The Ahmedabad Bench of Income Tax Appellate Tribunal ( ITAT ) partly allowed the appeal filed by the assessee remitting the matter back to the Assessing Officer ( AO ) for verification of related expenditures concerning the disallowance of deduction for interest from a Nationalized Bank under Section 80P(2)(a)(i) of Income Tax Act,1961.
The State Transport Employees Co Operative Credit and Thrift Society, appellant-assessee,filed its return showing no income after claiming a deduction of Rs.34,32,392 under Section 80P. The case was selected for scrutiny, and notices were issued.
During the assessment, the assessee claimed a deduction of Rs.34,33,392, including Rs.1,73,036 for interest on deposits with the State Bank of India, a nationalized bank. The Assessing Officer added this amount, citing the Supreme Court’s decision in the Totgar case.
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The assessee also earned Rs.95,242 from savings bank interest and Rs.3,62,719 from fixed deposits with Mehsana District Central Co-operative Bank. The total deduction claimed was Rs.4,57,961, which the Assessing Officer disallowed.
The assessee aggrieved by the order of AO appealed before the Commissioner of Income Tax(Appeals)[CIT(A)] who later dismissed the appeal.The assessee then appealed before the tribunal.
The issue was the disallowance of a Rs.1,73,036/- deduction claimed under section 80P(2)(a)(i) for interest received from the State Bank of India. The taxpayer rightly claimed this interest, according to the assessee counsel.
Comprehensive Guide of Law and Procedure for Filing of Income Tax Appeals, Click Here
The two member bench comprising Suchitra Kamble(Judicial Member) and Makrand Vasnat Mahadeokar(Accountant Member) heard both parties and reviewed the material. It was noted that interest from SBI, a Nationalized Bank, is not allowed under section 80P. However, the assessee had related expenses that should be checked and allowed. The issue was sent back to the AO for review and verification of these expenses. The assessee should be given a chance to present their case.
In short,the appeal filed by the assessee was partly allowed.
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