Tribunal allows deduction under Section 80P for interest income from State Bank.

The Tribunal upheld the allowance of deduction u/s.80P of the Income-tax Act, 1961 for interest income earned by the assessee society from State Bank of India. Relying on previous Tribunal decisions and in the absence of a direct judgment from the jurisdictional High Court, the Tribunal dismissed the Revenue's appeal and affirmed the order permitting the deduction. The decision was rendered on 28th November 2018.

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Issues:
Appeal against allowing deduction u/s.80P of the Income-tax Act, 1961 for interest earned by the assessee society from State Bank of India.

Analysis:
The appeal before the Appellate Tribunal ITAT Pune was focused on the deduction u/s.80P of the Income-tax Act, 1961, related to interest income earned by the assessee society from State Bank of India. The Assessing Officer had denied the deduction claimed by the assessee, leading to the appeal by the Revenue against the order of the CIT(A)-2, Nashik for the Assessment Year 2012-13.

During the assessment proceedings, it was noted that the assessee, a co-operative society providing credit facilities to its members, earned interest income from State Bank of India. The AO disallowed the deduction claimed u/s.80P. However, the ld. CIT(A) allowed the deduction by relying on previous Tribunal orders, including one involving Shivneri Nagari Sahakari Patsanstha Ltd. The Revenue challenged this decision before the Tribunal.

In the Tribunal's analysis, it was observed that the ld. CIT(A) had based the allowance of deduction u/s.80P on the precedent set by the Tribunal in the case of Shivneri Nagari Sahakari Patsanstha Ltd. Additionally, another order by the Pune Bench was presented, supporting a similar deduction in a different case. The Tribunal noted conflicting views by different High Courts but preferred to follow the stance favoring the assessee, as per the decision of the Hon’ble Karnataka High Court. With no direct judgment from the jurisdictional High Court, the Tribunal upheld the deduction u/s.80P on interest income, in line with the previous decisions and legal precedents.

Ultimately, the Tribunal dismissed the appeal, affirming the order that allowed the deduction u/s.80P on the interest income earned by the assessee society from State Bank of India. The decision was pronounced in the Open Court on 28th November 2018.

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