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2024 (4) TMI 449 - AT - Income TaxRevision u/s 263 - Deduction u/s 80P on interest received from Cooperative Bank - HELD THAT - As decided in Katlary Kariyana Merchant Sahkart Sarafi Mandali Ltd 2022 (1) TMI 1309 - GUJARAT HIGH COURT wherein held as following the decision of Totagar's Co-operative Sale Society ltd. 2010 (2) TMI 3 - SUPREME COURT 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. This Court further finds that by virtue of amendment in section 194A(3)(v) of the Income tax act, it has also excluded the cooperative banks from the definition of co-operative society by the Finance act, 2015. The High Court of Karnataka has taken note of this amendment in the case of Totagars Co-op/sale society 2017 (7) TMI 1049 - KARNATAKA HIGH COURT thereby holding that the effect of the aforesaid amendment explicitly makes clear intention of legislation that co-operative banks are not specie of genus co-operative society, which would entitled to exemption or deduction under the special provisions of Chapter VI-A in the form of section 80P of the Act. Thus the allowance of deduction of the income derived by way of interest from the investment in the form of FDR's with other banks was incorrect. No infirmity in the Revision order passed by the Ld. PCIT which does not warrant any interference. Thus the grounds raised by the assessee is devoid of merits liable to be rejected.
Issues Involved:
1. Validity of the order passed u/s 263. 2. Whether the assessment order was erroneous and prejudicial to the interest of the revenue. 3. Adequacy of opportunity provided to the appellant. 4. Consideration of relevant documents and information by the Assessing Officer (AO). 5. Scope of action u/s 263 under the settled legal position. 6. Legality and validity of the initiation of action u/s 263. Summary: Validity of the order passed u/s 263: The Assessee contested that the Principal Commissioner of Income Tax (PCIT) erred in passing the order u/s 263. The Tribunal noted that the PCIT relied on the decision of the Gujarat High Court in Katlary Kariyana (2022), which clarified that co-operative banks are not a species of co-operative society, thus affecting the deduction claims u/s 80P. Assessment order erroneous and prejudicial to the revenue: The PCIT deemed the assessment order erroneous and prejudicial to the interest of the revenue, particularly concerning the interest received from co-operative banks not being deductible u/s 80P(2)(d). The Tribunal upheld this view, referencing the jurisdictional High Court's stance. Adequacy of opportunity provided to the appellant: The Assessee argued that adequate and reasonable opportunity was not provided. However, the Tribunal found that the Assessee had multiple opportunities to present its case but failed to appear or provide proper authorization for representation. Consideration of relevant documents and information by AO: The Assessee claimed that all relevant documents were provided to the AO, negating the need for action u/s 263. The Tribunal, however, found that the AO's failure to apply the correct legal principles as established by higher courts rendered the assessment order erroneous. Scope of action u/s 263 under settled legal position: The Tribunal emphasized the importance of adhering to the legal position settled by the jurisdictional High Court, which in this case, did not support the Assessee's claim for deductions on interest from co-operative banks. Legality and validity of initiation of action u/s 263: The Assessee contended that the initiation of action u/s 263 was illegal and void. The Tribunal dismissed this argument, stating that the PCIT's actions were consistent with the legal requirements and judicial precedents. Conclusion: After considering the jurisdictional High Court judgments, the Tribunal found no infirmity in the Revision order passed by the PCIT. Consequently, the grounds raised by the Assessee were deemed devoid of merit and the appeal was dismissed. Order Pronouncement: The appeal filed by the Assessee was dismissed, and the order was pronounced in the open court on 05-04-2024.
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