2023 (5) TMI 1436 - AT - Income Tax

Denial of deduction u/s.80P(2)(a)(i) - interest income earned from a nationalized bank namely Oriental Bank Ltd. Kolhapur - HELD THAT - Pune Tribunal in Sureshdada Jain Nagari Sahakari Patsanstha Maryadit 2019 (4) TMI 682 - ITAT PUNE has decided the question of availability of deduction u/s 80P on interest income by noticing that the Pune Bench in an earlier case of Shri Laxmi Narayan Nagari Sahakari Pat Sanstha Maryadit 2019 (4) TMI 682 - ITAT PUNE has allowed similar deduction. In the said case the Tribunal discussed the contrary views expressed in Tumkur Merchants Souharda Credit Cooperative Ltd. 2015 (2) TMI 995 - KARNATAKA HIGH COURT allowing deduction u/s. 80P on interest income and that of Mantola Cooperative Thrift Credit Society Ltd. 2014 (9) TMI 833 - DELHI HIGH COURT not allowing deduction u/s.80P on interest income earned from banks. Both the Hon ble High Courts took into consideration the ratio laid down in the case of Totgar s Cooperative Sale Society Ltd. 2010 (2) TMI 3 - SUPREME COURT No direct judgment from the Hon ble jurisdictional High Court on the point having been pointed out the Tribunal in Shri Laxmi Narayan Nagari Sahakari Pat Sanstha Maryadit (supra) preferred to go with the view in favour of the assessee by the Hon ble Karnataka High Court in the case of Tumkur Merchants Souharda Credit Cooperative Ltd. (supra). The position continues to remain the same before this Tribunal also. Respectfully following the precedent the impugned order is overturned and the interest income earned from the deposits kept with nationalised bank is allowed as deduction u/s.80P(2)(a)(i) - Assessee appeal allowed.

Summary

The ITAT Pune, in appeal arising from the CIT(A) order dated 16-01-2023 under section 250 of the Income-tax Act, 1961 for AY 2017-18, addressed the allowability of deduction under section 80P(2)(a)(i) on interest income earned by a credit cooperative society from a nationalized bank. The Assessing Officer had denied the deduction, upheld by the CIT(A). The Tribunal noted absence of the assessee and relied on precedents, particularly the Pune Tribunal's decisions in Sureshdada Jain Nagari Sahakari Patsanstha Maryadit v. Pr.CIT and Shri Laxmi Narayan Nagari Sahakari Pat Sanstha Maryadit v. ITO, which favored allowing the deduction. The Tribunal distinguished conflicting views from the Karnataka High Court in Tumkur Merchants Souharda Credit Cooperative Ltd. (allowing deduction) and the Delhi High Court in Mantola Cooperative Thrift Credit Society Ltd. (denying deduction), noting no binding jurisdictional High Court ruling. Following the Karnataka High Court's ratio, the Tribunal held that "the interest income earned from the deposits kept with nationalised bank amounting to Rs.5,16,876/- is allowed as deduction u/s.80P(2)(a)(i) of the Act." Consequently, the appeal was allowed.