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of <h1>Appeal partly allowed, issue remanded for verification. Deduction allowed for interest from Co-operative Banks. Decision on 19th April 2023.</h1> <h3>Chansama Taluka Ni Prath Sala, Shikshakoni Nana Dhiranari Sahakari Mandali Limited Versus Dy. Commissioner of Income Tax, Circle – Gandhinagar.</h3> Chansama Taluka Ni Prath Sala, Shikshakoni Nana Dhiranari Sahakari Mandali Limited Versus Dy. Commissioner of Income Tax, Circle – Gandhinagar. - TMI Issues involved:The appeal against the order dated 21.10.2022 passed by the CIT(A), National Faceless Appeal Centre (NFAC), Delhi for the Assessment Year 2017-18.Issue 1: Disallowance under Section 80P of the Income Tax ActThe assessee, a Co-operative Credit Society, filed an appeal against the disallowance of Rs.2,74,885/- under Section 80P of the Income Tax Act for interest received from State Bank of India and Dena Bank savings accounts. The Assessing Officer disallowed this amount, citing it as not permissible as per the decision of the Hon'ble Gujarat High Court. The appeal was dismissed by the CIT(A) based on this decision.Issue 2: Proportionate expenditure for interest incomeThe assessee also raised the issue of allowing proportionate expenditure to earn interest income if interest received from nationalized banks is not allowable under Section 80P. The tribunal set aside this issue to the Assessing Officer for proper adjudication and verification, emphasizing the need to determine whether proportionate expenditure should be allowed. The assessee was granted an opportunity of hearing for this issue.Issue 3: Disallowance of interest received from Co-operative BanksThe appeal challenged the disallowance of Rs.11,23,088/- under Section 80P(2)(d) for interest received from Co-operative Banks, specifically Mehsana Urban Co-operative Bank and Mehsana District Central Co-operative Bank Limited. The assessee argued that this interest, being from Co-operative Societies, is allowable under Section 80P(2)(d) of the Act. The tribunal allowed this ground, citing the decision of the Hon'ble Gujarat High Court in a similar case.Conclusion:The tribunal partly allowed the appeal for statistical purposes, setting aside one issue for further verification by the Assessing Officer and allowing the deduction for interest received from Co-operative Banks. The decision was pronounced on 19th April 2023.
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