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TMI Blog2023 (7) TMI 1042X X X X Extracts X X X X X X X X Extracts X X X X ..... eal raised by the assessee are square covered in favour of assessee and against the revenue. Thus, we hold that the order of ld PCIT passed under section 263 is not justified - Grounds of appeal allowed in favour of the assessee and against the revenue. - ITA No. 233/SRT/2023 - - - Dated:- 10-7-2023 - Shri Pawan Singh, Judicial Member And Dr. Arjun Lal Saini, Accountant Member For the Assessee : Shri Akshay M. Modi, A.R. For the Department : Shri Ashok B. Koli, CIT-DR ORDER UNDER SECTION 254(1) OF INCOME TAX ACT. PER: PAWAN SINGH, JUDICIAL MEMBER: 1. This appeal by the assessee is directed against the order of learned Principal Commissioner of Income Tax-1, Surat [in short the ld. Pr.CIT] dated 02/03/2022 passed under Section 263 of the Income Tax Act, 1961 (in short, the Act) for the Assessment Year (AY) 2018-19. The assessee has raised following grounds of appeal: 1 On the facts and in the circumstances of the case as well in law, the learned Pr. CIT, Surat-1, Surat erred in having assumed jurisdiction u/s 263 of the Act in order to substitute his subjective view in place of judicious view taken by the AO on the same set of facts and material ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... her prejudicial to the interest of the revenue nor an erroneous and hence, the order u/s 263 of the Act is liable to be struck down. 5. Without any prejudice to the above, on the facts and in the circumstances of the case as well in law, the order of the learned Pr. CIT u/s 263 of the Act suffers from serious illegalities in as much as, according to the settled position in law and in consideration of the same set of facts in existence consistently allowing the deduction claimed u/s 80P(2)(d) of the Act by the AO and/or the appellate authorities (as explained during the assessment/revisionary proceedings) and therefore, the order passed u/s 263 of the Act invoking Clause (a)/(b) of the Explanation 2 of Section 263 of the Act patently in violation of rule of consistency is bad in law, without jurisdiction, arbitrary, invalid and hence, liable to be quashed. 6. Your appellant further reserves its rights to add, alter, amend or modify any of the aforesaid grounds before or at the time of hearing of an appeal. 2. At the outset of hearing, the learned Authorised Representative (ld. AR) of the assessee submits that the grounds of appeal raised by assessee is covered by va ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ever, the adjournment request was rejected and the ld. Pr. CIT passed the order under Section 263 in setting aside the assessment order on the issue of deduction of interest of Rs. 2.01 crore under Section 80P(2)(d) of the Act. The ld. AR of the assessee submits that the grounds of appeal in fact are squarely covered in favour of assessee by the various decisions including the decision relied by him. The ld AR for the assessee prayed to allow the appeal of assessee. 5. On the other hand, the learned Commissioner of Income Tax- Departmental Representative (ld. CIT-DR) for the revenue submits that the case was selected for scrutiny for examining the deduction under Chapter VI-A. The Assessing Officer while issuing show cause notice has issued notice as to why the interest income and dividend income of Rs. 2.35 crores earned from should not be treated as income from other sources . No addition was made by the Assessing Officer on such issue. The assessee has not earned such interest income in its business activities, thus such income was to be taxed under the head other sources . The assessment order is silent about taxing of such income under the head other sources . The ld. CI ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ue was examined by the assessing officer. We further find that the ld PCIT revised the assessment order on the issue of deduction under section 80P(2)(d). On carful considerations of grounds of appeal and the facts of the case, we find that on similar grounds of appeal on similar set of facts, this combination has this Tribunal allowed similar relief to that assessee, thus in our view, the grounds of appeal raised by the assessee are square covered in favour of assessee and against the revenue. For completeness of order, the relevant part of decision in Bardoli Vibhag Gram Vikas Co-op Credit Society Ltd. Vs PCIT (supra) is extracted below: 11. We have considered the rival submission of both the parties. We have also deliberated on the written submission filed by learned AR of the assessee and various case laws relied by him during his submission. We have also gone through the various documentary evidences filed in the form of paper book (PB) by learned AR of the assessee. We have noted that during the assessment the Assessing Officer vide notice under section 143(2)/142(1) of the Act dated 31.08.2015 and 13.04.2016. The assessee filed its reply through its CA (AR) and furnishe ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ceived from co-operative bank without adjusting interest paid to said bank. 16. The Co-ordinate Bench of Rajkot Tribunal in Surendarnagar District Cooperative Milk Producer Union Ltd., vs. DCIT [2019] 111 taxmann.com 69 (Rajkot Tribunal) also held the assessee co-operative society could not claim benefit under section 80P(2)(d) in respect of interest earned by it from deposits made with nationalized/private banks, however, the said benefit was available in respect of interest earned and on deposits made with co-operative bank. Thus, in view of the aforesaid legal discussion we are of the considered view that order passed by Assessing Officer is not erroneous, though it may be prejudicial to the interest of the Revenue. Therefore, the twin conditions that orders is erroneous and so far as prejudicial to the interest of revenue, as prescribed under section 263 is not fulfilled in the present case. 17. Moreover, we have seen that in assessee s own case for A.Y. 2009-10, 2010-11 and 2012-13, the similar disallowance under section 80P(2)(d) was made by the assessing officer while passing assessment order under section 143(3), however, on appeal before Ld. CIT(A) , the disallow ..... X X X X Extracts X X X X X X X X Extracts X X X X
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