Appeal allowed on conflicting judgments for deduction under section 80P.

The appeal was against the denial of deduction under section 80P of the Income-tax Act by the Assessing Officer. The CIT(A) initially allowed the deduction based on a judgment of the jurisdictional High Court but later issued a notice proposing rectification based on a subsequent Full Bench judgment. The ITAT directed the Assessing Officer to examine the activities of the assessee society to determine eligibility for the deduction under section 80P(2) in line with the conflicting judgments of the High Court. The appeal was allowed for statistical purposes, and the issues were resolved by the ITAT's decision on January 10, 2020.

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Issues:
1. Denial of deduction u/s 80P of the Income-tax Act by Assessing Officer.
2. Appeal to CIT(A) and subsequent issuance of notice u/s 154 for rectification.
3. Disallowance of deduction u/s 80P(2) by CIT(A) and appeal to ITAT.
4. Interpretation of judgments by jurisdictional High Court regarding eligibility for deduction u/s 80P.
5. Assessment of interest income from investments with Cooperative Banks and other Banks.

Analysis:

1. The appeal was against the CIT(A)'s order denying deduction u/s 80P of the Income-tax Act. The Assessing Officer disallowed the deduction claiming the assessee was engaged in banking activities. The CIT(A) allowed the deduction based on the judgment of the Hon’ble jurisdictional High Court. However, the CIT(A) later issued a notice u/s 154 proposing to rectify the order based on a subsequent judgment of the Full Bench of the High Court.

2. The CIT(A) rejected the objections raised by the assessee and disallowed the deduction u/s 80P(2) of the Income-tax Act. The assessee appealed to the ITAT on grounds of the order being illegal and arbitrary, and the CIT(A) not appreciating the judgment of the Full Bench of the High Court. The ITAT considered the arguments presented by both parties.

3. The ITAT referred to conflicting judgments of the jurisdictional High Court regarding the eligibility for deduction u/s 80P. The Larger Bench held that the Assessing Officer must conduct an inquiry into the activities of the assessee society for each assessment year to determine eligibility. The ITAT directed the Assessing Officer to examine the activities of the assessee to grant deduction u/s 80P(2) accordingly.

4. Regarding interest income from investments with Cooperative Banks and other Banks, the ITAT followed a previous Tribunal order stating such income is part of banking activity. However, the Assessing Officer was instructed to examine the activities of the assessee-society before granting deduction u/s 80P on this interest income, in line with the Full Bench judgment of the High Court.

5. The Stay Application filed by the assessee was dismissed as the appeal was allowed for statistical purposes. The ITAT's decision was pronounced on January 10, 2020, resolving the issues raised in the appeal.

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