2022 (8) TMI 358 - AT - Income Tax

Deduction u/s.80P(2)(a)(i) in respect of interest income earned from banks - AO held such interest income to be falling under the head Income from other sources and hence, ineligible for deduction u/s.80P. - HELD THAT - The Pune Benches of the Tribunal in Sureshdada Jain Nagari Sahakari Patsanstha Maryadit 2019 (4) TMI 682 - ITAT PUNE decided the question of availability of deduction u/s 80P on interest income by noticing that the Pune Bench in an earlier case of Shri Laxmi Narayan Nagari Sahakari Pat Sanstha Maryadit 2015 (8) TMI 1085 - ITAT PUNE has allowed similar deduction. In the said case, the Tribunal discussed the contrary views expressed by the Hon ble Karnataka High Court in Tumkur Merchants Souharda Credit Cooperative Ltd. 2015 (2) TMI 995 - KARNATAKA HIGH COURT allowing deduction u/s. 80P on interest income and that of the Hon ble Delhi High Court in Mantola Cooperative Thrift Credit Society Ltd. 2014 (9) TMI 833 - DELHI HIGH COURT not allowing deduction u/s.80P on interest income earned from banks. Both the Hon ble High Courts took into consideration the ratio laid down in the case of Totgar s Cooperative Sale Society Ltd. 2010 (2) TMI 3 - SUPREME COURT - No direct judgment from the Hon ble jurisdictional High Court on the point having been pointed out, the Tribunal in Shri Laxmi Narayan Nagari Sahakari Pat Sanstha Maryadit (supra) preferred to go with the view in favour of the assessee by the Hon ble Karnataka High Court in the case of Tumkur Merchants Souharda Credit Cooperative Ltd. (supra). The position continues to remain the same before this Tribunal also. Assessee appeal allowed.

Summary

Issues:
Assessment of deduction u/s.80P(2)(a)(i) on interest income earned by a Cooperative Society for A.Y. 2015-16 and 2017-18.

Analysis:
For the assessment year 2015-16, the assessee, a Cooperative Society, claimed deduction u/s.80P(2)(a)(i) for interest income from banks. The AO treated the interest income as "Income from other sources," disallowing the deduction. The ld. CIT(A) upheld the AO's decision, leading the assessee to appeal to the Tribunal. The Tribunal noted a similar disallowance in the previous year but observed a departure in the current year. Referring to precedents, the Tribunal highlighted conflicting views by different High Courts on the eligibility of deduction u/s.80P on interest income. Citing relevant case laws, the Tribunal favored the assessee, overturning the impugned order for A.Y. 2015-16.

In the case of A.Y. 2017-18, the assessee earned interest income from banks, which the AO disallowed under section 80P(2)(d). The ld. CIT(A) concurred with the AO's decision. The Tribunal found the facts and circumstances of this appeal to be similar to the previous year. Relying on the decision made for A.Y. 2015-16, the Tribunal overturned the impugned order for A.Y. 2017-18 as well. The Tribunal emphasized that the primary claim of the assessee directly pertained to the eligibility of deduction u/s.80P(2)(a)(i), distinguishing it from other cases cited by the authorities.

In conclusion, the Tribunal allowed both appeals, overturning the decisions of the lower authorities. The Tribunal's analysis was based on the interpretation of relevant provisions, precedents, and the specific nature of the Cooperative Society's income, leading to the favorable outcome for the assessee in both assessment years.