2023 (6) TMI 735 - AT - Income Tax

Deduction u/s 80P - interest income derived from Nationalized Bank - as per DR assessee is only entitled for eligible for deduction of interest income earned from co-operative society only and not interest income earned from Nationalized Bank - HELD THAT - As no tax be levied or collected without authority of law as has been mandated by Article 265 of Constitution of India, similarly the assessee should not suffer prejudice, due to the ignorance of specific provisions in the Income Tax Act, if the assessee is otherwise eligible for such deduction. Therefore, the ground of appeal raised by the assessee is dismissed at this stage. However, by invoking inherent power of appellate authority, the appeal is restored back to the file of assessing officer to examine the claim of deduction of interest income earned from Nationalised Bank under section 80P(2)(a)(i). Needless to direct that before passing the order afresh the AO shall grant opportunity of hearing to the assessee. The assessee is also directed to substantiate its claim by filing appropriate submissions and evidences.Appeal of the assessee is partly allowed.

Summary

Issues involved:
The appeal by assessee against the order of National Faceless Appeal Centre, Delhi for assessment year 2014-15, challenging the addition made by the Assessing Officer under section 143(3) of the Income Tax Act, 1961 regarding the deduction under section 80P(2)(d) for interest income derived from Nationalized Banks.

Details of the Judgment:

Issue 1:
The Assessing Officer disallowed the deduction of interest income earned from sources other than co-operative society, leading to the addition of Rs.13,62,958/- as "income from other source" in the assessment order dated 16.11.2016.

Issue 2:
The appeal before the National Faceless Appeal Centre, Delhi reiterated the submission that interest income from Nationalized Banks should be eligible for deduction under section 80P(2)(d) of the Act, supported by a decision of the Hon'ble Apex Court in Totgars Co-operative Sale Society Ltd. vs. ITO, Karnataka [2010] 188 Taxman 282 (SC).

Issue 3:
During the Tribunal hearing, the Authorized Representative for the assessee argued for the eligibility of interest income from Nationalized Banks for deduction under section 80P(2)(d) of the Act, citing another decision in Shri Basavaraj, CEO Primary Agriculture Credit Co-operative Society Vs CIT (ITA No. 867/Bang/2017) dated 31.05.2017.

Judgment Summary:
The Tribunal dismissed the appeal at this stage but restored it back to the Assessing Officer to reexamine the claim of deduction for interest income earned from Nationalized Banks under section 80P(2)(a)(i). The Tribunal emphasized the necessity for the assessing officer to provide an opportunity for the assessee to substantiate the claim with appropriate submissions and evidence before passing a fresh order. The appeal was partly allowed, with the order pronounced on 15/06/2023 in open court.