Tribunal allows deductions under section 80P for interest and commission income

The Tribunal partly allowed the appeals by directing the AO to allow deductions under section 80P(2)(a)(i) for both interest income from SBI and commission income from MSEB. The issues regarding penalty and interest were remitted for further assessment.

---

---

Issues:
1. Disallowance of deduction claimed under section 80P(2)(a)(i) of the Act for interest income from SBI and commission income from MSEB.
2. Rejection of claim for deduction under section 80P(2)(a)(i) of the Act on commission income earned from MSEB.
3. Initiating penalty under section 271(1)(c) and levying interest under section 234A, B, C, and D.

Analysis:
1. The appeals were filed against orders of the Ld. CIT(A) disallowing deductions under section 80P(2)(a)(i) of the Act for interest income from SBI and commission income from MSEB for A.Y. 2014-15 and 2015-16. The Tribunal directed the AO to allow the deductions based on previous decisions in the assessee's favor for similar issues.
2. The issue of rejection of deduction under section 80P(2)(a)(i) for commission income from MSEB was contested. The AO treated the commission income as taxable under section 80P(2)(c) of the Act. However, following a decision by the Pune SMC Bench, the Tribunal allowed the deduction under section 80P(2)(a)(i) for commission income earned from MSEB, similar to the treatment of other allied activities by cooperative credit societies.
3. The appeals also addressed the initiation of penalty under section 271(1)(c) and interest under section 234A, B, C, and D. The Tribunal considered these issues as consequential and remitted them to the Assessing Officer for further action.

In conclusion, the Tribunal partly allowed the appeals by directing the AO to allow deductions under section 80P(2)(a)(i) for both interest income from SBI and commission income from MSEB. The issues regarding penalty and interest were remitted for further assessment. The decision was pronounced on 25.11.2021 following the rules of the ITAT.

---