State Transport Employees Co Operative Credit and Thrift Society Vs DCIT (ITAT Ahmedabad)
ITAT Ahmedabad held that interest received by co-operative society from SBI, which is a Nationalized Bank, is not allowable as per the section 80(P) of the Income Tax Act. Accordingly, AO directed to carry out proper adjudication and verification.
Facts- During scrutiny assessment, AO observed that during the assessment proceedings the assessee claimed deduction u/s.80P of the Act, totalling to Rs.34,33,392/- which comprises of deduction under various sub section to section 80P of the Income tax Act, including the deduction u/s.80P(2)(d) of the Act of Rs.1,73,036/- on account of interest received and deposits from State Bank of India which is a nationalized bank and not registered as a co-operative society. Thus, the AO made the addition of Rs.1,73,036/-. AO also observed that the assessee has received interest of Rs.95,242/- from the saving bank deposits and interest of Rs.3,62,719/- from fixed deposits with Mehsana District Central Co-operative Bank Limited. Thus, the assessee claimed total amount of Rs.4,57,961/- as deduction u/s.80P(2)(d) of the Act. AO disallowed the same.
CIT(A) dismissed the appeal. Being aggrieved, the present appeal is filed.
Conclusion- Held that the interest received from SBI which is a Nationalized Bank is not allowable as per the section 80(P) of the Act but at the same time the assessee has incurred certain expenditure earned. The said proportionate expenditure should be allowed and needs to be verified therefore the issue is set-aside to the file of the AO for proper adjudication and verification of the component of the proportionate expenditure by receiving this interest income.
