2017 (8) TMI 1493 - AT - Income Tax

Claim for deduction u/s. 80P denied - break-up details of interest income not furnished - Held that - From the computation of total income furnished by the assessee as noticed that an amount of 20, 50, 220/- has been assessed by the Assessing Officer under the head Income from other sources - the same actually represents interest received from the bank deposits. As noticed that the assessee had received interest from the bank deposits to the tune of 22.61 lakhs and set off of brought forward loss of 2.11 lakhs and accordingly declared net interest income of 20.50 lakhs - the breakup of details of interest receipts has not been furnished by the assessee. However we agree in principle with contention of the assessee that interest received from the cooperative bank is eligible for deduction u/s. 80P(2)(d) relying on case of Totagars Cooperative Sale Society 2017 (1) TMI 1100 - KARNATAKA HIGH COURT . However the break-up details of interest income require verification. Set aside the order passed by the learned CIT(A) and restore this issue to the file of the Assessing Officer for the limited purposes of verifying the breakup details interest income received by the assessee and also direct the Assessing Officer to allow deduction u/s. 80P(2)(d) of the Act in respect of interest received from the cooperative banks/societies. - Decided in favour of assessee for statistical purposes.

Summary

Issues:
1. Rejection of claim for deduction u/s. 80P of the Act
2. Validity of reopening of assessment

Analysis:

Issue 1: Rejection of claim for deduction u/s. 80P of the Act
The appellant, a cooperative credit society, contested the decision of the CIT(A) confirming the Assessing Officer's rejection of the deduction claim u/s. 80P of the Act. The Assessing Officer reopened the assessment and disallowed the deduction, assessing a sum as income. The appellant argued that the assessed income represented interest income from deposits with cooperative banks and claimed deduction u/s. 80P(2)(d) instead of u/s. 80P(2)(a)(i). The CIT(A) relied on precedents to deny the deduction. The appellant's representative highlighted that the income was nil due to setting off business loss and cited a Karnataka High Court ruling considering cooperative banks as cooperative societies. The ITAT Mumbai found merit in the appellant's contentions, noting the interest income from cooperative banks should be deductible u/s. 80P(2)(d) based on the Karnataka High Court's decision. The ITAT directed the AO to verify the interest income details and allow the deduction accordingly.

Issue 2: Validity of reopening of assessment
The appellant did not argue the validity of reopening the assessment before the ITAT. However, the ITAT found merit in the appellant's contentions regarding the deduction claim, rendering the discussion on the validity of reopening unnecessary. Consequently, the ITAT treated the appeal as allowed for statistical purposes without delving into the issue of the assessment's reopening. The ITAT's decision was pronounced on 21.8.2017, setting aside the CIT(A)'s order and remanding the issue to the AO for verification and allowance of the deduction u/s. 80P(2)(d) for interest received from cooperative banks/societies.