DEDUCTIONS UNDER SECTION 80TTA AND 80TTB OF INCOME TAX ACT, 1961

[DR.MARIAPPAN GOVINDARAJAN]

Part CA of Chapter VI of the Income Tax Act, 1961 (‘Act’ for short) provides for the deductions in respect of other income vide Section 80TTA and Section 80TTB.  Section 80TTA provides for the deduction in respect of interest on deposits in Savings Bank account.   Section 80TTB provides for the deduction in respect of interest on deposits in case of Senior Citizens.

Section 80TTA

Section 80TTA of the Act provides that where the gross total income of an assessee, other than the senior citizens, being an individual or a Hindu undivided family, includes any income by way of interest on deposits (not being time deposits, i.e. fixed deposits) in a savings account with-

• National and private banks;
• Co-operative Societies engaged in the banking activities;
• a Post Office.

shall be eligible for deduction from the income to the tune of Rs.10,000/- where the amount of such income does not exceed in the aggregate ten thousand rupees, the whole of such amount; and  in any other case Rs.10,000/-.

No deduction of interest in respect of Savings Account, held by, or on behalf of, a firm, an association of persons or a body of individuals, is  allowed in in respect of such income in computing the total income of any partner of the firm or any member of the association or any individual of the body.

In SHRI MATHAI EAPEN VETTATH VERSUS THE INCOME TAX OFFICER, NON-CORPORATE, WARD-1 (3) , KOCHI - 2019 (2) TMI 1512 - ITAT COCHIN, the appeal filed by the assessee is directed against the order of the Commissioner of Income Tax (Appeals), Kottayam dated 02.05.2018 and pertains to the assessment year 2014-15.  The first ground is with regard to sustenance of addition of Rs. 49,22,000/- towards deposits in the SB accounts of Catholic Syrian Bank and SBI.  The Assessing Officer called for information under section 133(6) from Catholic Syrian Bank and State Bank of India wherein the assessee was maintaining banks accounts.  The banks supplied the statements and the Assessing Officer found that the assessee had deposited Rs. 49,22,000/- on 06/03/2014 and 07.03.2014. The Assessing Officer called for explanation for the source of the above cash deposits.  The assessee submitted his explanation for sources of funds. The Assessing Officer did not accept the above explanation of the assessee.  The assessing Officer treated the cash deposit of Rs.49,22,000/- as unexplained cash credit and assessed the same under section 68 of the Act.  The assessee filed an appeal before the Commissioner of Income Tax (Appeals).  The Commissioner of Income Tax (Appeals) confirmed the order of Assessing Officer.  Against this the appellant filed the present appeal before the ITAT.

Among the other submissions the appellant submitted that he earned interest of Rs. 10,000/- on savings Bank account. As such, he was entitled for deduction under section 80TTA of the Act.  The ITAT observed that the assessee did not furnish the details of interest income earned on saving Bank account. As such, the ITAT remitted the issue to the file of the Assessing Officer with a direction to the assessee to provide necessary details. The ITAT allowed the appeal of the assessee partly.

In ANJULA GOEL VERSUS THE D.C.I.T., CIRCLE-II, CHANDIGARH - 2021 (4) TMI 291 - ITAT CHANDIGARH, the Department disallowed the deduction on account of interest paid on housing loan under Section 24 of the Act and repayment of principal amount of housing loan and deduction on account of interest earned on savings bank account under Section 80(c) and 80TTA of the Act respectively.  The ITAT observed that undoubtedly the assessee has claimed deduction of savings bank interest which has been shown as income of the assessee. This income returned is not disputed by the Revenue, therefore, the ITAT did not understand the logic for denial of deduction of the same income. Accordingly, the ITAT allowed the claim of the assessee to deduction under Section 80TTA of the Act of interest earned on savings bank account.

In ASHISH DWIVEDI VERSUS I.T.O., RANGE – 1 (1) , ALLAHABAD - 2021 (4) TMI 676 - ITAT ALLAHABAD, the Assessing Officer made an addition on account of interest income under the head ‘income from other sources’, under Section 80TTA.  Before the Commissioner of Income Tax (Appeals),  the assessee has claimed the deduction under Section  80TTA as the interest income was in respect of saving bank account is less than the threshold limit. The Commissioner of Income Tax (Appeals) has directed the Assessing Officer to allow the necessary deduction as per law from income of Rs. 3,097/- being in the income from other sources.  The ITAT held that once the Commissioner of Income Tax (Appeals) has directed the Assessing Officer to allow the deduction as per law no grievance is left against the impugned order of the Commissioner of Income Tax (Appeals).   Accordingly, the ITAT directed the Assessing Officer to consider the claim of deduction under section 80TTA and allow the same if the assessee satisfy the requirements of eligibility of deduction.  The ITAT allowed the appeal in this regard.

In TAPAN ROY SECURITY AGENCY VERSUS INCOME TAX OFFICER, WARD-69 (1) , NEW DELHI - 2023 (1) TMI 619 - ITAT DELHI - this appeal, by the assessee, is directed against the order of the learned Commissioner of Income-tax (Appeals), National Faceless Appeal Centre (NFAC), Delhi, dated 04.08.2022, pertaining to the assessment year 2020-21.   One among the ground in this appeal is  that the Commissioner of Income Tax  (Appeals) failed to appreciate that the disallowance of amount of Rs.5,632/- is not proper since the said amount is nothing but the interest on the Savings Bank Account and the said amount is within the allowable limit of deduction and the same cannot be added back more particularly when the appellant was in his possession the Pass Book reflecting the said amount of interest and the appellant did not get the reasonable opportunity to submit the same.  The ITAT observed that the disallowance was made purely on the ground that no evidence was furnished. However, it is the contention of the assessee that the interest was in fact earned and the assessee was also having the bank pass book, which duly reflected the interest from savings bank account. Considering the totality of the facts, the ITAT restored to the file of Assessing Officer who will verify the correctness of the claim of the assessee and in the event the interest is found to have been reflected in the bank statement of the assessee, the Assessing Officer would grant deduction as per law.  The ITAT allowed the appeal.

In SMT. PASHIBEN PRAJAPATI FAMILY TRUST (DISC) VERSUS THE INCOME-TAX OFFICER, WARD-3 (3) (5) , AHMEDABAD - 2024 (8) TMI 972 - ITAT AHMEDABAD,  all the beneficiaries under the Trust are individuals, and it is by virtue of deeming fiction created under Section 164(1) read with clause(ii) of the first proviso to Section 164(1), that the tax will be charged on the relevant income, in the instant case as if it were the total income of an association of person (AOP), but that deeming fiction cannot be extended to denial of deduction under section  80C and 80TTA as the trust per-se is not a person defined under section  2(31) and the trustees in the instant case are to taxed as representative assessee under section  160(1)(iv) of the  Act, and the beneficiaries of the Trust in the instant case being all individuals, in the considered view of the ITAT, deduction under section 80C cannot be denied to the assessee albeit by deeming fiction under section  164(1) read with clause (ii) of first proviso , the tax shall be charged on the relevant income as if it were total income of an AOP, but that deeming fiction cannot extend to an extent of denial of deduction under section 80C and 80TTA which is otherwise available to individuals , as all the beneficiaries under the instant Trust being individuals.

Section 80TTB

Section 80TTB of the Act provides that where the gross total income of an assessee, being senior citizen, includes any income by way of interest on deposits with-

• National and private banks;

• Co-operative Societies engaged in the banking activities;
• a Post Office.

shall be eligible for deduction from the income to the tune of Rs.50,000/- where the amount of such income does not exceed in the aggregate ten thousand rupees, the whole of such amount; and in any other case Rs.50,000/-.

No deduction of interest in respect of Savings Account, held by, or on behalf of, a firm, an association of persons or a body of individuals, is allowed in in respect of such income in computing the total income of any partner of the firm or any member of the association or any individual of the body.