2022 (8) TMI 1075 - AT - Income Tax

Revision u/s 263 - allowability of deduction u/s. 80P(2)(d) - HELD THAT - As relying on THE SARDAR PATEL CO-OPERATIVE CREDIT SOCIETY LIMITED 2022 (6) TMI 843 - ITAT AHMEDABAD wherein held 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 decision of the Coordinate Bench of this Tribunal in case of the People Co-op. Credit Society Ltd. 2022 (3) TMI 71 - ITAT AHMEDABAD and set aside the impugned order passed by the PCIT under Section 263 of the Act restoring that of the Assessing Officer passed u/s 143(3) of the Act. - Decided in favour of assessee.

Summary

Issues Involved:
1. Eligibility for deduction of interest income under Section 80P(2)(d) of the Income Tax Act.
2. Validity of the revision proceedings under Section 263 of the Income Tax Act.
3. Applicability of judicial precedents from different High Courts.

Issue-wise Detailed Analysis:

1. Eligibility for Deduction of Interest Income under Section 80P(2)(d):
The primary issue was whether the assessee, a Co-operative credit society, was eligible for deduction under Section 80P(2)(d) of the Income Tax Act for interest income earned from investments made with Co-operative Banks. The assessee claimed a deduction of Rs. 1,04,56,923/- under Section 80P, which included interest income from Co-operative Banks. The Principal Commissioner of Income Tax (PCIT) held that the interest income from Co-operative Banks was not entitled to deduction under Section 80P(2)(d), relying on the judgment of the Karnataka High Court in Totgars Co-Operative Sale Society. However, the assessee argued that the Gujarat High Court had allowed such deductions in similar cases, and the Tribunal had previously quashed revision orders under Section 263 on similar grounds.

2. Validity of the Revision Proceedings under Section 263:
The PCIT initiated revision proceedings under Section 263, claiming that the Assessing Officer (AO) had erroneously allowed the deduction of interest income from Co-operative Banks. The PCIT directed the AO to reframe the assessment de-novo. The assessee contended that the revision proceedings were invalid as the AO had already considered the relevant details during the original assessment, and the jurisdictional High Court had allowed such deductions. The Tribunal, following its own precedents and the jurisdictional High Court's judgment, quashed the revision order passed by the PCIT, restoring the original assessment order.

3. Applicability of Judicial Precedents from Different High Courts:
The PCIT relied on the Karnataka High Court's judgment in Totgars Co-Operative Sale Society to disallow the deduction. The assessee, however, cited decisions from the Gujarat High Court and the Tribunal, which allowed deductions under Section 80P(2)(d) for interest income from Co-operative Banks. The Tribunal noted that the jurisdictional High Court's judgment was binding and took precedence over the Karnataka High Court's decision. The Tribunal also referenced its own decisions in similar cases, which supported the assessee's position.

Conclusion:
The Tribunal allowed the appeal filed by the assessee, quashing the revision order passed by the PCIT under Section 263 and restoring the original assessment order. The Tribunal held that the assessee was eligible for deduction under Section 80P(2)(d) for interest income from Co-operative Banks, following the jurisdictional High Court's judgment and its own precedents. The Tribunal emphasized that the PCIT could not invoke Section 263 based on a non-jurisdictional High Court's decision when the jurisdictional High Court had ruled in favor of the assessee. The Tribunal's order was pronounced in the open court on 24-08-2022.