGE NO THE BHARUCH DISTRICT CO-OP. MILK PRODUCERS UNION L TD. 2 2. ON THE FACTS AND CIRCUMSTANCES OF THE CASE AS WE LL AS LAW ON THE SUBJECT THE LEARNED PRINCIPAL COMMISSIONER OF INCOME TAX ERRED IN SETTI NG ASIDE THE ASSESSMENT ORDER OF THE ASSESSING OFFICER U/S 143(3) OF THE ACT OBSERVING T HAT THE CONTENTIONS RAISED BY THE ASSESSEE NECESSITATE REVERIFICATION OF THE MATTER WITHOUT CO MMENTING ANYTHING ON ORDER BEING ERRONEOUS AS WELL AS PREJUDICIAL TO THE INTEREST OF REVENUE. 3. THE FACT IN BRIEF IS THAT THE ASSESSEE FILED RET URN OF INCOME ON 28 TH NOV 2014 DECLARING TOTAL INCOME AT RS. NIL AFTER C LAIMING DEDUCTION OF RS. 98 69 898/- U/S. 80P(2) OF THE ACT. THE CASE WAS S UBJECT TO SCRUTINY ASSESSMENT AND ASSESSMENT U/S. 143(3) OF THE ACT WA S COMPLETED ON 29 TH DECEMBER 2017 AND TOTAL INCOME WAS ASSESSED AT RS. 4 08 470/-. SUBSEQUENTLY THE PR. CIT ISSUED A SHOW CAUSE NOTIC E U/S. 263 OF THE ACT ON 19 TH MARCH 2020 THAT ASSESSING OFFICER HAS FAILED TO C ARRY OUT ENQUIRIES AS WARRANTED BY THE FACTS AND CIRCUMSTANCES OF THE CAS E IN RESPECT OF CLAIM OF DEDUCTION U/S. 80P(2)(D) OF THE ACT. THE RELEVANT P ART OF THE NOTICE IS REPRODUCED AS UNDER:- '2. IN YOUR CASE THE CASE RECORDS FOR THE A. Y. 2014-15 WERE CALLED FOR AND EXAMINED. THE RETURN OF INCOME FOR THE A. Y. 2014-15 WAS FILED BY YOU ON 20.11.2014 DECLARING TOTAL INCOME OF RS.NIL AFTER CLAIMING DEDUCTION OF RS. 98 69 895/- U/S.80P(2) OF THE I.T. ACT. THE CASE WAS ASSESSED UNDER SECTION 143(3) ON 29.12.2017 BY DETE RMINING TOTAL INCOME OF RS.4 08 470/-AFTER ALLOWING DEDUCTION OF RS. 98 69.. S95/- U/S. 80P(2) OF I. T. ACT. 3. ON SCRUTINY OF BALANCE SHEET PROFIT AND LOSS AC COUNT AND COMPUTATION OF INCOME REVEALED THAT THE ASSESSEE HAD OFFERED INCOME OF RS.NIL AFTE R CLAIMING DEDUCTION U/S.80P(2) AMOUNTING TO RS.98.69 895/- WHICH INCLUDED RS.84 99 892/- AS FIX ED DEPOSIT INTEREST EARNED FROM THE BHARUCH DISTRICT CENTRAL CO-OPERATIVE BANK LTD AND THE SAME WAS ALLOWED DURING THE ASSESSMENT. AS PER SECTION 80P(2)(D) IT WAS REQUIRED TO BE DISALLOWED BY THE AO BUT BY NOT DOING SO IT RESULTED IN UNDER ASSESSMENT OF RS.84.99 892/-. THEREFORE THE ORDER PASSED U/S. 143(3) OF THE ACT IS BOTH ERRONEOUS AND PREJUDICIAL TO THE INTERESTS OF REVEN UE. 4. FROM THE ABOVE IT IS CLEAR THAT THE ASSESSING O FFICER HAS FAILED TO CARRY OUT ENQUIRIES AS WARRANTED BY THE FACTS AND CIRCUMSTANCES OF THE CAS E AND ASSESSMENT HAS BEEN COMPLETED WITHOUT EXAMINING ALL ASPECTS WHICH WERE REQUIRED TO BE LOO KED INTO FOR DETERMINING THE TOTAL INCOME OF THE ASSESSEE. IT HAS BEEN HELD IN NUMBER OF CASES B Y THE HON'BLE COURTS THAT UNLIKE THE CIVIL COURT WHICH IS NEUTRAL TO GIVE A DECISION ON THE BASIS OF EVIDENCE PRODUCED BEFORE IT THE ASSESSING OFFICER IS NOT ONLY AN ADJUDICATOR BUT A/SO AN INVE STIGATOR. HE CANNOT REMAIN PASSIVE ON THE FACE OF A RETURN WHICH IS APPARENTLY IN ORDER BUT CALLS FOR FURTHER ENQUIRY. IT IS HIS DUTY TO ESTABLISH T HE TRUTH OF THE FACTS STATED IN THE RETURN OF INCOME W HEN THE CIRCUMSTANCES OF THE CASE ARE SUCH AS TO PROVOKE ENQUIRY- IF THERE IS FAILURE TO MAKE SUCH E NQUIRY THE ORDER IS ERRONEOUS AND PREJUDICIAL TO THE INTEREST OF REVENUE IN THIS REGARD USEFUL REFE RENCES MAY BE MADE TO THE FOLLOWING CASES: GEE VEE ENTERPRISES VS. ADD/. CIT 99 ITR 375(DEL) RAMPYARI DEVI SARAOGI VS. COMMISSIONER OF INCOME-TAX 67 ITR 84(SC) MALABAR INDUSTRIAL CO. LTD VS. CIT (2000) 243 ITR 83 (SC) RAJAIAKSHMI MILLS LTD VS. /TO 2009 ITOL-317-ITAT -MAD-SB I.T.A NO. 370/AHD/2020 A.Y. 2014-15 PAGE NO THE BHARUCH DISTRICT CO-OP. MILK PRODUCERS UNION L TD. 3 5. IT MAY FURTHER BE STATED THAT EXPLANATION 2 HAS BEEN INSERTED BELOW SUBSECTION (1) OF SECTION 263 WHEREIN IT HAS BEEN DECLARED THAT AN ORDER PASS ED BY THE ASSESSING OFFICER SHALL BE DEEMED TO BE ERRONEOUS IN SO FAR AS IT IS PREJUDICIAL TO THE INTERESTS OF THE REVENUE IF IN THE OPINION OF THE PRINCIPAL COMMISSIONER OR COMMISSIONER OF INCOME-TA X THE ORDER IS PASSED WITHOUT MAKING ENQUIRIES OR VERIFICATION WHICH SHOULD HAVE BEEN MA DE. 6. IN VIEW OF THE ABOVE FACTS CLEAR PROVISIONS OF THE ACT AND THE AUTHORITIES YOU ARE HEREBY REQUIRED TO SHOW CAUSE AS TO WHY THE ASSESSMENT ORD ER PASSED BY THE ASSESSING OFFICER ON 29.12.2017 SHOULD NOT BE SET ASIDE FOR DE NOVO CONS IDERATION AS PER THE PROVISIONS OF THE SECTION 263 OF THE ACT.' IN RESPONSE TO THE SHOW CAUSE NOTICE THE ASSESSEE HAS EXPLAINED AS UNDER:- 'WE BRING TO YOUR NOTICE THAT AS PER SECTION 2(19) OF THE ACT A 'CO-OPERATIVE SOCIETY' MEANS A CO- OPERATIVE SOCIETY REGISTERED UNDER THE CO-OPERATIVE SOCIETIES ACT 1912 OR ANY OTHER LAW FOR THE TIME BEING IN FORCE IN ANY STATE FOR THE REGISTRATI ON OF THE CO-OPERATIVE SOCIETIES. SINCE THE CO-OPERATIVE BANKS ARE ALSO REGISTERED UN DER THE CO-OPERATIVE /SOCIETIES ACT HENCE AS PER THE DEFINITION OF CO-OPERATIVE SOCIETY AS STATE D ABOVE CO-OPERATIVE BANKS ARE ALSO TO BE TREATED AS CO-OPERATIVE SOCIETY-FURTHER IT SHOULD BE NOTED THAT THE CO-OPERATIVE SOCIETY CAN BE OF DIFFERENT NATURE AND CAN BE INVOLVED IN DIFFERENT ACTIVITIES THE CO-OPERATIVE SOCIETY BANK IS MERELY A VARIETY OF THE CO-OPERATIVE SOCIETIES. THUS THE CO -OPERATIVE BANK WHICH IS A SPECIES OF THE GENUS CO-OPERATIVE SOCIETIES WOULD NECESSARILY BE COVERED BY THE WORD 'CO-OPERATIVE SOCIETY' AND SINCE CLAUSE 80P(2)(D) OF THE ACT PERMITS SUCH 100% DEDUC TION IN RESPECT OF THE INCOME BY WAY OF INTEREST OR DIVIDENDS DERIVED BY THE CO-OPERATIVE S OCIETY (ASSESSEE} FROM ITS INVESTMENTS WITH ANY OTHER CO-OPERATIVE SOCIETY (INCLUDING CO-OPERATIVE BANK) AND THE WHOLE OF SUCH INTEREST INCOME IS ELIGIBLE FOR 100% DEDUCTION.' HOWEVER THE LD. PR. CIT HAS NOT AGREED WITH THE SU BMISSION OF THE ASSESSEE STATING THAT CONTENTION RAISED BY THE ASSESSEE WAS REQUIRED RE-VERIFICATION. THEREFORE ENTIRE ISSUE WAS RESTORED TO THE FILE OF ASSESSING OFFICER FOR FRESH ADJUDICATION. 4. DURING THE COURSE OF APPELLATE PROCEEDINGS BEFOR E US LD. COUNSEL HAS SUBMITTED PAPER BOOK COMPRISING DETAILS AND COPIES OF DOCUMENTS FURNISHED BEFORE THE ASSESSING OFFICER AT THE TIME OF ASSESSM ENT AND BEFORE THE PR. CIT DURING THE COURSE OF PROCEEDINGS U/S. 263 OF TH E ACT. THE LD. COUNSEL REFERRED PAGE NO. 4 OF THE PAPER BOOK CONTAINING DE TAILED SUBMISSION MADE BY THE ASSESSEE VIDE LETTER DATED 18-12-2017 AND VI DE LETTER DATED 19-12- 2017 IN RESPONSE TO THE QUERY RAISED BY THE ASSESS ING OFFICER FOR CLAIMING I.T.A NO. 370/AHD/2020 A.Y. 2014-15 PAGE NO THE BHARUCH DISTRICT CO-OP. MILK PRODUCERS UNION L TD. 4 DEDUCTION U/S. 80P OF THE ACT. VIDE THE ABOVE REF ERRED LETTER THE ASSESSEE HAS MADE DETAILED SUBMISSION IN SUPPORT OF CLAIM OF DEDUCTION U/S. 80P(2)(D) ALONG WITH REFERENCE OF JUDICIAL PRONOUNCEMENTS. TH E LD. COUNSEL FURTHER CONTENDED THAT THE LD. PR. CIT HAS ERRONEOUSLY HELD THAT ISSUE IS REQUIRED RE- VERIFICATION WITHOUT CONTRADICTING DETAILED VERIFIC ATION/EXAMINATION ALREADY MADE BY THE ASSESSING OFFICER DURING THE COURSE OF ASSESSMENT PROCEEDINGS. THE LD. COUNSEL ALSO SUBMITTED THAT SIMILAR DEDUCTI ON U/S. 80P(2)(D) WAS ALSO ALLOWED IN EARLIER ASSESSMENT YEARS TO THE ASSESSEE . THE LD. COUNSEL ALSO REFERRED PAGE NO. 18 OF THE PAPER BOOK VIDE WHICH T HE LD. PR. CIT WAS INFORMED THAT DURING THE COURSE OF ASSESSMENT MADE U/S. 143(3) THE ASSESSING OFFICER HAS ALREADY MADE DETAILED VERIFIC ATION AND CONSIDERED THE SUBMISSION AND DOCUMENTARY EVIDENCES PRODUCED BY TH E ASSESSEE IN SUPPORT OF ITS CLAIM OF DEDUCTION U/S. 80P(2)(D) OF THE ACT . THE ASSESSEE HAS ALSO REFERRED VARIOUS JUDICIAL PRONOUNCEMENTS IN SUPPORT OF ITS CLAIM OF DEDUCTION U/S. 80P(2)(D) BEFORE THE LD. PR. CIT. ON THE OTHE R HAND THE LD. DEPARTMENTAL REPRESENTATIVE HAS SUPPORTED THE ORDER OF PR. CIT. 5. HEARD BOTH THE SIDES AND PERUSED THE MATERIAL ON RECORD. THE CASE WAS SUBJECT TO SCRUTINY ASSESSMENT AND ORDER U/S. 1 43(3) OF THE ACT WAS FINALIZED ON 29 TH DECEMBER 2017 AND ASSESSING OFFICER HAS ALLOWED T HE CLAIM OF DEDUCTION U/S. 80P(2)(D) OF THE ACT. SUB SEQUENTLY THE LD. PR. CIT HELD THAT ASSESSMENT ORDER PASSED WAS ERRONEOUS AND PREJUDICIAL TO THE INTEREST OF REVENUE SINCE THE ASSESSING OFFICER HAS FAILED TO CARRY OUT ENQUIRIES/VERIFICATION IN RESPECT OF CLAIM OF DEDUC TION MADE U/S. 80P(2)(D) OF THE ACT. IN THIS REGARD WE HAVE PERUSED THE COPY OF NOTICE U/S. 142(1) DATED 10 TH OCTOBER 2017 ISSUED BY THE ASSESSING OFFICER DURI NG THE COURSE OF I.T.A NO. 370/AHD/2020 A.Y. 2014-15 PAGE NO THE BHARUCH DISTRICT CO-OP. MILK PRODUCERS UNION L TD. 5 ASSESSMENT PROCEEDINGS U/S. 143(3) OF THE ACT AS PE R ANNEXURE OF QUESTIONNAIRE ENCLOSED WITH THE ABOVE REFERRED NOTI CE. IT IS OBSERVED THAT AT SERIAL NO. 15 OF THE QUESTIONNAIRE THE ASSESSING OF FICER HAS ASKED THE ASSESSEE TO FURNISH DETAILS IN JUSTIFICATION OF THE CLAIM OF DEDUCTION U/S. 80P. VIDE LETTER DATED 18 TH DECEMBER 2017 THE ASSESSEE HAS MADE DETAILED SUBMISSION IN RESPECT OF CLAIM OF DEDUCTION U/S. 80 P OF THE ACT. THE ASSESSEE HAS ALSO EXPLAINED THAT THIS WAS NOT THE F IRST YEAR OF CLAIMING THE DEDUCTION AND SIMILAR CLAIMS OF DEDUCTION U/S. 80P( 2)(D) OF THE ACT WERE ALLOWED BY THE REVENUE IN ITS CASE ALSO IN THE EARL IER YEAR. DURING THE COURSE OF ORIGINAL ASSESSMENT THE DETAILED SUBMISSION OF THE ASSESSEE VIDE LETTER DATED 08.12.2017 IS REPRODUCED AS UNDER:- IN CONTINUATION WITH THE EARLIER SUBMISSION FOR TH E A.Y. 2014-15 AND IN RESPONSE TO YOUR QUARRY REGARDING THE DEDUCTION CLAIMED BY THE ASSESSEE UND ER SECTION 80P(2)(D) WE WOULD LIKE TO SUBMIT AS UNDER- ASSESSEE HAD SHOWN THE INTEREST INCOME EARNED FROM CO OPERATIVE BANK UNDER THE HEAD INCOME FROM OTHER SOURCE AND CLAIMED THE DEDUCTION FOR THE SAME UNDER SECTION 80P(2)(D) OF THE INCOME TAX ACT AND NOT U/S 80P(2)(A)(I) SO THE JUDGMENT P ASSED BY THE SUPREME COURT IN CASE OF TOTGAR'S CO-OPERATIVE SALE SOCIETY LIMITED V. INCOME TAX OFFICER IS NOT APPLIC ABLE TO THE ASSESSEE. IT IS ALSO WORTHWHILE TO NOTE THAT THIS IS NOT THE FIRST YEAR WHEN ASSESSEE IS CLAIMING THE DEDUCTION UNDER THIS SECTION. ASSESSEE IS CLAIMING THIS DEDUC TION SINCE LONG BACK AND THE JUDGMENT OF SUPREME COURT IS ALSO NOT A NEWLY PASSED ORDER. THE ASSESSING AUTHORITY ITSELF HAD ALLOWED THE CLAIM OF THE ASSESSEE UNDER SECTION 80P(2)(D) OF TH E ACT AND THE REVENUE HAS NOT CONTESTED THE MATTER FURTHER. EVEN IN THE ASSESSMENT YEAR 2013-14 THE ORDER U/S 1 43(3) WAS PASSED AND IN THAT YEAR ALSO WE HAD CLAIMED THE DEDUCTION U/S 80P(2)(D) AND SAME WAS AL LOWED TO US BY THE A.O. THERE IS NO CHANGE IN THE FACTS OF THE CASE SO THE SAME VIEW NEEDS TO BE FOLLOWED THIS YEAR ALSO. SECTION 80P(2)(D) OF THE ACT READS AS UNDER:- 'IN RESPECT OF ANY INCOME BY WAY OF INTEREST OR DIV IDENDS DERIYEDJ3Y THE CO-OPERATIVE SOCIETY FROM ITS INVESTMENTS WITH ANY OTHER CO-OPERATIVE SOCIETY THE WHOLE OF SUCH INCOME' WE LIKE TO RING TO YOUR NOTICE THAT AS PER SECTION 2(19) OF THE ACT A 'COOPERATIVE SOCIETY' MEANS A CO-OPERATIVE SOCIETY REGISTERED UNDER THE CO- OPERA TIVE SOCIETIES ACT 1912 OR ANY OTHER LAW FOR THE TIME BEING IN FORCE IN ANY STATE FOR THE REGIST RATION OF THE CO-OPERATIVE SOCIETIES. SINCE THE CO-OPERATIVE BANKS ARE ALSO REGISTERED UN DER THE CO-OPERATIVE SOCIETIES ACT HENCE AS PER THE DEFINITION OF CO OPERATIVE SOCIETY AS STATE D ABOVE CO-OPERATIVE BANKS ARE ALSO TO BE TREATED AS CO-OPERATIVE SOCIETY. FURTHER IT SHOULD BE NOTED THAT THE CO-OPERATIVE SO CIETY CAN BE OF DIFFERENT NATURE AND CAN BE INVOLVED IN DIFFERENT ACTIVITIES; THE CO-OPERATIVE SOCIETY BANK IS MERELY A VARIETY OF THE CO- OPERATIVE SOCIETIES. THUS THE CO-OPERATIVE BANK WH ICH IS A SPECIES OF THE GENUS CO-OPERATIVE SOCIETIES WOULD NECESSARILY BE COVERED BY THE WORD 'CO-OPERATIVE SOCIETY' AND SINCE CLAUSE 80P(2)(D) OF THE ACT PERMITS SUCH 100% DEDUCTION IN RESPECT OF THE INCOME BY WAY OF INTEREST OR DIVIDENDS DERIVED BY THE CO- OPERATIVE SOCIETY (ASS ESSEE) FROM ITS INVESTMENTS WITH ANY OTHER CO- I.T.A NO. 370/AHD/2020 A.Y. 2014-15 PAGE NO THE BHARUCH DISTRICT CO-OP. MILK PRODUCERS UNION L TD. 6 OPERATIVE SOCIETY (INCLUDING CO-OPERATIVE BANK) AND THE WHOLE OF SUCH INTEREST INCOME IS ELIGIBLE FOR 100% DEDUCTION. REGARDING THE ABOVE MATTER GUJARAT HIGH COURT IN THE CASE OF SURAT VANKAR SAHAKARI SANGH LTD. V. ASSISTANT COMMISSIONER OF INCOME-TAX HELD THAT- 'SECTION 80P(2)(D) OF THE ACT ALLOWS WHOLE DEDUCTIO N 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 CO- OPERATIVE SOCI ETY EXCEEDS THE INTEREST RECEIVED FROM THE BANK ON INVESTMENTS. THE REVENUE IS NOT REQUIRE D 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 SUCH ADJUSTMENT IN REGARD TO INTEREST DER IVED FROM THE CO-OPERATIVE SOCIETY FROM ITS INVESTMENT IN ANY OTHER CO-OPERATIVE SOCIE TY. THEREFORE WE DO NOT AGREE WITH THE ARGUMENT ADVANCED BY LEARNED COUNSEL FOR THE REVENU E. IN OUR OPINION THE LEARNED TRIBUNAL WAS RIGHT IN LAW IN ALLOWING DEDUCTION UND ER SECTION 80P(2)(D) OF THE INCOME- TAX ACT 1961 IN RESPECT OF INTEREST OF RS. 4.00.91 9 ON ACCOUNT OF INTEREST RECEIVED FROM NAWANSHALN CENTRAL CO-OPERATIVE BANK WITHOUT ADJUST ING THE INTEREST PAID TO THE HANK THEREFORE THE REFERENCE IS ANSWERED AGAINST THE RE VENUE IN THE AFFIRMATIVE AND IN FAVOUR OF THE ASSESSEE.' COPY OF THE GUJARAT HIGH COURT JUDGMENT IS ATTACHED HEREWITH FOR YOUR READY REFERENCE. FURTHER THE KARNATAKA HIGH COURT IN CASE OF PRINCIP AL COMMISSIONER OF INCOME-TAX HUBLI V. TOTAGARS CO-OPERATIVE SALE SOCIETY HELD THAT- 'THE ISSUE WHETHER A CO-OPERATIVE BANK IS CONSIDERE D TO BE A CO-OPERATIVE SOCIETY IS NO LONGER RES INTEGRA. FOR THE SAID ISSUE HAS BEEN DEC IDED BY THE TRIBUNAL ITSELF IN DIFFERENT CASES. MOREOVER THE WORD 'CO-OPERATIVE SOCIETY 1 ARE THE WORDS OF A LARGE EXTENT AND DENOTES A GENUS WHEREAS THE WORD 'CO-OPERATIVE BAN K' IS A WORD OF LIMITED EXTENT WHICH MERELY DEMARCATES AND IDENTIFIES A PARTICULAR SPECI ES OF THE GENUS CO-OPERATIVE SOCIETIES. CO-OPERATIVE SOCIETY CAN BE OF DIFFERENT NATURE AND CAN BE INVOLVED IN DIFFERENT ACTIVITIES; THE CO-OPERATIVE SOCIETY BANK IS MERELY A VARIETY OF THE CO-OPERATIVE SOCIETIES. THUS THE CO-OPERATIVE BANK WHICH IS A S PECIES OF THE GENUS CO-OPERATIVE SOCIETIES WOULD NECESSARILY BE COVERED BY THE WORD 'CO-OPERATIVE SOCIETY'. FURTHERMORE SECTION 56(I)(CCV) OF THE BANKING REGU LATIONS ACT 1949 DEFINES A PRIMARY CO-OPERATIVE SOCIETY BANK AS THE MEANING OF CO-OPER ATIVE SOCIETY. THEREFORE A CO- OPERATIVE SOCIETY BANK WOULD BE INCLUDED IN THE WOR DS 'COOPERATIVE SOCIETY'. ADMITTEDLY THE INTEREST WHICH THE ASSESSEE-RESPOND ENT HAD EARNED WAS FROM A CO- OPERATIVE SOCIETY BANK. THEREFORE ACCORDING TO SEC TION 80P(2)(D) THE SAID AMOUNT OF INTEREST EARNED FROM A CO-OPERATIVE SOCIETY BANK WO ULD BE DEDUCTABLE FROM THE GROSS INCOME OF THE CO-OPERATIVE SOCIETY IN ORDER TO ASSE SS ITS TOTAL INCOME. THEREFORE THE ASSESSING OFFICER WAS NOT JUSTIFIED IN DENYING THE SAID DEDUCTION TO THE ASSESSEE- RESPONDENT.' COPY OF THE KARNATAKA HIGH COURT JUDGMENT IS ATTACH ED HEREWITH FOR YOUR REFERENCE. PUNJAB & HARIYANA HIGH COURT IN CASE OF C1T V. DOAB A COOPERATIVE SUGAR MILLS LTD. [1998] 96 TAXMAN 509/230 ITR 774 HELD THAT - 'INTEREST DERIVED BY THE ASSESSEE CO-OPERATIVE SUGA R MILL FROM ITS INVESTMENT IN COOPERATIVE BANK WOULD QUALIFY FOR DEDUCTION IN ITS ENTIRETY UNDER S ECTION 80P(2)(D) WITHOUT ADJUSTMENT OF INTEREST PAID BY THE ASSESSEE TO THE CO-OPERATIVE BANK.' SO AS PER THE ABOVE VARIOUS JUDGMENTS OF HIGH COUR TS AND MAINLY BASED ON THE GUJARAT HIGH COURT DECISION IT CAN BE INFERRED THAT INTEREST INCOME EA RNED BY CO-OPERATIVE SOCIETY FROM THE CO- OPERATIVE BANK IS ALLOWED AS A DEDUCTION U/S 80P(2) (D) OF THE ACT. I.T.A NO. 370/AHD/2020 A.Y. 2014-15 PAGE NO THE BHARUCH DISTRICT CO-OP. MILK PRODUCERS UNION L TD. 7 DURING THE COURSE OF ORIGINAL ASSESSMENT PROCEEDING S THE ASSESSEE HAS ALSO MADE SUBMISSION THAT ITS CLAIM OF DEDUCTION WAS ALS O ALLOWED BY LD. CIT(A) IN RESPECT IF ASSESSMENT YEAR 2011-12 TO 2013-14 A ND THERE WAS NO FURTHER APPEAL MADE BY THE REVENUE AGAINST THE ORDER OF LD. CIT(A). THE RELEVANT PART OF THE SUBMISSION DATED 12 TH DECEMBER 2017 MADE BY THE ASSESSEE DURING THE COURSE OF ASSESSMENT ON THIS ISSUE IS RE PRODUCED AS UNDER:- IN CONTINUATION WITH THE EARLIER SUBMISSION DATED 07.12.2017 FOR THE A.Y. 2014-15 AND IN RESPONSE TO YOUR QUARRY REGARDING THE DEDUCTION CLA IMED BY THE ASSESSEE UNDER SECTION 80P(2)(D) WE WOULD LIKE TO FURTHER SUBMIT AS UNDER - AS PER PROVISION OF SECTION 80P(2)(D) INTEREST EAR NED BY US FROM THE INVESTMENT IN CO-OPERATIVE SOCIETY/BANK IS DEDUCTIBLE U/S 80P(2)(D). OURS IS A CO-OPERATIVE SOCIETY ENGAGED IN MANUFACTURING OF THE MILK AND MILK PRODUCTS. THE MILK IS BEING SU PPLIED BY THE MEMBERS OF THE SOCIETY AND THIS MILK IS PROCESSED IN OUR PLANT AND DIFFERENT DAIRY PRODUCTS SUCH AS TONE MILK SHAKTI MILK CHEESE BUTTER GHEE ARE PRODUCED AND THE SAME IS MARKETED BY THE APEX BODY GUJARAT CO-OPERATIVE MILK MARKETING FEDERATION. THIS IS THE TYPICAL AMUL MODE L WHICH WAS PUT IN FORCE BY DR. VERGHESE KURIEN AND IT IS QUITE SUCCESSFUL. NOW AS REGARDS CLAIM OF DEDUCTION U/S 80P(2){D) IS CONSIDERED THIS DEDUCTION IS CLAIMED BY US RIGHT FROM THE BEGINNING OF THE INTER EST EARNED BY US FROM THE COOPERATIVE BANKS ONLY. A CO-OPERATIVE SOCIETY CAN CLAIM DEDUCTION UNDER SE CTION SOP. BY VIRTUE OF THE SUB SECTION 4 TO SECTION SOP NO DEDUCTION IS HOWEVER AVAILABLE UN DER SECTION SOP TO ANY CO-OPERATIVE BANK. HERE CO-OPERATIVE BANK MEANS A CO-OPERATIVE SOCIETY HAVING A PRIMARY OBJECT OR PRINCIPAL BUSINESS OF WHICH IS THE TRANSACTION OF BANKING BUS INESS. SO OTHER THAN THE CO-OPERATIVE BANKS ALL OTHER CO-OPERATIVE SOCIETIES CAN CLAIM DEDUCTION U/ S SOP OF THE ACT. ASSESSEE HAD INVESTED ITS SURPLUS FUND WHICH IS NOT REQUIRED IMMEDIATELY IN A COOPERATIVE BANK. OUT OF THAT INVESTMENT ASSESSEE HAD EARNED INTEREST INCOME. SINCE THE INVESTMENT IS NOT FOR THE PURPOSE OF THE BUSINESS ASSESSEE HAD SHOWN THE INTE REST INCOME EARNED FROM CO OPERATIVE BANK UNDER THE HEAD INCOME FROM OTHER SOURCE U/S 56 OF T HE ACT AND NOT UNDER THE HEAD PGBP. AS ASSESSEE HAD SHOWN THE INTEREST INCOME UNDER THE HEAD OTHER SOURCE ACCORDINGLY DAIRY HAD CLAIMED THE DEDUCTION FOR THE SAME UNDER SECTION 80 P(2)(D) OF THE INCOME TAX ACT AND NOT UNDER SECTION 80P(2)(A)(I) WHILE THE JUDGMENT PASSED BY THE SUPREME COURT IN C ASE AT SALE SOCIETY LIMITED IS MAINLY OF SUCH SOCIETY WHICH IS PROVIDING CREDIT TO ITS MEMBERS. AS PER SECTION 80P(2)(A){I) A CO-OPERATIVE SOCIETY WHICH IS ENGAGED IN THE BUSINESS OF BANKING OR PROVIDING CREDIT FACILITIES TO ITS MEMBERS IS ELIGI BLE TO CLAIM THE INCOME FROM CARRYING ON BANKING BUSINESS TO ITS MEMBER OR INCOME FROM PROVIDING CRE DIT FACILITIES TO ITS MEMBER AS DEDUCTION UNDER SECTION 80P(2)(A)(I). WHILE OUR SOCIETY IS NOT ENGA GED IN THE BUSINESS OF THE PROVIDING CREDIT TO ITS MEMBERS SO THIS JUDGMENT IS NOT APPLICABLE TO US. IN THE JUDGMENT SUPREME COURT HAD HELD THAT 'IN THE IN CASE THE INTEREST HELD NOT ELIGIBLE FOR DEDUCTION UNDER SECTION 80P(2)(A)(I) WAS NOT THE IN TEREST RECEIVED FROM THE MEMBERS FOR PROVIDING CREDIT FACILITIES TO THEM. WHAT WAS SOUGHT TO BE TA XED UNDER SECTION 56 WAS THE INTEREST INCOME ARISING ON THE SURPLUS INVESTED IN SHORT-TERM DEPOS ITS AND SECURITIES WHICH SURPLUS WAS NOT REQUIRED FOR BUSINESS PURPOSES. THE HEAD NOTE TO SE CTION SOP INDICATES THAT THE SAID SECTION DEALS WITH DEDUCTIONS IN RESPECT OF INCOME OF CO-OPERATIV E SOCIETIES. SECTION 80P(1) INTER ALIA STATES THAT WHERE THE GROSS TOTAL INCOME OF A COOPERATIVE SOCIETY INCLUDES ANY INCOME FROM ONE OR MORE SPECIFIED ACTIVITIES THEN SUCH INCOME SHALL BE DED UCTED FROM THE GROSS TOTAL INCOME IN COMPUTING THE TOTAL TAXABLE INCOME OF THE ASSESSEE-SOCIETY. A N INCOME WHICH IS ATTRIBUTABLE TO ANY OF THE SPECIFIED ACTIVITIES IN SECTION 80P(2) WOULD BE ELI GIBLE FOR DEDUCTION.' I.T.A NO. 370/AHD/2020 A.Y. 2014-15 PAGE NO THE BHARUCH DISTRICT CO-OP. MILK PRODUCERS UNION L TD. 8 AS THE FACT OF THE CASE OF SUPREME COURT JUDGMENT I S NOT SIMILAR TO THE FACT OF OUR CASE SO THE JUDGMENT OF THE SUPREME COURT IN CASE OF TOTGAR'S C O-OPERATIVE SALE SOCIETY LIMITED IS NOT APPLICABLE TO US. AS PER SECTION 80P(2)(D) OF THE ACT 'THE WHOLE OF INTEREST AND DIVIDEND INCOME DERIVED BY A CO- OPERATIVE SOCIETY FROM ITS INVESTMENT IN ANY OTHER CO-OPERATIVE SOCIETY IS DEDUCTIBLE UNDER SECTION 80P(2)(D). IN ABOVE RESPECT WE LIKE TO BRING TO YOUR NOTICE TH AT AS PER SECTION 2(19) OF THE ACT A 'CO- OPERATIVE SOCIETY' MEANS A CO-OPERATIVE SOCIETY REG ISTERED UNDER THE CO-OPERATIVE SOCIETIES ACT 1912 OR ANY OTHER LAW FOR THE TIME BEING IN FORCE IN ANY STATE FOR THE REGISTRATION OF THE CO- OPERATIVE SOCIETIES. SINCE THE CO-OPERATIVE BANKS A RE ALSO REGISTERED UNDER THE CO-OPERATIVE SOCIETIES ACT HENCE AS PER THE DEFINITION OF CO OPE RATIVE SOCIETY AS STATED ABOVE CO-OPERATIVE BANKS ARE ALSO TO BE TREATED AS CO-OPERATIVE SOCIET Y. FURTHER IT SHOULD BE NOTED THAT THE CO-OPERATIVE S OCIETY CAN BE OF DIFFERENT NATURE AND CAN BE INVOLVED IN DIFFERENT ACTIVITIES; THE CO -OPERATIVE SOCIETY BANK IS MERELY A VARIETY OF THE CO-OPERATIVE SOCIETIES. THUS THE CO-OPERATIVE BANK WHICH IS A SPECIES OF THE GENUS CO-OPERATIVE SOCIETIES WOULD NECESSARILY BE COVERED BY THE WORD 'CO-OPERATIVE SOCIETY AND SINCE CLAUSE 80P(2)(D) OF THE ACT PERMITS SUCH 100% DEDUCTION IN RESPECT OF THE INCOME BY WAY OF INTEREST OR DIVIDENDS DERIVED BY THE CO- OPERATIVE SOCIETY (ASS ESSEE) FROM ITS INVESTMENTS WITH ANY OTHER CO- OPERATIVE SOCIETY (INCLUDING CO-OPERATIVE BANK) AND THE WHOLE OF SUCH INTEREST INCOME IS ELIGIBLE FOR 100% DEDUCTION. GUJARAT HIGH COURT IN THE CASE OF SURAT VANKAR SAHA KARI SANGH LTD. V. ASSISTANT COMMISSIONER OF INCOME-TAX WHERE HIGH COURT HAD HELD THAT 'IN OUR O PINION THE LEARNED TRIBUNAL WAS RIGHT IN LAW IN ALLOWING DEDUCTION UNDER SECTION 80P{2}(D) OF TH E INCOME- TAX ACT 1961 IN RESPECT OF INTEREST OF RS. 4 00 919 ON ACCOUNT OF INTEREST RECEIVED FRO M NAWANSHALN CENTRAL CO-OPERATIVE BANK WITHOUT ADJUSTING THE INTEREST PAID TO THE BANK. TH EREFORE THE REFERENCE IS ANSWERED AGAINST THE REVENUE IN THE AFFIRMATIVE AND IN FAVOR OF THE ASSE SSEE/ FURTHER HIGH COURT OF GUJARAT KAIRA DISTRICT CO-OP. M3K PRODUCERS UNION LTD. V. DEPUTY COMMISSIONER OF INCOME-TAX HELD THAT 'THE PETITIONE R HAD EARNED INTEREST INCOME OF RS.2.29 CRORES WHICH WAS EARNED OUT OF INVESTMENT OF AMOUNT RECEIVED ON SALE OF MILK MILK PRODUCTS FROM GCMMFL. IT WAS POINTED OUT THAT SINCE THE INTEREST WAS RECEIVED FROM THE COOPERATIVE BANK SOCIETY AND EARNED OUT OF INVESTMENT MADE FROM ITS OWN FUND THE ASSESSEE WAS ENTITLED TO FULL DEDUCTION UNDER SECTION 80P(2)(D) OF THE ACT. IT WA S FURTHER CLARIFIED THAT SUCH INTEREST WAS EARNED ON SHORT TERM DEPOSITS WITH THE COOPERATIVE BANKS O R FROM COOPERATIVE SOCIETIES. IT WAS STATED THAT NO EXPENDITURE IN THE FARM