2018 (11) TMI 1589 - AT - Income Tax

Deduction u/s.80P in respect of interest earned by the assessee society from State Bank of India denied - HELD THAT - There being no direct judgment from the Hon ble jurisdictional High Court on the point the Tribunal in Shri Laxmi Narayan Nagari Sahakari Pat Sanstha Maryadit (2015 (8) TMI 1085 - ITAT PUNE) preferred to go with the view taken in favour of the assessee by the Hon ble Karnataka High Court in the case of Tumkur Merchants Souharda Credit Cooperative Ltd. 2015 (2) TMI 995 - KARNATAKA HIGH COURT . In the absence of their being any change in the legal position prevailing on this issue after the passing of the order by the Pune Bench of the Tribunal in Shri Laxmi Narayan Nagari Sahakari Pat Sanstha Maryadit (supra) and host of other orders reiterating the similar view respectfully following the precedent we uphold the impugned order in allowing deduction u/s.80P on the interest income. - Decided against revenue

Summary

Issues:
Appeal against allowing deduction u/s.80P of the Income-tax Act, 1961 for interest earned by the assessee society from State Bank of India.

Analysis:
The appeal before the Appellate Tribunal ITAT Pune was focused on the deduction u/s.80P of the Income-tax Act, 1961, related to interest income earned by the assessee society from State Bank of India. The Assessing Officer had denied the deduction claimed by the assessee, leading to the appeal by the Revenue against the order of the CIT(A)-2, Nashik for the Assessment Year 2012-13.

During the assessment proceedings, it was noted that the assessee, a co-operative society providing credit facilities to its members, earned interest income from State Bank of India. The AO disallowed the deduction claimed u/s.80P. However, the ld. CIT(A) allowed the deduction by relying on previous Tribunal orders, including one involving Shivneri Nagari Sahakari Patsanstha Ltd. The Revenue challenged this decision before the Tribunal.

In the Tribunal's analysis, it was observed that the ld. CIT(A) had based the allowance of deduction u/s.80P on the precedent set by the Tribunal in the case of Shivneri Nagari Sahakari Patsanstha Ltd. Additionally, another order by the Pune Bench was presented, supporting a similar deduction in a different case. The Tribunal noted conflicting views by different High Courts but preferred to follow the stance favoring the assessee, as per the decision of the Hon’ble Karnataka High Court. With no direct judgment from the jurisdictional High Court, the Tribunal upheld the deduction u/s.80P on interest income, in line with the previous decisions and legal precedents.

Ultimately, the Tribunal dismissed the appeal, affirming the order that allowed the deduction u/s.80P on the interest income earned by the assessee society from State Bank of India. The decision was pronounced in the Open Court on 28th November 2018.