2022 (2) TMI 118 - AT - Income Tax

Availability of deduction u/s 80P on interest - AO denied the benefit of deduction on the ground that the amount of interest income did not qualify which view came to be countenanced partly in the first appeal by the ld. CIT(A) allowing proportionate deduction - HELD THAT - CIT(A) has accepted the assessee s contention in principle about the eligibility of deduction u/s.80P(2) of the Act on interest income. He however restricted the benefit proportionately by considering the total receipts of the assessee vis- -vis the amount of interest income. Once the ld. CIT(A) accepted the contention of the assessee for deduction u/s.80P(2) it was to be allowed in respect of the entire interest income. As against the interest income of 1.04 crore the assessee s amount of deduction u/s 80P stood only at 11, 04, 044. Therefore set-aside the impugned order and direct to grant the benefit of deduction u/s.80P(2)(a) on the full amount claimed by the assessee.- Decided in favour of assessee.

Summary

Issues: Availability of deduction u/s.80P on interest income.

Analysis:
1. Facts of the Case: The appellant, a Cooperative Society, filed its return declaring net profit and claimed a deduction u/s.80P(2)(a) of the Income-tax Act, 1961. The Assessing Officer (AO) denied the deduction on the grounds that the interest income did not qualify. The CIT(A) partially allowed the deduction in the first appeal.

2. Legal Precedents: The Tribunal referred to the Pune Benches' decision in Sureshdada Jain Nagari Sahakari Patsanstha Maryadit Vs. The Pr.CIT, where the availability of deduction u/s 80P on interest income was discussed. The Tribunal also considered conflicting views from the Hon'ble Karnataka High Court and the Hon'ble Delhi High Court on the issue. No direct judgment from the jurisdictional High Court was cited.

3. Decision: The CIT(A) accepted the eligibility of deduction u/s.80P(2) on interest income but restricted the benefit proportionately based on total receipts. The Tribunal set aside the CIT(A)'s order and directed to grant the full deduction claimed by the assessee on the interest income. Despite the CIT(A) accepting the deduction, it should have been allowed for the entire interest income amounting to ?1.04 crore.

4. Conclusion: The Tribunal allowed the appeal, emphasizing that once the eligibility for deduction u/s.80P(2)(a) on interest income was accepted, it should be granted for the full amount claimed by the assessee. The decision aligned with the view favoring the assessee as per the precedent set by the Hon'ble Karnataka High Court. The judgment clarified the application of deduction u/s.80P on interest income for Cooperative Societies, ensuring consistency in interpretation and application of tax laws.