2015 (7) TMI 738 - AT - Income Tax

Deduction u/s.80P(2)(d) - Whether CIT (Appeals) ought to have considered the fact that deduction u/s.80P(2)(d) is allowable only on net receipts after deducting the expenses from the gross receipts of interest and that the Assessing Officer has rightly disallowed the deduction u/s.80P(2)(d) on prorata basis - Held that - The argument of the ld. Departmental Representative is misconceived. The Departmental Representative cannot raise the issue what was not considered by the Assessing Officer. The issue before the Assessing Officer was whether the gross income or net income to be considered for deduction u/s.80P(2)(d) of the Act. The Commissioner of Income Tax (Appeals) while deciding the issue followed the Co-ordinate Bench decision in the case of M/s. SL(SPL) 151 Karkudalpatty PACCS Ltd vs. ITO 2014 (5) TMI 556 - ITAT CHENNAI and allowed the claim of the assessee. So, we are not in a position to reverse the findings of the Commissioner of Income Tax (Appeals) as the decision of Commissioner of Income Tax (Appeals) was based on the orders of Co-ordinate Bench which is binding on this Tribunal. - Decided against revenue.

Summary

Issues:
- Interpretation of deduction u/s.80P(2)(d) of the Income Tax Act, 1961.
- Consideration of gross income or net income for deduction u/s.80P(2)(d) of the Act.
- Eligibility of co-operative societies for deduction under section 80P(2)(d) of the Act.

Analysis:
1. Interpretation of deduction u/s.80P(2)(d) of the Income Tax Act, 1961:
The crux of the issue raised was whether the deduction u/s.80P(2)(d) is allowable only on net receipts after deducting expenses from gross receipts of interest. The Assessing Officer disallowed the deduction on a prorata basis, considering the net income eligible for deduction. The Tribunal analyzed the investments made by the assessee in various funds and banks, calculating the proportionate investment from interest-bearing funds. The net income from investments was determined, leading to the computation of the qualifying amount eligible for deduction under 80P(2)(d).

2. Consideration of gross income or net income for deduction u/s.80P(2)(d) of the Act:
The Commissioner of Income Tax (Appeals) followed previous Tribunal decisions and allowed the claim of the assessee for deduction under 80P(2)(d). The Tribunal upheld this decision, emphasizing that the issue was whether gross income or net income should be considered for the deduction. The Tribunal held that the Commissioner's decision was based on Co-ordinate Bench orders, which were binding, and thus confirmed the allowance of the deduction based on net income calculations.

3. Eligibility of co-operative societies for deduction under section 80P(2)(d) of the Act:
The Tribunal referred to previous cases where the eligibility of co-operative societies for deduction under section 80P(2)(d) was discussed. It highlighted that the income earned by co-operative societies from investments could be eligible for deduction under this section. The Tribunal emphasized the beneficial nature of the section for co-operative societies and allowed the deduction in line with the interpretation of the law and previous judicial decisions.

In conclusion, the Tribunal dismissed the Revenue's appeal, confirming the Commissioner of Income Tax (Appeals) order granting the deduction under section 80P(2)(d) to the assessee. The decision was based on the interpretation of relevant provisions, calculation of net income for deduction, and the eligibility of co-operative societies for the benefit under the Income Tax Act.