Interest Income Earned from Scheduled Banks would not be Entitled to Deduction Under Section 80P(2)(a)(i) of Income Tax Act: ITAT [Read Order]

The Bangalore bench of the Income Tax Appellate Tribunal (ITAT) held that the interest income earned from the scheduled banks would not be entitled to deduction under section 80P(2)(a)(i) or 80P(2)(d) of the Income Tax Act,1961. 

Uppinangady Catholic Multipurpose Co-operative Society, the appellant assessee was a credit co-operative society registered under the Karnataka Co-operative Societies Act, 1959, and engaged in the business of providing credit facilities to its members.

The assessee appealed against the order passed by the Commissioner of Income Tax (Appeals) for confirming the rejection of the claim of deduction by the assessing officer under sections 80P(2)(a)(i) or 80P(2)(d) of the Income Tax Act. 

Mahesh R. Uppin, the counsel for the assessee contended that regarding the regular members, the assessee would be entitled to proportionate deduction under section 80P(2)(a)(i) of the Income Tax Act.

It was further submitted that the rejection of the claim of deduction made by the assessing officer was not as per the law and is liable to be deleted. 

Ganesh R. Ghale, the counsel for the revenue department relied on the decisions made by the lower authorities and contended that the assessee was essentially dealing with non-members, and therefore would not be entitled to deduction under section 80P(2)(a)(i) of the Income Tax Act.

A single-member bench comprising George George K (Judicial) held that interest income earned from scheduled banks was not entitled to the claim of deduction either under section 80P(2)(a)(i) or 80P(2)(d) of the Income Tax Act and directed re-adjudication while allowing the appeal filed by the assessee.

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