2022 (11) TMI 536 - AT - Income Tax
Deduction u/s.80P(2)(a)(i) - AO held the assessee to be a primary Cooperative Society and hence, not eligible for deduction in terms of section 80P(4) - CIT-A Partly reversed the order of the AO rejected the assessee’s claim towards interest on long term investments/deposits held for a period more than one year, which was held to be ‘Income from other sources’ on which, the deduction us.80P(2)(a)(i) and u/s.80P(2)(d) was not eligible and AO was directed to allow cost of the fund, if any and proportionate administrative expenses in respect of such income u/s. 57(iii) - HELD THAT:- Interest income on short term deposits for a period less than one year has been held to be business income and hence, eligible for deduction u/s.80P(2)(a)(i). The ld. DR could not draw my attention towards any provision drawing a distinction between deposits/investments held for a period of more than one year to be treated as ‘Income from other sources’ and for a period less than one year as ‘Business income’. It is seen that the assessee falls under the jurisdiction of Hon’ble Karnataka High Court.
In Tumur Merchants Souharda Credit Cooperative Ltd. [2015 (2) TMI 995 - KARNATAKA HIGH COURT]has held the amount of interest received from deposits kept with banks as eligible for deduction u/s.80P of the Act. In view of the fact that the relevant distinction between the short term deposits and long term deposits and the consequential eligibility and non-eligibility for deduction u/s.80P, is not borne out from the impugned order, I am of the considered opinion that it would be just and fair if the impugned order is set aside and the matter is restored to the file of the ld. CIT(A).
Thus order accordingly and direct him to pass a speaking order and to make a mention of the relevant provision, if any, under which such a distinction has been drawn. He will also take into consideration the ratio of the above said judgment of the Hon’ble Karnataka High Court. Needless to say, the assessee will be allowed reasonable opportunity of hearing. Appeals are allowed for statistical purposes.