2023 (5) TMI 270 - AT - Income Tax

Deduction u/s 80P - assessee has claimed deduction of interest from staff welfare fund and interest income from staff loan and also had earned miscellaneous income which represent amounts received from members for giving various services - HELD THAT - We viewed that income derived from such transactions are eligible for deduction u/s 80P(2)(a)(i) and the interest income earned by the assessee from staff welfare fund and miscellaneous income earned from various services provided to its members are beneficial to the members of the assessee. Therefore, we hold that assessee is eligible for claim deduction u/s 80P(2)(a)(i) - Accordingly, the grounds raised by the assessee are allowed and set aside the order passed by the CIT(A). We also direct the AO to delete the addition made against the assessee in terms of assessment order passed u/s 143(3) of the Act. Appeal of the assessee is allowed.

Summary

Issues:
The issues involved in this case are related to the deduction u/s 80P and the addition of certain income as income from other sources u/s 56 of the Income Tax Act, 1961.

Deduction u/s 80P:
The appeal was filed by the assessee against the order of the ld. CIT(A) dated 30.03.2022, arising out of the assessment order framed u/s 143(3) of the Income Tax Act dated 31.12.2016. The assessee contended that the additions made by the ld. AO should be allowed as deduction u/s 80P as per the conditions laid therein. The ld. AO had added certain amounts as income from other sources, which the assessee argued were exempted income related to giving loans to members and miscellaneous receipts received from members. The Tribunal found that the income derived from such transactions was eligible for deduction u/s 80P(2)(a)(i) as it was beneficial to the members of the assessee. Therefore, the Tribunal allowed the grounds raised by the assessee, set aside the order of the ld. CIT(A), and directed the AO to delete the addition made against the assessee in the assessment order.

Addition as Income from Other Sources:
The assessee had received interest from staff welfare fund, interest from staff loan, and miscellaneous income, which were considered exempted income related to giving loans to members and providing services to members. The ld. AO added a sum as income from other sources due to lack of reasonable explanation from the assessee. The Tribunal, after considering the submissions, held that the income earned by the assessee from staff welfare fund and miscellaneous services provided to members was eligible for deduction u/s 80P(2)(a)(i) of the Act. Consequently, the Tribunal allowed the appeal of the assessee, setting aside the order of the ld. CIT(A) and directing the AO to delete the addition made against the assessee.