Bilari Cooperative Cane Union Vs ITO (ITAT Delhi)
The appeal concerned the allowance of deduction under Section 80P for Assessment Year 2020-21. The assessee, a cooperative society, earned interest income of Rs.76,92,252 from surplus deposits held in scheduled/nationalized banks. The Assessing Officer, upheld by the CIT(A)/NFAC, denied the Section 80P deduction, holding that interest from fixed deposits did not arise from an eligible business activity under Section 80P(2) and should instead be taxed as income from “other sources.”
During the hearing before the ITAT, the assessee cited judicial support, including Vaveru Co-operative Rural Bank Ltd. v. CIT (AP) where similar interest income was allowed under Section 80P. While the Revenue relied on conflicting authority favoring disallowance, the Tribunal noted that no binding guidance existed from the jurisdictional High Court. Following the Supreme Court decision in Vegetable Products Ltd. [1973] 88 ITR 192, the Tribunal adopted the view favoring the assessee. Consequently, the ITAT allowed the appeal, confirming that the interest income qualifies for Section 80P deduction, with computation to follow as per law.
FULL TEXT OF THE ORDER OF ITAT DELHI
This assessee’s appeal for assessment year 2020-21, arises against the Commissioner of Income Tax (Appeals)/National Faceless Appeal Centre [in short, the “CIT(A)/NFAC”], Delhi’s DIN and order no. ITBA/NFAC/S/250/2023-24/1059015667(1), dated 22.12.2023 involving proceedings under section 143(3) of the Income-tax Act, 1961 (hereinafter referred to as ‘the Act’).
