The Pune bench of the Income Tax Appellate Tribunal (ITAT) directed the assessing officer to re-adjudicate the rejection of the claim of deduction under section 80P of the Income Tax Act,1961 due to utilization of income for nonbusiness activities.
Yuvashakti Nagari Sahkari, the appellant assessee was a cooperative credit society 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 made by the assessing officer.
Pramod S. Shingte, the counsel for the assessee contended that Section 80P(2)(a)(i) of the Income Tax Act provides that in the case of a cooperative society engaged in carrying on the business of banking or providing credit facilities to its members, the whole of the number of profits and gains of business attributable to such activities shall be deductible in the computation of total income.
Gurmeel Singh, the counsel for the revenue relied on the decisions made by the lower authorities and contended that the claim of deduction under section 80P of the Income Tax Act was eligible for the interest income earned from the business purposes.
It was further submitted that the rejection made by the assessing officer was as per the law and is liable to be sustained.
The bench observed that the claim of deduction by the assessee was as per the law and the assessee was entitled to get the deduction under section 80P of the Income Tax Act.
A single-member bench comprising R.S. Syal (Vice President) held that the assessee was eligible to get the claim of deduction of interest income earned and directed the assessing officer to grant the deduction while allowing the appeal filed by the assessee.
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