2023 (5) TMI 1137 - AT - Income Tax

Revision u/s 263 - Deduction u/s 80P - interest income derived from deposits made in cooperative societies - HELD THAT - CIT-DR could not dispute that in latest decision Postal Employees Co. Op Credit Society Ltd. 2023 (2) TMI 813 - BOMBAY HIGH COURT has already rejected the Revenue s identical stand in initiating sec.148 proceedings for the purpose of assessing similar interest income derived from co-operative banks and other institutions. We adopt the foregoing detailed discussion mutatis mutandis to accept the assessee s arguments. Learned PCIT s revision directions in issue stand reversed. The Assessing Officer s corresponding regular assessment is restored as the necessary corollary - Assessee appeal allowed.

Summary

Issues Involved:
The judgment involves a challenge to the revision directions issued by the Principal Commissioner of Income Tax (PCIT) under section 263 of the Income Tax Act, 1961 concerning the allowance of section 80P deduction claim for interest income derived from deposits made in various cooperative banks.

Details of the Judgment:

1. Issue 1: Assessment Order Considered Erroneous by PCIT
- The PCIT deemed the Assessing Officer's assessment as erroneous due to allowing the section 80P deduction claim for interest income from cooperative banks.
- The Revenue supported the PCIT's decision citing a Karnataka High Court ruling that such interest income does not qualify for deduction under section 80P.
- The Tribunal considered a similar case and held that interest income earned from cooperative banks qualifies for deduction under section 80P(2)(a)(i) and 80P(2)(d) of the Act.

2. Issue 2: Validity of PCIT's Revision Directions
- The appellant contended that previous tribunal decisions supported their claim for deduction under section 80P.
- The PCIT's failure to examine the taxable income from cooperative banks was the basis for deeming the assessment order as erroneous.
- The Tribunal found that interest income from cooperative banks qualifies for exemption under section 80P(2)(a)(i) and 80P(2)(d) based on judicial precedents.

3. Separate Judgment by Tribunal
- The Tribunal highlighted a recent decision by the jurisdictional high court rejecting the Revenue's stance on assessing interest income from cooperative banks.
- The Tribunal reversed the PCIT's revision directions and restored the Assessing Officer's original assessment, ruling in favor of the assessee.

This detailed judgment provides a comprehensive analysis of the issues raised, including the interpretation of relevant sections of the Income Tax Act and the application of judicial precedents to determine the eligibility of interest income derived from cooperative banks for deduction under section 80P.