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2019 (1) TMI 1708 - AT - Income TaxRevision u/s 263 - A.O had erroneously allowed the assesses claim for deduction u/s 80P(2)(d) on the interest income that was earned from the investments made with the co-operative bank - HELD THAT - Though the co-operative bank pursuant to the insertion of sub-section (4) of Sec. 80P would no more be entitled for claim of deduction under Sec. 80P of the Act, however, as a co-operative bank continues to be a co-operative society registered under the Cooperative Societies Act, 1912 (2 of 1912), or under any other law for the time being in force in any State for the registration of co-operative societies, therefore, the interest income derived by a co-operative society from its investments held with a co-operative bank would be entitled for claim of deduction under Sec.80P(2)(d) of the Act. Interest income earned by a co-operative society on its investments held with a co-operative bank would be eligible for claim of deduction under Sec.80P(2)(d) of the Act. Be that as it may, in our considered view as the A.O while framing the assessment under Sec. 143(3), dated 23.12.2017, had arrived at a plausible as regards the assesses entitlement under Sec. 80P(2)(d) on the interest income earned on its investments held with the co-operative banks, which view we find at the point of framing of the assessment was in conformity with that arrived at by the jurisdictional Tribunal in a host of judicial pronouncements, therefore, the said fact in itself would suffice to divest the Pr.CIT of his revisional jurisdiction under Sec. 263 in respect of the aforesaid issue. A.O had erroneously worked out the tax liability of the assessee under the normal provisions as against the alternate minimum tax (ALT) - As specifically provided in clause (i) of sub-section (2) to Sec. 115JC, the total income of the assessee is not to be increased by the deduction claimed under Sec. 80P. On a perusal of the calculation of the adjusted total income as per ITNS, we find, that the A.O had worked out the same by increasing the total income of the assessee by the amount of deduction that was claimed by the assessee under Sec.80P of the Act. As such, on the basis of his aforesaid working, the A.O had erroneously calculated the adjusted total income at ₹ 1,13,55,916/- as against the correct amount of ₹ 57,39,674/-. In the backdrop of the aforesaid facts, we find substantial force in the claim of the Ld. A.R that the observation of the Pr.CIT that the tax liability of the assessee as per AMT was higher than that worked out on its normal income , is based on incorrect working of the A.O in the ITNS. In sum and substance, a correct working of the AMT on the adjusted total income of ₹ 57,39,674/- is clearly found to be lower than the tax liability of the assessee under the normal provisions . On the basis of the aforesaid facts, we are of a strong conviction that as the calculation of the tax liability by the A.O under the normal provisions at ₹ 19,47,515/- ₹ 57,39,670/- (normal income) x 30% ( ) Surcharge and E.cess is higher than the correct amount of AMT viz. ₹ 57,39,674/- (adjusted total income) x 18.5% , therefore, the calculation of the tax liability by the A.O as per the normal provisions at ₹ 19,47,515/- cannot be held to be prejudicial to the interest of the revenue. Accordingly, on the basis of our aforesaid deliberations, we are of the considered view that the Pr.CIT is in error in concluding that the saddling of the assessee with the tax liability under the normal provisions had rendered the assessment order passed by the A.O under Sec. 143(3), dated 23.12.2017 as erroneous, insofar it was prejudicial to the interest of the revenue. We set aside the order passed by the Pr.CIT under Sec. 263 of the Act and restore the assessment framed by the A.O vide his order passed under Sec. 143(3) - Decided in favour of assessee.
Issues Involved:
1. Validity of the order passed under Section 263 of the Income Tax Act, 1961. 2. Disallowance of deduction claimed under Section 80P(2)(d) of ?56,16,242. 3. Calculation of tax liability under Section 115JC (Alternate Minimum Tax). Issue-wise Detailed Analysis: 1. Validity of the Order Passed under Section 263: The assessee contended that the order passed by the Principal Commissioner of Income Tax (Pr.CIT) under Section 263 was bad-in-law and liable to be quashed. The main argument was that the Assessing Officer (A.O) had already considered all relevant details and applied his mind while passing the original assessment order under Section 143(3). Therefore, the exercise of revisional jurisdiction by the Pr.CIT was unwarranted. The Tribunal agreed with the assessee, noting that the A.O had taken a plausible view supported by various judicial pronouncements. Hence, the Pr.CIT's assumption of jurisdiction under Section 263 was erroneous. 2. Disallowance of Deduction Claimed under Section 80P(2)(d): The Pr.CIT directed the A.O to disallow the deduction claimed under Section 80P(2)(d) on the interest income earned from deposits kept in co-operative banks. The Pr.CIT's view was that post the insertion of sub-section (4) to Section 80P, the assessee was not entitled to claim this deduction. However, the Tribunal disagreed, citing several judicial precedents that supported the assessee's claim. The Tribunal noted that the interest income derived from investments made with co-operative banks qualifies for deduction under Section 80P(2)(d). The Tribunal also highlighted that co-operative banks are considered co-operative societies under Section 2(19) of the Act, thus making the interest income eligible for deduction. 3. Calculation of Tax Liability under Section 115JC (Alternate Minimum Tax): The Pr.CIT observed that the A.O had incorrectly calculated the tax liability under normal provisions instead of the Alternate Minimum Tax (AMT) provisions, leading to a short levy of tax. The Tribunal examined the calculations and found that the A.O had erroneously increased the total income by the amount of deduction claimed under Section 80P while computing the adjusted total income for AMT purposes. The correct adjusted total income was significantly lower than what the A.O had calculated. Consequently, the Tribunal concluded that the tax liability under normal provisions was higher than the AMT, and thus, the A.O's calculation was not prejudicial to the interest of the revenue. Conclusion: The Tribunal set aside the order passed by the Pr.CIT under Section 263 and restored the original assessment order passed by the A.O under Section 143(3). The appeal filed by the assessee was allowed, and the order was pronounced in the open court on 08.01.2020.
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