9911796707
|
Home
Forgot password New User/ Regiser ⇒ Register to get Live Demo
2019 (12) TMI 303 - AT - Income TaxDeduction u/s 80P - Revenue s case is that the Assessing Officer had rightly disallowed the assessee s impugned section 80P(2)(a)(i) deduction claimed since its interest income had been derived from fixed deposits with nationalized bank here only - HELD THAT - We find that this tribunal s yet another in COMMISSIONER OF INCOME TAX VERSUS M/S EXCEL INDUSTRIES LTD. AND MAFATLAL INDUSTRIES P. LTD. 2013 (10) TMI 324 - SUPREME COURT holds that such an interest income derived from fixed deposits made in nationalized banks is not entitled for the impugned deduction claimed. We adopt the above detailed discussion mutatis mutandis to decide the instant issues in Revenue s favour to restore the impugned section 80P(2)(a)(i) deduction disallowance of ₹ 6,97,20,658/- made by the Learned Assessing Officer. AR submitted that the impugned section 80P deduction disallowance deserved to be computed on netting basis since the assessee has not only derived its interest income from fixed deposits in nationalized banks but has also incurred corresponding interest expenses as well. Learned CIT-DR is equally fair that the instant netting issue sought to be raised at the assessee s behest, be restored to the Assessing Officer for appropriate computation. We therefore direct the Assessing Officer to compute the impugned section 80P(2)(a)(i) disallowance in assessee s case going by the netting method within three effective opportunities of hearing.
Issues Involved:
1. Eligibility for Section 80P(2)(d) deduction. 2. Interpretation of interest income from fixed deposits. 3. Applicability of judicial precedents and consistency principle. 4. Computation of the deduction on a netting basis. Issue-wise Detailed Analysis: 1. Eligibility for Section 80P(2)(d) Deduction: The primary issue in this case is whether the assessee is eligible for a Section 80P(2)(d) deduction amounting to ?6,97,20,658/-. The Assessing Officer disallowed this deduction, citing the Supreme Court's decision in Totgars Co-operative Sale Society Ltd. vs. ITO (2010), which held that interest income from deposits in non-cooperative banks aimed at earning interest income does not qualify for the deduction. The CIT(A), however, allowed the deduction, relying on the Tribunal's order in the assessee's own case for the Assessment Year 2012-13, which distinguished the facts from the Totgars case and found the interest income eligible for deduction under Section 80P(2)(a)(i). 2. Interpretation of Interest Income from Fixed Deposits: The core of the dispute revolves around whether the interest income derived from fixed deposits in nationalized banks can be considered as income from the business of providing credit facilities to members, thereby qualifying for the Section 80P(2)(a)(i) deduction. The CIT(A) and Tribunal's earlier decisions favored the assessee, distinguishing the facts from the Totgars case. However, the Revenue argued that the jurisdictional High Court's decision in CIT vs. South Eastern Railway Employees Co-op Credit Society Ltd. (2017) 390 ITR 524 (Calcutta) should prevail, which held that such interest income does not qualify for the deduction. 3. Applicability of Judicial Precedents and Consistency Principle: The Tribunal noted that the jurisdictional High Court's decision in the South Eastern Railway Employees Co-op Credit Society case should be followed for consistency, as mandated by the Supreme Court in CIT vs. Excel Industries 358 ITR 295. The Tribunal also referenced its own decision in ITA No.1868/Kol/2017, which aligned with the High Court's view that interest income from fixed deposits in nationalized banks is not eligible for Section 80P(2)(a)(i) deduction. Thus, the Tribunal treated its earlier orders favoring the assessee as per incuriam (not taking into consideration the settled law). 4. Computation of the Deduction on a Netting Basis: The Tribunal acknowledged the assessee's submission that the Section 80P deduction disallowance should be computed on a netting basis, considering both interest income from fixed deposits and corresponding interest expenses. The Tribunal directed the Assessing Officer to recompute the deduction using the netting method, ensuring the assessee is given adequate opportunity of hearing in the consequential proceedings. Conclusion: The Tribunal allowed the Revenue's appeal in principle, restoring the disallowance of the Section 80P(2)(a)(i) deduction made by the Assessing Officer. However, it directed the Assessing Officer to recompute the deduction on a netting basis, considering both interest income and corresponding interest expenses, within three effective opportunities of hearing. The appeal was partly allowed for statistical purposes.
|
