JUDGMENT R.K. Agrawal, J.
1. Income Tax Reference No. 153 of 1987 relates to Assessment Year 1971-72 wherein the Income Tax Appellate Tribunal, New Delhi has referred the following question of law under Section 256(1) of the 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?"
whereas Income Tax Reference No.29 of 1987 relates to the Assessment Year 1979-80 wherein the Income-tax Appellate Tribunal, New Delhi has referred the following question of law under Section 256(1) of the Act' for opinion to this Court:-
"Whether, on the facts and in the circumstances of the case, the I.T.A.T. was legally correct in holding that deduction under Section 80P(2)(d) of the I.T. Act, 1961 was allowable on the gross amount of income from interest in the asstt. Year 1979-80?"
2. Even though two questions have been worded differently the controversy is the same as to whether the deduction under Section 80P(2)(d) of the Act was allowable on the gross amount of income from interest or the net amount.
3. Briefly stated the facts giving rise to the present References are as follows :-
The respondent is a Cooperative Society. For the previous years relevant to the Assessment Years 1971-72 and 1979-80 the respondent had claimed deduction under Section 80P(2)(d) of the Act on the gross amount of interest amounting to Rs. 1,28,948/- and Rs.2,18,557/-respectively. The Income Tax Officer had found that during the Assessment Year 1971-72 it had to pay a sum of Rs.3,50,580/- as interest on loan taken by it from various bodies. During the Assessment Year 1979-80 the Income Tax Officer found that payment of interest exceeded the receipts and, therefore, no separate deduction under Section 80P(2)(d) of the Act can be given. In the appeal preferred by the respondents the deduction has been allowed on the gross amount. The Revenue's appeal before the Tribunal has failed.
4. We have heard Sri Shambhu Chopra, learned counsel for the Revenue and Sri Vikram Gulati, learned counsel for the respondent.
5. Sri Shambhu Chopra, learned Standing Counsel appearing for the Revenue submitted that in view of the Section 80B(5) of the Act, only the net amount of the income derived by the respondent is to be allowed as deduction under Section 80P(2)(d) of the Act. He invited the attention of the Court to the following decisions:-
(1) Hansraj Gordhandas v. H.H. Dave, Assistant Collector of Central Excise and Customs, Surat and Ors., AIR 1970 Supreme Court 755 (2) Commissioner of Income-tax v. Doaba Co-operative Sugar Mills Ltd., (1998) 230 ITR 774(P &H)
6. Sri Vikram Gulati, learned counsel for respondent, however, submitted that from the mere reading of Section 80P(2)(d) of the Act it clearly shows that the whole of the income received by way of interest or dividend by a cooperative society from its investment is to be allowed as a deduction under the aforesaid provisions and the provisions of Section 80AB or Section 80B(5) of the Act will not be attracted at all. He submitted that unlike Section 80AA or Section 80AB has not been given retrospective effect and, therefore, the said section would be of no help to the department. He relied upon the decision of the Apex Court in the case of Cloth Traders (P.) Ltd. v. Addl. Commissioner of Income-tax, Gujarat-I, (1979) 118 ITR 243(SC). He has also placed reliance upon the Circular No.341 dated 10thMay, 1982 issued by the Central Board of Direct Taxes in which it has been stated that Section 80AB has been made effective from 1stApril, 1981 and not retrospectively.
7. Having heard the learned counsel for the parties we find that even though section 80P(2)(d) of the Act provided deduction of the whole of such income received by way of interest or dividend by the cooperative society from its investment with any other cooperative society, it is subject to the provisions of Section 80AB of the Act, which was inserted by Finance (No.2) Act, 1980 with effect from 1stApril, 1981. Section 80B(5) of the Act is of no relevance as it defines gross total income. It does not specify as to whether deduction of the gross income or net income has to be given under Chapter VI A of the Act. Section 80AB of the Act as it stood during the relevant period reads as under: -
"80AB. Where any deduction is required to be made or allowed under any section except Section 80M included in this Chapter under the heading "C.-Deductions in respect of certain incomes" in respect of any income of the nature specified in that section which is included in the gross total income of the assessee, then, notwithstanding anything contained in that section, for the purpose of computing the deduction under that section, the amount of income of that nature as computed in accordance with the provisions of this Act (before making any deduction under this Chapter) shall alone be deemed to be the amount of income of that nature which is derived or received by the assessee and which is included in his gross total income."
8. In the case of Hansraj Gordhandas (supra) the Apex Court has held that it is well established that in a taxing statute there is no room for any intendment and if the taxpayer is within the plain terms of the exemption it cannot be denied its benefit by calling in aid any supposed intention of the exempting authority.
9. In the case of Doaba Co-operative Sugar Mills Ltd.(supra) the Punjab & Haryana High Court has held that Section 80P(2)(d) of the Act allows whole deduction of an income by way of interest or dividends derived by a co-operative society from its investment with any other co-operative society and this provision does not make any distinction in regard to the source of the investment, because the section envisages deduction in respect of any income derived by the cooperative 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 section does not speak of any adjustment as sought to be made out. 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.
10. In the case of Cloth Traders (P.) Ltd. the Apex Court has held that under Section 80M of the Act the assessee is entitled to relief of the entire amount of dividend income without deduction of interest paid on borrowings in acquiring shares.
11. It may be mentioned here that the decision in the case of Cloth Traders (P.) Ltd. (supra) has been overruled by the Apex Court in the case of Distributors (Baroda) P. Ltd. v. Union of India and Ors., (1985) 155 ITR 120 (SC). Notwithstanding that the decision of the Apex Court in the case of Cloth Traders (P.) Ltd.(supra) has been overruled subsequently by the Apex Court in the case of Distributors (Baroda) P. Ltd. (supra), the learned counsel appearing for the respondent has cited the aforesaid decision. We are constrained to deprecate such a practice. The Apex Court in the case of State of Orissa v. Nalinikanta Muduli, 2004 AIR SCW 4713, has deprecated such practice in the following words:-
"It is strange that a decision which has been overruled by this Court nearly quarter of a century back was cited by the Bar and the Court did not take note of this position and disposed of the matter placing reliance on the said overruled decision. It does not appear that the decision of this Court reversing the judgment of the High Court was brought to the notice of the learned single Judge who was dealing the matter. It is a very unfortunate situation that learned counsel for the accused who is supposed to know the decision did not bring this aspect to the notice of the learned single Judge. Members of the Bar are officers of the Court. They have a bounden duty to assist the Court and not mislead it. Citing judgment of a Court which has been overruled by a larger bench of the same High Court or this Court without disclosing the fact that it has been overruled is a matter of serious concern. It is one thing that the Court notices the judgment overruling the earlier decision and decides on the applicability of the later judgment to the facts under consideration on it."
12. It may be mentioned here that the Legislature by the Finance (No.2) Act, 1980 had introduced Sections 80AA and 80AB into the Act by the reason of the interpretation placed by the Apex Court upon Section 80M in Cloth Traders (P.) Ltd.'s case. Section 80AA was introduced with retrospective effect from 1stApril, 1968 and Section 80AB was introduced with effect from Is1 April, 1981. In the ease of Distributors (Baroda) P.Ltd.(supra) the retrospective effect of Section 80AA was under challenge. The Apex Court interpreted Section 80M in a manner different from that placed upon it in Cloth Traders (P.) Ltd. (supra) and overruled the said decision. It did not consider the question of constitutional validity of the retrospective operation of Section 80AA but held that it was in retrospective operation, merely declaratory of the law as it always had been since April 1, 1968, when the provisions of Chapter VI-A were introduced.
13. The Apex Court in the case of H.H. Sir Kama Varma (Deed., by legal representatives) v. Commissioner of Income-tax, (1994) 205 ITR 433(SC) has held that on a parity of reasoning given by it in the case of Distributors (Baroda)(P) Ltd.supra) it must he held that section 80AB was enacted to declare the law as it always stood in relation to the deductions to be made in respect of the income specified under the head 'C' of Chapter VI-A.
14. The aforesaid decision has subsequently been followed by the Apex Court in the cases of Motilal Pesticides (I.) Pvt. Ltd. v. Commissioner of Income-tax, (2000) 243 ITR 26 (SC) and N.N. Bhagwati v. Commissioner of Income-tax, (2001) 247 ITR 206(SC).
15. The Apex Court in the case of N.N. Bhagwati(supra) has held that the Circular of the Board wherein it has been stated that Section 80AB was prospective in operation is of no relevance.
16. With great respect to the learned Judges of the Punjab and Haryana High Court we are unable to persuade ourselves to follow the view taken by them in the case of Doaba Cooperative Sugar Mills Ltd. (supra) as the provisions of Section 80AB of the Act which has been held to be declaratory and retrospective in operation has not been taken into consideration.
17. In view of the foregoing discussion, we answer both the questions of law referred to us in the negative i.e. in favour of the Revenue and against the assessee. However, there shall be no order as to costs.