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Income Tax Appellate Tribunal, AHMEDABAD “SMC” BENCH, AHMEDABAD
Before: Ms. SUCHITRA KAMBLE
This appeal is filed by the Assessee against the order dated 16.09.2020 passed by the CIT(A)-3, Ahmedabad for the Assessment Year 2017-18.
The assessee has raised the following ground of appeal :-
1. The Id. CIT (Appeals)-3 has erred in law and on facts of the case by confirming the disallowance to the extent of Rs.4,83,634/- made u/s.80(P)(2)(a)(i) of Income Tax Act, 1961 by the Assessing Officer after holding that Appellant is not eligible for deduction in respect of interest earned from Bank other than Co-operative Bank under said section.
3. The assessee is a Co-operative Society and engaged in business of dealing in procuring raw cotton from its farmer member and after ginning & pressing the raw cotton, cotton bales are sold in the open market at the prevailing market rate. The assessee filed return of income on 26.10.2018 declaring total income at Rs. Nil. The Assessing Officer made addition on account of disallowance of interest income received from Bank as the assessee has claimed deduction under Section 80(P)(2)(i) of the Income Tax Act, 1961.
Page 2 of 3 4. Being aggrieved by the assessment order, the assessee filed appeal before the CIT(A). The CIT(A) partly allowed the appeal of the assessee.
The Ld. AR submitted that the issue is covered against the assessee as the interest earned on FDRs are from the Nationalised Banks which has been decided by the Hon’ble Jurisdictional High Court in the case of State Bank of India Co-operative Society vs. CIT 72 taxmann.com 64. The Ld AR further submitted that the net interest should be taken into account and, therefore, relied upon the decision of Ahmedabad Tribunal in the case of M/s. Jafari Momin Vikas Co-op. Credit Society Vs. ITO (ITA Nos.2320, 2321 & 2322/Ahd/2014, order dated 28.08.2018).
The Ld. DR relied upon the assessment order and the order of the CIT(A). Ld. DR submitted that the Jurisdictional High Court has decided this issue against the assessee.
Heard both the parties and perused all the relevant material available on record. In the present case also interest earned from investment made are from Nationalised Banks and, therefore, deduction under Section 80(P) is not allowable as per decision of Hon’ble Jurisdictional High Court in the case of SBI Co-operative Society (supra). However, in respect of expenditure incurred by the assessee for earning such income could be allowed if the same is not allowed by the Revenue Authorities. Therefore, the matter is remanded back to the file of Assessing Officer to the limited extent to determine the net interest income as well as miscellaneous income earned by the assessee and only thereafter the said income has to be executed from the admissibility of deduction under Section 80P of the Act. Needless to say the assessee be given opportunity of hearing by following the principles of natural justice. Appeal of the assessee is, therefore, partly allowed for statistical purpose.
In the result, appeal of the assessee is partly allowed for statistical purpose. Order pronounced in the open Court on this 30th day of November, 2022.