Naragund Taluka Prathamika Shiksa Shiksakiyar Co-op. Credit Society Ltd. Vs ITO (ITAT Bangalore)
Income Tax Appellate Tribunal (ITAT) Bangalore recently ruled on the case of Naragund Taluka Prathamika Shiksa Shiksakiyar Co-op. Credit Society Ltd. Vs ITO, concerning the eligibility of interest income for deduction under Section 80P(2)(a)(i) of the Income Tax Act. The assessee, a co-operative credit society, had filed its return claiming the deduction, but the Assessing Officer (AO) disallowed Rs. 3,09,103/- of interest income, categorizing it as income from other sources. Additionally, a computational error resulted in a tax demand based on an inflated taxable income of Rs. 50,51,034/-, significantly higher than the assessed income. The Commissioner of Income Tax (Appeals) [CIT(A)] upheld the AO’s order but remitted the issue to the AO for verification.
The Tribunal noted that the assessee had filed its return within the extended due date, making it eligible for deduction under Section 80P. Furthermore, it found that the AO had not addressed the issue of an additional interest income of Rs. 47,33,962/- in the assessment order, yet the CIT(A) directed a fresh review of this amount. The Tribunal held that such a direction was beyond the scope of CIT(A)’s authority and set it aside. The ITAT also questioned whether the CIT(A) had the power to remand the issue or enhance the assessment without a proper remand report from the AO and without providing the assessee a reasonable opportunity to respond.
