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2024 (8) TMI 687 - AT - Income TaxReopening of assessment u/s 147 - disallowance u/s 80P(2)(d) - interest and dividend received from Ahmedabad District Co-op. Bank and Gujarat State Cooperative Bank Limited when interest earned from investment made in any bank, not being co-operative society is not deductible u/s 80P(2)(d) - HELD THAT - The original assessment has also dealt with this issue as the return of income was filed by the assessee on 29.11.2014 which was incorrectly mentioned in the reassessment proceedings that the assessee has not filed the return of income. The notices issued alongwith questionnaire categorically mentioned information called upon the assessee relating to dividend from Co-op Society and interest from Co-op Society for which the assessee has given the detailed reply alongwith its submissions. CIT(A) merely by deciding the case on merit cannot ignore legal aspect and state that it is infructuous. The reopening is on very same issue and, therefore, it is second opinion. Thus, application under Rule 27 of the Income Tax (Appellate Tribunal) Rules, 1963 is allowed. Since the assessment itself becomes bad in law, the issues contested by the Revenue in the present appeal does not require any comment. Appeal of revenue dismissed. Deduction u/s 80P(2)(d) - As decision of Hon ble Gujarat High Court in the case of Surat District Co-op. Milk Producers Union vs. ACIT 2023 (9) TMI 1525 - GUJARAT HIGH COURT CIT(A) has categorically mentioned that the Ahmedabad District Co-op. Bank Limited and the Gujarat State Co-operative Bank Limited are Co-operative Societies registered under Gujarat Co-operative Societies Act, 1961 and, therefore, the word Co-operative Society mentioned in Section 80P(20)(d) of the Act includes these Co-operative Societies also and, therefore, the interest earned and dividend income from these Co-operative Societies/Banks should be taken into account while granting deduction u/s 80P(2)(d). Decided in favour of assessee.
Issues:
- Appeal against orders passed by CIT(A) for two separate Assessment Years, challenging disallowance under Section 80P(2)(d) of the IT Act. - Validity of reopening assessment under Section 147 of the IT Act. - Interpretation of Section 80P(2)(d) regarding deduction for interest and dividend income from Co-op. Banks. Analysis: Issue 1: Disallowance under Section 80P(2)(d) of the IT Act - The Revenue challenged disallowance under Section 80P(2)(d) for interest and dividend income received from Co-op. Banks in two separate Assessment Years. - The CIT(A) partly allowed the appeal of the assessee in both cases. - The Revenue contended that banks working under Banking Regulation are not Co-op. Societies, thus not eligible for deduction under Section 80P. - The AR argued that Co-op. Banks are registered under the Co-op. Societies Act, making them eligible for deduction under Section 80P(2)(d). - The Tribunal upheld the CIT(A)'s decision, citing precedents where Co-op. Banks were considered Co-op. Societies under Section 80P(2)(d). - Consequently, both appeals filed by the Revenue were dismissed. Issue 2: Validity of Reopening Assessment - The Revenue challenged the validity of reopening assessment under Section 147, claiming it was a change of opinion. - The AR argued that since the original assessment order examined the same issue, the reopening was bad in law. - The Tribunal allowed the application under Rule 27, stating that the reopening was a second opinion on the same issue, rendering the assessment bad in law. - As the assessment itself was deemed invalid, the issues contested by the Revenue were considered moot, leading to the dismissal of the appeal. Conclusion: - The Tribunal dismissed the Revenue's appeals, upholding the CIT(A)'s decisions regarding the deduction under Section 80P(2)(d) for interest and dividend income from Co-op. Banks. - The Tribunal also rejected the Revenue's challenge on the validity of reopening assessment, deeming the assessment bad in law. - The decisions were based on the interpretation of Section 80P(2)(d) and previous judgments considering Co-op. Banks as Co-op. Societies for the purpose of deduction. - The orders were pronounced on August 9, 2024, in the open court.
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