2023 (9) TMI 547 - ITAT AHMEDABAD

Revision u/s 263 - Deduction u/s 80P(2)(d) - allowability of interest earned by the assessee from cooperative banks - assessee herein Co-operative Society providing credit facilities by way of loans and advances to its members - HELD THAT:- Hon'ble Karnataka High Court in Totagars Cooperative Sales Society [2017 (7) TMI 1049 - KARNATAKA HIGH COURT] held that for the purpose of section 80P(2)(d) a Co-operative Bank should be considered by a Co-operative Society and interest earned by Co-operative Society from Cooperative Bank would necessarily be deductible under section 80P(1)

Cordinate Bench of Rajkot Tribunal in Surendarnagar District Co-operative Milk Producer Union Ltd. [2019 (9) TMI 978 - ITAT RAJKOT] 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, order passed by AO is not erroneous, though it may be prejudicial to the interest of the Revenue. Therefore, the twin conditions that the assessment order is erroneous and so far as prejudicial to the interest of revenue, as prescribed under section 263 is not fulfilled in the present case.

PCIT erred in holding that the order passed by A.O. as erroneous and prejudicial to the interest of the Revenue on account of allowability of interest earned by the assessee from cooperative banks, coupled with the fact when the Ld. Assessing Officer had made due enquiries on this issue, during the course of original assessment proceedings .Appeal filed by the Assessee is hereby allowed.