2023 (12) TMI 1418 - AT - Income Tax

Revision u/s 263 - allowance/deduction u/s 80P(2)(a) or 80P(2)(d) with regard to interest received from Surat District Cooperative Bank - HELD THAT - We find that the Surat District Cooperative Bank is a cooperative society registered under Gujarat State Cooperative Societies Act. Tribunals held that the cooperative banks are primarily cooperative societies and interest earned on deposits with such cooperative bank is exempt u/s 80P(2)(d) of the Act. The Hon ble Jurisdictional High Court in the case of Surat Vankar Sahakari Sangh Ltd. 2016 (7) TMI 1217 - GUJARAT HIGH COURT also held that the assessee cooperative society was eligible for deduction u/s 80P(2)(d) in respect of gross interest received from cooperative bank without adjusting interest paid to said bank. No doubt that in the assessment order there is no discussions of the issue of deduction of interest income earned by assessee on fixed deposits from Surat District Cooperative bank still we found that the assessment is not erroneous on the deduction u/s 80P(2)(d) as the same is consonance with the decision of Surat Vankar Sahakari Sangh Ltd. 2016 (7) TMI 1217 - GUJARAT HIGH COURT and the various other decisions of this Tribunal. Thus the twin condition for invoking section 263 is not satisfied. Decided in favour of assessee.

Summary

The appeal before the Appellate Tribunal involved the issue of whether the order of the Principal Commissioner of Income Tax, Surat-1, setting aside the assessment order passed by the Assessing Officer under Section 143(3) of the Income Tax Act for the Assessment Year 2018-19 was erroneous and prejudicial to the interest of revenue. The key issues considered were the disallowance of interest income from a cooperative bank under Section 80P(2)(a)(i) or 80P(2)(d) of the Income Tax Act and the delay in filing the appeal before the Tribunal.The Appellate Tribunal first addressed the issue of condonation of delay in filing the appeal. The assessee claimed that the delay was due to a misunderstanding by their consultant regarding the appealability of the order under Section 263 of the Act. The Tribunal, considering the lack of intentional delay and following precedent, condoned the delay of 166 days in filing the appeal.On the substantive issue of the disallowance of interest income from a cooperative bank, the Tribunal noted that the Principal Commissioner had set aside the assessment order based on the interest income not being eligible for deduction under Section 80P(2)(d) of the Act. The Tribunal observed that the cooperative banks are considered cooperative societies and interest earned on deposits with such banks is exempt under Section 80P(2)(d). Citing decisions by various Tribunals and the High Court, the Tribunal found that the assessment order was not erroneous as it was in line with the legal position established by precedent. Therefore, the Tribunal allowed the appeal, quashing the order passed by the Principal Commissioner under Section 263 of the Act.In conclusion, the Appellate Tribunal held that the interest income earned by the assessee from a cooperative bank was eligible for deduction under Section 80P(2)(d) of the Income Tax Act, and the order of the Principal Commissioner setting aside the assessment order was not justified. The Tribunal allowed the appeal of the assessee, emphasizing the legal position established by previous decisions in similar cases.