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Income Tax Appellate Tribunal, RAJKOT BENCH, RAJKOT
Before: SHRI WASEEM AHMED
O R D E R PER BENCH: The captioned appeal has been filed at the instance of the Assessee against the order of the Learned Commissioner of Income Tax (Appeals), Jamnagar [Ld. CIT(A) in short] dated 16/01/2018 arising in the matter of assessment order passed under s.143(3) of the Income Tax Act, 1961 (hereinafter referred to as "the Act") dated 29/11/2016 relevant to the Assessment Years (A.Y.) 2014-15.
2 - 2. The interconnected issue involved in the grounds of appeal nos. 1 to 3 relates whether interest income earned on fixed deposits with the nationalized bank would qualify for deduction under section 80P(2)(a)(i) of the Act.
3. At the outset, the learned counsel for the assessee fairly conceded that issue in dispute is squarely covered against the assessee by the decision of the Hon'ble jurisdictional High Court in the case of State Bank of India Vs. CIT, 389 ITR 578, wherein Hon'ble Court held that interest earned from the investment made in any bank is not deductible under section 80P(2)(a)(i) of the Act. In this view of the matter, we dismiss the appeal of the assessee. However, we direct the AO to exclude the amount of net interest income from the deduction claimed u/s 80P(2)(a)(i) of the Act. Thus the AO will allow the expenses incurred by the assessee in the earning of such interest income not eligible for deduction under section 80P(2)(a)(i) of the Act. In this connection we find support & guidance from the order of this Tribunal in the case of Shreeji Co-operative Credit Society Ltd vs. ITO pertaining to the assessment year 2013-14 in vide order dated 15-02-2018 wherein it was held as under: “3. At the outset, the ld. Counsel for the assessee fairy conceded that issue in dispute is squarely covered against the assessee by decision of the Hon’ble Jurisdictional High Court in the case of State Bank of India vs. CIT, 389 ITR 578 wherein Hon’ble Court held that interest earned from investment made in any bank is not deductible under section 80P(2)(d). In this view of the matter, we dismiss the appeal of the assessee. However, any expenditure incurred by the assessee for earning such income could be allowed to it. In other words, the ld. AO has to determine the net interest earned by the assessee on such investment with bank, and only thereafter that income has to be excluded from the admissibility of deduction under section 80P(2) of the Act.
In the result, appeal of the assessee is partly allowed for statistical purpose.” 3.1 The facts of the case on hand are identical to the facts as discussed in the above case. Therefore, respectfully following the same, we direct the AO to exclude the amount of net interest income from the deduction claimed u/s 3 - 80P(2)(a)(i) of the Act. Thus the AO will allow the expenses incurred by the assessee in the earning of such interest income not eligible for deduction under section 80P(2)(a)(i) of the Act. Hence, grounds of appeal filed by the assessee are allowed for statistical purposes.
The 2nd issue raised by the assessee is that the learned CIT (A) erred in 4. not allowing the deduction of ₹50,000 provided under section 80P(2)(c) of the Act.
At the outset, we note that the issue raised by the assessee for claiming the deduction as discussed above is not arising from the order of the authorities below. However, we find that such deduction is statutory deduction as provided under the provisions of section 80P(2)(c)(ii) of the Act. Accordingly, we direct the AO to allow such deduction to the assessee after necessary verification as per the provisions of law. Hence the ground of appeal of the assessee is allowed for the statistical purpose.
In the result, the appeal of the assessee is partly allowed for statistical purposes.