Appeal dismissed, case remanded for deduction reevaluation under section 80P(2)(a)(i). Importance of presenting evidence emphasized.

The Tribunal dismissed the appeal but remanded the case back to the Assessing Officer to reevaluate the deduction claim for interest income from Nationalized Banks under section 80P(2)(a)(i). The Tribunal stressed the importance of allowing the assessee to present supporting evidence before a new decision is made. The appeal was partially allowed, with the judgment delivered on 15/06/2023.

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Issues involved:
The appeal by assessee against the order of National Faceless Appeal Centre, Delhi for assessment year 2014-15, challenging the addition made by the Assessing Officer under section 143(3) of the Income Tax Act, 1961 regarding the deduction under section 80P(2)(d) for interest income derived from Nationalized Banks.

Details of the Judgment:

Issue 1:
The Assessing Officer disallowed the deduction of interest income earned from sources other than co-operative society, leading to the addition of Rs.13,62,958/- as "income from other source" in the assessment order dated 16.11.2016.

Issue 2:
The appeal before the National Faceless Appeal Centre, Delhi reiterated the submission that interest income from Nationalized Banks should be eligible for deduction under section 80P(2)(d) of the Act, supported by a decision of the Hon'ble Apex Court in Totgars Co-operative Sale Society Ltd. vs. ITO, Karnataka [2010] 188 Taxman 282 (SC).

Issue 3:
During the Tribunal hearing, the Authorized Representative for the assessee argued for the eligibility of interest income from Nationalized Banks for deduction under section 80P(2)(d) of the Act, citing another decision in Shri Basavaraj, CEO Primary Agriculture Credit Co-operative Society Vs CIT (ITA No. 867/Bang/2017) dated 31.05.2017.

Judgment Summary:
The Tribunal dismissed the appeal at this stage but restored it back to the Assessing Officer to reexamine the claim of deduction for interest income earned from Nationalized Banks under section 80P(2)(a)(i). The Tribunal emphasized the necessity for the assessing officer to provide an opportunity for the assessee to substantiate the claim with appropriate submissions and evidence before passing a fresh order. The appeal was partly allowed, with the order pronounced on 15/06/2023 in open court.

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