2022 (10) TMI 898 - AT - Income Tax

Deduction u/s. 80P on interest income - HELD THAT - The issue raised in the extant appeal is no more res integra by virtue of series of orders passed by the Pune Tribunal. The Pune Benches of the Tribunal in Sureshdada Jain Nagari Sahakari Patsanstha Maryadit 2019 (4) TMI 682 - ITAT PUNE decided the question of availability of deduction u/s 80P on interest income by noticing that the Pune Bench in an earlier case of Shri Laxmi Narayan Nagari Sahakari Pat Sanstha Maryadit 2015 (8) TMI 1085 - ITAT PUNE has allowed similar deduction. In the said case, the Tribunal discussed the contrary views expressed in Tumkur Merchants Souharda Credit Cooperative Ltd. 2015 (2) TMI 995 - KARNATAKA HIGH COURT allowing deduction u/s. 80P on interest income and that of the Hon ble Delhi High Court in Mantola Cooperative Thrift Credit Society Ltd. 2014 (9) TMI 833 - DELHI HIGH COURT not allowing deduction u/s.80P on interest income earned from banks. Both the Hon ble High Courts took into consideration the ratio laid down in the case of Totagar s Cooperative Sale Society Ltd. (supra). No direct judgment from the Hon ble jurisdictional High Court on the point having been pointed out, the Tribunal in Shri Laxmi Narayan Nagari Sahakari Pat Sanstha Maryadit (supra) preferred to go with the view in favour of the assessee by the Hon ble Karnataka High Court in the case of Tumkur Merchants Souharda Credit Cooperative Ltd. (supra). I, therefore, overturn the impugned order on this score and allow the deduction - Assessee appeal is allowed.

Summary

Issues:
1. Condoning the delay in filing the appeal due to the Covid-19 pandemic.
2. Denial of deduction u/s.80P for interest income earned from term deposits.
3. Interpretation of the availability of deduction u/s.80P on interest income.

Analysis:
1. The appeal was delayed by 41 days, but the delay was attributed to the Covid-19 pandemic. The Tribunal referred to judgments by the Hon'ble Supreme Court regarding the extension of limitation due to the pandemic. Citing these judgments, the delay was condoned, and the appeal was admitted for disposal on merits.

2. The assessee contested the denial of deduction u/s.80P for interest income of Rs.6,13,359 earned from term deposits with banks. The Assessing Officer disallowed the interest income based on a Supreme Court judgment and the decision was upheld at the first appellate authority level. The assessee then approached the Tribunal to challenge this denial.

3. The Tribunal considered the issue of deduction u/s.80P on interest income, noting that it had been addressed in previous orders by the Pune Tribunal. Referring to specific cases, the Tribunal highlighted conflicting views of different High Courts on the matter. In the absence of a direct judgment from the jurisdictional High Court, the Tribunal favored the view supporting the assessee's claim, overturning the previous order and allowing the deduction. The appeal was ultimately allowed, and the order was pronounced on 18th October 2022.