CIT Vs. DUGDH UTPADAK SANGH LTD

JUDGEMENT

(1.) THE Income Tax Appellate Tribunal, New Delhi has referred the following question of law under section 256(2) of Income Tax Act, 1961 (hereinafter referred to as the Act) for opinion to this court : 'Whether on the facts and in the circumstances of the case, the Income Tax Appellate Tribunal was legally correct in holding that deduction under section 80P(2)(d) of the Income Tax Act, 1961 is allowable on the gross amount of interest ignoring the provisions of section 80B(5) which defines the term 'Gross total income' in such a way that it could only mean net income before making any deduction under Chapter VI -A or section 280 -O and without applying the provisions of section 64?' Briefly stated the facts giving rise to the present reference are as follows :

(2.) THE reference relates to the assessment year 1972 -73. The respondent -assessee is a co -operative society. During the assessment year in question it has received Rs, 67,807 by way of interest from the primary societies and had also paid Rs. 46,441 as interest on loan taken from the, U.P. Government and it claimed deduction under section 80P(2)(b) on the gross amount of Rs. 67,807. The Income Tax Officer, however, allowed deduction only on the net income by way of interest amounting to Rs. 21366. However, in appeal, the Commissioner (Appeals) had upheld the claim of the respondent and had held that the entire amount of interest is allowable as deduction which orders has been upheld by the Income Tax Appellate Tribunal by following the decision of the Apex Court in the case of Cloth Traders (P) Ltd. v. Addl. CIT : [1979]118ITR243(SC) .