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TMI Blog2022 (1) TMI 349X X X X Extracts X X X X X X X X Extracts X X X X ..... claring total income at Rs.NIL after claiming deduction of Rs. 3,27,122/- under section 80P(2) of the Act. Thereafter, return of the assessee was selected for scrutiny assessment by issuance of notice under section 143(2) of the Act, which was duly served upon the assessee. During the scrutiny assessment, it was noticed by the AO that the assessee has earned a total interest income of Rs. 19,66,179/-, out of which, an amount of Rs. 5,50,983/- was earned by the assessee from the deposits made with nationalized bank. The ld.AO was of the view that the assessee was not entitled for claim of deduction under section 80P(2)(a) because said income falls under the category "income from other sources". The ld.AO accordingly issued a show cause notice dated 22.01.2015 proposing as to why interest income of Rs. 5,50,983/- earned from non-members should not be disallowed, and added to the income of the assessee. In response thereto, the assessee amongst other, submitted that the assessee is a cooperative credit society and engaged in the business of providing credit facility to its members. It also accepts deposits from the members. The assessee was required to pay interest on deposits accepte ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ions of section 263 are not applicable to the assessee, as order of the AO passed under section 143(3) which was sought to be revised under section 263 was subject matter of an appeal, and was considered and decided in appeal. Therefore, by applying principle of doctrine of merger, order of AO was emerged with order of the ld.CIT(A), which was not amenable to section 263 of the Act, meaning thereby, once the issue was considered and decided by the CIT(A) revision under section 263 could not be done. However, contentions of the assessee were not convincing to the ld.Pr.CIT. He was of the view that the case of the assessee was hit by section 80P(4) of the Act, and therefore, deduction under section 80P(2)(a)(i) was not allowable to the assessee, therefore, order of the AO being erroneous in so far as prejudicial to the interest of the Revenue, required to be revised to that extent. Accordingly, the ld.Pr.CIT directed AO to make additions in accordance with the order passed under section 263 of the Act. Dissatisfied with action of the Pr.CIT, assessee is now before the Tribunal. 5. Before us, the ld.counsel for the assessee advanced arguments on similar footings as were made before t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... jurisdiction under section 263 after passing appellate order. We find that when the original assessment order under section 143(3) was challenged before the first appellate authority, and first appellate authority has decided the issue and passed order in favour of the assessee, consequently, the assessment order gets merged with the appellate order. Further, even the Revenue has not preferred any appeal against the appellate order, and therefore, issue in dispute attained finality. We also find that clause (c) of Explanation 1 to Section 263(1) has clarified that when the subject matter of revision is in appeal before the CIT(A), the CIT has no power to revise the same. In other words, CIT is competent to revise an order of assessment passed by the AO in all the matters except those which have been considered and decided in appeal. The ld.CIT can exercise revisional powers only on issue which are not before the ld.CIT(A). This is because powers of the CIT(A) are co-terminus to that of the CIT. The case on hand is clearly in violation of the Explanation 1 to section 263(1), therefore, applying principle of doctrine of merger, exercise of power under section 263 in the present case ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ee. Section 80P(4), in the present form, refers as under : "(4) The provisions of this section shall not apply in relation to any co-operative bank other than a primary agricultural credit society or a primary co-operative agricultural and rural development bank. Explanation.-For the purposes of this sub-section,- (a) 'co-operative bank' and "primary agricultural credit society" shall have the meanings respectively assigned to them in Part V of the Banking Regulation Act, 1949 (10 of 1949); (b) 'primary co-operative agricultural and rural development bank' means a society having its area of operation confined to a taluk and the principal object of which is to provide for long-term credit for agricultural and rural development activities." 4. As per section 80P(4), the provisions of section 80P would not apply in relation to any co-operative bank other than primary agricultural credit society or primary co-operative agricultural and rural development bank. As per the Explanation, the terms "co-operative bank" and "primary agricultural credit society" shall have the meanings respectively assigned to them in Part V of the Banking Regulation Act, 1949. 5. Th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of section 80P will not apply in this case. 5. This is issued with the approval of the Chairman, Central Board of Direct Taxes." 7. From the above clarification, it can be gathered that sub-section (4) of section 80P will not apply to an assessee which is not a co-operative bank. In the case clarified by the Central Board of Direct Taxes, the Delhi Co-op. Urban Thrift and Credit Society Ltd. was under consideration. The circular clarified that the said entity not being a cooperative bank, section 80P(4) of the Act would not apply to it. In view of such clarification, we cannot entertain the Revenue's contention that section 80P(4) would exclude not only the co-operative banks other than those fulfilling the description contained therein but also credit societies, which are not co-operative banks. In the present case, the respondent-assessee is admittedly not a credit co-operative bank but a credit co-operative society. The exclusion clause of sub-section(4) of section 80P, therefore, would not apply. In the result, the tax appeals are dismissed." 8. In view of our above observation qua validity of 263 order, and judgment of Hon'ble jurisdictional High Court in the case of ..... X X X X Extracts X X X X X X X X Extracts X X X X
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