Tribunal Grants Deduction for Bank Interest under Section 80P(2)(a)(i)

The Pune Benches of the Tribunal allowed the appeal, overturning the order of the National Faceless Appeal Centre, Delhi. The Tribunal granted the deduction under section 80P(2)(a)(i) for interest received on Fixed Deposits, amounting to Rs.3,57,44,782 earned from banks. Despite conflicting High Court views, the Tribunal favored the assessee in the absence of a direct judgment from the jurisdictional High Court. The Tribunal deemed the cited case by the ld. PCIT irrelevant to the current scenario, emphasizing the eligibility of deduction under section 80P(2)(a)(i) in this specific case.

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Issues:
Denial of deduction u/s.80P(2)(a)(i) in respect of interest received on Fixed Deposits kept with Bank.

Analysis:
The appeal was filed against the order passed by the National Faceless Appeal Centre, Delhi regarding the denial of deduction under section 80P(2)(a)(i) for interest received on Fixed Deposits. The Assessing Officer observed that the deduction claimed by the assessee was not eligible under section 80P, leading to the dismissal of the claim. The issue raised in the appeal was the denial of deduction amounting to Rs.3,57,44,782 earned from banks. The Pune Benches of the Tribunal referred to previous cases to determine the availability of deduction under section 80P on interest income. The Tribunal considered conflicting views by different High Courts, including the Karnataka High Court allowing deduction and the Delhi High Court not allowing deduction on interest income earned from banks. As no direct judgment from the jurisdictional High Court was presented, the Tribunal preferred to follow the view favoring the assessee.

The Tribunal found the reliance of the ld. PCIT on a different case not relevant to the current scenario. The case cited by the PCIT involved the eligibility of deduction under a different section of the Act based on the activities of a cooperative society. The Tribunal clarified that the primary claim of the assessee in the present case directly pertained to the eligibility of deduction under section 80P(2)(a)(i) of the Act, making the cited case irrelevant. Consequently, the Tribunal overturned the impugned order and directed to grant the deduction under section 80P(2)(a)(i) of the Act. As a result, the appeal was allowed, and the order was pronounced in the Open Court on 20th December 2022.

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