New Delhi, Oct. 6 -- A tax deduction claim that is later rejected by the Income Tax Department does not automatically amount to misreporting of income, the Income Tax Appellate Tribunal (ITAT), Bangalore, has ruled. The tribunal deleted a Rs.23.31 lakh penalty imposed on a cooperative housing society after it claimed a Rs.37.82 lakh deduction on interest income.

The ruling in Pashupalana Elake Noukarara Gruha Nirmana Sahakara Sanga Nigama v. Income Tax Officer, ITA No. 2366/Bang/2025, concerned assessment year 2018-19. The tribunal held that the deduction claim was a debatable legal issue, particularly because there were conflicting judicial decisions on whether such interest income qualified for deduction under section 80P(2)(d) of the ...