2021 (6) TMI 312 - AT - Income Tax

Deduction u/s 80P - Income from other sources - Treatment to Interest earned from Cooperative Bank' and Commercial Bank - HELD THAT - As decided in own case 2020 (7) TMI 715 - ITAT DELHI assessee being a co-operative society not involved in banking operation is not eligible for deduction u/s. 80P(2)(a)(i).The assessee being a co-operative society is eligible for deduction u/s. 80P(2)(d) on the interest earned from other co-operative societies. The assessee is eligible for the expenditure u/s. 57 incurred in earning the interest income which is taxable under the head income from other sources as per Section 56. Thus addition is hereby deleted.

Summary

Issues:
- Appeal against orders of CIT(A)
- Determination of tax liability
- Treatment of interest income from banks
- Eligibility for deduction under Section 80P(2)(d)
- Allowance of expenditure under Section 57

Analysis:
- The appeals were filed against the orders of the ld. CIT(A)-18, New Delhi. The issues in all appeals being common were heard together.
- The appellant contested the orders on various grounds, including errors in law, non-compliance with procedures, and treatment of interest income from Cooperative and Commercial Banks under the head of Income from other sources.
- The appellant relied on previous favorable orders for similar issues in other assessment years.
- The Tribunal considered the submissions and material on record, noting that a similar issue was previously decided in favor of the assessee in other appeals.
- The Tribunal analyzed the provisions of Section 80P(2)(d) and concluded that the assessee was eligible for deduction on interest income earned from cooperative societies.
- Regarding expenditure under Section 57, the Tribunal directed the Assessing Officer to allow the expenditure related to earning interest from commercial banks.
- The Tribunal held that the appellant, being a cooperative society not involved in banking operations, was not eligible for deduction under Section 80P(2)(a)(i) but was eligible for deduction under Section 80P(2)(d) for interest earned from other cooperative societies.
- Additionally, the Tribunal ruled that the appellant could claim expenditure under Section 57 for earning interest income taxable under the head "income from other sources" as per Section 56.
- Consequently, in the absence of any material change in the facts, the addition was deleted, and all appeals of the assessee were allowed.