2022 (7) TMI 899 - AT - Income Tax

Eligibility of deduction u/s 80P - disallowance of interest and dividend income received from co-operative bank - HELD THAT - Tribunal in the case of Bardoli Vibhag Gram Vikas Co.Op. Credit Society Ltd. 2018 (12) TMI 1912 - ITAT SURAT whereby the issue relating to deduction u/s 80P(2)(d) of the Act has been adjudicated in favour of assessee that is, interest received from co-operative bank is eligible for deduction u/s 80P(2)(d) - Appeal of assessee allowed.

Summary

Issues Involved:
Appeal against addition of interest and dividend income from a co-operative bank under section 80P(2)(d) of the Income Tax Act, 1961.

Detailed Analysis:

1. Addition of Interest and Dividend Income:
The appeal challenged the addition of Rs.19,95,497 on account of disallowance of interest and dividend income received from a co-operative bank under section 80P(2)(d) of the Act. The assessee contended that the interest received from the co-operative bank was eligible for deduction under this section. The Tribunal referred to a previous decision in a similar case where the issue was adjudicated in favor of the assessee, allowing the deduction under section 80P(2)(d). The Tribunal highlighted that the Assessing Officer had already allowed deductions under this section during the assessment process. The Tribunal also cited legal precedents emphasizing that when two views are possible on an issue and the Assessing Officer has made a reasonable decision, the Commissioner cannot invoke jurisdiction under section 263 of the Act. Furthermore, the Tribunal noted that in the assessee's previous cases, similar disallowances were deleted by the CIT(A), strengthening the argument for allowing the deduction in the current case.

2. Legal Precedents and Binding Precedent:
The Tribunal extensively discussed various legal precedents, including judgments from different High Courts, to support its decision. It highlighted that conflicting decisions from non-jurisdictional High Courts should defer to the decision of the jurisdictional High Court as a binding precedent. The Tribunal specifically referenced cases where co-operative societies were deemed eligible for deduction under section 80P(2)(d) for interest received from co-operative banks without adjusting interest paid to the bank. By relying on these legal positions, the Tribunal concluded that the order passed by the Assessing Officer was not erroneous, and hence, the grounds of appeal raised by the assessee were allowed.

3. Decision and Outcome:
Given that the issue was squarely covered in favor of the assessee by a previous decision of the coordinate Bench, and there were no new facts or legal changes presented by the Revenue, the Tribunal decided to delete the addition made by the Assessing Officer. Consequently, the appeal filed by the assessee was allowed, and the order was pronounced in favor of the assessee on 19/07/2022.

This detailed analysis of the judgment showcases the legal intricacies involved in challenging the addition of interest and dividend income from a co-operative bank under section 80P(2)(d) of the Income Tax Act, 1961, and how legal precedents and interpretations played a crucial role in arriving at the final decision.