TMI Blog2022 (1) TMI 349X X X X Extracts X X X X X X X X Extracts X X X X ..... clearly in violation of the Explanation 1 to section 263(1), therefore, applying principle of doctrine of merger, exercise of power under section 263 in the present case is bad in law and liable to be quashed. Also on merit, the dispute is covered in favour of the assessee by the decision of Jafari Momin Vikas Co-op. Credit Society Ltd. [ 2014 (2) TMI 28 - GUJARAT HIGH COURT] wherein, the Hon ble High Court examined applicability of section 80P(2)(a)(i) read with section 80P(4) of the Act and the CBDT Circular No.133 of 2007 dated 9.5.2007 clarifying scope of section 80P(2) in respect of cooperative credit society. The circular clarified that Delhi Co-op Urban Thrift and Credit Society Ltd. is not a cooperative bank, but a credit cooperative society, and section 80P(4) of the Act would not be applicable to it. Thus we quash order of the ld.Pr.CIT passed under section 263 of the Act, and thus allow the main ground of appeal of the assessee. - ITA No.1064/Ahd/2017 - - - Dated:- 7-1-2022 - Shri Rajpal Yadav, Vice-President And Shri Waseem Ahmed, Accountant Member For the Assessee : Shri Aseem L. Thakkar, AR For the Revenue : Shri Mohd Usman,CIT-DR ORDER ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ion 80P(2)(a)(i) of the Act. However, the ld.AO did not accept this submission of the assessee. He rejected claim of the assessee in respect of the claim qua interest income of ₹ 5,50,983/- earned on fixed deposits in nationalized banks. He added back ₹ 5,50,983/- to the gross total income. However, deductions under section 80P(2)(a)(i) and 80P(2)(a)(ii) amounting to ₹ 3,77,122/- were allowed, and assessed income at ₹ 5,09,983/-. Aggrieved, assessee went in appeal before the ld.first appellate authority. Before the ld.CIT(A) assessee reiterating submissions made before the ld.AO, and further relied upon following decisions: i) Jafari Momin Vikas Co-op. Credit Society Vs. ITO, 49 taxmann.com 571 (Guj); ii) Dhanalaxmi Co-op Crdit Scoeity Ltd. Vs. ITO, ITA No.2342/Ahd/.2012 (ITAT-Ahmedabad) iii) CI T Vs. Ratnagiri Dist. Central Coop Bank Ltd., 254 ITR 697 iv) Yamkanmardi Urban Co-op Credit Society Ltd. Vs. CIT 45 taxmann.com 297 (Kar) v) CIT Vs. Muzzaffarnagar Dist Coop Bank Ltd., 28 taxmann.com 132 (All) vi) Mehsana Dist. Coop Bank Ltd. Vs. ITO, 251 ITR 522 (SC) 4. On consideration of submissions of the assessee, and on the basis of the ab ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... went in appeal before the ld.CIT(A) and the ld.CIT(A) vide order dated 28.12.2015 allowed claim of the assessee. Against this order of the ld.first appellate authority, no appeal has been preferred by the Revenue, and therefore, the issue of deduction under section 80P(2)(a)(i) attained finality, and order of the AO got merged with appellate order. This being so, revisionary power exercised by the ld.Pr.CIT under section 263 is bad in law and liable to quashed. On the other hand, the ld.DR supported order of the Pr.CIT. 6. We have considered rival submissions and gone through the record carefully. We have also gone through relevant judgments cited at Bar by the ld.counsel for the assessee and Circular No.133 of 2007 of the CBDT. We find that issue before us is that, whether the assessee-society is entitled for deduction under section 80P(2)(a)(i) read with section 80P(4), and whether the ld.Pr.CIT can exercise revisionary power in view of Explanation 1(c) to section 263 of the Act. The fact is that the assessee is a cooperative credit society engaged in business of providing financial assistance to its members, and also accepting deposits from the members, and surplus funds ava ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ction 80P(2)(a)(i) read with section 80P(4) of the Act and the CBDT Circular No.133 of 2007 dated 9.5.2007 clarifying scope of section 80P(2) in respect of cooperative credit society. The circular clarified that Delhi Co-op Urban Thrift and Credit Society Ltd. is not a cooperative bank, but a credit cooperative society, and section 80P(4) of the Act would not be applicable to it. For better understanding of the proposition laid down in this behalf, we would reproduce the above judgment Hon ble jurisdictional High Court. They read as under: 2. The Revenue has challenged the judgment of the Income-tax Appellate Tribunal (for short the Tribunal ) raising the following question for our consideration : Whether the hon'ble Tribunal is correct in allowing the deduction under section 80P(2)(a)(i) to the assessee's society even though the same is covered under section 80P(4) read with section 2(24)(viia) being income from providing credit facilities carried on by a co-operative society with its member ? 3. The issue pertains to the interpretation of section 80P(2) and section 80P(4) of the Income-tax Act, 1961 ( the Act for short). The respondent-assessee is a co- ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nk, exclusion provided in subsection (4) of section 80P would not apply. This, irrespective of the fact that the respondent would not fall within the expression primary agricultural credit society . 6. Had this been the plain statutory provisions under consideration in isolation, in our opinion, the question of law could be stated to have arisen. When, as contended by the assessee, by virtue of sub-section (4) only co-operative banks other than those mentioned therein were meant to be excluded for the purpose of deduction under section 80P, a question would arise why then the Legislature specified primary agricultural credit societies along with primary co-operative agricultural and rural development banks for exclusion from such exclusion and, in other words, continued to hold such entity as eligible for deduction. However, the issue has been considerably simplified by virtue of the Central Board of Direct Taxes Circular No. 133 of 2007, dated May 9, 2007. Circular provides as under : Subject : Clarification regarding admissibility of deduction under section 80P of the Income-tax Act, 1961. 1. Please refer to your letter No. DCUS/30688/2007, dated March 28, 2007, ..... 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