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2023 (2) TMI 751 - AT - Income TaxRevision u/s 263 by CIT - deduction us 80P(2) - HELD THAT - This tribunal in the case of Sardar patel Co-operative Credit Society ( 2022 (6) TMI 843 - ITAT AHMEDABAD involving the identical facts and circumstances has decided the issue in favour of the assessee. No material has been placed on record by the Revenue to demonstrate that the decision of Tribunal as discussed above has been set aside/stayed or overruled by the higher Judicial Authorities. Before us, Revenue has not placed any material on record to point out any distinguishing feature in the facts of the case for the year under consideration and that of case referred above nor has placed any contrary binding decision in its support. Thus, we hold that the order framed under section 263 of the Act is unsustainable. Hence, the ground of appeal of the assessee is allowed.
Issues:
1. Delay in filing the appeal due to COVID-19 pandemic situation. 2. Allowability of interest income deduction under section 80P(2) of the Income Tax Act, 1961. 3. Validity of the Revision order passed under section 263 of the Act. 4. Interpretation of relevant case laws by the Principal Commissioner of Income Tax. Issue 1: Delay in filing the appeal due to COVID-19 pandemic situation: The appeal filed by the Assessee against the Revision order dated 09.03.2020 was noted to have a delay of 16 days. However, it was argued that the delay occurred during the COVID-19 pandemic situation. Citing a judgment of the Hon'ble Supreme Court, the time limit for filing appeals was extended from 15.3.2020. Consequently, the delay was deemed excusable, and the appeal was accepted for adjudication. Issue 2: Allowability of interest income deduction under section 80P(2) of the Income Tax Act, 1961: The Assessee, a Cooperative Society, earned interest income from various sources. The Assessing Officer initially allowed the interest income as deductible under section 80P(2) of the Act. However, the Principal Commissioner of Income Tax issued a show cause notice, challenging this treatment based on a judgment of the Hon'ble Karnataka High Court. The Assessee argued that the judgment was distinguishable due to a decision by the Hon'ble Gujarat High Court. The Principal Commissioner overruled this objection, directing a reframe of the assessment in line with the Karnataka High Court judgment. The Assessee appealed, contending that the interest income from a Co-operative Bank was eligible for deduction under section 80P(2) based on relevant case laws and tribunal decisions. Issue 3: Validity of the Revision order passed under section 263 of the Act: The Assessee raised multiple grounds of appeal against the Revision order passed by the Principal Commissioner of Income Tax. These grounds included challenging the initiation of proceedings under section 263, the alleged error in the assessing officer's order, and the failure to consider relevant case laws. The Assessee argued that the assessment was not passed hastily and without proper enquiry, thus not meeting the criteria for being considered erroneous under section 263. Issue 4: Interpretation of relevant case laws by the Principal Commissioner of Income Tax: During the appeal, the Assessee presented arguments supported by the Jurisdictional Gujarat High Court decision and a Tribunal decision involving similar facts. The Tribunal noted that a previous case had already decided in favor of the Assessee, setting aside the PCIT's order under section 263 and restoring that of the Assessing Officer. The Tribunal found the issue to be squarely covered by the previous decision and ruled in favor of the Assessee, holding that the order under section 263 was unsustainable. In conclusion, the Appellate Tribunal ITAT Ahmedabad, in the cited judgment, addressed the issues of delay in filing the appeal, the allowability of interest income deduction under section 80P(2) of the Income Tax Act, the validity of the Revision order under section 263, and the interpretation of relevant case laws. The Tribunal ultimately ruled in favor of the Assessee, following previous decisions and finding the order under section 263 to be unsustainable based on established legal principles and precedents.
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