2017 (7) TMI 1417 - AT - Income Tax

Tribunal affirms CIT(A)'s decision in favor of assessee on interest income eligibility under Sec. 80-P.

The Tribunal upheld the CIT(A)'s order, ruling in favor of the assessee and dismissing the Revenue's appeal. The decision emphasized that interest income ... Exemption claimed u/s 80-P with regard to the interest income earned on fixed deposit with State Bank of India - CIT(A) noticed that the decision of the Mumbai Bench of Tribunal in the case of M/s. Jaoli Taluka Sahakari Patpedhi Maryadit [2015 (9) TMI 170 - ITAT MUMBAI] fully covered the controversy in favour of the assessee - HELD THAT:- At the time of hearing, the ld. DR reiterated the stand of the Assessing Officer, but quite fairly pointed out that the CIT(A) has followed the decision of the Mumbai Bench of the Tribunal in the case of M/s. Jaoli Taluka Sahakari Patpedhi Maryadit (supra), which continues to hold the field. In view of the aforesaid fact-situation, we find no reasons to interfere with the decision of the CIT(A), which we hereby affirm. Thus, appeal of the Revenue is dismissed. Issues:Exemption claimed under Sec. 80-P of the Income Tax Act for interest income earned on fixed deposit with State Bank of India.Analysis:The appeal by the Revenue challenges the denial of exemption under Sec. 80-P of the Act for interest income earned on fixed deposit with State Bank of India. The Assessing Officer disallowed the exemption, stating that the income did not relate to providing credit facilities to members. The assessee argued that it was not a cooperative bank and relied on relevant case laws to support its claim. The CIT(A) found in favor of the assessee, citing precedents where similar claims were allowed under Sec. 80-P. The CIT(A) emphasized that the interest income was attributable to the business activity of the appellant, following the decision of the ITAT Mumbai Bench in a related case. The Revenue appealed this decision.During the hearing, the Departmental Representative supported the Assessing Officer's position but acknowledged the precedent set by the Mumbai Bench of the Tribunal. The Tribunal upheld the CIT(A)'s decision, noting the consistency of the Mumbai Bench's rulings in such matters. Consequently, the Tribunal affirmed the CIT(A)'s decision and dismissed the Revenue's appeal. The Tribunal concluded that the interest income from investments in State Bank of India was eligible for deduction under Sec. 80-P(2)(a)(i), in line with the precedents and legal interpretations presented during the case.Therefore, the Tribunal upheld the CIT(A)'s order, ruling in favor of the assessee and dismissing the Revenue's appeal. The decision highlighted the importance of the interest income being attributable to the business activities of the appellant for eligibility under Sec. 80-P of the Income Tax Act. The judgment serves as a significant legal precedent for similar cases involving exemption claims under Sec. 80-P, emphasizing the interpretation of the law and relevant case laws to determine the applicability of deductions for interest income earned by cooperative credit societies.