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2024 (6) TMI 1220 - AT - Income TaxIssues: 1. Denial of deduction under section 80P(2)(a)(i) of the Income Tax Act. 2. Denial of deduction under section 80P(2)(d) of the Income Tax Act. 3. Confirmation of levy of interest under sections 234A and 234B of the Act. Issue 1: Denial of deduction under section 80P(2)(a)(i) of the Income Tax Act: The appellant contested the denial of deduction under section 80P(2)(a)(i) of the Income Tax Act by the lower authorities. The Assessing Officer (AO) held that the appellant was not eligible for the deduction due to conducting business with nominal members, besides ordinary members. The appellant argued that the term "member" should be interpreted based on the State Co-operative Societies Acts under which the societies are registered. The appellant relied on various judgments, including those of the Supreme Court and the High Court of Karnataka, to support their claim. The Appellate Tribunal referred to similar cases and remitted the issue back to the AO for fresh consideration in light of the observations made in those cases. Issue 2: Denial of deduction under section 80P(2)(d) of the Income Tax Act: The appellant also challenged the denial of deduction under section 80P(2)(d) of the Income Tax Act by the lower authorities. The AO observed that the interest earned on deposits from Co-operative banks and scheduled banks should be treated as "income from other sources," leading to the denial of the deduction. The Tribunal, in a similar vein as the previous issue, remitted this matter back to the AO for fresh consideration based on relevant judgments and observations. Issue 3: Confirmation of levy of interest under sections 234A and 234B of the Act: The appellant raised concerns about the confirmation of the levy of interest under sections 234A and 234B of the Act. The Tribunal noted that if the interest earned by the appellant from banks is considered under "Income from other sources," relief should be granted to the appellant under section 57 of the Act. Consequently, the Tribunal restored this issue to the AO for reconsideration with specific instructions. In conclusion, the Appellate Tribunal partially allowed the appeal for statistical purposes, remitting all three issues back to the Assessing Officer for fresh consideration in line with relevant legal judgments and observations.
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