2021 (4) TMI 913

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....ometax Act,1961 ['the Act' for short]. b) Denial of exemption u/s 80P(2)(d) of the Act in respect of interest income earned from Co-operative banks. c) Denial of deduction u/s 80P of the Act in respect of commission income earned on sale of e-stamps. 2. I heard the parties and perused the record. The facts relating to the case are stated in brief. The assessee originally filed its return of income declaring nil total income after claiming deduction u/s 80P of the Act. In assessment year 2013-14 & 2014-15, the A.O. rejected the claim for deduction u/s 80P of the Act. Consequently, the A.O re-opened the assessment of year under consideration by issuing notice u/s 148 of the Act. In the reopened assessment, the A.O. rejected th....

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....ssessee is eligible for deduction u/s 80P(2)(a)(i) of the Act in respect of its business income. However, he confirmed the disallowance u/s 80P(2)(d) of the Act in respect of interest income and also rejection of deduction u/s 80P(2)(c) in respect of commission income earned on sale of e-stamps. Aggrieved, the assessee has filed this appeal before the Tribunal. 4. Before the Tribunal, the assessee has raised a legal issue challenging the validity of re-opening of assessment besides contesting the disallowance of deduction u/s 80P(2)(c) and 80P(2)(d) of the Act. 5. I first take up the issues urged on merits. With regard to claim for deduction u/s 80P(2)(d) of the Act, the Ld. A.R. submitted that the Hon'ble Karnataka High Court has passed ....

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....0P(2)(d) and it was held that the assessee is eligible for deduction of expenses incurred for earning the interest income. The relevant observations made by the Tribunal are extracted below:- "7. The next common issue relates to rejection of deduction claimed u/s 80P(2)(d) of the Act in respect of interest income earned from fixed deposits kept with bank. We noticed earlier that the A.O. has observed in Assessment Year 2015-16 that the interest income received by the assessee from deposits kept with banks is not eligible for deduction u/s 80P(2)(c) & 80P(2)(d) of the Act since the assessee is not eligible for deduction u/s 80P(2)(a)(i) of the Act. In AY 2016-17, the AO assessed the interest income received on bank deposits under the head ....

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....rned from bank deposits as income under the head "other sources". 9. We heard Ld. D.R. on this issue. We find merit in the prayer of the assessee, since it is supported by the decision rendered by Hon'ble High Court of Karnataka in the case of Totgars Cooperative Sale Society Ltd. Vs. ITO (2015) 58 taxmann.com 35 (Karn). Accordingly, we direct the A.O. to allow deduction of proportionate cost, administrative and other expenses, if the A.O. proposes to assess the interest income earned from bank deposits as income under the head "other sources". Following the above said decision of the Tribunal, we set aside the order passed by Ld CIT(A) on this issue and restore the same to the file of the AO with the direction to allow deduction of pr....