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2023 (5) TMI 1218 - AT - Income TaxRevision u/s 263 - Deduction u/s 80P - interest income derived from parking of surplus funds in fixed deposits - HELD THAT -This tribunal s recent order in Solapur Zilha Prathamik Shikshah Sahakari Sanstha Niyamit 2023 (1) TMI 1254 - ITAT PUNE observed that the interest income earned by a co-operative society on its investments held with a cooperative bank would be eligible for claim of deduction u/s.80P(2)(d) of the Act. AO while framing the assessment had taken a possible view, and allowed the assessee s claim for deduction under Sec. 80P(2)(d) on the interest income earned on its investments/deposits with co-operative banks, therefore, the Pr. CIT was in error in exercising his revisional jurisdiction u/s 263 of the Act for dislodging the same - No justification on the part of the Pr. CIT, who in exercise of his powers u/s 263 of the Act, had dislodged the view that was taken by the A.O as regards the eligibility of the assessee towards claim of deduction under Sec. 80P(2)(d), we set-aside his order and restore the order passed by the A.O under Sec. 143(3) - Assessee appeal allowed.
Issues Involved:
1. Correctness of PCIT's revision directions regarding the assessee's sec. 80P deduction claim. 2. Eligibility of the assessee for deduction under Sec. 80P(2)(d) on interest income derived from investments/deposits with cooperative banks. Summary: Issue 1: Correctness of PCIT's Revision Directions The appeal concerns the PCIT, Pune-3, Pune's order dated 13.02.2023, which termed the sec. 143(3) regular assessment dated 18.01.2021 as erroneous, causing prejudice to the interest of Revenue. The PCIT's revision order directed a re-examination of the assessee's sec. 80P(2)(a)(i) deduction claim of Rs. 37,93,379/-. The Revenue supported the PCIT's order, arguing that the deduction claim needed re-evaluation. Issue 2: Eligibility for Deduction Under Sec. 80P(2)(d) The tribunal examined whether the assessee's income derived from deposits in various cooperative banks qualifies for deduction under sec. 80P(2)(d). Referring to a recent tribunal order (ITA.No.421/PUN./2022) for the preceding assessment year, which rejected the Revenue's stand, the tribunal noted that the interest income from fixed deposits in cooperative banks does not disqualify for sec. 80P relief. The tribunal cited several judicial precedents and found that the co-operative society's interest income from investments in cooperative banks is eligible for deduction under Sec. 80P(2)(d). The tribunal emphasized that the term "co-operative society" includes cooperative banks, and thus, interest income derived from such banks qualifies for the deduction. The tribunal also referenced conflicting judicial pronouncements and decided to follow the view favoring the assessee, as per the principle established by the Hon'ble High Court of Bombay in K. Subramanian and Anr. Vs. Siemens India Ltd. and Anr (1985) 156 ITR 11 (Bom). Conclusion The tribunal concluded that the Assessing Officer had taken a plausible view in allowing the assessee's claim for deduction under Sec. 80P(2)(d). Therefore, the PCIT's exercise of revisional jurisdiction under Sec. 263 was unjustified. The tribunal reversed the PCIT's revision directions and restored the Assessing Officer's assessment order dated 18.01.2021. Order pronounced in the open Court on 25.05.2023.
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