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Income Tax Appellate Tribunal, “SMC” BENCH, AHMEDABAD
Before: SHRI PRADIP KUMAR KEDIA & SHRI MAHAVIR PRASAD
PER PRADIP KUMAR KEDIA - AM:
The captioned appeal has been filed at the instance of the assessee against the order of the CIT(A)-4, Vadodara (‘CIT(A)’ in short), dated 30.09.2016 arising in the assessment order dated 29.10.2015 passed by the Assessing Officer (AO) under s. 143(3) of the Income Tax Act, 1961 (the Act) concerning AY 2013-14.
The grounds of appeal raised by the assessee reads as under:
“1. The Learned Commissioner of Income Tax, (Appeals)-4, Vadodara has erred in law and on facts of the case in not allowing
ITA No. 144/Ahd/17 [Kaival Credit Co.Op. Society Ltd. vs. ITO] A.Y. 2013-14 - 2 - interest of Rs.3,00,250/- received from nationalized bank u/s.80P(2)(a)(i) of the I.T.Act, 1961. 2. Without prejudice to above, while disallowing interest of Rs.3,00,250/-, the C.I.T.(Appeals) has not deducted therefrom interest paid to depositors in respect of the same, and accordingly, disallowing only net interest of Rs.1,26,132/- u/s.80P(2)(a)(i) of the I.T.Act, 1961.”
When the matter was called for hearing, the learned AR for the assessee pleaded for allowability of interest of Rs.3,00,250/- received from nationalized bank under s.80P(2)(a)(i) of the Act. In the alternative, she contended that the expenditure attributable to earning of such income requires to be deducted from the gross interest earned from the nationalized bank.
The learned AR also pleaded that the assessee is entitled to deduction of Rs.50,000/- against the interest income so earned under s.80P(2)(a)(i) of the Act.
The learned DR relied upon the order of the lower authorities.
We do not find any merit in the principle plea lead by assessee for allowability of interest derived on deposits under s. 80P(2)(a)(i) of the Act of surplus funds with the nationalized bank, in view of several decisions including the decision of Hon’ble Gujarat High Court in the case of SBI Employees Co-credit & Supply Society v. CIT(A) (2016) 389 ITR 578. Thus, we decline to interfere with the action of the Revenue on this score. However, we find merit in the alternative plea of the assessee for allowability of expenditure attributable to the earning of such income, if any. This aspect will require factual verification and accordingly remitted back to the file of the AO for deciding the allowability of expenditure attributable to interest earned on deposits, if any, with nationalized banks.
ITA No. 144/Ahd/17 [Kaival Credit Co.Op. Society Ltd. vs. ITO] A.Y. 2013-14 - 3 - 6.1 We also remit the issue towards eligibility of standard deduction contemplated under s.80P(2)(c)(ii) of the Act in the light of the facts of the case, to the file of AO. The AO shall decide the issue in accordance with the law after giving fair opportunity to the assessee.
In the result, appeal of the assessee is partly allowed.
This Order pronounced in Open Court on 03/07/2018
Sd/- Sd/- (MAHAVIR PRASAD) (PRADIP KUMAR KEDIA) JUDICIAL MEMBER ACCOUNTANT MEMBER Ahmedabad: Dated 03/07/2018 True Copy S. K. SINHA आदेश क� ��त�ल�प अ�े�षत / Copy of Order Forwarded to:- 1. राज�व / Revenue 2. आवेदक / Assessee 3. संबं�धत आयकर आयु�त / Concerned CIT 4. आयकर आयु�त- अपील / CIT (A) 5. �वभागीय ��त�न�ध, आयकर अपील�य अ�धकरण, अहमदाबाद / DR, ITAT, Ahmedabad 6. गाड� फाइल / Guard file. By order/आदेश से,
उप/सहायक पंजीकार आयकर अपील�य अ�धकरण, अहमदाबाद ।