2014 (11) TMI 1286 - AT - Income Tax

Allowability of deduction u/s. 80P - interest income earned from banks/post office FDR etc. - HELD THAT - In the case of Income Tax Officer v. Sahkari Ganna Vikas Samiti Ltd. 2002 (10) TMI 89 - ALLAHABAD HIGH COURT cited by assessee also, the issue in dispute was regarding allowability of deduction u/s. 80P in respect of interest earned from State Bank of India, Punjab National Bank and Oriental Bank of Commerce along with interest received on FDR and from post office. In this case, the Tribunal has followed the judgments of Co-operative Cane Development Union Ltd. 1979 (2) TMI 91 - ALLAHABAD HIGH COURT and also the judgment of Krishak Sahkari Ganna Samiti Ltd. and decided the issue in favour of the assessee. We decline to interfere in the order of CIT(A) in both the cases.

Summary

Issues:
Allowability of deduction u/s. 80P of the Income Tax Act for interest income earned from banks/post office FDRs, Tribunal's reliance on previous judgments, dispute over cancellation of addition by CIT(A) and restoration of Assessing Officer's order.

Analysis:
In the present case, two appeals were filed by the Revenue concerning Zila Ganna Utpadak Sahkari Samiti Ltd. for the assessment year 2010-11 and Sahkari Ganna Vikas Samiti Ltd. for the assessment year 2011-12. The Revenue challenged the deletion of an addition of Rs. 37,33,330 in both cases by the CIT(A), based on the allowability of deduction u/s. 80P of the Income Tax Act for interest income earned from banks/post office FDRs. The Revenue contended that the assesses failed to prove that the interest income was exclusively derived from saving bank accounts and not from long-term deposits made for investments, thus not qualifying for deduction under section 80P(2)(d) of the Act. The Revenue argued that the facts of the instant case differed from the case law cited by the assessee and that the addition was rightly made by the Assessing Officer.

The Tribunal considered the submissions of both parties and noted that the issue in dispute was similar to a previous case involving the allowability of deduction u/s. 80P for interest earned from various sources. The Tribunal referenced a previous decision where the issue was regarding deduction u/s. 80P in respect of interest earned from specific banks and post office, and the Tribunal had followed judgments of the Hon'ble Allahabad High Court in favor of the assessee. The Tribunal, therefore, declined to interfere in the order of the CIT(A) in both cases, citing consistency with the previous Tribunal decision and the judgments of the Hon'ble Allahabad High Court.

Conclusively, the Tribunal dismissed both appeals of the Revenue, maintaining the order of the CIT(A) that deleted the addition of Rs. 37,33,330 in both cases. The Tribunal's decision was based on the consistent interpretation of the law and previous judgments favoring the allowance of deduction u/s. 80P for interest income from banks/post office FDRs, as supported by the Tribunal's previous decision and judgments of the Hon'ble Allahabad High Court.