2017 (11) TMI 1851 - AT - Income Tax

Eligibility for deduction u/s. 80-P - CIT(A) held that the interest income from nationalized banks was income from business and was eligible for deduction HELD THAT - We note that the issue is squarely covered in favour of the assessee by the decision of Hon ble jurisdictional High Court at Calcutta in the case of SE SEC E.Co. Railways Employees Cooperative Credit Society 2014 (10) TMI 848 - ITAT KOLKATA and M/S JAOLI TALUKA SAHAKARI VERSUS INCOME TAX OFFICER 15 (1) (2) MUMBAI. 2015 (9) TMI 170 - ITAT MUMBAI

Summary

Issues:
Appeal by revenue against CIT(A) order for AY 2012-13 - Eligibility of interest income from nationalized banks for deduction u/s. 80-P of the Income-tax Act, 1961.

Analysis:
The appeal pertains to the revenue challenging the CIT(A) order regarding the treatment of interest income from nationalized banks for deduction under section 80-P of the Income-tax Act, 1961. The assessee, a primary employee co-operative credit society, had declared its total income as Nil after claiming deduction under section 80P. The Assessing Officer (AO) raised concerns about the interest income from investments made by the assessee, considering whether it should be treated as income from other sources. The AO relied on a Supreme Court decision and allowed deduction under section 80P(2)(d) for a portion of the interest income while adding the remaining amount to the total income under the head "Income from Other Sources."

The assessee appealed to the CIT(A), who favored the assessee based on the judgment of the jurisdictional High Court and a Third Member decision in the assessee's own case from previous assessment years. The CIT(A) distinguished the case law cited by the revenue and allowed the assessee's appeal. The revenue, aggrieved by this decision, appealed to the Appellate Tribunal.

The Tribunal noted that the issue was whether the interest income from nationalized banks could be considered income from business eligible for deduction under section 80-P. The Tribunal found that the CIT(A) had correctly relied on the decisions of the jurisdictional High Court and the Third Member decision in the assessee's previous cases. The Tribunal also mentioned a decision by the ITAT "SMC" Bench, Mumbai, supporting the CIT(A)'s reasoning. As the revenue failed to provide any new facts or legal arguments to challenge the CIT(A)'s decision, the Tribunal upheld the CIT(A)'s order, dismissing the revenue's appeal.

In conclusion, the Tribunal dismissed the appeal by the revenue, affirming the CIT(A)'s decision in favor of the assessee. The order was pronounced on 17th November 2017.