2022 (11) TMI 421 - AT - Income Tax

Denying deduction u/s 80P 2 a i - interest income earned from fixed deposits kept by it with nationalized banks and taxing the said income u/s 56 - HELD THAT - The issue before us is identical to the issue decided by ITAT Pune Bench in assessee s own case 2019 (1) TMI 1994 - ITAT PUNE for A.Y. 2008-09 i.e. interest income earned on fixed deposits kept with Nationalized Banks. Therefore, respectfully following the decision of ITAT Pune Bench in assessee s own case for Assessment Year 2008-09(supra), it is held that assessee is eligible for deduction under section 80P(2)(a)(i) in the interest earned from Nationalized Bank. Accordingly, appeal of the assessee is allowed.

Summary

Issues:
Whether the assessee is eligible for deduction under section 80P(2)(a)(i) on interest earned from fixed deposits with nationalized banks.

Analysis:

1. The appeal was filed against the order of the Commissioner of Income Tax (Appeals) denying deduction under section 80P(2)(a)(i) of the Income Tax Act, 1961 for interest income earned by the assessee from fixed deposits with nationalized banks. The primary issue was whether the interest income of Rs.1,08,53,328/- was eligible for the deduction.

2. The Assessing Officer denied the deduction, stating that the income was not part of the assessee's business activity and should be taxed under section 56 of the Act as income from other sources. The AO held that the interest earned did not relate to providing credit facilities to members. The Commissioner of Income Tax (Appeals) upheld the AO's decision.

3. The ITAT Pune Bench had previously ruled in favor of the assessee in a similar case for A.Y. 2008-09, allowing the deduction under section 80P. The Tribunal cited precedents and legal positions from various High Courts to support its decision. Following the previous ruling, the ITAT Pune Bench allowed the appeal, holding that the assessee was eligible for the deduction under section 80P(2)(a)(i) for the interest income earned from nationalized banks.

4. The Tribunal's decision was based on the principle of consistency with previous rulings and legal interpretations. As the issue was identical to the one previously decided in favor of the assessee, the appeal was allowed, and the assessee was granted the deduction under section 80P(2)(a)(i) for the interest income earned from fixed deposits with nationalized banks.

5. In conclusion, the ITAT Pune Bench allowed the appeal of the assessee, holding that the interest income of Rs.1,08,53,328/- was exempt under section 80P(2)(a)(i) of the Income Tax Act, 1961. The decision was based on the consistency with previous rulings and legal interpretations, ensuring the assessee's eligibility for the deduction.