Punjab-Haryana High Court
Commissioner Of Income-Tax vs Doaba Co-Operative Sugar Mills Ltd. on 24 April, 1997
Equivalent citations: [1998]230ITR775(P&H)
Author: Iqbal Singh
Bench: Ashok Bhan, Iqbal Singh
JUDGMENT Iqbal Singh, J.
1. The Revenue has proposed the following question of law by way of reference under Section 256(1) of the Income-tax Act, 1961 (hereinafter referred to as "the Act"), for the opinion of this court:
"Whether, on the facts and in the circumstances of the case, the learned Income-tax Appellate Tribunal is right in law in allowing deduction under Section 80P(2)(d) of the Income-tax Act, 1961, in respect of interest of Rs. 4,90,919 on account of interest received from Nawanshahr Central Co-operative Bank without adjusting interest paid to the bank ?"
2. It is necessary to give the brief facts of the case for deciding the abovesaid question.
3. Doaba Co-operative Sugar Mills Ltd. (hereinafter referred to as "the assessee") is running a sugar mill. It filed a return declaring income of Rs. 66,22,050 on July 23,1987. The revised return was also filed on February 23,1989, declaring income of Rs. 56,05,577. The assessment was completed on February 27,1989, after making disallowance of Rs. 4,90,919 on account of deduction claimed under Section 80P of the Act besides other tax. Aggrieved by this order, an appeal was filed by the assessee before the learned Commissioner of Income-tax (Appeals), (A)-2, Jalandhar, who affirmed the order of the Assessing Officer. Again being not satisfied with this order, the assessee filed a second appeal before Income-tax Appellate Tribunal, Amritsar Bench, Amritsar, who allowed the appeal of the assessee relying upon its earlier decision on the issue involved. The Revenue aggrieved by this order sought a reference for the opinion of this court on the abovestated question.
4. We have heard learned counsel for the parties.
5. The contention of Mr. Gupta, learned counsel appearing for the Revenue, is that the Tribunal was wrong in allowing deduction under Section 80P(2)(d) of the Act because it is not established that the assessee had derived the interest by investing all the amount of surplus funds. It is further contended by Mr. Gupta that the assessee has paid interest to Jalandhar Central Co-operative Bank and has also received interest from the said co-operative bank, thereby showing that the assessee has on the aggregate paid interest to the bank and, therefore, no deduction under Section 80P(2)(d) can be allowed. To appreciate this argument, we have to look to the provisions of Section 80P(2)(d) of the Act, For facility of reference, it is reproduced as under :
"80P. (2)(d) in respect of any income by way of interest or dividends derived by the co-operative society from its investments with any other co-operative society, the whole of such income."
6. So far as the principle of interpretation applicable to a taxing statute is concerned, we can do no better than to quote the by-now classic words of Rowlatt J., in Cape Brandy Syndicate v. IRC [1921] 1 KB 64, 71 :
". . . 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,"
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 co-operative 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 Co-operative 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.