2023 (2) TMI 802 - AT - Income Tax

Revision u/s 263 - deduction u/s 80P(2)(d) in respect of interest income - HELD THAT - As observed that though co-operative banks, other than primary agricultural credit society or a primary co-operative agricultural and rural development bank, are not eligible for deduction pursuant to insertion of section 80P(4) w.e.f. 1.4.2007, but this provision does not dent the otherwise eligibility u/s 80P(2)(d) of a cooperative society on interest income on investments/deposits parked with a cooperative bank, which is a registered co-operative society as per section 2(19) defining co-operative society to mean a co-operative society registered under the Co-operative Societies Act, 1912 or under any law for the time being in force. The assessees are also Co-operative society registered. Similar view has been taken by the Pune Benches of the Tribunal in several cases including The Sesa Goa Employees Coop. Credit Society Ltd. 2022 (12) TMI 959 - ITAT PUNE . In view of the fact that the Pune Benches of the Tribunal in series of decisions have held that the assessees are entitled to deduction u/s.80P(2)(a)(i)/80P(2)(d) in respect of interest income, we hold that the impugned orders cannot be sustained. All the orders are, therefore, overturned. All the appeals are allowed.

Summary

Issues:
1. Delay in filing the appeal
2. Validity of deduction claimed under Chapter VIA u/s 80P(2)(d) of the Income-tax Act, 1961
3. Jurisdiction of Pr. CIT under section 263 of the Act

Delay in filing the appeal:
The appeal was time-barred by 188 days, but the assessee filed an Affidavit and condonation petition explaining the reasons for the delay. The Tribunal, after considering the reasons provided, concluded that the delay was not deliberate or intentional on the part of the assessee. Despite strong objections raised by the ld. D.R regarding the delay, the Tribunal decided to condone the delay and proceeded to hear the case on merits.

Validity of deduction claimed under Chapter VIA u/s 80P(2)(d) of the Income-tax Act, 1961:
The appeal involved a dispute regarding the deduction claimed under Chapter VIA, specifically u/s 80P(2)(d) of the Act. The ld. Pr. CIT passed an order under section 263 of the Act, holding the assessment order erroneous and prejudicial to the interest of revenue. The Tribunal referred to similar cases where the allowability of deduction u/s 80P was discussed. It was noted that co-operative societies engaged in providing credit facilities to members are eligible for deduction u/s 80P(2)(d) on interest income from investments/deposits in cooperative banks. The Tribunal relied on precedents and held that the assessees were entitled to the deduction, ultimately allowing the appeal.

Jurisdiction of Pr. CIT under section 263 of the Act:
The Tribunal discussed the jurisdiction of the Pr. CIT under section 263 of the Act in revising the assessment order. It was observed that the Pr. CIT invoked jurisdiction based on the perceived error in allowing the deduction u/s 80P. However, the Tribunal found that the primary claim of the assessee was directly related to the eligibility of deduction u/s 80P(2)(a)(i) of the Act, making the decision inapplicable. The Tribunal, following previous decisions, concluded that the impugned orders could not be sustained and overturned them, allowing the appeal of the assessee based on the same reasoning.

In conclusion, the Tribunal allowed the appeal of the assessee, emphasizing the eligibility of the deduction claimed under Chapter VIA u/s 80P(2)(d) of the Income-tax Act, 1961. The decision highlighted the importance of considering precedents and relevant legal provisions in determining the validity of such deductions.