2022 (6) TMI 795 - AT - Income Tax

Deduction u/s 80P - disallowance of interest income of the assessee society out of its investments with other co-operative banks is not eligible for deduction either uls 80P(2)(a)(i) or u/s 80P(2)(d) - CIT-A allowed the claim - HELD THAT - We find in a recent decision of Pune Tribunal 2018 (11) TMI 1589 - ITAT PUNE and 2019 (4) TMI 682 - ITAT PUNE held that interest itself is eligible for deduction u/s.80P of the Act, the compulsion of the assessee to offer certain amount in order to enable the completion of the assessment, cannot be stretched so far so as to bring the entire amount of interest received from bank to tax which is otherwise deductible - we are of the considered view that there is no reason to interfere with the findings of the ld. CIT(A) and the relief provided to the assessee is sustained. - Decided against revenue.

Issues Involved:

1. Condonation of delay in filing appeals due to Covid-19.
2. Eligibility for deduction under Section 80P of the Income Tax Act, 1961, for interest income from investments with other co-operative banks.

Issue-wise Detailed Analysis:

Condonation of Delay:

The appeals in ITA No. 74/PUN/2021 and ITA No. 75/PUN/2021 were delayed by 150 days and 127 days respectively. The delay was attributed to the outbreak of Covid-19. The Tribunal, considering the unprecedented situation, condoned the delay by referencing the Supreme Court judgments in Cognizance for Extension of Limitation cases (438 ITR 296 (SC), 432 ITR 206 (SC), and 421 ITR 314). Consequently, the appeals were admitted for disposal on merits.

Eligibility for Deduction under Section 80P:

The primary grievance of the Revenue was the deletion of disallowance under Section 80P by the Commissioner of Income Tax (Appeals) [CIT(A)]. The Assessing Officer (A.O) had denied the deduction, treating the assessee societies as co-operative banks based on their activities and investments in other co-operative banks, which do not qualify for deduction under Section 80P(2)(d).

The CIT(A), however, allowed the deduction by relying on various judicial precedents. The Tribunal noted that the issue was covered by several decisions of the Pune Tribunal, which had consistently allowed deductions under similar circumstances.

Key Judicial Precedents Referenced:

1. Shivneri Nagari Sahakari Patsanstha Ltd. Case: The Tribunal upheld the deduction under Section 80P, following the decision in Shivneri Nagari Sahakari Patsanstha Ltd. and other similar cases.
2. Shri Laxmi Narayan Nagari Sahakari Pat Sanstha Maryadit Case: The Tribunal preferred the view of the Karnataka High Court in Tumkur Merchants Souharda Credit Cooperative Ltd. over the Delhi High Court in Mantola Cooperative Thrift Credit Society Ltd., allowing deduction under Section 80P on interest income.
3. Sureshdada Jain Nagri Sahakari Patsanstha Case: The Tribunal reiterated its stance on allowing deductions under Section 80P for interest income from nationalized banks.
4. Pr. CIT vs. Totagars Cooperative Sales Society: The Tribunal distinguished this case, noting that it pertained to Section 80P(2)(d) and not directly relevant to the present cases focused on Section 80P(2)(a)(i).

Conclusion:

The Tribunal upheld the CIT(A)'s decision, allowing deductions under Section 80P for the interest income of the assessee societies. The Tribunal found no reason to interfere with the CIT(A)'s findings and dismissed the Revenue's appeals. The decision in ITA No. 75/PUN/2021 was applied mutatis mutandis to ITA No. 74/PUN/2021, resulting in the dismissal of both appeals.

Order Pronouncement:

The order was pronounced in the open Court on June 15, 2022.

← Previous Next →