The Income Tax Appellate Tribunal (ITAT), Bangalore Bench while remitting the matter back to the Assessing Officer (AO) ruled that the Karnataka Judicial Officers Credit Co-operative Society entitled to Income Tax Deduction on proportionate cost, administrative, and other expenses.
The assessee, Karnataka Judicial Officers Credit Co-operative Society Ltd. is a credit co- operative society engaged in the business of accepting deposits from and lending loans to its members. The assessee filed its return of income claiming deduction under section 80P of the Act.
The AO rejected the claim on the reasoning that the assessee is a bank, and hence provisions of 80 Section P are not applicable. The assessee had earned interest from deposits/investments kept with other co-operative societies. The AO held that the assessee is not eligible to claim deduction under section 80P(2)(d) of the Act in respect of the income.
The issue raised was in respect of the deduction claimed by the assessee under section 80P(2)(d) of the Act in respect of interest income.
The coram of the Accountant Member, B.R.Baskaran, and Judicial Member Beena Pillai relied on the decision of the coordinate bench of ITAT in the case of Karkala Co-op Bank Ltd. wherein it was held that the interest earned by the appellant is an income from other sources without allowing deduction in respect of proportionate cost, administrative expenses incurred in respect of such deposits.
Therefore, the ITAT directed the A.O. to allow deduction of proportionate cost, administrative and other expenses, if the A.O. proposes to assess the interest income earned from bank deposits as income under the head “other sources”.
The Tribunal set aside the order of CIT(A) and restore the same to the file of the AO
Subscribe Taxscan Premium to view the JudgmentSupport our journalism by subscribing to Taxscan AdFree. Follow us on Telegram for quick updates.
