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2010 (8) TMI 1068 - AT - Income TaxRevision u/s 236 - Applicability of deduction u/s 80P(2)(a)(i) - whether assessee being a regional rural bank established under RRB Act, 1976, was to be treated as a co-operative bank or could be considered as a co operative society? - CIT considered, sub-section (4) of section 80P, which was applicable to co-operative banks, as applicable to assessee also - as per assessee AO was very well aware that assessee was a rural bank under RRB Act, 1976 and it was only after considering relevant provisions, he had decided that the assessee was equivalent to a co operative society eligible for deduction u/s 80P(2)(a)(i) HELD THAT:- There is much strength in the argument of the assessee that it is to be treated as co-operative society in view of the provisions contained in RRB Act, 1976. If so, it would be eligible under section 80P(2)(a)(i) of the Act. In present case, the AO had carefully considered the claim of the assessee and allowed deduction u/s 80P(2)(a)(i). AO was very well aware that assessee was a rural bank under RRB Act, 1976 and it was only after considering relevant provisions, he had decided that the assessee was equivalent to a co operative society eligible for deduction u/s 80P(2)(a)(i). Thus, the issue whether assessee was qualified for deduction u/s 80P(2)(a)(i) was very well within the contemplation of the AO and it was only after applying his mind over it that he decided that assessee had to be treated as co-operative society for income tax purpose. May be the order was cryptic, but application of mind is clearly discernible. AO had adopted one of the courses permissible in law and even if such a course resulted in loss to the Revenue, it could not be deemed as erroneous and prejudicial to the interest of the revenue. This position of law has been clearly laid down by Hon'ble Apex Court in the case of CIT v. Max India Ltd.[2007 (11) TMI 12 - SUPREME COURT]. Thus, CIT was only trying to substitute his view for a lawful view taken by the AO in this regard. This is not possible u/s 263. Hence, the order of CIT passed u/s 263, is quashed. Appeal filed by the assessee stands allowed. In the result, the appeal filed by the assessee stands allowed.
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