TaxTMI 
TaxTMI 
2023 (6) TMI 1206
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....nied of the benefits of deduction u/s. 80P(2)(a)(i) of the Act on gross Interest Income of Rs.1,66,327/- being "attributable to' business of the appellant. It is requested to delete the same. 3. On the facts and circumstances of the case of the Appellant, the learned CIT(A) has erred in limiting the deduction of expenditure incurred for earning interest income while making impugned disallowance of deduction u/s 80P(2)(a)(i) of such income on an ad-hoc basis of only 5% of such interest income as against computing allowance of expenditure on proportionate basis. The AO may be directed to allow expenditure in proportion to the income earned. 3. On the facts and circumstances of the case of the Appellant, the learned CIT(A) has erred in confirming the disallowance of deduction u/s 80P of the Act for Rs. 68,673/- on account of income derived from UGVCL on Bill Collection services without appreciating that the same are in the nature of the business activities of the appellant. It is requested to delete the same. 4. On the facts and circumstances of the case of the Appellant, the learned CIT(A) has erred in making addition of interest income derived from Axis Bank of Rs.55,008/-,....
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....; (i) whether deduction under Chapter VI-A had been correctly claimed, and (ii) whether deduction claimed on account of interest expenses was admissible. He filed a copy of notice under section 143(2) of the Act, issued to the assessee during the assessment proceedings for the impugned year dated 4.7.2017 revealing the fact that it was a limited scrutiny assessment for the aforementioned purposes. 6. Thereafter, the ld.counsel for the assessee contended that the issue of any income having been included was not the scope of limited scrutiny and therefore, the AO had travelled beyond his scope of assessment while making addition of interest income short returned by the assessee to the tune of Rs.55,008/-. He pointed out that in several decisions the ITAT had held that the assessment orders on issues beyond scope of scrutiny of the AO were not sustainable on such issues. In this regard, he placed before us copy of the order of the ITAT, Ahmedabad Bench in the case of Chaitanya Bansibhai Nagori Vs. Pr.CIT, ITA No.377/Ahd/2020 order dated 23.5.2022. From the said order, he pointed out, various decisions of the Tribunal which were referred to in the said order laying down such propositi....
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....nk Rs.16,113/- v) Commission income (others) Rs.14,488/- 11. With respect to the denial of deduction of interest earned from the bank amounting to Rs.46,239/- (12454 + 17672 +16113), the ld.counsel for the assessee fairly agreed that the assessee was not entitled to the same inview of Hon'ble jurisdictional High Court decision in the case of State Bank of India (supra). 12. With respect to the interest earned from UGVCL and commission income, the contention of the ld.counsel for the assessee before me was that the assessee-cooperative society was also engaged in activities of providing bills collection facilities for telephone and electricity and depositing such collection to BSNL, GEB/UGVCL; that during such process, it has to keep advance deposits with the said institutions, and which entitled them to interest income; thatfor providing collection facilities, the assessee has also earned commission income. The contention of the ld.counsel for the assessee is that both the commission income and interest has been earned from the business activities carried out by the assessee-society and is accordingly entitled to deduction under section 80P(2)(a)(i) of the Act. My attention a....
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.... taxed under the head "Income from other sources". Accordingly, it is held that, the A.O. was right in disallowing the sum of Rs.1,66,327/- by relying on the Totagar decision. However, so far as the allowing of the expenses u/s 57 of the Act is concerned, I have decided in other identical cases wherein such disallowed interest has been held to be confirmed 5% of the such disallowed interest. Accordingly, the disallowance of net interest worked out at Rs.1,58,011/- after deducting the expenses of Rs.8,316/-from the gross interest of Rs.1,66,327/- is worked out. Thus, the appellant would get relief of Rs.8,316/- whereas the net interest of Rs.1,58,011/- stands confirmed. Accordingly, the grounds nos.3 and 3.1 of the appeal is partly allowed." 14. I have both the parties. I see no reason to interfere in the order of the ld.CIT(A). The ld.counsel for the assessee is seeking deduction u/s 80P(2)(a)(i) on income earned from activities of providing bills collection facilities to its members; the income amounting to Rs.1,20,058/- (Rs.1,05,600/- plus Rs.14,488/-). This fact of the income having been earned from bill collection activity is as per the admission of the assessee itself. The s....