2022 (7) TMI 672 - AT - Income Tax

Revision u/s 263 by CIT - deduction under Section 80P(2) - HELD THAT - It is observed that the assessment completed by the AO under Section 143(3) of the Act allowing the similar claim of an assessee for deduction under Section 80P(2) of the Act in respect of interest income earned on the deposits with Mehsana Urban Co-operative Bank was set aside by the same learned PCIT vide his order passed under Section 263 of the Act in the case of the People Co-op. Credit Society Ltd by relying on the decision in the case of Totgars Co-operative Sale Society ( 2017 (7) TMI 1049 - KARNATAKA HIGH COURT and, on appeal by the assessee, the Coordinate Bench of this Tribunal 2022 (3) TMI 71 - ITAT AHMEDABAD set aside the order passed by the learned PCIT under Section 263 of the Act restoring that of the Assessing Officer by relying inter alia on the decision of the Hon ble jurisdictional High Court in the case of State Bank of India 2016 (7) TMI 516 - GUJARAT HIGH COURT The issue involved in the present case is thus squarely covered by the decisions rendered by the Tribunal in the case of the People Co-op. Credit Society Ltd. ( 2022 (3) TMI 71 - ITAT AHMEDABAD and Sardar Patel Co-op. Credit Society Ltd ( 2022 (6) TMI 843 - ITAT AHMEDABAD wherein a similar issue involving identical facts and circumstances has been decided by the Tribunal in favour of the assessee and even the learned DR has not been able to dispute this position. We, therefore, follow the said decisions of the Coordinate Bench of this Tribunal and set aside the impugned order passed by the PCIT under Section 263 of the Act restoring that of the Assessing Officer passed under Section 143(3) of the Act. Appeal of assessee allowed.

Summary

Issues:
Assessment under Section 263 of the Income-tax Act, 1961 regarding deduction under Section 80P(2) for interest income received by a Co-operative Credit Society from deposits with banks.

Analysis:
The appeal was filed against the order of the Principal Commissioner of Income-tax, Gandhinagar, passed under Section 263 of the Income-tax Act, 1961. The Co-operative Credit Society, engaged in providing credit facility to members, filed a return declaring a total income of Nil after claiming a deduction under Section 80P. The Assessing Officer made an addition to the income on account of interest on refund received under Section 244A. The Principal Commissioner found that interest income received by the assessee on savings account and deposits with banks was wrongly allowed as a deduction under Section 80P(2) based on a Karnataka High Court judgment. The Principal Commissioner set aside the assessment order and directed a denovo assessment considering the Karnataka High Court judgment. The assessee contended that a Gujarat High Court judgment supported their claim, but the Principal Commissioner upheld his decision under Section 263. The Tribunal, in similar cases, set aside the Principal Commissioner's orders relying on the Gujarat High Court judgment. The issue was decided in favor of the assessee based on the Tribunal's previous decisions, and the impugned order was set aside, restoring that of the Assessing Officer.

The issue involved in the case was found to be covered by previous Tribunal decisions in favor of the assessee. The Tribunal followed its previous decisions in similar cases and set aside the order passed by the Principal Commissioner under Section 263, restoring that of the Assessing Officer. The decision was based on the consistency of previous Tribunal rulings and the failure of the Revenue to dispute the position. Consequently, the appeal of the assessee was allowed, and the order was pronounced in court on 6th July 2022 at Ahmedabad.