The Kolkata bench of the Income Tax Appellate Tribunal (ITAT) has held that a co-operative bank is eligible for deduction under section 80P(2)(a)(i) of the Income Tax Act, 1961 interest from staff welfare fund and interest from staff loan.
The assessee, Ghatal Co-operative Agriculture and Rural Development Bank Ltd, is a co-operative rural bank claimed deduction of interest from staff welfare fund and interest from staff loan totaling to Rs. 98971/- and assessee had also earned miscellaneous income of Rs. 85047/- invoking section 80P of the Income Tax Act.
Shri Sonjoy Sarma (Judicial Member) and Shri Girish Agrawal (Accountant Member) observed that “the assessee has claimed deduction of interest from staff welfare fund and interest income from staff loan totaling of Rs. 98971/- and also had earned miscellaneous income for Rs. 85047/- which represent amounts received from members for giving various services i.e. charges for closing flexi account, fine against non-payment of R/D amount due in time and those income has been duly reflected in its revenue income also. In such a situation, we viewed that income derived from such transactions are eligible for deduction u/s 80P(2)(a)(i) and the interest income earned by the assessee from staff welfare fund and miscellaneous income earned from various services provided to its members are beneficial to the members of the assessee. Therefore, we hold that assessee is eligible for claim deduction u/s 80P(2)(a)(i) of the Act. Accordingly, the grounds raised by the assessee are allowed and set aside the order passed by the ld. CIT(A). We also direct the AO to delete the addition made against the assessee in terms of assessment order dated 31.12.2016 passed u/s 143(3) of the Act.”
The assessee was represented by Shri Asim Kumar De and the department was represented by Smt. Ranu Biswas, Addl. CIT, Sr. DR.
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