Tribunal allows appeals, grants Section 80P deduction for interest income, emphasizes cooperative society eligibility.

The tribunal allowed the appeals of the assessee, directing the deletion of the disallowance of interest income for Section 80P deduction in all four cases. The delay in filing appeals was condoned for substantial justice due to reasons beyond the assessee's control. The tribunal emphasized the eligibility of income for Section 80P deduction based on the nature of the income and activities of the cooperative society, following the high court's decision.

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Issues:
- Delay in filing appeals
- Disallowance of interest income for Section 80P deduction

Delay in filing appeals:
The judgment involves four assessee's appeals for different assessment years arising from the CIT(A)-2, Hyderabad's order passed under section 143(3) read with section 147 of the Income Tax Act, 1961. The appeals faced a delay of 411 days due to reasons beyond the control of the assessee, related to the management committee's term expiration and subsequent delays in elections and pandemic-related disruptions. The tribunal, citing a landmark decision of the Supreme Court, condoned the delay for the cause of substantial justice as the department did not rebut the reasons provided.

Disallowance of interest income for Section 80P deduction:
The substantive grievance in all four cases challenged the disallowance of interest income for Section 80P deduction, totaling different amounts for each assessment year. The revenue contended that the interest income, derived from fixed deposits in nationalized banks, was rightly disallowed as not eligible for the deduction. However, the tribunal considered the issue in light of the hon'ble jurisdictional high court's decision, emphasizing the eligibility of income for Section 80P deduction based on the nature of the income and the activities of the cooperative society.

The tribunal referred to the high court's decision, which clarified that income not attributable to specific activities listed under Section 80P could still qualify for deduction under other clauses of the section. It highlighted that the temporary parking of funds in nationalized banks and earning interest did not disqualify cooperative societies from claiming deductions. The tribunal, following the detailed discussion and reasoning from the high court decision, directed the Assessing Officer to delete the disallowance and treat the assessee as eligible for Section 80P deduction.

In conclusion, the tribunal allowed the appeals of the assessee, directing the deletion of the disallowance of interest income for Section 80P deduction in all four cases. The order was pronounced in the open court on 24th February 2021.

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