TMI Blog2023 (12) TMI 1028X X X X Extracts X X X X X X X X Extracts X X X X ..... ligible to deduction u/s 80P(2)(a)(i) was only Rs. 36 Crore and not Rs. 41 Crore as claimed and allowed to the assessee. While the assessee claim of deduction of Rs. 41 Crores of profit u/s 80P(2)(a)(i) emanated from the records including the financial statement, the tax audit report and computation of income filed by the assessee, all documents filed before us in Paper book, and was also examined during assessment proceedings by issuance of notice u/s 142(1) of the Act and replies filed by the assessee placed before us,the basis of the Ld. PCIT for holding that the assessee was eligible to only Rs. 36 Crores deduction under Section 80P(2)(a)(i) of the Act is not clear nor does it seen to arise from the records before us. Therefore, we hold that the very basis for assumption of jurisdiction to revise assessment order fails on account of the error in the assessment order having been found by the Ld. PCIT on the basis of incorrect facts. Records do not support the finding of the PCIT that the assessee had claimed excessive deduction u/s 80P(2)(a)(i) - And as long as the finding of error of PCIT is based on facts which palpably do not emanate from records, it is immaterial wh ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... in law to such claim , and then concludes by reverting back to his original finding of error on account of excessive claim of deduction on account of incorrect appropriation of expenses. The powers of revision being exercisable on a categorically finding of error in assessment order causing prejudice to the Revenue, this uncertainty in the finding of the error by Ld. PCIT renders the revisional order completely unsustainable in law. Decided in favour of assessee. - Smt. Annapurna Gupta, Accountant Member And Shri T.R. Senthil Kumar, Judicial Member For the Appellant : Shri Tushar Hemani, Sr. Advocate And Shri Parimalsinh B. Parmar, A.R. For the Respondent : Dr. Darsi Suman Ratnam, CIT. D.R. ORDER PER ANNAPURNA GUPTA, ACCOUNTANT MEMBER The above appeal has been filed by the assessee against the order passed by the ld. Pr.CIT, Ahmedabad-5 dated 20.03.2017 under section 263 of the Income Tax Act, 1961 (hereinafter referred to as the Act ), for the assessment year 2012-13. 2. The grounds raised by the assessee are as under: 1. The learned CIT has grossly erred in law and on facts in assuming jurisdiction u/s 263 of the Act on the erroneous ground ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... come, the expenses had not been properly apportioned between two sets of income and therefore while its eligible exempt income as per the Ld. PCIT was only to the tune of Rs. 36,73,36,662/-, it had claimed and had been allowed deduction under Section 80P of the Act to the tune of Rs. 41,31,31,877/-, resulting in excess deduction allowed to the tune of Rs. 4,67,95,215/-. 5. Accordingly jurisdiction was assumed by the Ld.PCIT u/s. 263 of the Act for revision of the assessment order issuing show cause notice to the assessee. In response to the same the assessee contended that the claim of deduction under Section 80P of the Act had been duly examined during assessment proceedings and correctly allowed by the Assessing Officer (AO). The Ld. PCIT, however, rejected the contention of the assessee and held that since its income included interest earned from deposits kept in Nationalised Banks, it was not entitled to deduction of the said income under Section 80P(2)(a)(i) of the Act. He accordingly held that the assessee having been allowed excessive claim of deduction under Section 80P of the Act on account of failure of the AO to apply the law correctly on the issue, the assessment ord ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... acility to its members for agriculture allied Activities and rural development. For the impugned it had declared Nil income after claiming deduction under Section 80P of the Act. The error noted by the Ld. PCIT on going through the records of the assessee was that while the assessee had been allowed deduction under Section 80P(2)(a)(i) of the Act to the tune of Rs. 41.31 Crores, it was eligible to claim deduction of Rs. 36.73 Crore only .This figure of Rs. 36.73 Crore was worked out by the Ld. PCIT noting the fact that while interest income of the assessee earned from members of its society was Rs. 87.52 Crores , the relatable expenditure thereon was Rs. 51.04 Crores resulting in profits of Rs. 36.73 Crore , eligible for deduction under Section 80P(2)(a)(i) of the Act. This specific error was pointed out to the assessee in the show cause notice issued by the Ld. PCIT under Section 263 of the Act which is reproduced at para 2.1 of the order as under: .On verification of the assessment order passed by the AQ u/s. 143(3) of the Act, it is noticed that an amount of Rs. 41,31,31,877/- has been allowed u/s. 80P(2)(a)(i) of the Act as claimed by you. However, on verification of th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Depreciation treated separately 6526966 BDDR 107992947 Gratuity 76849231 Revaluation Reserve 5984365 Loss on sale of vehical 216094 197569603 Less: Income considered separately IT Provision Written Back 150000000 H.P. Income 494905 (-) 150494905 Less: Deduction/Expenses claimed Depreciation as per Statement (-) 6773672 41,28,43,004 12. The Ld. Counsel for the assessee has also pointed out to us from the reply filed to the Ld. PCIT during ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... on facts which palpably do not emanate from records, it is immaterial whether this fact is pointed out for the first time before us. In view of the same there is no error in the assessment border vis a vis quantum of allowance of deduction to the assessee u/s 80 P of the Act. The revisionary order passed by the Ld. PCIT, therefore, needs to be set aside for having failed to fulfill one of the twin conditions , of the assessment order being both erroneous and prejudicial to the interest of the Revenue, necessary for invoking revisionary jurisdiction , as laid down by the Hon ble Supreme Court in the case of Malabar Industrial Co. Ltd. vs CIT (2000) 243 ITR 83 (SC0 this ground alone. 16. However, we have noted that subsequently, after noting that as per records the assessee was eligible to lesser claim of deduction under Section 80P(2)(a)(i) of the Act, the Ld.PCIT has gone on a different tangent after receiving the assessee s reply to the show cause notice. We find from the reply filed by the assessee during revisionary proceedings that the assessee stated to have earned income by way of interest from deposits made in Nationalized Banks. Picking this information he held that the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... allowed an incorrect claim of deduction on incomes which otherwise were not eligible as per law the Ld. PCIT concludes his finding of error by reverting back to his original charge of excess claim of deduction allowed to the assessee under Section 80P(2)(a)(i) of the Act. This finding is at para 5.5 of the order of the Ld. PCIT. The same is reproduced hereunder: 5.5 In the reply the assessee has invited the attention towards mistake of calculation of profit in the show cause notice issued. The contention of the assessee found correct and interest income from members of society is Rs. 87,77,85,350/-and relatable expenditure shown as Rs. 51,04,48,688/-, accordingly the profit calculated at Rs. 36,73,36,662/-. The assessee had claimed deduction at Rs. 41,31,31,877/- which resulted into excess claim of deduction at Rs. 4,57,95,215/- u/s 80P of the Act which was excessively allowed to this extent by the assessing officer. 20. It appears that the Ld. PCIT is unclear and is not sure as what exactly is the error in the assessment order. He begins by noting error on account of excess claim of deduction under Section 80P(2)(a)(i) of the Act due to incorrect apportionment of expend ..... X X X X Extracts X X X X X X X X Extracts X X X X
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