2022 (9) TMI 1646 - AT - Income Tax

Deduction u/s. 80P - interest earned from deposits kept with nationalised banks - contradictory judgements on the issue - HELD THAT - Pune Benches of the Tribunal in Sureshdada Jain Nagari Sahakari Patsanstha Maryadit 2019 (4) TMI 682 - ITAT PUNE decided the question of availability of deduction u/s 80P on interest income by noticing earlier case of Shri Laxmi Narayan Nagari Sahakari Pat Sanstha Maryadit 2015 (8) TMI 1085 - ITAT PUNE has allowed similar deduction. In the said case, the Tribunal discussed the contrary views expressed in Tumkur Merchants Souharda Credit Cooperative Ltd. 2015 (2) TMI 995 - KARNATAKA HIGH COURT allowing deduction u/s. 80P on interest income and that of the Hon ble Delhi High Court in Mantola Cooperative Thrift Credit Society Ltd. 2014 (9) TMI 833 - DELHI HIGH COURT not allowing deduction u/s. 80P on interest income earned from banks. Both the Hon ble High Courts took into consideration the ratio laid down in the case of Totgar s Cooperative Sale Society Ltd. 2010 (2) TMI 3 - SUPREME COURT No direct judgment from the Hon ble jurisdictional High Court on the point having been pointed out, the Tribunal in Shri Laxmi Narayan Nagari Sahakari Pat Sanstha Maryadit 2015 (8) TMI 1085 - ITAT PUNE preferred to go with the view in favour of the assessee by the Hon ble Karnataka High Court in the case of Tumkur Merchants Souharda Credit Cooperative Ltd. 2015 (2) TMI 995 - KARNATAKA HIGH COURT Assessee appeal allowed.

Summary

The appeal before the ITAT Pune, presided over by Vice President Shri R.S. Syal, concerns the assessee's challenge to the denial of a deduction under Section 80P of the Income-tax Act, 1961. The dispute revolves around interest income of Rs. 9,46,230/- earned from deposits with nationalized banks for the assessment year 2017-18. Despite the absence of representation from the assessee, the Tribunal considered the issue settled (res integra) due to precedents set by the Pune Tribunal. Specifically, the Tribunal referenced its decision in Sureshdada Jain Nagari Sahakari Patsanstha Maryadit Vs. The Pr.CIT, which aligned with an earlier ruling in Shri Laxmi Narayan Nagari Sahakari Pat Sanstha Maryadit Vs. ITO, allowing similar deductions. These decisions considered conflicting judgments from the Karnataka High Court, which allowed the deduction, and the Delhi High Court, which did not. The Tribunal chose to follow the Karnataka High Court's favorable stance towards the assessee, as seen in Tumkur Merchants Souharda Credit Cooperative Ltd. Vs. ITO. Consequently, the Tribunal overturned the NFAC's order and allowed the deduction, pronouncing the decision in open court on September 1, 2022.