2022 (4) TMI 1649 - HC - Income Tax

Revision u/s 263 - Deduction u/s 80P - interest earned from investments in banks - HELD THAT - Appeal admitted on substantial question of law. Whether Tribunal had erred in holding that the order passed by the AO is neither erroneous nor prejudicial to the interest of Revenue by ignoring the decision of Totgars Cooperative Sale Society Ltd 2010 (2) TMI 3 - SUPREME COURT wherein it was held that interest earned from investments made in any bank not being cooperative society is not deductible under section 80P(2)(d) of the Act. Whether Tribunal had erred in holding that the order of assessment passed by the AO should not be interfered with only because another view is possible without appreciating that the view taken by the AO was unsustainable in law in light of the provisions of section 80P(4) of the Act and reflects non application of mind by the AO. Whether Tribunal had erred in quashing the revision proceedings u/s 263 of the Income Tax Act by overlooking the fact that in the case of Totgars Cooperative Sale Society (supra) has held that the intention of legislature is clear that cooperative banks are not specie of genus cooperative society which would entitle to exemption or deduction under the special provisions of chapter VI-A in the form of section 80P of the Act. This finding has also been approved by the Hon ble High Court of Gujarat in the case Katlary Kariyana Merchant Sahkari Sarafi Mandali Ltd. 2022 (1) TMI 1309 - GUJARAT HIGH COURT

Summary

The Gujarat High Court, with Honourable Justices J.B. Pardiwala and Nisha M. Thakore presiding, heard a Tax Appeal by the Revenue. The appeal raised substantial questions of law regarding the correctness of the Tribunal's decision on the deductibility of interest earned from investments in banks under section 80P(2)(d) of the Income Tax Act. The Tribunal's decision was challenged for allegedly ignoring relevant legal precedents and misapplying the law. The Tribunal's quashing of revision proceedings under section 263 of the Income Tax Act was also contested based on interpretations from other High Court decisions. The respondent-assessee was put on notice regarding the appeal.