TMI Blog2023 (9) TMI 547X X X X Extracts X X X X X X X X Extracts X X X X ..... 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. - Shri Waseem Ahmed, Accountant Member And Shri T.R. Senthil Kumar, Judicial Member For the Assessee : Shri M.K. Patel, A.R. (ITA No. 322/A/23) None (ITA No. 350/A/23) For the Revenue : Shri Sanjeev Jain, CIT-DR ORDER PER : T.R. SENTHIL KUMAR, JUDICIAL MEMBER:- These two appeals are filed by two different Assessees as against separate Revision orders both dated 16.03.20 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ociety Ltd. Vs. ITO [2010] 322 ITR 283 (SC). Further this issue was not verified by the Assessing Officer without inquiring into the claim made by the assessee, therefore as per Explanation 2 to section 263 (1) of the Act, why the assessment should not be revised. 4. In reply, the assessee submitted, during the assessment proceedings the Assessing Officer asked for explanation/details for deduction under Chapter-VIA and vide assessee replies dated 08- 10-2019, 09-12-2020 and 18-12-2020, the assessee has elaborately explained with judicial decisions on the facts and figures thereby the Assessing Officer accepted the explanation and allowed the claim of deduction u/s. 80P(2)(d) of the Act. Therefore the question of invoking explanation (2) to section 263(1) does not arise and the claim of deduction u/s. 80P(2)(d) is well within the provisions of law. Further the assessee brought to the attentions, assessee s own case for the Assessment Years 2011-12 2012-13 in ITA Nos. 1891/Ahd/2014 2987/Ahd/2015 wherein, the Hon ble ITAT allowed the claim of deduction u/s. 80P(2) of the Act. The assessee also relied upon various case laws in support of its claim. However the above submissions ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ligible for deduction under section 80P of the Act. Therefore, after making requisite verification, the AO allowed the assessee s claim for deduction under section 80P(2)(d) of the Act, and therefore it is not a case, where due enquiries were not made by the AO or there was non-application of mind on the part of the AO before allowing assessee s claim for deduction under section 80P(2)(d) of the Act. Without prejudice the above, the assessee submitted that the issue has been decided in favour of the assessee in the case of State Bank of India v. CIT 389 ITR 578 (Gujarat), in which the Gujarat High Court held that if the assessee wants to avail of the benefit of deduction of such interest income, it was always open for it to deposit the surplus funds with a co-operative bank and avail of deduction under section 80P(2)(d) of the Act . Therefore, since the issue has been decided in favour of the assessee by the jurisdictional High Court, coupled with the fact that the AO had also enquired into this aspect during the course of assessment proceedings, and after due application of mind had decided the issue in favour of the assessee, this is not a fit case for initiation of proceedings ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ossible view which cannot be held as erroneous. 10. Moreover, we have seen that in assessee's own case for A.Ys. 2011-12 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 the Co-ordinate Benches of this Tribunal in ITA No. 1891/Ahd/2014 (cited supra) held as follows: 15. We now advert to the lead issue of Section 80(P)(2) disallowance of Rs. 27,97,019/- in respect of assessee's interest income derived from its deposits with the Banas Co-operative Bank. Both the lower authorities quote the legislative amendment vide Finance Act, 2006 w.e.f. 01.04.2007 inserting subsection 4 in Section 80P as well as CBDT's explanatory notes to the above Finance Act dated 28.122006 in holding that the impugned interest income derived from co-operative bank is not eligible for deduction. Learned Departmental Representative vehemently contends that hon'ble Karnataka high court's recent decision in (2017) 83 taxmann.com 140 (Karnataka) PCIT vs. Totagars Co-operative Sale Society has settled the law that such an income is not allowable as Section 80P de ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... impugned disallowance of Rs. 27,97,019/- in question. This lead appeal ITA No. 1891/Ahd/2014 is partly accepted. 10.1. The Hon'ble Karnataka High Court in Totagars Cooperative Sales Society (supra) 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) of the Act. Further, the Hon'ble Jurisdictional High Court in Surat Vankar Sahakari Sangh Ltd. (supra) held that assessee co-operative society is 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 10.2. Further the Co-ordinate Bench of Rajkot Tribunal in Surendarnagar District Co-operative Milk Producer Union Ltd. v. Dy. CIT [2019] 111 taxmann.com 69/179 ITD 690 (Rajkot Tribunal) also 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 mad ..... X X X X Extracts X X X X X X X X Extracts X X X X
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