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Income Tax Appellate Tribunal, A BENCH, MUMBAI
IN THE INCOME TAX APPELLATE TRIBUNAL "A" BENCH, MUMBAI SHRI B.R. BASKARAN, ACCOUNTANT MEMBER SHRI RAHUL CHAUDHARY, JUDICIAL MEMBER M/s Adarsh Nagari Sahakari Patsanstha Maryadit, Near State Bank of India, Opp. Mayur Bakery, Tilak Road, Alibag, Raigad - 402201 [PAN: AAABA0202G] …………… Appellant Vs Principal Commissioner of Income Tax-1- Thane, Office of the Pr. Commissioner of Income Tax-1, Thane Ashar I.T. Park “B” Wing 6th Floor, Road No. 16Z, Wagle Indl. Estate Respondent ……………. Thane (West) - 400604 Appearance For the Appellant/Assessee : Shri Poojan Mehta For the Respondent/Department : Ms. N.V. Nadkarni Date Conclusion of hearing : 24.07.2023 Pronouncement of order : 27.07.2023 O R D E R Per Rahul Chaudhary, Judicial Member: By way of the present appeal the Appellant has challenged the 1. order, dated 30/03/2023, passed by the Ld. Principal Commissioner of Income Tax, Thane-1 [hereinafter referred to as „the PCIT‟] under Section 263 of the Income Tax Act, 1961 [hereinafter referred to as „the Act‟] pertaining to the Assessment Year 2018-19, whereby the PCIT had set aside the Assessment Order dated 21/12/2020, passed under Section 143(3) read with Sections 143(3A) & 143(3B) of the Act holding the same to be erroneous in so far as prejudicial to the interest of the Revenue.
The Appellant has raised the following grounds of appeal: 2. “1. The assessment order was neither erroneous nor prejudicial to the interest of the revenue.
2. The Ld. AO passed the assessment order after thorough enquiry and due application of mind.
3. No Particular fault with the view of the Ld. AO has been found by the Ld. PCIT. The Ld. PCIT has proceeded on the misconception that the Ld. AO has not applied his mind to the facts and the law.
4. The facts and figure on the basis of which the Ld. PCIT has revised the order is totally baseless, false and misinterpretation of the provisions of law.” The relevant facts in brief are that the Appellant, a co-operative 3. society, filed return of income for the Assessment Year 2018-19 on 10/09/2018 declaring total income of INR 3,65,470/-. The case of the Appellant was selected for scrutiny and assessment was framed on the Appellant under Section 143(3) read with Sections 143(3A) & 143(3B) of the Act accepting the returned income as assessed income of the Appellant vide Assessment Order, dated 21/12/2020. Subsequently, on examination of the record, the PCIT noted that 4. the Assessing Officer had allowed deduction to the Appellant under Section 80P(2)(d) of the Act in respect of interest income of INR 2,64,72,958/- received from a Co-operative Bank. The PCIT was of the view that the deduction in respect of the aforesaid interest 2 income could not be granted to the Appellant either under Section 80P(2)(a)(i) or Section 80P(2)(d) of the Act. Therefore, exercising of power to revision under Section 263 of the Act, the PCIT set aside the Assessment Order, dated 21/12/2020, directing the Assessing Officer to disallow entire deduction of INR 2,64,72,958/- claimed by the Appellant under Section 80P(2)(d) of the Act.
Being aggrieved, the Appellant has preferred the present appeal 5. before the Tribunal.
We have heard both the sides on the issue under consideration. The 6. Ld. Authorised Representative for the Appellant reiterated the submissions made before the PCIT as reproduced in paragraph 3.1 of the order impugned. Ld. Authorised Representative for the Appellant also placed on record the decision of the Tribunal in the case of the Appellant for the Assessment Year 2017-18 (ITA No. 866/Mum/2022, dated 20/09/2022) and submitted that in identical facts and circumstances, the order of revision passed by the PCIT in the case of the Appellant was quashed by the Tribunal. On the basis of the aforesaid, the Ld. Authorised Representative for the Appellant submitted that the Assessment Order was neither erroneous nor prejudicial to the interest of Revenue. The Assessing Officer had correctly allowed the claim of deduction of interest income received by the Appellant from a Co-operative Bank under Section 80P(2)(d) of the Act. The issue under consideration stood decided in favour of the Appellant by various decisions of coordinate Benches of the Tribunal cited before the PCIT. Per contra, Ld. Departmental Representative relied upon paragraph 4.1 to 4.6 of the order passed by the PCIT and submitted that interest received from a co-operative bank did not qualify for deduction 3 under Section 80P(2)(d) of the Act since the interest was not received from co-operative society but a co-operative bank. He further submitted that since the interest income was in the nature of income from other sources the deduction under Section 80P(2)(a)(i) of the Act, which was available in respect of operational income of a co-operative society, was also not available in respect of the aforesaid interest income. Thus, the Ld. Departmental Representative supported the order passed by the PCIT setting aside the Assessment Order as being erroneous in so far as prejudicial to the interest of Revenue.
We have heard the rival contention and perused the material on 7. record including the judicial precedents cited during the course of hearing. We find that in the case of the Appellant for the Assessment Year 2017-18, in identical facts and circumstances, the order passed by PCIT under Section 263 of the Act has been quashed by the Tribunal vide order dated 20/09/2022, passed in ITA No. 866/Mum/2022. In that case the Tribunal has concluded that view taken by the Assessing Officer to allow deduction under Section 80P(2)(d) of the Act in respect of interest income received by the Appellant from a co-operative bank during the previous year relevant to the Assessment Year 2017-18 was a plausible view and therefore, the PCIT was not justified in exercising jurisdiction under Section 263 of the Act.
We note that while quashing the order passed under Section 263 of 8. the Act for the Assessment Year 2017-18 the Tribunal had relied upon the decision of the co-ordinate Bench of the Tribunal in the case of Nagothane Vyapari Sahakari Patsanstha Maryadit Vs. PCIT : dated 29/03/2022 which turn referred to 4 the decision of the Mumbai Bench of the Tribunal in the case of Kaliandas Udyog Bhavan Premises vs. ITO: ITA No. 6547/Mum/2017, dated 24/04/2018 wherein, after considering the provisions of Section 80P(4) of the Act, it has been held by the Tribunal that a co-operative bank continues to be a co-operative society, and even after introduction of Section 80P(4) of the Act, a co-operative society is entitled to claim deduction under Section 80P(2)(d) of the Act in respect of the interest received from a co- operative bank.
From the above, it is clear that the view taken by the Assessing Officer was in line with the above decisions of the Mumbai Bench of the Tribunal and therefore, the same cannot be regarded as erroneous or prejudicial to the interest of Revenue. Assuming arguendo even if the contention of PCIT is accepted, the view taken by the Assessing Officer allowing deduction of INR 2,64,72,958/- under Section 80P(2)(d) of the Act in respect of interest received by the Appellant from a co-operative banks would still qualify as a plausible view and thereby taking away the jurisdiction of PCIT to invoke powers of revision under Section 263 of the Act. It is settled legal position that in case the view taken by the Assessing Officer is a plausible view, PCIT cannot be permitted to substitute his opinion in place of the Assessing Officer to arrive to a contrary finding.
In view of the above, the order, dated 30/03/2023, passed by the 10. PCIT under Section 263 of the Act is set aside and the Assessment Order, dated 21/12/2020, for the Assessment Year 2018-19 is reinstated. Ground No. 1 raised by the Appellant is allowed while rest of the grounds raised by the Appellant as being infructuous.