Tax Reassessment Overturned: ITAT Deletes Disallowance Under Sec. 68, Orders Reassessment Following SC Ruling.

The ITAT set aside the CIT(A) order, directing reassessment of disallowances under sec. 80P(2)(a)(i) and 80P(2)(d) of the Income-tax Act, following a new Supreme Court ruling. The addition under sec. 68 was deemed unjustified due to flawed reasoning by the AO, leading to deletion of the disallowance. The appeal was allowed for statistical purposes.

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Issues:
1. Disallowance of claim made u/s 80P(2)(a)(i) of the Income-tax Act,1961.
2. Disallowance of claim made u/s 80P(2)(d) of the Act.
3. Addition made u/s 68 of the Act.

Analysis:
1. Disallowance u/s 80P(2)(a)(i) of the Act:
The AO disallowed the claim under this section as the interest income was considered under "income from other sources" and not entirely as "income from business." The AO held that the assessee's principle of mutuality was affected, following a Supreme Court decision. The AR argued for a fresh examination post the Supreme Court's clarification in a different case. The Tribunal agreed, setting aside the CIT(A) order for reassessment based on the new Supreme Court ruling.

2. Disallowance u/s 80P(2)(d) of the Act:
The AO disallowed this claim as well, considering the interest income from bank deposits as "income from other sources." The AR cited a similar case where such interest was considered business income eligible for deduction u/s 80P(2)(a)(i). The Tribunal, noting this new argument raised for the first time, referred the issue back to the AO for proper examination.

3. Addition u/s 68 of the Act:
The AO added the amount deposited post-demonetization as unexplained income under sec. 68. The AR argued that the deposits were legitimate business collections recorded in the books, not unexplained income. The Tribunal found the AO's reasoning flawed, as the demonetized notes were collected before RBI's notification prohibiting such collections. The AO's application of sec. 68 was deemed unjustified, and the order was set aside to delete the disallowance.

In conclusion, the Tribunal allowed the appeal for statistical purposes, directing a reassessment based on the clarified legal principles and proper examination of the issues raised.

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