2024 (3) TMI 93 - AT - Income Tax

Deduction u/s 80P(2)(a)(i) - interest derived from various other co-operative societies/Nationalised/scheduled banks - HELD THAT - It is found that the instant issue is no more res integra as decided in The Rena Sahakari Sakhar Karkhana Ltd 2022 (1) TMI 419 - ITAT PUNE wherein held commission income on collection of bills from MSEDCL has been made eligible for deduction u/s. 80P(2)(a) on the ground of the same being in the nature of business activity to accept the assessee s sec.80P(2)(d) deduction claim in very terms. Decided in favour of assessee.

Summary

Issues Involved:
1. Disallowance of deduction u/s 80(P)(2)(a)(i) of the Income Tax Act.
2. Direct addition to the income of the appellant from gross commission earned from MSEDCL.

Summary:

1. Disallowance of Deduction u/s 80(P)(2)(a)(i):
The assessee challenged the disallowance of a deduction amounting to Rs. 23,62,370/- u/s 80(P)(2)(a)(i) of the Income Tax Act. The lower authorities had declined the deduction, holding that the interest earned from investments in other cooperative societies/nationalized/scheduled banks is taxable under the head "Income from Other Sources" and not "Income from Profits and Gains from Business/Profession." The tribunal referred to its recent coordinate bench's order in ITA.No.1249/PUN./2018 dated 07.01.2022 (The Rena Sahakari Sakhar Karkhana Ltd. vs. PCIT), which held that interest income derived by a cooperative society from its investments with any other cooperative society is eligible for deduction u/s 80P(2)(d). The tribunal concluded that the interest income earned by a cooperative society from its investments held with a cooperative bank is entitled to deduction u/s 80P(2)(d). Consequently, the tribunal accepted the assessee's deduction claim.

2. Direct Addition to Income from Gross Commission Earned from MSEDCL:
The assessee contested the addition of Rs. 15,24,810/- as gross commission earned from MSEDCL without considering the direct expenses of Rs. 16,35,798/- incurred in running the MSEDCL bill collection center, resulting in a net loss of Rs. 1,03,539/-. The tribunal referred to its recent coordinate bench's order in Bhagyalaxmi Nagari Sahakari Path Sanstha Meryadit vs. ITO ITA.Nos.705 & 706/PUN./2021 decided on 14.03.2022, which allowed deduction on commission from MSEDCL bills as it was considered a business activity eligible for deduction u/s 80P(2)(a). The tribunal, following the detailed discussion, accepted the assessee's claim regarding the commission earned from MSEDCL.

Conclusion:
The tribunal allowed the assessee's appeal, granting the deductions claimed u/s 80(P)(2)(a)(i) and for the commission earned from MSEDCL. The order was pronounced in the open Court on 28.02.2024.