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2018 (3) TMI 298 - AT - Income TaxClaim deduction u/s 80P denied - interest income and dividend income earned - Held that - If the deposits in bank are out of own funds of society then the interest on same is eligible for deduction u/s. 80P (1) and if the deposit in bank is out of the fund available with the society in the form of liability then the same is not eligible for deduction u/s. 80P (2) of IT Act. The conclusion is different in both the judgments because the facts are different in both these cases. If as per the facts of the present case, it is found that the deposit in bank are out of own funds of society then the interest on same is eligible for deduction u/s. 80P (1) as per the judgment in the case of Tumkur Merchants Souharda Credit Cooperative Ltd. Vs. ITO (2015 (2) TMI 995 - KARNATAKA HIGH COURT) but if it is found that the deposit in bank is out of the fund available with the society in the form of liability then the same is not eligible for deduction u/s. 80P (2) of IT Act as per the judgment rendered in PCIT and Another vs. Totagars Co-operative Sale Society (2017 (7) TMI 1049 - KARNATAKA HIGH COURT). Hence, the facts of the present case has to be looked into and since the facts of the present case are not readily available and there is no finding of any of the authorities below in respect of these facts, set aside the orders of CIT (A) in both years and restore the matter back to his file for a fresh decision - Decided in favour of assessee for statistical purposes.
Issues:
- Appeal against orders of CIT(A) for Assessment Years 2012-13 and 2013-14. - Eligibility of interest and dividend income for deduction under Section 80P of the Income Tax Act. - Interpretation of interest and dividend income received on idle funds invested with other members or financial institutions. - Application of principles regarding interest income considered as business income under Section 80HHC to the present case. Analysis: 1. Appeal against CIT(A) Orders: The appellant challenged the orders of the CIT(A) for Assessment Years 2012-13 and 2013-14, contending that they were not in accordance with the law and the facts of the case. The appellant raised independent grounds of appeal in each year, seeking to claim deductions under Section 80P of the Income Tax Act for interest and dividend income. 2. Eligibility for Deduction under Section 80P: The appellant argued that interest and dividend income should be eligible for deduction under Section 80P, as they were incidental to carrying on the main activities of the society. The appellant relied on the principle that interest income considered as business income under Section 80HHC should also be applicable to the present case. The appellant emphasized that interest and dividend income were essential components of their business operations and should be treated as income from business or profession. 3. Interpretation of Interest and Dividend Income: The dispute revolved around the interpretation of interest and dividend income received on idle funds invested with other members or financial institutions. The appellant contended that such income should be considered as income from business or profession, thereby qualifying for deduction under Section 80P. The appellant argued that the interest and dividend income earned were integral to their business activities and should not be excluded from the purview of Section 80P. 4. Application of Legal Precedents: The appellant cited judgments of the Hon'ble Karnataka High Court in similar cases to support their claim for deduction under Section 80P. The Tribunal analyzed the judgments and noted that the eligibility for deduction depended on whether the deposits in the bank were from the society's own funds or from liabilities. The Tribunal emphasized that the facts of the present case needed further examination to determine the nature of the deposits and the applicability of Section 80P. 5. Decision and Order: After considering the submissions and legal precedents, the Tribunal found that the facts of the present case required a detailed assessment to ascertain the source of the deposits and the eligibility for deduction under Section 80P. As the lower authorities had not provided findings on these crucial facts, the Tribunal set aside the orders of the CIT(A) for both years and directed a fresh decision after examining the case in light of the relevant judgments. Consequently, the appeals filed by the assessee were allowed for statistical purposes. 6. Conclusion: The judgment highlighted the importance of factual analysis in determining the eligibility for deductions under the Income Tax Act. The Tribunal emphasized the need for a thorough examination of the source of funds to ascertain the applicability of Section 80P. The decision underscored the significance of legal precedents and the necessity for lower authorities to provide detailed findings on crucial facts to ensure a fair and accurate assessment of tax liabilities.
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