Tribunal rules in favor of assessee on deduction under section 80P(2)(d)

The Tribunal allowed the appeal, condoned the delay in filing, and ruled in favor of the assessee regarding the deduction under section 80P(2)(d). The original assessment order was restored, negating the PCIT's revisions. The appeal was allowed, and the order was pronounced on the 9th of September, 2022.

---

---

Issues Involved:
1. Delay in filing the appeal.
2. Entitlement to deduction under section 80P(2)(d) of the Income Tax Act, 1961.
3. Disallowance of payments under section 40(a)(ia) read with section 194C of the Income Tax Act, 1961.

Detailed Analysis:

1. Delay in Filing the Appeal:
The assessee filed the appeal with a delay of 329 days. The assessee's representative argued that the delay should be condoned based on the Supreme Court's decision in Suo Motu Writ Petition (C) No. 3 of 2020, which extended the limitation period due to the COVID-19 pandemic. After hearing both parties and reviewing the materials on record, the Tribunal agreed that the delay was covered under the COVID Protocol and condoned the delay.

2. Entitlement to Deduction under Section 80P(2)(d):
The assessee, a co-operative housing society, claimed a deduction under section 80P(2)(d) for interest income received from co-operative banks. The Principal Commissioner of Income Tax (PCIT) revised the assessment order, stating that the interest income from co-operative banks is not eligible for deduction under section 80P(2)(d) because co-operative banks are not classified as 'co-operative societies' under this provision. The PCIT relied on the Karnataka High Court's decision in PCIT vs Totagars Co-operative Sale Society.

The assessee argued that the Assessing Officer had correctly allowed the deduction and that the PCIT's revision was erroneous. The Tribunal reviewed various decisions, including those from co-ordinate benches, which consistently held that interest income from investments with co-operative banks is eligible for deduction under section 80P(2)(d). The Tribunal cited several cases, including M/s Petit Towers Co-op. Housing Society Ltd vs ITO and M/s Solitaire CHS Ltd vs PCIT, which supported the assessee's claim.

The Tribunal concluded that the PCIT erred in revising the assessment order and held that the interest income from co-operative banks is indeed eligible for deduction under section 80P(2)(d). The Tribunal set aside the PCIT's order and restored the original assessment order.

3. Disallowance of Payments under Section 40(a)(ia) Read with Section 194C:
The assessee contended that as a co-operative society not engaged in any business, it should not be subject to disallowance of payments under section 40(a)(ia) read with section 194C. This issue was not elaborately discussed in the judgment, but the Tribunal's decision to restore the original assessment order implies that the disallowance was not upheld.

Conclusion:
The Tribunal allowed the appeal, condoned the delay in filing, and ruled in favor of the assessee regarding the deduction under section 80P(2)(d). The original assessment order was restored, negating the PCIT's revisions. The appeal was allowed, and the order was pronounced on the 9th of September, 2022.

---