Interest earned from investment in Nationalized Banks to be granted Benefit of Deduction u/s 80P(2): ITAT [Read Order]

The Income Tax Appellate Tribunal (ITAT), Kolkata Bench, held that interest earned from investment in Nationalized Banks are to be granted benefit of deduction under Section 80P(2) of the Income Tax Act, 1961.

The assessee, Pahalampur Samabay Krishi Unnayan Samity Ltd, filed two appeals against orders passed by JCIT(A)-1, Visakhapatnam and CIT(A), Kolkata. The representative for the assessee was Somnath Ghosh and Kallol Mistry represented the Revenue department. The assessee had made investments in nationalized banks, for which they received interest to the tune of INR 82,95,187/- in 2016-17.

The counsel for the assessee submitted that the assessee had been denied the benefit of deduction under Section 80P(2) on the ground that the interest is not eligible for deduction, treating the same as income from other sources. Reliance was placed on the decision of the Coordinate Bench of ITAT in the case of Mundukhola Baksagarh SKUS Ltd v. ITO (2025), where the bench held that the assessee is entitled to the benefit of deduction for the interest earned from co-operative banks as the same is eligible for deduction.

Other case laws referred to by the assessee-appellant counsel were Gour Gamin Bank v. DCIT (2014) and Sagar Gamin Bank v. DCIT (2014). The opposing counsel supported the orders of the Assessing Officer and the Commissioner of Income Tax (Appeals).

The ITAT found merit in the contentions put forth by the assessee and directed the Assessing Officer to grant the benefit of deduction under Section 80P(2) on the interest earned from nationalized banks. The appeals of the assessee were accordingly allowed by the bench of George Mathan (Judicial Member).

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