2019 (5) TMI 1958 - AT - Income Tax

Deduction u/s 80P - allowability of deduction on the interest income earned by the assessee - HELD THAT - As no distinguishing feature in the facts of the present case or that of earlier years been pointed out by Revenue. Further Revenue has also not placed any material to demonstrate that the order of Tribunal in assessee s own case in earlier years have been set aside / stayed or overruled by Higher Judicial Forum. In view of the aforesaid facts, we following the order of the Co-ordinate Bench of the Tribunal in assessee s own case for earlier years 2018 (4) TMI 1931 - ITAT PUNE and for similar reason hold that assessee is eligible for deduction u/s 80P of the Act on the interest earned by the assessee. Appeal of assessee is allowed.

Summary

Issues:
1. Allowability of deduction u/s 80P on interest income.
2. Justification of AO's addition of interest as business income.

Analysis:
1. The appeal involved a dispute regarding the allowability of deduction u/s 80P on interest income earned by the assessee, a Co-operative Credit Society. The AO had denied the claim of deduction u/s 80P(2)(a)(vi) for interest income of Rs. 54,14,690 earned by the assessee during the assessment year. The Ld.CIT(A) upheld the AO's order, leading the assessee to appeal before the ITAT. The assessee contended that the issue was decided in their favor by the Tribunal in earlier years, and therefore, the same principle should apply in the current case. The ITAT, after considering the facts and submissions, referred to a previous case where it was held that interest earned by the assessee on fixed deposits is entitled to deduction under section 80P(2)(a)(vii) of the Act. The ITAT found no distinguishing features in the present case and decided in favor of the assessee, allowing the deduction u/s 80P on the interest income.

2. Another issue raised in the appeal was the AO's addition of interest as business income. The AO had noted that the interest income earned by the assessee was claimed as a deduction u/s 80P but was of the view that it did not qualify for the said deduction. The Ld.CIT(A) upheld the AO's decision. The assessee argued that the AO's logic was not in accordance with the law. The ITAT reviewed the facts and submissions, including the previous Tribunal order in a similar case. The ITAT found no new evidence presented by the Revenue to challenge the earlier Tribunal's decision. Consequently, the ITAT allowed the assessee's appeal, holding that the interest income should be eligible for deduction u/s 80P of the Act.

In conclusion, the ITAT ruled in favor of the assessee on both issues, allowing the deduction u/s 80P on the interest income and rejecting the AO's addition of interest as business income. The decision was based on the precedent set in earlier Tribunal orders and the lack of contrary evidence presented by the Revenue.