2014 (10) TMI 996 - AT - Income Tax

Claim of deduction u/s 80P(2)(a)(i) on the interest income received from the bank - HELD THAT - We direct the Assessing Officer to allow claim of deduction under section 80P(2)(a)(i) of the Act on the interest income received from the bank. The grounds of appeal raised by the assessee are thus, allowed. See ITO Vs. Niphad Nagari Sahakari Patsanstha Ltd. 2015 (1) TMI 1004 - ITAT PUNE - Decided in favour of assessee.

Summary

Issues:
Claim of deduction under section 80P(2)(a)(i) of the Income Tax Act.

Analysis:
The appeal pertains to the assessment year 2009-10 and challenges the order of the CIT(A) regarding the claim of deduction under section 80P(2)(a)(i) of the Income Tax Act. The assessee, a co-operative credit society, primarily earns income from interest on loans to members and other societies, as well as interest on deposits with banks. The Assessing Officer denied the deduction under section 80P(2)(a)(i) on the interest income from bank deposits, citing a Supreme Court decision. The CIT(A) upheld this denial, stating that the interest income from banks was not attributable to the activities of providing credit facilities to members. However, the assessee relied on a Pune Tribunal decision in a similar case, arguing for the deduction. The Tribunal noted the consistency of decisions in favor of cooperative societies and allowed the plea, directing the Assessing Officer to allow the deduction on the interest income received from the bank.

The Tribunal considered the arguments and precedents, emphasizing that the assessee, engaged in providing credit facilities to members, is eligible for deduction under section 80P(2)(a)(i) for interest income from banks. It distinguished the case from the Supreme Court decision cited by the Assessing Officer, highlighting that the Court did not consider the specific provisions applicable to cooperative societies engaged in banking activities. The Tribunal's decision aligned with previous rulings in similar cases, ensuring consistency in the application of tax laws to cooperative credit societies. Consequently, the Tribunal allowed the appeal, directing the Assessing Officer to grant the deduction on the interest income received from the bank, totaling the specified amount.

In conclusion, the Tribunal's decision favored the assessee, upholding the claim of deduction under section 80P(2)(a)(i) of the Income Tax Act for the interest income derived from bank deposits. By considering relevant legal provisions and precedents, the Tribunal ensured consistency in its approach to similar cases involving cooperative credit societies. The judgment emphasized the eligibility of the assessee for the deduction based on its activities of providing credit facilities to members, in line with the specific provisions of the Income Tax Act.