Tribunal permits deduction of interest income under section 80P(2)(d) and orders further review for commission income

The Tribunal allowed the assessee's claim for deduction under section 80P(2)(d) for interest income by directing the AO to allow proportionate expenses against the interest income. Additionally, the Tribunal directed a fresh examination by the AO for the deduction claim under section 80P(2)(c) for commission income on e-stamps, emphasizing the need to determine profits attributable to the specific activity. Both appeals were treated as allowed for statistical purposes.

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

Analysis:
1. Denial of exemption u/s. 80P(2)(d) for interest income:
The AO rejected the claim for deduction u/s. 80P of the Act, citing the principle of mutuality due to dealings with nominal members. The AO relied on a Supreme Court decision. However, the Ld. CIT(A) distinguished the case, holding the assessee eligible for deduction u/s. 80P(2)(a)(i) for business income but disallowed u/s. 80P(2)(d) for interest income. The Tribunal referred to a Karnataka High Court decision allowing deduction of expenses against interest income. Following this, the Tribunal directed the AO to allow proportionate expenses against interest income.

2. Denial of deduction u/s. 80P for commission income:
The AO disallowed the deduction u/s. 80P for commission income earned on e-stamps. The Ld. CIT(A) upheld this disallowance. However, the Tribunal noted that sec. 80P(2)(c) does not restrict deductions based on income sources. It allows deductions for activities not covered in clauses (a) or (b). The Tribunal directed a fresh examination by the AO to determine the profits attributable to the commission income on e-stamps for claiming the deduction u/s. 80P(2)(c). Consequently, both appeals were treated as allowed for statistical purposes.

In conclusion, the Tribunal allowed the assessee's claim for deduction u/s. 80P(2)(d) for interest income by directing the AO to allow proportionate expenses against the interest income. Additionally, the Tribunal directed a fresh examination by the AO for the deduction claim u/s. 80P(2)(c) for commission income on e-stamps, emphasizing the need to determine profits attributable to the specific activity.

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