Case Law Details
Subordinate Engineers Association MSEB Co.op. Credit Society Ltd Vs ITO (ITAT Pune)
Introduction: The Income Tax Appellate Tribunal (ITAT) Pune recently delivered a crucial verdict concerning deductions on interest income earned from deposits with nationalized banks, as per Section 80P(2)(a)(i) of the Income-tax Act, 1961. This verdict stemmed from the case Subordinate Engineers Association MSEB Co.op. Credit Society Ltd Vs ITO.
Analysis: The appeal by the assessee arose from the denial of a deduction claim on the interest income of Rs.5,16,876/- earned from Oriental Bank Ltd., a nationalized bank. The ITAT referenced an earlier ruling by the Pune Tribunal, Sureshdada Jain Nagari Sahakari Patsanstha Maryadit Vs. The Pr.CIT, which allowed a similar deduction. The Tribunal also reviewed conflicting judgments from the Karnataka High Court and Delhi High Court regarding deductions on interest income.
In the absence of a direct ruling from the jurisdictional High Court, the ITAT Pune chose to align with the Karnataka High Court’s decision favoring the assessee. Hence, it overruled the initial order, allowing the interest income earned by Co.op. Credit Society from the deposits kept with a nationalized bank to be eligible for deduction under section 80P(2)(a)(i) of the Act.
Conclusion: The ITAT Pune’s decision in the Subordinate Engineers Association MSEB Co.op. Credit Society Ltd Vs ITO case reaffirms the rights of credit cooperative societies to claim deductions on interest income from nationalized bank deposits. This ruling not only provides clarity on the applicability of Section 80P(2)(a)(i) of the Income-tax Act, 1961, but also emphasizes the importance of jurisdictional interpretations in complex tax matters.
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