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TMI Blog2023 (4) TMI 1342X X X X Extracts X X X X X X X X Extracts X X X X ..... see as against the Revision order dated 27.03.2022 passed by the Principal Commissioner of Income Tax-1, Vadodara under section 263 of the Income Tax Act, 1961 (hereinafter referred to as the Act ) relating to the Assessment Year (A.Y) 2017-18. 2. The brief facts of the case is that the assessee is a co-operative society engaged in the business of providing credit facilities to its members. For the Assessment Year 207-18, the assessee filed its Return of Income declaring total income at Rs. 5,14,460/- after claiming deduction of Rs. 9,41,73/- under chapter VIA of the Act. Regular assessment u/s. 143(3) was made on 09.2.2019 accepting the Returned income. 2.2. On perusal of records by PCIT, the assessee shown gross total income at Rs. 14,55,535/- after claiming deduction u/s. 80P of Rs. 9,41,073/-. Further perusal of Profit and Loss account, the assessee received interest income of Rs. 18,14,676/- from the Cooperative Bank (KDCC Bank) which is not eligible for deduction either u/s. 80P(2)(a)(i) or u/s. 80P(2)(d) of the Act. The Assessing Officer while passing the assessment order has not verified the claim of deduction u/s. 80P of the Act, which is an erroneous order and prejudicial ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ers u/s. 263 to revise the assessment order by the Ld. PCIT is unjustifiable and liable to be quashed. 5. Per contra, the Ld. CIT-DR Shri Aarsi Prasad appearing for the Revenue supported the order passed by Ld. PCIT and submitted the Jurisdictional High Court in the case of State Bank of India vs. CIT held that interest income on deposit placed with commercial bank is not exempt u/s. 80P(2)(a)(i) of the Act. Further Jurisdictional High Court in the case of Katlay Kariyana Merchant Sahkari Sarafi Mandali Ltd. Vs. ACIT held that co-operative banks are not specie of genus co-operative society, which would be entitled to exemption or deduction under the special provisions of Chapter VI-A in the form of section 80P of the Act. Therefore the Revision order passed by the PCIT does not require any interference and the assessee is liable to be dismissed. 6. We have given our thoughtful consideration and perused the materials available on record including the Paper Book and case laws filed by the assessee. This issue was considered by Coordinate Bench of this Tribunal and passed the following order after considering the Karnataka High Court judgment in the case of Totagar s Co-operative Sale ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... . The PCIT has issued the show cause notice under Section 263 on 14.02.2020 on the very same issue which was verified by the Assessing Officer in Section 143(3) proceedings itself. Once the issue verified by the Assessing Officer and the jurisdictional Court has allowed the said claim related to interest income earned from Co-operative Bank, the PCIT cannot exercise Section 263 of the Act. The ld. A.R. aptly relied upon the decision of State Bank of India vs. CIT (2016) 72 Taxmann.com 64 dated 25.04.2016. On the basis of Hon'ble Karnataka High Court decision in the case of Totgars Co-operative Sales Society (supra), the PCIT cannot invoke provisions of section 263 of the Act. Thus, Section 263 does not sustain and appeal of the assessee is allowed. 5.1. Further the Co-ordinate Bench judgment in the case of People s Co.Op. Credit Society Ltd. (cited supra) held as follows: 4. We now advert to the lead issue of Section 80(P)(2) disallowance of Rs. 27,97,019/- in respect of assessee's interest income derived from its deposits with the Banas Co-operative Bank. Both the lower authorities quote the legislative amendment vide Finance Act, 2006 w.e.f. 01.04.2007 inserting subsectio ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... follow hon'ble jurisdictional high court's judgment than hon'ble Karnataka high court's decision. Coming to hon'ble apex court's decision in the Citizen Co-operative Society Ltd. (supra), we find that there is no dispute about the category of members as it was before their lordships. We thus conclude in view of all these facts and circumstances that hon'ble jurisdictional high court's judgment is binding on us. We accordingly delete the impugned disallowance of Rs. 27,97,019/- in question. This lead appeal ITA No. 1891/Ahd/2014 is partly accepted. 5.2. We therefore respectfully following the above decisions of the Co-ordinate Bench of this Tribunal, which has followed jurisdictional High Court judgment and we hereby quash the impugned order passed by the Ld. PCIT u/s. 263 of the Act and restore the assessment order passed by the Assessing Officer u/s. 143(3) of the Act. Thus, the grounds raised by the assessee are hereby allowed. 6.1. In another Co-ordinate Bench of This Tribunal in the case of Laxmi Bachat Sharafi Sahkari Mandali Ltd. (cited supra) held as follows: 9. The next contention that the order of the Ld.PCIT needs to set aside being passed ..... X X X X Extracts X X X X X X X X Extracts X X X X
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