2023 (3) TMI 1046 - AT - Income Tax

Deduction u/s 80P - interest earned on deposits and saving bank accounts with Nationalized Banks Cooperative banks - HELD THAT - AO in Assessment Order has not pointed out as to why the disallowance u/s 80P was made in assessee s case. CIT-A s order is also reproduced the submissions as well as the decisions relied upon by the assessee. It is pertinent to note that in the present assessee s case it is a Cooperative Society deriving interest from the member cooperative society and therefore, coming under the purview of Section 80P (2)(d) - assessee is entitled for deduction under Section 80P, the CIT(A) as well as the Assessing Officer has ignored this fact. Appeal of the assessee is allowed.

Summary

Issues involved: Appeal against order passed by Ld. CIT(Appeals) at NFAC, Delhi for A.Y. 2018-19.

Issue 1: Validity of assessment order u/s 143(3) r.w.s. 143(3A) & 143(3B):
The assessee, a Cooperative Society, filed a return of income for A.Y. 2018-19 on 05.10.2018 declaring NIL income. The Assessing Officer considered the return as belated due to filing date discrepancy and disallowed deduction claim u/s 80P of the Act. The Ld. A.R. contended that proper procedure was not followed by the Assessing Officer, who failed to provide any reason for disallowing the deduction. The CIT(A) upheld the disallowance without considering that the assessee, deriving interest from member cooperative society, is eligible for deduction u/s 80P(2)(d) of the Act.

Issue 2: Disallowance of interest income from Cooperative Banks:
The Ld. A.R. argued that interest income from Cooperative Banks like Mehsana Urban Cooperative Society should have been considered by the Assessing Officer. The interest on deposits from various Cooperative Banks, being Cooperative Societies, should have been taken into account. However, the Assessing Officer and CIT(A) failed to acknowledge this aspect.

Decision:
After hearing both parties and reviewing the material, it was observed that the Assessing Officer did not justify the disallowance under Section 80P. The CIT(A) also overlooked the fact that the assessee, as a Cooperative Society, falls under Section 80P(2)(d) and is entitled to deduction. Consequently, the appeal of the assessee was allowed.

This judgment was pronounced in Open Court on 22/03/2023.