9911796707
|
Home
Forgot password New User/ Regiser ⇒ Register to get Live Demo
2024 (7) TMI 1130 - AT - Income TaxDenial of deduction u/s. 80P(2)(d) - interest received - DR contended that interest income earned by a co-operative society on deposits made out of surplus funds with co-operative banks qualifies for deduction both u/s 80P(2)(a)(i) and section 80P(2)(d) - HELD THAT - In the present case, the interest received by the Appellant from Punjab State Cooperative Agricultural Development Bank, Chandigarh, clearly falls within the ambit of Section 80P(2)(d). It is income derived by the Appellant from its investments with another cooperative society, namely, Punjab State Cooperative Agricultural Development Bank (SADB). In our view, the statutory provision u/s 80P(2)(d) is unambiguous and explicit in its scope. It allows for a deduction in respect of interest income derived from investments with other cooperative societies. The interest received by the Appellant squarely meets this criterion and is therefore eligible for deduction u/s 80P(2)(d).Accordingly, the CIT(A) ought to have recognized the eligibility of the interest received by the Appellant for deduction u/s 80P(2)(d). In the present case, the interest being received by the Appellant from Punjab State Cooperative Agricultural Development Bank, Chandigarh, which clearly falls within the ambit of Section 80P(2)(d). Thus, it is the income derived by the Appellant from its investments with another cooperative society, namely, Punjab State Cooperative Agricultural Development Bank (SADB). We accept that the grievance of the appellant is justified and accordingly following the coordinate bench and judicial precedent, we hold that appellant is eligible for deduction u/s 80P(2)(d) of the Act and therefore, the addition is deleted. Disallowance of payment to Gratuity Fund - CIT(A) has observed that Gratuity Fund allowable as per Rule at 8.33% and Excess contribution to Gratuity Fund has been disallowed - AR submitted that Id. CIT (Appeals) has ignored the fact that such payment of gratuity was according to the terms, conditions and directions of the Head office - HELD THAT - As we hold that since the AO disallowed the excess contribution to gratuity fund contributed by the appellant during the Assessment Year 2020-21 amounting to Rs. 36,981/- and rightly added back to the total income of the appellant under the head income from other sources. We find no perversity in the order of the ld. CIT(A) on the issue of confirmation of amount of Rs. 36,981/- on account of excess payment of gratuity and thus, this ground of appeal is rejected.
Issues Involved:
1. Deduction of interest income under Section 80P(2)(d) of the Income Tax Act, 1961. 2. Disallowance of payment to Gratuity Fund. Issue-wise Detailed Analysis: 1. Deduction of Interest Income under Section 80P(2)(d): The appellant challenged the CIT (Appeals) decision that confirmed the addition of interest income amounting to Rs. 13,90,954/- as taxable under Section 56, disregarding the eligibility for deduction under Section 80P(2)(d) of the Income Tax Act, 1961. The appellant argued that the interest income earned from Punjab State Cooperative Agricultural Development Bank Ltd (SADB) qualifies for deduction under Section 80P(2)(d), which allows deductions for any income by way of interest or dividends derived by a cooperative society from its investments with any other cooperative society. The appellant cited several precedents, including the ITAT Pune Bench's decision in "Kolhapur District Central Co-op. Bank Kanista Sevakanchi Sahakar Pat Sanstha Ltd. v. Income Tax Officer," which held that interest income earned by a cooperative society on deposits made out of surplus funds with cooperative banks qualifies for deduction under Section 80P(2)(d). The appellant also referenced the Supreme Court's ruling in "Pr. Commissioner of Income Tax 17, Mumbai Vs. M/S. Annasaheb Patil Mathadi Kamgar Sahakari Pathpedi Limited," which affirmed that credit societies are entitled to exemption under Section 80(P)(2) of the Income Tax Act. The Tribunal found that the interest received by the appellant from SADB falls within the ambit of Section 80P(2)(d), as it is income derived from investments with another cooperative society. The Tribunal noted that the statutory provision under Section 80P(2)(d) is explicit in allowing deductions for interest income derived from investments with other cooperative societies. Consequently, the Tribunal held that the CIT(A) erred in denying the deduction and annulled the impugned order, allowing the deduction of Rs. 13,90,954/- claimed by the appellant under Section 80P(2)(d). 2. Disallowance of Payment to Gratuity Fund: The appellant objected to the confirmation of the addition of Rs. 36,981/- made by the AO on account of disallowance of payment to the Gratuity Fund. The appellant argued that the payment was made according to the terms, conditions, and directions of the Head Office. However, the CIT(A) observed that the Gratuity Fund allowable as per Rule is at 8.33%, and any excess contribution to the Gratuity Fund was disallowed. The Tribunal upheld the CIT(A)'s decision, stating that the AO correctly disallowed the excess contribution to the Gratuity Fund amounting to Rs. 36,981/- and added it back to the total income of the appellant under the head "income from other sources." The Tribunal found no perversity in the CIT(A)'s order regarding the disallowance of the excess payment of gratuity and rejected this ground of appeal. Conclusion: The appeal was partly allowed. The Tribunal annulled the CIT(A)'s order denying the deduction under Section 80P(2)(d) for the interest income of Rs. 13,90,954/- and upheld the disallowance of Rs. 36,981/- on account of the excess payment to the Gratuity Fund.
|
