2011 (9) TMI 1070 - AT - Income Tax

Eligible for deduction u/s.80 on miscellaneous income - granting of deduction u/s.80P on interest income on bill discounting interest on bill discounting under the LC income from bank guarantee and profit arising from dealing in foreign exchange.

Summary

Issues:
1. Whether miscellaneous income is eligible for deduction u/s.80P.
2. Whether interest income on bill discounting, bank guarantee income, and foreign exchange profit are eligible for deduction u/s.80P.

Analysis:
1. The first issue pertains to the deduction u/s.80P on miscellaneous income. The CIT(A) allowed the deduction based on a similar decision in the previous assessment year, which was not appealed by the Department. The Tribunal upheld the CIT(A)'s decision, stating that the Department cannot now contest the deduction on miscellaneous income since it had accepted the previous year's order. Therefore, the deduction u/s.80P on miscellaneous income was upheld.

2. The second issue concerns the deduction u/s.80P on various incomes related to banking activities. The Tribunal noted that the assessee was engaged in banking business, and as per Sec. 80P(1), profits and gains attributable to banking activities qualify for deduction. The Tribunal referenced the judgment in Mehsana Dist. Central Co-op. Bank Ltd. vs. ITO and provisions of the Banking Regulation Act to support the conclusion that the incomes in question were attributable to banking operations. Consequently, the Tribunal upheld the CIT(A)'s decision to allow the deduction u/s.80P on interest income on bill discounting, bank guarantee income, and profit from dealing in foreign exchange.

In conclusion, the Tribunal dismissed the appeal and upheld the CIT(A)'s order, granting deductions u/s.80P on both miscellaneous income and various incomes related to banking activities. The judgment was pronounced on September 7, 2011.