Tribunal grants appeals, instructs reassessment for interest and commission income deductions.

The Tribunal allowed both appeals for statistical purposes, directing the Assessing Officer to reconsider the deductions for interest income and commission income based on legal interpretations provided in the judgments cited during the proceedings. The Tribunal set aside the CIT(A)'s order and directed the AO to allow proportionate expenses against interest income from deposits with co-operative banks, and to determine profits and gains attributable to commission income on e-stamps for granting the deduction under sec. 80P(2)(c).

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Issues:
1. Denial of exemption u/s 80P(2)(d) of the Act for interest income from Co-operative banks.
2. Denial of deduction u/s 80P of the Act for commission income from sale of e-stamps.

Analysis:

Issue 1: Denial of exemption u/s 80P(2)(d) for interest income:
The Assessing Officer (AO) rejected the assessee's claim for deduction u/s 80P of the Act, citing the principle of mutuality due to dealing with nominal members, relying on a Supreme Court decision. The AO also disallowed the deduction for interest income from deposits with co-operative banks, following a Karnataka High Court decision. However, the CIT(A) held that the assessee is eligible for deduction u/s 80P(2)(a)(i) for business income but confirmed the disallowance for interest income under u/s 80P(2)(d). The Tribunal considered the High Court's decision allowing proportionate expenses against interest income and directed the AO to allow such deductions, setting aside the CIT(A)'s order.

Issue 2: Denial of deduction u/s 80P for commission income:
The AO disallowed the deduction for commission income earned on sale of e-stamps, but the CIT(A) upheld this decision. However, the Tribunal noted that there was no restriction in sec.80P(2)(c) regarding earning commission mainly from outsiders. It emphasized that deduction under sec.80P(2)(c) is based on profits and gains attributable to specific activities, not limited to dealings with members. The Tribunal directed a fresh examination by the AO to determine the profits and gains attributable to the commission income on e-stamps for granting the deduction under sec.80P(2)(c).

In conclusion, the Tribunal allowed both appeals for statistical purposes, directing the AO to reconsider the deductions for interest income and commission income based on the legal interpretations provided in the judgments cited during the proceedings.

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