2026 (6) TMI 660

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....of the Income Tax Act (in short "the Act"). 2. The brief facts of the case are that the assessee had filed its return of income for A.Y. 2020-21 on 23.11.2020 declaring total income of Rs. 3,74,620/-. The case was selected for complete scrutiny under CASS. In the course of assessment, the AO noticed that the assessee had claimed deduction of Rs. 38,00,341/- under Section 80P of the Act. On further inquiry, it transpired that the assessee had earned interest income on deposits with cooperative banks and nationalized banks, which was claimed as exempt under Section 80P of the Act. The total interest of income earned by the assessee was Rs. 75,94,885/-. According to the AO this interest income did not qualify deduction under Section 80P (2)....

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....nt with other cooperative societies and such interest was eligible for deduction under Section 80P(2)(d) of the Act. In this regard she relied upon the decision of coordinate bench of this Tribunal in the case of Ashapura Cooperative Credit Society Ltd. (178 taxmann.com 18). Regarding the interest received from scheduled banks, the Ld. AR submitted that the AO had disallowed the gross interest received from SBI and IDBI without allowing set off for the expenditure incurred by the assessee for earing that income. She explained that the assessee had claimed deduction under Section 80P of the Act in respect of net interest income only. Further, the AO in the assessment order for AY 2016-17 had also given a finding that only the net interest in....