TaxTMI 
TaxTMI 
2026 (7) TMI 129
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....essee's claim for deduction under section 80P(2)(a)(i) on interest earned from deposits, including deposits made from reserve funds. The lower authorities treated the interest as income from other sources and denied deduction under section 80P(2)(d). 2. At the outset, we consider the delay in filing the appeal. The appellate order was uploaded on 20.03.2024, while the present appeal was filed on 28.03.2026, resulting in a delay of 666 days. 3. The assessee sought condonation of delay, supported by an affidavit of its Chief Executive Officer, Mr. Manjunatha. It stated that for A.Y. 2018-19 it had filed a return declaring nil income after claiming deduction under section 80P. Though the return was processed under section 143(1), scrutin....
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....al could not act due to his wife's illness. Nothing on record indicates any malafide intention on the assessee's part. Once the assessee became aware of the omission, it obtained legal advice in Bangalore and promptly filed the appeal. In these circumstances, the length of the delay is not decisive; the relevant question is whether sufficient cause is shown. We are satisfied that the assessee was prevented by sufficient cause from filing the appeal in time. Accordingly, the delay of 666 days is condoned, and the appeal is admitted for adjudication on merits. 6. On merits, the assessee is a members' credit co-operative society. It filed its return on 29.09.2018, claiming its entire income as deductible under section 80P(2)(a)(i) on the gr....
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....that any relief for cost of funds and proportionate administrative expenses be considered under section 57 in accordance with law. 8. Aggrieved, the assessee is in further appeal before us. It contends that, as a members' credit co-operative society, its entire income is deductible under section 80P(2)(a)(i).The learned authorised representative relied on decisions of the Hon'ble Karnataka High Court on similar facts, where deduction was allowed after considering the Supreme Court decision relied on by the lower authorities.He also submitted that interest earned on funds invested to comply with statutory reserve requirements qualifies for deduction under section 80P(2)(a)(i). He clarified that the assessee is not claiming such interest a....
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....lifies for deduction under section 80P(2)(a)(i). The assessee submits that such receipts are business income attributable to providing credit facilities to members. We find that the issue is covered in favour of the assessee by decisions of the Hon'ble Karnataka High Court. 12. We further find that the distinction between interest received from co-operative banks and from other banks is relevant to section 80P(2)(d), but section 80P(2)(a)(i) makes no such distinction. Therefore, where interest earned from deposits with banks forms part of the profits attributable to the assessee'sbusiness of providing credit facilities to its members, the assessee is entitled to deduction under section 80P(2)(a)(i). This includes interest from co-operati....