The Kolkata bench of the Income Tax Appellate Tribunal (ITAT) held that the income earned by the co-operative society is eligible for deduction under Section 80P(2)(a)(i) of the Income Tax Act, 1961.
The assessee is a co-operative society under the West Bengal Co-operative Societies Act, of 1940. The main objective of the assessee is a primary co-operative Agriculture and Rural Development Bank as defined in the explanation appearing under Section 80P(4) of the Income Tax Act. The assessee filed its return of income declaring income of Rs. 62,254/-.
The case of the assessee was selected for scrutiny under Section 143(3) of the Income Tax Act.
While framing the assessment, the Assessing Officer disallowed the claim of the assessee under Section 80P of the Income Tax Act by holding that since the assessee earned the alleged interest amount from the SBI and same is not eligible for deduction under Section 80P of the Income Tax Act.
The Authorized Representative submitted that the Commissioner of Income Tax (Appeals) [CIT(A)] erred in upholding the action of assessee by disallowing claim of deduction under Section 80P(v)(ai) of the Income Tax Act on the ground that interest income of Rs. 16,86,273/- earned from fixed deposit investment with SBI which was not derived from income and he viewed that it was taxable under the head of income from other sources.
It was further submitted that the assessee has deposited such funds with SBI in order to comply with the provisions of the West Bengal Cooperative Society Act which is mandatory for the assessee while accepting deposits from its members.
Therefore, the interest earned by the assessee is income from the business of the assessee and the assessee is eligible for claim of deduction under Section 80P of the Income Tax Act.
The Departmental Representative relied on the decision of the authorities below and he supported the action taken by the Commissioner of Income Tax (Appeal).
The two-bench member comprising of Manish Borad (Accountant member) and Sonjoy Sarma (Judicial member) held that the alleged interest income earned by the assessee is a business income and the assessing officer erred in treating it as income from other sources.
Therefore, the assessee is eligible for claiming deduction under Section 80P(2)(a)(i) of the Income Tax Act.
The order of the Commissioner of Income Tax (Appeal) was set aside and deleted the disallowance of deduction under Section 80P(2)(a)(i) of the Income Tax Act.
Thus, the appeal of the assessee was allowed.
Subscribe Taxscan Premium to view the JudgmentSupport our journalism by subscribing to Taxscan premium. Follow us on Telegram for quick updates
