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2021 (11) TMI 1145 - AT - Income TaxRevision u/s 263 - deduction u/s 80P has been granted without much inquiry - HELD THAT:-On perusal of the assessment order passed u/s 143(3) of the I.T.Act dated 30.11.2016, it is clear that there is no discussion by the A.O. and deduction u/s 80P of the I.T.Act has been granted without much inquiry. The assessment order completed without making necessary inquiry rendered the assessment erroneous and prejudicial to the interest of revenue. Therefore, the CIT has correctly invoked the provisions of section 263 of the I.T.Act and we uphold the same. Assessee has also raised grounds that assessment was selected for limited scrutiny in the Computer Aided Scrutiny Selection (CASS). Therefore, the inquiry in the assessment proceedings was restricted only to the issue which forms the basis of selecting the case for scrutiny as per the Instruction of the CBDT. This ground of the assessee is also devoid of any merit. No doubt, in this case, the assessment was selected for limited scrutiny. When the potential escapement of income was exceeding Rs.10 lakh, the A.O. has power to convert the limited scrutiny to a complete scrutiny assessment. There is no examination of the issue by the A.O. in the assessment order whether the escapement had resulted in excess of Rs.10 lakh. In this context also, the assessment order is erroneous and prejudicial to the interest of the revenue. Therefore, this ground of the assessee is also rejected. Whether the assessee is entitled to deduction u/s 80P(2)(a)(i) and 80P(2)(d)? - As recent order of the Tribunal in the case of M/s.Vasavamba Co-operative Society Ltd. v. The Pr.CIT[2021 (8) TMI 706 - ITAT BANGALORE] after considering the judicial pronouncements on the issue held that interest income earned out of investments made from surplus funds would be taxable under the head `income from other sources’ and would not be eligible for deduction u/s 80P(2)(a)(i) of the I.T.Act. It was further held by the Tribunal insofar as deduction u/s 80P(2)(d) only those interest received from investments with co-operative societies alone would be entitled to deduction. Hon’ble Apex Court in the case of Mavilayi Service Co-operative Bank Ltd. & Ors. v. CIT & Anr. (2021 (1) TMI 488 - SUPREME COURT] had settled various issues for claiming deduction u/s 80P(2)(a)(i) - the matter needs to be examined afresh by the A.O. de hors the observations of the CIT. The A.O. is directed to follow the dictum laid down by the Hon’ble Apex Court in framing the fresh assessment. Appeal filed by the assessee is allowed for statistical purposes.
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