2022 (3) TMI 772 - AT - Income Tax

Tribunal allows deductions for commission and interest income, integral to business activities.

The appeals were allowed for A.Y. 2017-18 and A.Y. 2018-19, granting deductions for commission income and interest income related to activities with ... Deduction u/s.80P(2)(a)(i) - Denial of deduction in respect of commission income received from Maharashtra State Electricity Distribution Company Limited (MSEDCL) and interest income earned on security deposit with MSEDCL - HELD THAT:-The activity of earning commission from collection of bills relating to MSEDCL has been held as eligible business activity and resultantly allowed granted deduction u/s.80P - DR fairly conceded the position but relied on the impugned orders on this score. In view of the fact that commission income on collection of bills from MSEDCL has been made eligible for deduction u/s.80P(2)(a) on the ground of the same being in the nature of business activity, we allow the assessee’s claim in respect of similar commission income Deduction u/s.80P(2) on the interest income on security deposit which was parked with MSEDCL for carrying on the business of collection of MSEDCL bills - In view of the fact that the activity of collection of bills has been held by the Tribunal in Banganga Nagri Sah. Patsanstha Ltd. [2016 (3) TMI 1434 - ITAT PUNE] as a business activity, whose income is eligible for deduction u/s.80P(2), the instant interest income of ₹ 20,000/- on security deposit with MSEDCL for carrying on the business of bill collection, which is a part and parcel of the overall activity of such business, cannot be accorded a different character.Therefore, order to grant deduction on interest on security deposit with MSEDCL - Assessee appeal allowed. Issues:- Denial of deduction u/s.80P(2)(a)(i) for commission income and interest income from Maharashtra State Electricity Distribution Company Limited (MSEDCL).- Denial of deduction u/s.80P(2) on interest income from security deposit with MSEDCL.- Denial of deduction u/s.80P(2)(a)(i) for commission income earned from MSEDCL bill collection.Analysis:A.Y. 2017-18:- The assessee contested the denial of deduction u/s.80P(2)(a)(i) for commission income of Rs. 60,363 and interest income of Rs. 20,000 from MSEDCL. The AO disputed the allowability of deduction on various income sources, including commission income and interest income. The CIT(A) accepted deduction for some income but disapproved the claim for commission income and interest from MSEDCL.- The Tribunal considered the precedent set by a previous order where commission income from MSEDCL was allowed as a deduction under u/s.80P(2)(a). As the commission income was related to the business activity of the assessee, it was held eligible for deduction. Similarly, the interest income on the security deposit with MSEDCL was also considered part of the business activity and granted deduction under u/s.80P(2).A.Y. 2018-19:- The sole issue in this appeal was the denial of deduction u/s.80P(2)(a)(i) for commission income of Rs. 2,36,160 earned from MSEDCL bill collection. The AO and CIT(A) had denied the deduction based on their previous views.- The Tribunal noted that the issue regarding commission income from MSEDCL bill collection was the same as in the previous year. Following the decision for the earlier year, the deduction u/s.80P(2)(a) was allowed for the commission income earned from MSEDCL bill collection.In conclusion, both appeals were allowed, and deductions were granted for the commission income and interest income related to MSEDCL activities for the respective assessment years. The Tribunal relied on precedents and the nature of the income sources being integral to the business activities of the assessee to allow the deductions under u/s.80P(2).