The Bangalore Bench of the Income Tax Appellate Tribunal ( ITAT ) has directed the Assessing Officer (AO) to reassess the fixed deposit interest claims of Tungabhadra Credit Co-operative Society, emphasizing that the exclusion under Section 80P(2)(d) must be considered alongside Section 57 of the Income Tax Act, 1961.
The case arose after the Tungabhadra Credit Co-operative Society appealed against the orders issued by the National Faceless Assessment Centre ( NFAC ) on 24th January 2024, for the assessment year ( AY ) 2013-14, and on 2nd February 2024, for AYs 2014-15 and 2017-18.
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The assessee’s counsel argued that this was the second round of litigation, with the tribunal having previously remitted the issue to the AO for reassessment under Section 80P(2)(a)(i). However, the AO again rejected the claim, this time citing the Supreme Court’s decision in Citizen Co-operative Society Ltd. vs. ACIT. The counsel contended that the more pertinent decision in Mavilayi Service Co-operative Bank Ltd. v. CIT had been overlooked.
In the first round of litigation, the tribunal did not have the benefit of the Supreme Court’s later decisions. Recognizing this, the tribunal decided to remit the issues back to the AO, instructing them to reconsider the assessee’s claims in light of the Supreme Court rulings in Mavilayi Service Co-operative Bank Ltd. v. CIT and Kerala State Co-operative Agricultural and Rural Development Bank Ltd. vs. AO. The AO was also directed to review the tribunal’s stance on fixed deposit interest claims under Section 80P(2)(d) and to allow the associated expenditure under Section 57 of the Act.
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Additionally, the tribunal addressed the delays in filing the appeals—88 days for AY 2013-14 and 79 days for AYs 2014-15 and 2017-18. The delays were attributed to the negligence of the previous authorized representative in responding to notices from the Commissioner of Income Tax (Appeals) [CIT(A)]. Once a new auditor was appointed, the issue was discovered, and the appeals were promptly filed with the tribunal.
Upon reviewing the submissions, the tribunal found no evidence of malafide intent on the part of the assessee and accepted the explanation for the delays. Citing the Supreme Court’s ruling in Collector Land Acquisition vs. Mst. Katiji & Ors., the tribunal decided to condone the delay and allowed the appeals to proceed.
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The two-member bench, comprising Beena Pillai ( Judicial Member ) and Waseem Ahmed ( Accountant Member ), upheld the grounds in all three appeals.
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