2022 (10) TMI 767 - AT - Income Tax

Denial of deduction u/s.80P - interest income earned from deposits kept with banks - HELD THAT - 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. Vs. CIT (2014) 110 DTR 89 (Delhi) 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 Totagar s Cooperative Sale Society Ltd. 2014 (9) TMI 833 - DELHI HIGH 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).Therefore, overturn the impugned order on this score and allow the deduction. Assessee appeal is allowed.

Summary

Issues:
1. Denial of deduction u/s.80P for interest income earned from deposits kept with banks.

Analysis:
The appeal pertains to the denial of deduction u/s.80P in relation to interest income earned from deposits kept with banks by a Cooperative society. The Assessing Officer disallowed the deduction invoking section 80P(2)(d). The case was taken up for scrutiny, and the AO made the disallowance of deduction on the interest income. The assessee, after an unsuccessful appeal before the CIT(A), approached the Tribunal challenging the denial of deduction.

Upon hearing both parties and reviewing the case, the Tribunal noted that the issue raised in the appeal has been addressed in previous orders by the Pune Tribunal. Referring to the decisions of the Pune Benches in similar cases, the Tribunal highlighted the conflicting views of different High Courts on the availability of deduction u/s 80P on interest income. The Tribunal considered the judgments of the Hon'ble Karnataka High Court and the Hon'ble Delhi High Court, which had differing opinions on this matter. In the absence of a direct judgment from the jurisdictional High Court, the Tribunal relied on the view favoring the assessee by the Hon'ble Karnataka High Court and decided to overturn the impugned order, allowing the deduction u/s.80P for the interest income earned.

Therefore, the Tribunal allowed the appeal, overturning the denial of deduction u/s.80P for the interest income earned from deposits kept with banks by the Cooperative society. The order was pronounced in the Open Court on 18th October 2022.