TMI Blog2021 (5) TMI 446X X X X Extracts X X X X X X X X Extracts X X X X ..... Ritesh Mishra CIT-DR ORDER PER PAWAN SINGH, JUDICIAL MEMEBER: 1. This appeal by the Assessee is directed against the order of ld. Principal Commissioner of Income Tax-2, Surat hereinafter referred as Ld. PCIT , passed under section 263 of Income-tax Act (Act) dated 26.03.2019 for the Assessment Year (AY) 2014-15. 2. Brief facts of the case are that the assessee is a Co-operative Society engaged in the business of providing credit facility to its members by accepting the deposits from members and lending money them too. The assessee filed its Return of Income for A.Y. 2014-15 on 21.08.2013 declaring Nil income. In the computation of income, the assessee claimed deduction 80P of the Act of ₹ 7,03,56,728/-. The return of income was selected for scrutiny. The assessment was completed under section 143(3) of the Act on 18.02.2016. During the assessment, the Assessing Officer (AO) noted that assessee derived interest income from savings bank account with HDFC Bank and UTI Bank. The AO was of the view that as per section 80P(2)(a)(d) of the Act, the interest earned out of the investment /deposits Co-op Societies or Co-operative Banks are only eligible for de ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e issue of deduction under section 80P(2)(d) in depth on application of fair and judicious mind and also considered the evidence passed the order under section 143(3) of the Act and allow deduction under section 80P(2)(d) of the Act. 6. The assessee also furnished the copy of notice under section 142(1) of the Act dated 13.04.2016, its reply dated 26.04.2016, further notice under section 142(1) of the Act dated 07.10.2016 and its reply dated 16.10.2016, wherein the AO raised quarries about the deduction of claim under section 80P(2)(d). The assessee also submits that similar deductions were claimed in earlier years and was allowed in favour of assessee. The assessee prayed for dropping the proceedings under section 263 of the Act. 7. The reply furnished by the assessee was not accepted by ld. PCIT. The ld. PCIT took his view that Hon'ble Supreme Court in Totagars Co-operative Sale Society held that assessee is not entitled for deduction under section 80P(2)(d) of the Act. The ld. PCIT further in para 4.1 of the order recorded that Hon'ble Karnataka High Court in CIT Vs Totagars Cooperative Sale Society (2017) 83 taxmann.com 140 (Kar) dated 16.06.2017, held the coop ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t is settled law that once assessing officer made enquiry on a particular point and after deliberation allow deduction, on that very point, the proceeding under section 263 cannot exist to form a different view. The ld.AR for assessee further submits that assessee claim similar deduction was disallowed by the assessing officer while passing the assessment order in A.Y. 2009-10, 2010-11 and again in 2012-13. However on appeal before Ld. CIT(A) the assessee was allowed deductions under section80P(2)(d). On further appeal by the revenue before the Tribunal the appeal of the revenue was dismissed in ITA No. 2166/Ahd/2014 dated 18.04.2017, ITA No. 2582/Ahd/2014 dated 28.06.2018 and in ITA No.2617/Ahd/2016 dated 18.12.2018 for A.Y. 2009-10, 2010-11 and 2012-13 respectively. The copies of the decisions of Tribunal are placed on record. The ld.PCIT for the first time revised the assessment order on the issue. 9. On merit of the case the learned AR for the assessee submits that the assessee earned interest from its investment in cooperative bank. The cooperative banks are primarily a cooperative society, as has been held by various benches of Tribunal. Cooperative societies interest inco ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 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 furnished required details and after examining the issue allowed the deductions under section 80P(2)(d) as discussed in para 4 of the assessment order. The Assessing Officer passed assessment order on 18.10.2016. 12. The ld. PCIT before passing under section 263 of the Act, identified the issue regarding the claim of deduction under section 80P(2)(d) in its show cause notice dated 06.03.2019. The assessee in its reply dated 7.03.2019 clearly explained that the issue was examined by Assessing Officer and that the assessment order is not erroneous. The assessee also explained that similar disallowances /issues was subject matter in the appeal filed by the revenue before Tribunal in A.Y. 2 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 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 disallowances were deleted and the order of the Ld. CIT(A) in all years were confirmed. 18. The ld. DR for the revenue relied on the case law in PCIT Vs. Totagars Co-operative Sales Society (second case)/(supra), wherein the Hon'ble Karnataka High Court held that interest earned by a Co-operative Society from surplus deposits kept with Co-operative bank, is not eligible for deduction under section 80P(2)(d). Considering the legal position that when there are conflicting decisions of non-jurisdictional High Courts, on similar issue, the decision of Jurisdictional High Court is having binding precedent. Thus, keeping in view of the decision Hon'ble Jurisdictional High Court in Surat Vankar Sah ..... X X X X Extracts X X X X X X X X Extracts X X X X
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