Society's interest income from nationalized banks properly taxed without section 80P deduction disallowance

The ITAT Surat ruled in favor of the assessee-society regarding deduction under section 80P. The society earned interest income from nationalized banks totaling Rs. 1,25,31,686. The tribunal noted that section 80P(2)(d) permits deduction only for interest income from cooperative societies, not from other sources. Since the assessee-society did not claim deduction under section 80P(2)(d) for this amount and instead declared it as income from other sources while paying taxes, no disallowance was warranted. The addition was deleted.

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Issues involved:
The appeal pertains to the assessment year 2014-15 and challenges the order passed by the National Faceless Appeal Centre, Delhi, arising from an assessment order u/s 143(3) of the Income Tax Act, 1961.

Issue 1 - Denial of deductions under Chapter VIA of the Act:
The appellant contested the denial of deductions claimed under Chapter VIA of the Act by the Deputy CIT u/s 143(3) of the Act, alleging misinterpretation and misconstruction of the law. The appellant argued that the denial was based on non-submission of detailed breakup for the claimed deduction u/s 80P(2)(d) of the Act, pertaining to income earned from investments with cooperative societies.

Issue 2 - Invocation of Section 80P(4) of the Act:
The appellant contended that the Assessing Officer's invocation of Section 80P(4) of the Act to deny deductions under Chapter VIA of the Act was erroneous. The appellant emphasized the nature of income earned from investments with cooperative societies and challenged the assessment order as misconceived and without jurisdiction.

Issue 3 - Denial of deduction u/s 80P(2)(d) based on judicial pronouncements:
The appellant argued that the denial of deduction u/s 80P(2)(d) of the Act, based on misinterpretation and misapplication of judicial pronouncements, was arbitrary and against the settled law. The appellant highlighted inconsistencies in the AO's approach and emphasized the need for adherence to the rule of consistency in tax assessments.

Summary of Judgment:
The ITAT Surat allowed the appeal filed by the assessee for the assessment year 2014-15. The Tribunal noted that the Assessing Officer had made an addition assuming that the assessee had claimed deduction u/s 80P(2)(d) of the Act for interest income derived from nationalized banks. However, the Tribunal clarified that deductions under section 80-P(2)(d) are eligible only for interest income earned from investments with cooperative societies, not from other entities. As the appellant had not claimed such deductions for the interest income from nationalized banks, the addition was deemed unwarranted, leading to the deletion of the said amount.

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