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2023 (4) TMI 854 - AT - Income TaxDeduction u/s 80P - interest received from SBI and Dena bank savings account - HELD THAT - Since the Hon ble Gujarat High Court in the case of SBI 2016 (7) TMI 516 - GUJARAT HIGH COURT has already decided this issue against the assessee, ground no.1 is dismissed. Interest received from Nationalised Banks/other Institutions - It is pertinent to note that the interest received from Nationalised Banks are not allowable u/s 80P or the Act, but at the same time the assessee has incurred certain expenditure to earn the said interest and whether the said proportionate expenditure should be allowable or not needs to be verified. Therefore, this issue is set aside to the file of the Assessing Officer for proper adjudication and verification. Ground no.2 is partly allowed for statistical purpose. Interest received from Co-operative Banks - It is pertinent to note that it is not disputed fact that the interest of Rs.11,23,088/- was not received by the assessee from Co-operative Banks which are registered under Co-operative Societies Act and as per the decision of Hon ble Gujarat High Court in the case of Surat Vankar Sahakari Sangh Limited 2016 (7) TMI 1217 - GUJARAT HIGH COURT interest received from Co-operative Banks are allowable for deduction under Section 80P(2)(d) of the Act. Therefore, ground no.3 is allowed.
Issues involved:
The appeal against the order dated 21.10.2022 passed by the CIT(A), National Faceless Appeal Centre (NFAC), Delhi for the Assessment Year 2017-18. Issue 1: Disallowance under Section 80P of the Income Tax Act The assessee, a Co-operative Credit Society, filed an appeal against the disallowance of Rs.2,74,885/- under Section 80P of the Income Tax Act for interest received from State Bank of India and Dena Bank savings accounts. The Assessing Officer disallowed this amount, citing it as not permissible as per the decision of the Hon'ble Gujarat High Court. The appeal was dismissed by the CIT(A) based on this decision. Issue 2: Proportionate expenditure for interest income The assessee also raised the issue of allowing proportionate expenditure to earn interest income if interest received from nationalized banks is not allowable under Section 80P. The tribunal set aside this issue to the Assessing Officer for proper adjudication and verification, emphasizing the need to determine whether proportionate expenditure should be allowed. The assessee was granted an opportunity of hearing for this issue. Issue 3: Disallowance of interest received from Co-operative Banks The appeal challenged the disallowance of Rs.11,23,088/- under Section 80P(2)(d) for interest received from Co-operative Banks, specifically Mehsana Urban Co-operative Bank and Mehsana District Central Co-operative Bank Limited. The assessee argued that this interest, being from Co-operative Societies, is allowable under Section 80P(2)(d) of the Act. The tribunal allowed this ground, citing the decision of the Hon'ble Gujarat High Court in a similar case. Conclusion: The tribunal partly allowed the appeal for statistical purposes, setting aside one issue for further verification by the Assessing Officer and allowing the deduction for interest received from Co-operative Banks. The decision was pronounced on 19th April 2023.
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