DCIT, NEW DELHI vs. M/S JUBILANT ENPOR PVT. LTD., NOIDA

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ITA 3408/DEL/2011Status: DisposedITAT Delhi28 February 2025AY 2007-08Bench: SHRI S RIFAUR RAHMAN (Accountant Member), SHRI SUDHIR PAREEK (Judicial Member)3 pages
AI SummaryAllowed

What did the Tribunal hold?

The Tribunal held in favour of the assessee, allowing the deduction under section 80P for the interest income. The Tribunal noted that while the Gujarat High Court in Brahmarshi Co-op. Credit Society Ltd. had ruled in favour of the Revenue, and the Andhra Pradesh High Court in Vaveru Co-operative Rural Bank Ltd. had ruled in favour of the assessee, there was no guidance from the jurisdictional High Court of Allahabad on this specific issue. Citing the Supreme Court decision in Commissioner of Income-Tax, West Bengal-I vs. Vegetable Products Ltd. [1973] 88 ITR 192 (SC), the Tribunal concluded that in the absence of a clear jurisdictional precedent, the view supporting the assessee's case should be adopted. Therefore, the sole substantive ground against the department was accepted. Necessary computation was directed to follow as per law. No other grounds were pressed.

What were the facts?

The assessee, Secretary, Co-operative Cane Development Union Ltd., filed appeals for Assessment Years 2017-18 and 2020-21 against the orders of the CIT(A)/NFAC, Delhi. These orders were passed under section 143(3) of the Income Tax Act, 1961. The core of the dispute concerns the denial of deduction under section 80P for interest income earned from surplus deposits kept in scheduled/nationalized banks. For AY 2017-18, this interest income was Rs. 89,88,343/-, and for AY 2020-21, it was Rs. 1,79,10,356/-. The lower authorities held that this interest income was not derived from eligible business activities under section 80P(2) and should be taxed as income from other sources.

What were the issues?

1. Whether the interest income derived from surplus deposits kept in scheduled/nationalized banks is income derived from an eligible business activity under section 80P(2) of the Income Tax Act, 1961, thereby qualifying for deduction? Assessee's contention: The assessee argued that the interest income earned from surplus funds deposited in banks is intrinsically linked to its primary business activity and should be eligible for deduction under section 80P. The assessee relied on the decision in Vaveru Co-operative Rural Bank Ltd. vs. CIT [(2017) 396 ITR 371 (AP)]. Revenue's contention: The Revenue contended that interest income from fixed deposits with scheduled/nationalized banks is not derived from the eligible business activity of the assessee and should be taxed as income from other sources. The Revenue cited the decision in Brahmarshi Co-op. Credit Society Ltd. Vs. ACIT [(2025) 170 taxmann.com 336 (Gujarat)].

Which sections of the Income-tax Act were involved?

Section 80P,Section 143(3)

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Cases cited in this judgment(3)Show list

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Income Tax Appellate Tribunal, DELHI BENCH ‘G’, NEW DELHI

Before: Sh. Satbeer Singh Godara & Sh. Naveen Chandra

For Appellant: Ms. Gurneet Kaur, Adv
Hearing: 04.11.2025Pronounced: 04.11.2025

Heard together (2 matters)

ITA No. 3407/Del/2024
ITA No. 3408/Del/2024

Read from the judgment's own cause title. This page is filed under one of them.

ORDER

Per Satbeer Singh Godara, Judicial Member:

1.

These assessee’s twin appeals in & 3408/Del/2024 for Assessment Years 2017-18 and 2020-21, arise against the CIT(A)/NFAC, Delhi’s DIN & order No. ITBA/NFAC/S/250/2023-24/1057773306(1) & 1057773541(1) both dated 07.11.2023, in proceedings u/s 143(3) of the Income Tax Act, 1961 (in short “the Act”), respectively.

2.

Heard both the parties at length. Case files perused.

& 3408/Del/2024 Secretary, Co-operative Cane Development Union Ltd. 2. It transpires during the course of hearing that both the learned lower authorities have refused section 80P deduction to the assessee qua it’s interest income derived from surplus deposits kept in scheduled/nationalized banks amounting to Rs.89,88,343/-and Rs.1,79,10,356/-; assessment year wise, respectively, in assessment order(s) dated 15.12.2019 and upheld in the lower appellate discussion.

3.

Both the learned lower authorities hold that such an interest income as in the present instance received from parking of surplus funds in fixed deposits with scheduled/nationalized banks could not be held as “derived” from an eligible business activity under section 80P(2); and, therefore, the same deserves to be assessed as income from “other” sources only.

4.

Mr. Gupta also quotes (2025) 170 taxmann.com 336 (Gujarat) Brahmarshi Co-op. Credit Society Ltd. Vs. ACIT deciding the very issue in the Revenue’s favour. The assessee on the other hand draws strong support from the Vaveru Co-operative Rural Bank Ltd. vs. CIT [(2017) 396 ITR 371 (AP)] wherein their lordships have rejected the Revenue’s identical stand. Be that as it may, the fact remains that no valuable guidance has come from hon’ble jurisdictional high court at Allahabad on the & 3408/Del/2024 Secretary, Co-operative Cane Development Union Ltd. instant issue. That being the case, we hereby quote Commissioner of Income-Tax, West Bengal-I vs. Vegetable Products Ltd. [1973] 88 ITR 192 (SC)to conclude that the view supporting the assessee’s case in such an instance has to be adopted; to accept the instant sole substantive ground against the department, in very terms. Necessary computation shall follow as per law.

5.

No other ground or argument has been pressed before us.

6.

These assessee’s twin appeals & 3408/Del/2024 are allowed. A copy of this common order be placed in the respective case files. Order Pronounced in the Open Court on 04/11/2025.

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