1. The assessee is a district level cooperative society. The main activity of the society is to supply fertilizers, insecticides, seeds and other agricultural implements etc. to its members as well as to non-members. The society is also giving credit facilities to its members and earns income by way of interest thereon. The return of income for assessment year 1982-83 and 1983-84 (years under consideration) were filed on 12-4-1984 declaring total income at nil.
The assessee had paid advance tax of Rs. 2,81,600 and Rs. 2,74,256 in assessment years 1982-83 and 1983-84. These returns of income were submitted perhaps with a view to claim refund of the pre-paid taxes paid by way of advance tax. The ITO completed the assessment at a total income of Rs. 12,14,463 for assessment year 1982-83 and at an income of Rs. 10,47,110 for assessment year 1983-84 vide assessment order dated 20-3-1985 and 20-3-1986 respectively. The CIT(A) decided the quantum appeals for these two years vide consolidated order dated 9-12-1987.
The revenue has preferred appeals against the order of the CIT(A) relating to quantum appeal for both these years, which are marked as ITA Nos. 393 and 394. The assessee has submitted cross objections which arc marked as C.O. Nos. 182 and 183. The ITO also imposed penalty under Section 271 (1)(a) for assessment year 1982-83 amounting to Rs. 1,63,920 which was subsequently rectified and reduced to Rs. 94,378.
This order of the ITO was confirmed by the CIT(A). He however directed the ITO to recompute the amount of penalty after giving effect to the appellate order passed by him in the quantum appeal. The revenue has preferred an appeal against this order relating to penalty under Section 271 (1)(a) which is marked as ITA No. 392. The assessee has submitted cross objection against the said penalty matter which is marked as C.O. No. 181.
2. We will first deal with the revenue's appeal relating to quantum for assessment year 1982-83.
The learned CIT(A) has erred in directing to work out gross profit after including sales of fertilizers, seeds, insecticides etc., and interest income on fertilizers amounting to Rs. 12,59,515.
The assessee claimed exemption under Section 80P(2)(a)(iv) at Rs. 12,99,823. The ITO computed such exemption at nil figure by observing that the amount of exemption under the aforesaid provision worked out as per order of CIT(A) for assessment year 1975-76 will come to nil figure as per the chart mentioned at page 2 of the assessment order.
The learned CIT(A) held that the assessee is entitled to exemption in respect of income derived from purchase of fertilizers, seeds, insecticides etc. and other articles intend for agriculture for the purposes of supplying them to its members. He therefore directed the ITO to compute the exemption allowable to the assessee under the aforesaid provision. While giving this direction he also observed that the ITO has not considered the interest income on fertilizers amounting to Rs. 12,59,515 for working of gross profit. This according to the CIT(A) was incorrect.
2.2. The learned Sr. DR contended that the ITO calculated the exemption allowable under Section 80P(2)(a)(iv) on the basis of order passed by the CIT(A) for assessment year 1975-76 which was accepted by the assessee in that year. The nil amount of exemption computed by the ITO was based on that appellate order for assessment year 1975-76. The assessee should have no grievance against such computation made by the ITO. He further contended that the income derived by the society from the purchase and sale (to members) of fertilizers, insecticides etc. do not qualify for grant of exemption under the aforesaid provision, as this provision exempts income derived from supply of "agriculture implements, seeds, and other articles intended for agriculture". The term fertilizer and the aforesaid petroleum product are not mentioned in the sub-clause of Section 80P(2). The term other articles intended for agriculture cannot include fertilizers, insecticides and petroleum products. The fertilizers are an important item and if the Legislature would have intended grant of exemption in respect of income from sale of fertilizer, insecticides etc., these words could have been specifically used in the aforesaid sub-clause. The words 'other articles' would not include these items. In any case the CIT(A) has clearly erred in directing that interest income of Rs. 12,59,515 on fertilizer should be considered for working out the gross profit derived in fertilizer account for computing the amount of exemption allowable under the aforesaid provision.
2.3. The learned counsel for the assessee contended that exemption on income derived by the society from supply of seeds, fertilizer, insecticides, light diesel, mobil oil which are solely used for direct use for agricultural purposes for running the engines installed in the farm have always been allowed to the assessee in the pastas well as in the subsequent assessments. The assessee is not claiming exemption on all she petroleum products but such exemption was claimed only in respect of two items viz. light diesel (crude) and mobil oil directly sold to the members of the society for agriculture purposes. The income derived on sale of other petroleum products used for plying of vehicles etc. has not been claimed. Our attention was invited towards order passed by the CIT under Section 263 for assessment year 1980-81 in which the CIT has himself held that the assessee is entitled to deduction in respect of income derived from sale of fertilizer, Rajdan, Hybrid seeds, pesticides and mobil oil aggregating to Rs. 65,716. It was contended that similar exemption has been granted since beginning till assessment year 1989-90. He also contended that the ITO while calculating ratio of management expenses for arriving at net income derived on the sale of these items for agriculture purposes had deducted total amount of interest paid in fertilizer account amounting to Rs. 21,52,442 without taking into consideration the interest income in that account amounting to Rs. 12,59,516. The CIT(A) had therefore rightly directed that this amount should be considered for working out the correct amount of net profit attributable to the aforesaid activities for computing the amount of exemption allowable under this provision.
2.4. We have considered the rival submissions made by the learned representatives and have also gone through the orders of the learned departmental authorities as well as various documents to which our attention was drawn during the course of hearing. The ITO calculated the amount of deduction allowable under Section 80P(2)(a)(iv) at nil figure as per details mentioned below:- of fertilizers Rs. 9,44,870 19,32,250II. Therefore percentage of GP is 2,046%III. Total management expenses 61,65,649 Minus I.T. Reserve fundCommon management expenses 36,45,830Total turnover 32,29,38,335Therefore percentage of manage-ment expenses on total turnover 1.128Gross profit percentage 2.046Therefore percent of net profit 0.918Net profit on sale to membersrate of 0.918 7,19,711Deduct rebate :-sale of 78399931 @ .945 Rs. 7.40,879 ------------ The deduction allowable under the aforesaid provision as per working submitted by the assessee in accordance with the directions given by the CIT(A) is as under:-1.
Total G.P. Sales to sales.
member of------------------------------------------------------------------------(a) Sales of Rajdan etc.
15,00,727 26,650 2,40,685(b) Sales of petrol diesel (crude) 56,28,468 24,814 53,39,939(c) Sales of insecticides 17,15.813 99,686 7.16,426 ------------ ------------ ------------from Total sales.
9,44,39,870 19,32.250 7.83,94,931 ------------ ------------ ------------Total 10,32,84,879 20,83,400 8,46,96,982 Average G.P. will be - 2.017% paper book 20,39,651(b) From direct purchases a/c as per page 25 of the report and as per details filed 78,411(c) Cotton department as per details filed and page No. 27 of the report 20,317(d) Expenses from vehicle expenses as the report.
1.21,658(e) Net interest considered by ITO at 892926 separate rebate has been claimed.
8,92,926(f) Total management expenses ------------ 31,52,962 ITO as total turnover of page 2 of the order:- 32,29,38,335 (b) Thus the P.C. percent of management will be 0.976 against 1.128 taken by the ITO. 0.976 (d) Thus the net rebate under Section 80P(2)(a)(iv) will be as under: - (i) Total gross profit of sales 2.017 (ii) Less total management expenses 0.976 -------- (iii) Net 1.041 (e) The rebate will be (sales to members) In our view the CIT(A) has rightly directed the ITO to allow deduction in respect of income derived by the assessee from supply of fertilixers, insecticides, light diesel (crude), mobil oil, rajdan etc.
to its members. The words 'other articles intended for agriculture' used in Section 80P(2)(a)(iv) are wide enough to include all articles directly required for agricultural operations. Insecticides, fertilizers, light diesel and mobil oil for running the diesel engines in the farm are clearly covered by the aforesaid provision. The findings given by the CIT(A) with regard to interest credited in fertilizer account has also been properly considered in the aforesaid working submitted by the assessee in item No. 2(e) of the chart submitted by the assessee, which has been reproduced herein before.
Subject to verification of the correctness of figures mentioned in the aforesaid chart submitted by the assessee, we confirm the findings given by the CIT(A) directing the ITO to allow deduction in respect of income derived by the assessee from sale of all the aforesaid items to its members. Ground No. 1 is therefore rejected.
The learned CIT(A) has erred in allowing deduction of Rs. 31,200 under Section 80P(2)(e) being rent received from Gujarat State Co-op. Marketing Federation.
The CIT(A) held that the amount of Rs. 31,200 received by the assessee from Gujarat State Co. op. Marketing Federation by way of godown rent is exempt under Section 80P(2)(e). He also relied upon the judgment of Hon'ble Madras High Court in CIT v. South Arcot District Co-operative Marketing Society Ltd. v. [1973] 92 ITR 371. The learned Sr. DR contended that the burden lies upon the assessee to prove that such income was derived from the letting of godowns or whorehouses for storage, processing or facilitating the marketing of commodities. No such materials has been produced by the assessee, in the absesne of which the CIT(A) should not have granted this deduction.
3.1. The learned counsel for the assessee submitted that the rent was received from Gujarat State Co-operative Marketing Federation of which the assessee is also a member. The rent was recovered for storing groundnut, groundnut seeds and wheat. Details were also filed at page 18 and 19 of the paper book.
3.2 After considering the submissions made by the learned representatives and after going through the relevant details and orders of the learned departmental authorities we are of the view that the CIT(A) has rightly granted deduction in respect of the aforesaid amount of godown rent under Section 80P(2)(e). A perusal of the relevant details indicates that rent of Rs. 19,200 was received from Gujarat State Sahakaii Marketing Federation Ltd. for storing their empty gunny bags of groundnut and groundnut seeus (HPS). Rs. 7,200 was received from Gujarat State Sahakari Marketing Federation Ltd. for storing 4116 bags of radia (raydo) from April, 1981 to June 1981. A sum of Rs. 4,800 was received from the same Federation for storing wheat bags 2967 for two months. The said income is clearly covered by the exemptions provided under Section 80P(2)(e). The findings given by the CIT(A) in this regard is therefore confirmed.
The learned CIT(A) has erred in directing allow to deduction of Rs. 25,000 being the amount contributed by the assessee to State Education Fund, treating the amount as compulsory levy by the Govt.
The learned Sr. DR contended that the CIT(A) has erred in allowing the aforesaid deduction. The payment in question is in the nature of donation and should not have been allowed as a revenue expenditure.
4.1. The learned counsel for the assessee contended that according to the provisions of Section 69 of the Gujarat Co-operative Societies' Act, 1961 every society which declares, out of the current year's profits, as dividend to members at a rate of 3 per cent or more shall contribute towards the educational fund of the Gujarat State Cooperative Union at such rate as may be prescribed. This amount was paid according to the aforesaid provisions. Our attention was also invited towards the decision of Hon 'ble Karnataka High Court in the case of CIT v. Pandavapura Sahakara Sakkare Karkhana Ltd., in which contribution made according to the statutory provisions was held to be allowable deduction.
4.2. In our view the findings given by the learned CIT(A) allowing deduction in respect of the aforesaid amount of Rs. 25,000 is valid.
The contribution be statutory liability constitutes an overriding charge on income or profits of the society and is clearly an allowable deduction. This view is fully fortified by the decision of Karnataka High Court (supra).
The learned CIT(A) has erred in granting deduction of Rs. 98,862 which was not claimed before the ITO.5.1. This point has been discussed by the learned CIT(A) in para 10 of his order. He has observed that the amount of Rs. 98,862 claimed as deduction represent the amount of rebate given to various customers and the same obviously results in reduction of the sale price received by the society. He therefore allowed the said deduction.
5.2. The learned Sr. DR contended that no such deduction was specifically claimed before the ITO. The CIT(A) has clearly erred in allowing the said deduction without giving specific opportunity to the ITO.5.3. The learned counsel for the assessee contended that the claim for this deduction is included in the printed annual account submitted before the ITO. It is incorrect to say that no such deduction was claimed before the ITO. He supported the order of the CIT(A) on this point.
5.4. We have considered the submissions made by the learned representatives. At page 40 of the printed balance sheet, it appears that a sum of Rs. 1 lakh has been provided for by way of provision for rebate on sales. At page 4 of the paper book it has been mentioned that details of Rs. 98,862 were submitted before the CIT(A) from pages 52 to 55. The paper book submitted for this year consist of page No. 1 to 41 and page No. 42 is marked on the printed balance sheet. There are no pages marked as page No. 52 to 55. In the absence of details it was not possible for us to verify the correctness or otherwise of the view taken by the CIT(A) relating to this ground. This matter is therefore restored back to the ITO with a direction that if the amount of Rs. 98,862 represents remission in sale price allowed to various customers, the same should be allowed as deduction as directed by the CIT(A) subject to verification of the details of Rs. 98,862.
The learned CIT(A) has erred in directing to treat Rs. 13,93,350 as exempt under Section 80P(2)(d).
6.1. The learned CIT(A) observed that amount of interest received form Gujarat State Co. op. Marketing Federation amounting to Rs. 13,93,350 is exempt under Section 80P(2)(J). The society is making cash payment on behalf of the said marketing federation for purchasing the goods and charging interest from them on the outstanding amount.
6.2. The learned Sr. DR submitted that Section 8()P(2)(d) provides exemption 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 amount made available for purchasing the goods on behalf of said marketing federation cannot be termed as investments and therefore interest derived by the assessee from the said marketing federation is not eligible for grant of exemption under Section 80P(2)(d).
6.3. The learned counsel for the assessee supported the order of the CIT(A). Our attention was invited towards the details relating to said interest income appearing at page 17 as well as page 25 of the printed balance sheet.
6.4. We have considered the submissions made by the learned representatives and have also gone through the relevant paras of the CIT(A)'s order and other documents to which our attention was drawn during the course of hearing. A persual of the printed balance sheet at page 25 thereof reveals that in the interest account appearing in the ledger folio No. 254 credit in interest account was Rs. 16,40,882.95 ps. The debits in this interest account was Rs. 14,03,572.33 ps. Thus there was a net credit in interest account of only Rs. 2,37,210. The details of credits in interest account aggregating to Rs. 16,40,882 placed at page 17 of the paper book reveals that the assessee received by way of interest an amount of Rs. 13,93,250 from Gujarat State Sahakari Marketing Federation Ltd. for loan given by the society for purchase of groundnut, groundnut seeds, (Hps) and Til etc. The CIT(A) granted deduction under Section 80P(2)(d) on the aforesaid amount of interest of Rs. 13,93,250 received from said marketing federation. In our view the nature of interest income received by the assessee from Gujarat State Sahakari Marketing Federation Ltd. for loan given for the purchase of goods on their behalf would clearly come within the scope of exemption provided under Section 80P(2)(d). The funds provided by the society for purchase of goods on behalf of the said federation would be treated as investments with the other co-operative society and interest income derived therefrom will be eligible for grant of exemption under this section. This view is fully fortified by the decision of Hon'ble Supreme Court in the case of CIT v. U.P.Co-operative Federation Ltd. [1989] 176 ITR 435. It will be worth-while to reproduce the findings given by the Hon'ble Supreme Court on page 441 :- There can be no dispute on the conclusion reached by the High Court that the money provided by the assessee was by way of investment. In fact, if this money had not been made available, the business as stipulated under the scheme could not have been carried out and perhaps there would have been no business.' Investment' has not been defined in the Act. P. Ramanaiha Aiyar's Law Lexicon (Reprint Edition 1987) states: The term 'invest' is used in a sense broad enough to cover the loaning of the money but is not restricted to that mode of 'investment' or loans made on commercial paper. The word 'invest' has been judicially defined as follows: 'To place property in business; to place so that it. will be safe and yield a profit. It is also commonly understood as giving money for some other property (as) investing funds on lands and houses.
Investment" means, in common parlance, putting out money on interest, either by way of loan, or by purchase of income producing property. ...' In the facts of the present case, the money provided by the assessee was necessary to run the business and generate profits; under the agreement, interest has been earned. In the peculiar situation appearing in the case as found by the High Court, the provision of money by the assessee, the purpose for which the money was provided, the stipulation for earning of interest, were all relevant considerations to be taken into account and it becomes difficult to take a view different from that of the High Court that the funding was investment and under the agreement, interest has been earned.
Admittedly, the funding was to other co-operative societies. In our opinion, therefore, the amount of Rs. 51,295 squarely came within Section 14(3)(iii)of the Act. The High Court, therefore, was right in its conclusion that no tax was payable on the said amount. We would like to point out that under Section 14(3), provision has been made to extend certain advantages to co-operative societies in order that the legislative purpose of providing incentives to the co-operative movement may be fulfilled. The High Court was right in holding that the provisions contained in Section 14(3) should be liberally construed.
6.5. However, one more important aspect which requires our consideration is as to whether the gross amount of interest received from Gujarat Suite Sahakari Marketing Federation Ltd. amounting to Rs. 13,93,250 would be eligible for deduction under Section 80P(2)(d) or only the net amount of income in this interest account amounting to Rs. 2,37,210 should be held to be eligible for grant of deduction under this section. The provisions of Section 14(3)(iii) of IT Act, 1922 provided exemption in respect of interest and dividends derived from its investments with any other co-operative society. Section 14 of IT Act, 1922 dealt with exemptions of general nature and was not a section appearing under the chapter of deductions like Section 80P appearing in Chapter VI-A in the IT Act, 1961. Chapter VI-A of the IT Act, 1961 provides for deductions to be made in computing total income. Prior to introduction of Section 80AA and Section 80AB various High Courts had held that in the absence of express statutory indication to the contrary, the deductions allowable under various sections under the chapter should be calculated with reference to the gross dividend, gross royalty etc. and not with reference to the net amount after deducting the allowable expenditure. This view was confirmed by the Supreme Court in Cloth Traders (P.) Ltd. v. Addl. CIT [1979] 118 ITR 243. To supersede this view, the Finance (No. 2) Act, 1980 introduced Section 80AA with retrospective effect from 1-4-1968 as regards intercorporate dividend and Section 80AB with effect from 1-4-1981 as regards other receipts. The Hon'ble Supreme Court in the case of Distributors (Baroda) (P.) Ltd. v. Union of India [1985] 155 ITR 120 overruled the judgment in the case of Cloth Traders (P.) Ltd. 's case (supra) and held that the deduction under Section 80M has to be calculated only with reference to the net amount after deducting the allowable expenditure. Thus it is clear that the relief allowable under the chapter including under the provisions of Section 80P has now to be calculated with reference to the net amount of income to be computed in accordance with the provisions of Income-tax Act, 1961 i.e., only after deducting the allowable expenditure. Sub-section (1) of Section 80P of the IT Act, 1961 provides that where the gross total income of a co-operative society includes any income referable to the activities mentioned in Sub-section (2) the whole of the amount of profits and gains of business attributable to such activities shall be deducted.
The words 'gross total income' referred to in Section 80P(1) must be understood as defined in Section 80B(5) which means that it is the total income computed in accordance with the provisions of the Act i.e., after allowing deduction in respect of expenditure incurred for earning such what is deductible under Section 80P(2)(d) is the income by way of interest or dividends derived by the co-operative society from its investment with any other cooperative society to be computed in accordance with the provisions of Income-tax Act i.e., after allowing deduction in respect of expenditure incurred for earning such interest income. If the said interest income is regarded as income from business the interest expenditure debited in the said interest account will have to be deducted from the gross interest income as per Section 36(1)(iii). If it is regarded as income from other sources the interest expenditure debited in the said interest account will have to be deducted from the gross interest income under Section 57 of the IT Act, 1961. Only the net income after allowing the aforesaid deductions under Section 36 or Section 57 will form part of gross total income and that net amount of interest income only will be eligible for grant of relief under Section 80P(2)(d). In the present case the credits in the said interest account was Rs. 16,40,882 which includes the interest received from Gujarat State Sahakari Marketing Federation Ltd. amounting to Rs. 13,93,250. The debits in this interest account as per page 25 of the printed balance sheet was Rs. 14,03,572. There is a net credit of only Rs. 2,37,210 in this account. We are therefore of the view that deduction under Section 80P(2)(d) should be allowed only in respect of the net income from interest on such investments under Section 80P(2)(d). This view is fully fortified by the decision of Hon'ble Andhra Pradesh High Court in the case of CIT v. Anakapalli Co-operative Marketing Society [1989] 175 ITR 584. The relief granted by the CIT(A) amounting to Rs. 13,93,250 is accordingly reduced to only Rs. 2,37,210.
7.1. Ground No. 1 is same as ground No. 1 of Appeal for assessment year 1982-83. The order of the CIT(A) granting relief under Section 80P(2)(a)(iv) on sale of fertilizers, rajdan etc. to its members is held to be valid. The ITO is directed to compute the amount of deduction allowable under this provision as per findings given in ground No. 1 of revenue's appeal for assessment year 1982-83.
8. Ground No. 2 deals with findings given by the CIT(A) directing the ITO to grant deduction of Rs. 2,73,055 in respect of interest received from Gujarat State Co-op Marketing Federation Ltd. under Section 80P(2)(d). A perusal of the relevant details submitted at page 17 of the paper book reveals that total interest credited in the said interest account was Rs. 13,82,307 and the corresponding debit in this interest account as per details appearing at page 27 of the printed balance sheet was Rs. 13,94,307, Thus there is a net debit of Rs. 12,000 in the said interest account. In view of detailed discussions and findings given in relation to ground No. 5 of revenue's appeal for assessment year 1982-83 the relief of Rs. 2,73,055 granted by the C1T(A) is cancelled.
9. Ground No. 3 is same as ground No. 3 of revenue's appeal for assessment year 1982-83. The CIT(A) has rightly allowed deduction of Rs. 25,000 being contribution to State Education Fund.
10. Ground No. 4 relates to the findings given by the CIT(A) in allowing Rs. 97,916 treating it as a rebate or a discount given to the purchasers. This ground is similar to ground No. 4 of revenue's appeal for assessment year 1982-83. This matter is also restored back to the ITO for verifying the details of Rs. 97,916. If this is found to be rebate or discount given to purchasers, the same should be allowed as a deduction.
11. Now we will deal with the cross objection submitted by the assessee for assessment year 1982-83 and assessment year 1983-84. The first common ground in assessment years 1982-83 and 1983-84 relates to disallowance of bonus of Rs. 13,000 and Rs. 20,585 confirmed by the CIT(A) on the ground that the said amount of bonus was paid in excess of the amount payable as per the provisions of payment of Bonus Act.
This point has been discussed by the learned CIT(A) in para 4 and 13 of the consolidated order passed by him. The learned Sr. DR supported the order of the learned CIT(A). The learned counsel for the assessee contended that the bonus payment was made as per the provisions of Bonus Act to arrive at 20 per cent bonus as per the limits prescribed in the Bonus Act. Our attention was also invited towards the resolution passed by the society placed at page 36 of the paper book in which the said bonus payment of Rs. 13,000 has mentioned. Similar submissions were made with regard to bonus amounting to Rs. 20,585 paid for assessment year 1983-84, 11.1. After considering the Submissions made by the learned representatives and after going through the relevant details and resolution passed by the society, we are of the view that the amount of bonus paid to the staff amounting to Rs. 13,000 and Rs. 20,585 in these two years respectively are allowable as business expenditure, in view of second proviso to Section 36(1)(ii) read with judgment of Hon'ble Supreme Court in the case of Shahzada Nand & Sons v. CIT [1977] 108 ITR 12. The second ground of cross objection in both these years relate to assessee's claim for grant of deduction under Section 80P(2)(a)(i) in respect of interest received from member of co-operative societies for providing credit facilities to the members. The deduction claimed in assessment year 1982-83 was Rs. 12,59,515 and Rs. 14,90,037 in assessment year 1983-84. A perusal of page 23 of the printed balance sheet for assessment year 1982-83 reveals that debit in this interest account was Rs. 21,52,441. The credit in this interest account was Rs. 12,59,515. Thus there was a net debit in the said interest account amounting to Rs. 8,92,936 in assessment year 1982-83. Similarly in assessment year 1983-84 relief of Rs. 14,90,037 has been claimed under Section 80P(2)(a)(i) in respect of interest on bank guarantee. A perusal of page 25 of the printed balance sheet reveals that total debits in bank guarantee interest is Rs. 23,97,245 while the corresponding credits arc only Rs. 14,90,307. Thus there is a net deficit in bank guarantee interest account. In view of the fact that there is a deficit in the said interest account, the assessce is not entitled to grant of any deduction in relation to the said gross amount of interest income credited in the said interest account. Our reasons for taking this view have been discussed in detail while dealing with ground No. 5 of revenue's appeal for assessment year 1982-83. It will also be worthwhile to add that deduction under Section 80P(2)(a)(i) is allowable in respect of income derived form the business of banking or providing credit facilities to its members. Such income should be derived on the amount of loan and not on the selling of goods on credit. The interest income derived on goods supplied on credit is not covered by the exemptions provided for in 80P(2)(a)(i). This view is fortified by the decision in Kerala Co-operative Consumers' Federation Ltd. v. CIT [1988] 170 ITR 455 (Ker.). The CIT(A) has therefore rightly denied grant of deduction in respect of this item in both the years under consideration.
13. Ground No. 3 in cross objection for assessment years 1982-83 and 1983-84 relates to denial of deduction under Section 80P(2)(a)(i) in respect of interest receipts of Rs. 16,40,883 and Rs. 76,40,883 in assessment years 1982-83 and 1983-84. The correct amount for assessment year 1983-84 is Rs. 7,68,009 instead of Rs. 76,40,883 stated to have wrongly been typed in the cross objection. This point is also fully covered by the discussions made while dealing with Ground No. 5 of revenue's appeal for assessment year 1982-83. Since there is a net deficit in the interest account in both these years under consideration, the relief claimed by the assessee in ground No. 3 of their cross objection for both the years under consideration is not allowable.
13A. No arguments were advanced in relation to Gr. No. 4 of cross objection for both these years. This ground does not arise out of the order passed by the CIT(A). Hence the same is rejected.
14. In the result the revenue's appeals are treated as partly allowed for statistical purposes for assessment years 1982-83 and 1983-84. The cross objections submitted by the assessee for both these years are partly allowed.
15. to 17. [These paras are not reproduced here as they involved minor issues.]