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TMI Blog2019 (12) TMI 1611X X X X Extracts X X X X X X X X Extracts X X X X ..... he interest of revenue. Further, the order cannot be termed as erroneous unless it is not in accordance with law, if the Assessing Officer acting in accordance with law make certain assessment, the same cannot be branded as erroneous by Commissioner simply because, according to him, he order should have been written more elaborately. As we have noted above, the order passed by AO though not speaking, however, is in accordance with law, so far as deduction under section 80P is concerned. Therefore, in our consider view, the twin condition as enunciated under section 263 are not furnished in the present case. Therefore, the ld. PCIT was not justified in treating the assessment order for revising it by exercising power under section 263. As we have noted earlier that ld. PCIT while issuing show-cause notice himself has recorded in the show-cause notice itself that Assessing Officer has erroneously allowed the deduction under section 80P(2)(d) on interest received from a Credit Co-operative Society. Hence, we are not convinced with the submission that issue was not examined by Assessing Officer as the language of show-cause notice itself suggest that Assessing Officer erroneousl ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the assessment order, the ld. PCIT by show-cause notice dated 05.02.2019. The operative part of show-cause notice is extracted in para-2 of the order. In the show-cause notice, the ld. PCIT noted that Assessing Officer has erroneously allowed the deduction under section 80P(2)(d) on the interest received of M/s Vadasinor Pragati Samaj Co-operative Credit Society Ltd. resulting into under assessment of tax. The assessee filed its reply dated 12.02.2019. The essence of reply of assessee is recorded by ld. PCIT in para-3 of its order as under. The main contents of the reply of the assessee are as under; (i) That the assessee is a credit co-operative society and not a cooperative bank within the meaning of Explanation to Section 80P(4) of the Act. It does not operate like a bank inasmuch as it does not accept funds from non-members or issue cheque books or carry out any activities that banks carry out. It accepts fixed deposits and recurring deposits only from its members and gives loans to needy members under-various schemes. The surplus, if any, of idle funds are invested with co-operative banks. (ii) That both Maharashtra State Co-operative Bank Mumbai District Central Co-o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... (AR) of the assessee and ld. Departmental Representative (DR) for the revenue and perused the material available on record. The ld. AR of the assessee submits that the Assessing Officer during the assessment raised query with regard to deduction under section 80P. The assessee filed its detailed reply before the Assessing Officer, copy of which is placed on record vide paid no. 14 15 of the Paper Book. The ld. AR for the assessee further submits that after considering the explanation of the assessee, the Assessing Officer allowed the deduction of interest from investment with other Co-operative Society namely Maharashtra State Co-operative Bank and Mumbai District Co-operative Bank. Both the Banks/Institutions governed by Maharashtra Co-operative Societies Act and accordingly, the assessee is entitled for deduction under section 80P. 6. The ld. AR of the assessee fairly submits that though there is no discussion in the assessment order about the deduction allowed in favour of assessee, however, the order was passed after due application of mind and that the order is neither erroneous nor prejudicial to the interest of revenue. The ld. AR of the assessee submits that in a numb ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... calls for further inquiry in the facts and circumstances of the case, the word erroneous prescribed in section 263 includes the failure to make such an enquiry by Assessing Officer. The Assessing Officer has not applied his mind on factual aspect of the record and allowed the deduction without enquiry and the assessment order is not only erroneous and prejudicial to the interest of revenue. The ld. DR submits that the twin condition as enunciated by celebrated case of Malabar Industrial Co. Ltd. vs. CIT (243 ITR 83) are clearly made out in the present case. The ld. CIT-DR prayed for dismissal of appeal. 8. In the rejoinder submission, the ld. AR of the assessee submits that ld. PCIT while issuing show-cause notice under section 263 dated 05.02.2019 has clearly written in its show-cause notice that the Assessing Officer erroneously allowed the deduction. Thus, the language of show-cause notice itself suggests that the issue of deduction under section 80P was considered by Assessing Officer while passing the assessment order. Now, the question is if the deduction under section 80P is allowed without examining the issue or allowed erroneously. 9. The ld. AR of the assessee fu ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the showcause notice apart from the other contents, the ld. PCIT has mentioned that Assessing Officer has erroneously allowed the deduction under section 80P(2)(d) on interest received from M/s. Vadasinor Pragati Samaj Co-operative Credit Society Ltd. (supra). The assessee filed its detailed reply vide reply dated 12.02.2019, summary of which is already correctly recorded by ld. PCIT as we have referred above in para-14 15. The contention of assessee was not accepted by PCIT by taking view that after insertion of sub-section (4) of section 80P w.e.f. 01.04.2007, the legislature has excluded Co-operative Bank from the ambit of section 80P, which deals with the deduction in respect of Co-operative Societies. The ld. PCIT also opined that the mandate of legislature should be read that no word used by Parliament should be rendered nugatory and if the word Co-operative Society is to be read as Cooperative Bank, it would be rendered the entire provision nugatory. It is further held that deduction under section 80P(2)(d) is allowable to the Co-operative Society in respect of interest or dividend by a Co-operative Society from its investment with other Co-operative Society. 11. T ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e have noted above, the order passed by Assessing Officer, though not speaking, however, is in accordance with law, so far as deduction under section 80P is concerned. Therefore, in our consider view, the twin condition as enunciated under section 263 are not furnished in the present case. Therefore, the ld. PCIT was not justified in treating the assessment order for revising it by exercising power under section 263. 15. So far as objection/statement of CIT-DR is concerned that the Assessing Officer has not made proper enquiry or the order is silent about the deduction claimed and allowed to the assessee under section 80P. As we have noted earlier that ld. PCIT while issuing show-cause notice himself has recorded in the show-cause notice itself that Assessing Officer has erroneously allowed the deduction under section 80P(2)(d) on interest received from a Credit Co-operative Society. Hence, we are not convinced with the submission that issue was not examined by Assessing Officer as the language of show-cause notice itself suggest that Assessing Officer erroneously allowed the deduction. Hence, the grounds of appeal raised by assessee are allowed, resultantly, the revision order ..... X X X X Extracts X X X X X X X X Extracts X X X X
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