2024 (5) TMI 159 - AT - Income Tax

Deduction u/s 80P(2)(a)(i) - interest derived from deposits of SLR funds Statutory Liquidity Ratio - DR argued that this amount has been found as the excessive component in assessee s deduction claim which hardly deserves to be accepted for the purpose of computing the impugned deduction - HELD THAT - Assessee has all along been claiming the impugned sum to be representing it s SLR i.e., Statutory Liquidity Ratio as mandatory compliance of the various banking norms applicable in case of a co-operative society. It is in this factual backdrop that hon ble apex court s landmark decision CIT vs., Karnataka State Cooperative Apex Bank 2001 (8) TMI 9 - SUPREME COURT and CIT vs. Nawanshahar Central Cooperative Bank Ltd. 2005 (8) TMI 28 - SC ORDER have already settled the issue in assessee s favour and against the department that such an interest derived from deposits of SLR funds duly qualifying for sec. 80P(2)(a)(i) deduction. Decided in favour of assessee.

Summary

Issues involved:
The judgment involves the appeal for assessment year 2020-21 against the National Faceless Appeal Centre, Delhi's Din and Order u/s. 143(3) of the Income Tax Act, 1961.

Delay in filing appeal:
The delay of 08 days in filing the appeal was condoned based on the assessee's solemn averments citing the precedent of Collector, Land Acquisition vs., MST Katiji [1987] 167 ITR 471 (SC) emphasizing substantial justice.

Substantive grievance - Eligibility for deduction:
The main grievance of the assessee revolved around an amount of Rs. 2,85,982/- representing alleged interest income, which was held as not eligible for sec. 80P(2)(a)(i) deduction.

Contentions of the parties:
The Revenue argued that the amount in question was an excessive component in the deduction claim and the correct statement of facts was not filed in the lower appellate proceedings, leading to the rejection of the deduction.

Judgment and reasoning:
After considering the arguments, the Judicial Member found merit in the assessee's case. The assessee had consistently claimed the sum to be representing its Statutory Liquidity Ratio (SLR) as mandatory compliance with banking norms for a cooperative society. Citing the decisions in CIT vs. Karnataka State Cooperative Apex Bank [2001] 251 ITR 194 (SC) and CIT vs. Nawanshahar Central Cooperative Bank Ltd., [2007] 289 ITR 6 (SC), which favored the assessee, it was held that the interest derived from SLR funds qualified for sec. 80P(2)(a)(i) deduction. As a result, the assessee's substantive grievance was accepted, and the appeal was allowed accordingly.

Conclusion:
The appeal of the assessee was allowed based on the acceptance of the substantive grievance regarding the eligibility for deduction under sec. 80P(2)(a)(i).

Separate Judgement (if applicable):
No separate judgment was delivered in this case.