Jammanahally Prathamika Krishi Pattina Sahakara Sangha Vs ITO (ITAT Bangalore)
ITAT Bangalore Allows 80P Deduction on Interest From Co-operative Banks; 307-Day Delay Condoned
The Bangalore SMC Bench of the ITAT condoned a delay of 307 days in filing the appeal and allowed deduction u/s 80P(2)(a)(i) on interest income earned by a primary agricultural credit co-operative society from deposits with co-operative banks. The Tribunal held that such interest was attributable to the business of providing credit facilities to members and could not be taxed as “Income from Other Sources” merely because it arose from bank deposits.
The Assessee, a co-operative society registered under the Karnataka Co-operative Societies Act, filed its return declaring Nil income after claiming deduction u/s 80P. The AO disallowed the claim on the ground that the Assessee had business loss and that interest income from deposits was taxable as “other sources”, relying on Totgars (SC). The NFAC confirmed the disallowance ex-parte.
On appeal, the Tribunal first condoned the delay, noting bona fide reasons, miscommunication between tax practitioners, and also the fact that a parallel appeal for the same AY on the same issue was already filed within time, making a hyper-technical approach unwarranted.
On merits, the Tribunal held that:
