2022 (6) TMI 74 - AT - Income Tax

Deduction claimed u/s 80P on the interest received on the deposits made in various bank accounts - HELD THAT - As decided in own case 2018 (5) TMI 246 - ITAT DELHI authorities below were not justified in refusing to grant deduction under section 80P of the I.T. Act in favour of the assessee. - Decided against revenue.

Summary

Issues:
Disallowance of deduction claimed under section 80P of the Income Tax Act, 1961 on interest received on deposits made in various bank accounts.

Analysis:

Issue 1: Disallowance of deduction under section 80P

The case involved an appeal by the Revenue against the order of the Ld. Commissioner of Income Tax (Appeals) regarding the disallowance of a deduction claimed under section 80P of the Income Tax Act, 1961 on the interest received on deposits made in different bank accounts. The Revenue contended that the disallowance was justified as it involved the parking of surplus funds, citing relevant legal precedents. The assessee, a cooperative society providing credit facilities, had e-filed its return of income declaring income and claiming the deduction under section 80P. The assessment was initially framed under section 143(3) disallowing the deduction claimed, which was set aside and fresh assessment was made disallowing an aggregate amount under section 80P. However, on appeal before the Ld. CIT(A), the disallowance was deleted based on previous decisions of the ITAT Delhi for earlier assessment years, where deductions on similar interest income were allowed under section 80P. The Ld. CIT(A) relied on these precedents and directed the Assessing Officer to delete the addition for the relevant assessment years.

Issue 2: Tribunal's Decision

The Tribunal, after hearing both parties and examining the material on record, observed that the Revenue failed to present any new arguments or evidence to distinguish the case from previous decisions. The Tribunal referred to its earlier decision for the preceding assessment year, where it was held that the matter was squarely covered by decisions in the assessee's own case for earlier years. The Tribunal emphasized that the interest income earned by the cooperative society was attributable to its business activities and fell within the exemption granted by section 80P of the Act. The Tribunal highlighted that the interest income from bank deposits was exempt under section 80P(2)(i) of the Act. The Tribunal, following its previous rulings and legal interpretations, dismissed the appeal of the Revenue, upholding the deletion of the disallowance made under section 80P for the relevant assessment year.

In conclusion, the Tribunal affirmed the decision of the Ld. CIT(A) to delete the disallowance of deduction claimed under section 80P on interest income, based on consistent legal interpretations and precedents set in earlier cases. The appeal of the Revenue was dismissed, and the Tribunal's decision was pronounced in open court on 31st May 2022.