2017 (4) TMI 1548 - HC - Income Tax

Deduction claimed u/s. 80P(2)(a)(i) - interest earned from FDRs, with banks - HELD THAT - The questions of law raised in these appeals, especially in relation to Cooperative Credit Societies, which earned interest on fixed deposits kept with other banks, has already been decided by us in a batch of writ petitions 2017 (4) TMI 663 - ANDHRA PRADESH HIGH COURT Therefore, following the same, the questions of law are answered in favour of the respondent-assessee and the appeal is dismissed.

Summary

Issues:
1) Disallowance of deduction claimed under Section 80P(2)(a)(i) of the Income Tax Act on interest earned from FDRs with banks.
2) Appreciation of decisions by the Hon'ble Supreme Court in similar cases.

Analysis:
Issue 1:
The appeal filed by the Revenue under Section 260A of the Income Tax Act questioned the correctness of upholding the order of the CIT(A) deleting the disallowance of deduction claimed under Section 80P(2)(a)(i) of the Act on interest earned from Fixed Deposit Receipts (FDRs) with banks. The Revenue contended that the interest income from FDRs with banks cannot be considered attributable to the activity mentioned in Section 80P(2)(a)(i) of the Act. However, the Hon'ble Tribunal upheld the CIT(A)'s decision. The Court referred to a previous judgment and concluded that the questions of law regarding Cooperative Credit Societies earning interest on fixed deposits with other banks had already been decided in a prior judgment. Consequently, the questions of law were answered in favor of the respondent-assessee, leading to the dismissal of the appeal.

Issue 2:
The second issue raised in the appeal questioned the correctness of upholding the order of the CIT(A) in deleting the disallowance of deduction claimed under Section 80(2)(a)(i) of the Income Tax Act on interest earned from FDRs with banks. The Revenue argued that the principles laid down by the Hon'ble Supreme Court in a specific case were not appreciated by the Tribunal. However, the Court, having already decided similar issues in a previous judgment, dismissed the appeal in favor of the respondent-assessee. The Court's decision was based on the precedent set in a batch of writ petitions, indicating a consistent interpretation in such matters.

In conclusion, the High Court of Andhra Pradesh, through the judgment delivered by Justice V. Ramasubramanian, upheld the decisions of the CIT(A) in favor of the respondent-assessee concerning the disallowance of deductions claimed under relevant sections of the Income Tax Act on interest earned from FDRs with banks. The judgment provided clarity on the applicability of the law in cases involving Cooperative Credit Societies and their interest income from fixed deposits with banks, establishing a precedent for future similar cases.