Appeals Admitted for Assessment Years w/ Delay Condoned Due to Illness & COVID-19

The delay in filing appeals for the assessment years 2017-18 & 2018-19 was condoned due to the Treasurer's illness and COVID-19 restrictions. The appeals were admitted for adjudication. Regarding the deduction u/s 80P(2)(a)(i) for interest income from saving bank accounts, the Tribunal allowed the deduction for the assessment year 2017-18 as the interest was essential for business activities. For the assessment year 2018-19, the matter was remanded for reconsideration by the CIT(A) to assess the interest income properly based on the submissions.

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Issues:
1. Condonation of delay in filing appeals.
2. Deduction u/s 80P(2)(a)(i) of the Income-tax Act for interest income from saving bank account.

Analysis:

Issue 1: Condonation of delay in filing appeals
The appeals by the assessee for the assessment years 2017-18 & 2018-19 were time-barred by 105 days. The delay was attributed to the illness of the assessee's Treasurer, who handles tax matters, compounded by COVID-19 restrictions. The Appellate Tribunal, considering the Supreme Court's judgment, excluded the period of limitation from 15.03.2020 to 28.02.2022 for calculating the delay. Consequently, the delay was condoned, and both appeals were admitted for adjudication on merits.

Issue 2: Deduction u/s 80P(2)(a)(i) for interest income from saving bank account
In the appeal for the assessment year 2017-18, the assessee, a cooperative credit society, challenged the denial of deduction u/s 80P(2)(a)(i) for interest income of Rs. 91,091 from a saving bank account. The Assessing Authority treated this income as taxable under other sources. The Tribunal found that the interest was essential for the society's business activities, earned from the saving bank account used for fund transactions with members. As it was not from surplus funds, the interest was considered business income eligible for deduction u/s 80P(2)(a)(i), overturning the CIT(A)'s decision.

In the appeal for the assessment year 2018-19, a similar issue arose where the deduction u/s 80P(2)(a)(i) for interest income of Rs. 13,52,434 from a saving bank account was denied. The Tribunal noted that the CIT(A) did not adequately consider the documents and details submitted by the assessee. Therefore, the matter was remanded to the CIT(A) for fresh adjudication, allowing all grounds raised by the assessee for statistical purposes.

In conclusion, the Tribunal allowed the appeal for the assessment year 2017-18, granting the deduction for interest income from the saving bank account. For the assessment year 2018-19, the matter was remanded to the CIT(A) for reconsideration, directing a fair assessment based on the submissions and findings from the previous appeal.

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