2019 (4) TMI 505 - AT - Income Tax

Deduction u/s 80(P)(2) - Interest income earned by the assessee from the deposits made with SBI, Neyveli - addition made towards interest income earned by the assessee with Cuddalore District Central Co-operative Bank - HELD THAT - CIT(A) has held that when the assessee society parked its funds temporarily in another co-operative society and earned interest which was ultimately used for providing credit to members the activities are related and are in the spirit of encouraging the co-operative sector. Since the Department also accepted the observations of the CIT(A) and not disputed in appeal before the Tribunal, we find no infirmity in the order passed by the CIT(A) on this issue. Whereas, since the assessee is not entitled to claim deduction on the interest income earned from the investments made in the scheduled bank, the CIT(A) has rightly confirmed the addition of interest income earned from SBI, Neyveli. Thus, the ground raised by assessee stands dismissed for the assessment years under consideration. Deduction under section 80(P)(2)(a)(i) - Held that - Assessee society is not granting any loan to general public and only extending credit facility to its members. Thus, we find no reason to interfere with the order passed by the ld. CIT(A). Hence, the ground raised by the Revenue stands dismissed for both the assessment years under consideration.

Summary

Issues:
1. Appeal filed by assessee against order of ld. CIT(A) for assessment years 2013-14, 2014-15, and 2015-16.
2. Addition of interest income earned by assessee and claimed deduction under section 80(P)(2) of the Income Tax Act, 1961.
3. Delay in filing appeals.
4. Interpretation of provisions under section 80(P)(2)(a)(i) of the Act.

Analysis:

Appeal by Assessee for Assessment Years 2013-14, 2014-15, and 2015-16:
The appeals were filed against the order of the ld. CIT(A) confirming the addition made towards interest income earned by the assessee and claimed as a deduction under section 80(P)(2) of the Act. The Assessing Officer held that only interest income earned from credit facilities provided to members qualifies for deduction. The ld. CIT(A) confirmed the addition related to interest income from one bank but deleted the addition from another cooperative bank. The Tribunal upheld the ld. CIT(A)'s decision, stating that interest income from investments in a scheduled bank is not eligible for deduction under section 80(P)(2) of the Act.

Delay in Filing Appeals:
The delay in filing the appeal for the assessment year 2013-14 by the assessee was 91 days, which was condoned by the Tribunal as no serious objection was raised by the ld. DR. Similarly, the Revenue's appeals for the assessment years 2013-14 and 2014-15 were delayed by 17 days, which were also condoned by the Tribunal upon the Revenue's request.

Interpretation of Section 80(P)(2)(a)(i) of the Act:
The Revenue appealed against the deletion of an addition made by the Assessing Officer for the deduction claimed by the assessee under section 80(P)(2)(a)(i) of the Act. The Assessing Officer argued that the assessee's activities were similar to a cooperative bank, making them ineligible for the deduction. However, the ld. CIT(A) relied on a decision of the Hon'ble Jurisdictional High Court, stating that the assessee was eligible for the deduction. The Tribunal upheld the ld. CIT(A)'s decision, emphasizing that the assessee, a credit society extending credit only to its members, was entitled to the deduction under section 80(P)(2)(a)(i) of the Act.

In conclusion, the Tribunal dismissed all appeals filed by both the Revenue and the assessee, upholding the decisions made by the ld. CIT(A) regarding the addition of interest income and the eligibility for deduction under section 80(P)(2)(a)(i) of the Act.

This detailed analysis covers the issues raised in the judgment, providing a comprehensive understanding of the legal aspects and decisions made by the Tribunal.