Tribunal Allows 98-Day Late Appeal, Restores Section 80P Deduction for Interest Income on Andhra Bank Deposits.

The Tribunal condoned a 98-day delay in the assessee's appeal, finding the explanation reasonable. It overturned the disallowance of the deduction claimed under Section 80P(2)(a)(i) of the Income Tax Act for interest income from Andhra Bank deposits. The Tribunal, referencing precedents from the jurisdictional High Court and similar cases, allowed the deduction, quashing the CIT(A)-NFAC's order.

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Issues Involved:
1. Condonation of delay in filing the appeal.
2. Disallowance of deduction claimed u/s 80P of the Income Tax Act, 1961.

Summary:

Condonation of Delay:
The appeal filed by the assessee was delayed by 98 days. The assessee explained that the delay was due to the belief that the appeal should be filed after receiving the order from the Income Tax Officer (ITO), Ward-1, Srikakulam. The Tribunal found the explanation reasonable and sufficient, condoning the delay and proceeding to adjudicate the appeal on merits.

Disallowance of Deduction u/s 80P:
The assessee, a primary agricultural Credit Cooperative Society, claimed a deduction u/s 80P(2)(a)(i) of the Act for interest income earned from deposits with Andhra Bank. The Ld. AO disallowed this claim, relying on the decision in the case of M/s. Totgars Cooperative Sale Society Ltd., assessing the total income at Rs. 29,54,372/-. The Ld. CIT(A)-NFAC confirmed the disallowance but allowed deduction for proportionate expenses incurred to earn the interest income.

The Tribunal noted that the facts in the Totgars case were distinguishable. The Tribunal referenced a similar case, Kakateeya Mutually Aided Thrift and Credit Co-op Society, where the deduction u/s 80P(2)(a)(i) was allowed. The Tribunal also referred to the decision of the Hon'ble High Court of Andhra Pradesh in Vavveru Cooperative Rural Bank Ltd., which held that interest income from investments in nationalized banks is eligible for deduction u/s 80P(2)(a)(i).

Respectfully following these precedents, the Tribunal quashed the order of the Ld. CIT(A)-NFAC and allowed the appeal of the assessee, granting the deduction u/s 80P(2)(a)(i) for the interest income earned from deposits with Andhra Bank.

Conclusion:
The appeal of the assessee was allowed, and the disallowance of deduction u/s 80P was overturned. The Tribunal followed the jurisdictional High Court's decision and similar Tribunal rulings to conclude that the interest income is eligible for deduction u/s 80P(2)(a)(i).

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