Case Law Details
Shri Kalyan Co-op Credit Society Ltd. Vs ITO (ITAT Ahmedabad)
The assessee filed its return for the financial year under consideration on 25.08.2014 declaring total income at Rs. Nil after claiming deduction under Section 80P of the Income Tax Act, 1961 to the extent of Rs.22,45,102/-. The Assessing Officer observed that the assessee co-op society earns interest on funds which are invested with Banks as well as from its members but claimed deduction under Section 80P of the Act on the income including the entire interest income whereas Section 80P(2)(a)(i) implies that the deduction is available on profit & gains of business attributable to the activity of providing credit facilities to its members. Since the interest earned on FDR with SBI is not from its members, the Assessing Officer held that since the amount of Rs.10,09,672/- aroused on the funds invested in deposits with banks or in other securities, the said income falls in the category of “income from other sources” under Section 56 of the Act not eligible for deduction under Section 80P of the Act. Therefore, the Assessing Officer disallowed the assessee’s claim of deduction under Section 80P to the extent of Rs.10,09,672/-earned from FDR with SBI and treated the same as income from other sources under Section 56 of the Act.
ITAT held that if the claim of 80P has been rejected, income from FDRs are treated as income from other sources under Section 56 of the Act. The expenses related to the said interest income earned by the assessee has to be allowed which is permissible under the Statute of law. Therefore, we remand back this issue for examination to the file of the Assessing Officer to verify the proportionate expenditure and if it is just and proper then the same may be allowed. Needless to say the assessee be given opportunity of hearing by following principles of natural justice. Ground nos.3 & 4 are partly allowed for statistical purposes.
FULL TEXT OF THE ORDER OF ITAT AHMEDABAD
These two appeals are filed by the assessee against two separate orders dated 15.02.2020 & 19.02.020 passed by the CIT(A), Vadodara-5 for the Assessment Years 2014-15 & 2015-16 respectively.
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