TMI Blog2022 (1) TMI 1090X X X X Extracts X X X X X X X X Extracts X X X X ..... venue. Thus, the twin condition as provided in section 263 of the act is not fulfilled qua the income component of interest income earned on deposit with Surat Cooperative Bank; therefore, the order passed by the ld PCIT is set-aside to that extent. In the result, the grounds of appeal raised by the assessee are partly allowed on the primary submissions of the ld AR for the assessee. Appeal of the assessee is partly allowed. - ITA No.302/SRT/2019 - - - Dated:- 17-1-2022 - Shri Pawan Singh, Judicial Member And Dr. Arjun Lal Saini, Accountant Member For the Assessee : Shri Sapnesh Sheth CA For the Revenue : Shri H.P.Meena CIT-DR ORDER UNDER SECTION 254(1) OF INCOME TAX ACT PER PAWAN SINGH, JUDICIAL MEMBER: 1. This appeal by the Assessee is directed against order of ld.Principal Commissioner of Income Tax-2, Surat passed under section 263 of the Act on 27.03.2019 for the A.Y. 2014-15. The assessee raised following grounds of appeal: 1. On the facts and circumstances of the case as well as law on the subject, the learned Pr. Commissioner of Income-tax has erred in passing revisionary order u/s 263 of the I.T.Act setting aside the order of ld. Asses ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... on page no. 3 to 7 of his order. In the reply, the assessee stated that assessee is a Co-operative Society registered under Gujarat State Co-operative Society Act. The Surat District Co-operative Bank is also a Co-operative Society registered under Gujarat Co-operative Society Act. The assessee also relied on the case laws of Mumbai Tribunal in Lands End Co-operative Housing Society Vs ITO (ITA No. 3566/Mum/2014), wherein in was held that the assessee is entitled for deduction of interest earned on deposit with Co-operative Banks. And it was explained that decision of Hon ble Supreme Court in Totagars Co-operative Sale Society Vs ITO (322 ITR 282 SC) held that interest earned on short term deposit not immediately required in the business of assessee is assessable under the head income from other sources and no deduction under section 80P(2)(a)(i) is allowable, thus the decision is rendered on the provisions of section 80P(2)(a). 4. The reply of the assessee is not accepted by the PCIT. The ld PCIT held that the decision of Hon ble Karnataka High Court (83 taxmann.com 140) is squarely applicable in case of assessee, wherein it was held that the word CoITA operative Bank are ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 7; 56,000/- earned from deposit with DGVCL on security deposit. On confronting this fact, the ld.AR of the assessee fairly agreed that the component of this interest income is not covered for eligible deduction under section 80P(2)(d) of the act. 7. The ld.AR of the assessee in his other alternative submissions submits that the AO during the assessment, thoroughly examined the issue of deductions of interest income earned by the assessee, which is disenable from para 5 of the assessment order. The AO issued necessary questionnaire by issuing notice under section 142(1) and examined the issue of eligible deduction under section 80(P)(2)(d) of the Act. The assessee filed its reply dated 28.06.2016. The AO after making full inquiry made disallowance of ₹ 66,72,834/- on account of interest income earned on deposit with nationalised bank. The AO while passing the assessment order has taken a reasonable, plausible and legally sustainable view which cannot be treated as erroneous; therefore, the twin condition for revising the order under section 263 of the Act is not fulfilled in the present case. 8. On the other hand, the ld.CIT-DR for the Revenue supported the order of ld. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n the appeal filed by the revenue before Tribunal in A.Y. 2009-10, 2010-11 and 2012-13 and the assessee was allowed similar deductions. 13. The Hon'ble Jurisdictional High Court in Aryan Arcade Ltd., vs PCIT (2019) 412 ITR 277 (Gujarat) held that merely because Commissioner held a different belief that would not permit him to take the order in revision, it if further held that when Assessing Officer made full enquiry, he made up his mind, the notice of revision is not valid. (emphasis added by us). Further, Hon'ble Madras High Court in CIT Vs Mepco Industries Ltd., (2007) 207 CTR 462 (Madras) held that when two views are possible on an issue and it is not the case of the Commissioner that the view taken by Assessing Officer is not permissible in law, Commissioner cannot invoke his jurisdiction under section 263 of the Act. (emphasis added by us) 14. As we have noted above the assessing officer has made enquiries on the allowability of deduction under section 80(P)(2)(d) and passed the assessment order, thus, the Assessing Officer has taken a reasonable and possible view which cannot be held as erroneous. 15. The Hon'ble Karnataka High Court in PCIT Vs. To ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the decision Hon'ble Jurisdictional High Court in Surat Vankar Sahakari Sangh Ltd., vs. ACIT (supra) wherein the assessee-co-operative society is held eligible for deduction under section 80P(2)(d) in respect of gross interest received from co-operative bank without adjusting interest paid to said bank, we conclude that the order passed by assessing officer is not erroneous. Hence, the grounds of appeal raised by assessee are allowed. 11. In view of the aforesaid discussion, we find that the assessment order qua the deduction under section 80(9)(2)(d) of the Act on account of interest earned from Surat Co-operative bank of ₹ 48,01,477/- is not erroneous. Since the order is not erroneous, though, it may be prejudicial to the interest of the Revenue. Thus, the twin condition as provided in section 263 of the act is not fulfilled qua the income component of interest income earned on deposit with Surat Cooperative Bank; therefore, the order passed by the ld PCIT is set-aside to that extent. In the result, the grounds of appeal raised by the assessee are partly allowed on the primary submissions of the ld AR for the assessee. 12. Now, adverting to the alternative submi ..... X X X X Extracts X X X X X X X X Extracts X X X X
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