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Income Tax Appellate Tribunal, “A” BENCH, AHMEDABAD
Before: SHRI P.M. JAGTAP, VICE- & SMT.SUCHITRA R. KAMBLE
PER P.M. JAGTAP, VICE-PRESIDENT :
This appeal filed by the assessee is directed against the order of the learned Principal Commissioner of Income-tax, Gandhinagar (“PCIT” in short) dated 11.03.2019 passed under Section 263 of the Income-tax Act, 1961 (“the Act” in short).
The assessee, in the present case, is a Co-operative Credit Society which is engaged in providing credit facility to its members only from the deposits received from them. The return of income for the year under consideration was filed by it on 30.08.2014 declaring a total income at Rs. Nil after claiming deduction of Rs.14,87,225/- under Section 80P of the Act. The said return was selected for scrutiny under CASS and in the assessment
Shree Ashapura Co-op Credit So. Ltd Vs. Pr. CIT AY : 2014-15 2 completed under Section 143(3) of the Act vide an order dated 23.06.2016, addition of Rs.7,414/- was made by the Assessing Officer to the total income of the assessee on account of interest on refund received under Section 244A of the Act. Thereafter, on receipt of a proposal dated 23.06.2016 received from the Assessing Officer for revision of the said assessment order, the relevant records were examined by the learned PCIT. On such examination, he found that interest income of Rs.13,55,023/- received by the assessee on savings account and other deposits with Mehsana Dist. Co. Op. Bank Ltd. as well as with Dena Gujarat Gramin Bank was wrongly allowed by the Assessing Officer as deduction under Section 80P(2) of the Act which was contrary to the principles enunciated by the Hon’ble Karnataka High Court in the case of PCIT Vs. Totgars Co-operative Sale Society, [2017] 83 Taxmann.com 140 (Karnataka). According to the learned PCIT, the order passed by the Assessing Officer dated 23.06.2016 under Section 143(3) of the Act allowing such deduction thus was erroneous and prejudicial to the interest of the Revenue and accordingly a show-cause notice was issued by him to the assessee under Section 263 of the Act. In reply, it was inter alia submitted by the assessee that the decision of the Hon’ble Karnataka High Court in the case of Totgars Co-operative Sale Society (supra) was contrary to the view taken by the Hon’ble Gujarat High Court in the case of State Bank of India Vs. CIT, [2016] 72 Taxmann.com 64. It was also brought to the notice of the learned PCIT by the assessee that Ahmedabad Bench of the ITAT while deciding a similar issue involved in various cases had followed the decision of Hon’ble Gujarat High Court in the case of State Bank of India (supra) and not the decision of the Hon’ble Karnataka High Court in the case of Totgars Co-operative Sale Society (supra). The learned PCIT did not find merit in the submission made on behalf of the assessee and relying on the decision of Hon’ble Karnataka
Shree Ashapura Co-op Credit So. Ltd Vs. Pr. CIT AY : 2014-15 3 High Court in the case of Totgars Co-operative Sale Society (supra), he set aside the assessment order passed by the Assessing Officer under Section 143(3) of the Act vide order dated 11.03.2019 passed under Section 263 of the Act with the direction to the Assessing Officer to make the assessment de- novo on the issue under consideration in accordance with law after taking into consideration the judgment of Hon’ble Karnataka High Court in the case of Totgars Co-operative Sale Society (supra) and after granting proper opportunity of being heard to the assessee. Aggrieved by the order of the learned PCIT passed under Section 263 of the Act, the assessee has preferred this appeal before the Tribunal.
At the time of hearing fixed in this case on 30.06.2022, none has appeared on behalf of the assessee. However, it is observed that the assessment completed by the Assessing Officer under Section 143(3) of the Act allowing the similar claim of an assessee for deduction under Section 80P(2) of the Act in respect of interest income earned on the deposits with Mehsana Urban Co-operative Bank was set aside by the same learned PCIT vide his order passed under Section 263 of the Act in the case of the People Co-op. Credit Society Ltd by relying on the decision of Hon’ble Karnataka High Court in the case of Totgars Co-operative Sale Society (supra) and, on appeal by the assessee, the Coordinate Bench of this Tribunal vide its order dated 21.02.2022 passed in set aside the order passed by the learned PCIT under Section 263 of the Act restoring that of the Assessing Officer by relying inter alia on the decision of the Hon’ble jurisdictional High Court in the case of State Bank of India (supra). Copy of the said order of the Tribunal is also placed on record and perusal of the same shows that a similar issue was decided by the Tribunal vide paragraph No.7 of its order as under:-
Shree Ashapura Co-op Credit So. Ltd Vs. Pr. CIT AY : 2014-15 4
“7. We have heard both the parties and perused all the relevant material available on record. It is pertinent to note that the entire details called for during the assessment proceedings were submitted by the assessee at the time of assessment under Section 143(3) of the Act and the Assessing Officer was very well aware that section 80P claim was reflected in the details of the assessee. The assessee vide letter dated 22.05.2017 submitted the details regarding deduction under Section 80P of the Act which was claimed in the return of income which included in the interest income from Mehsana Urban Co-operative Bank. The PCIT has issued the show cause notice under Section 263 on 14.02.2020 on the very same issue which was verified by the Assessing Officer in Section 143(3) proceedings itself. Once the issue verified by the Assessing Officer and the jurisdictional Court has allowed the said claim related to interest income earned from Co-operative Bank, the PCIT cannot exercise Section 263 of the Act. The ld. A.R. aptly relied upon the decision of State Bank of India vs. CIT (2016) 72 Taxmann.com 64 dated 25.04.2016. On the basis of Hon’ble Karnataka High Court decision in the case of Totgars Co-operative Sales Society (supra), the PCIT cannot invoke provisions of section 263 of the Act. Thus, Section 263 does not sustain and appeal of the assessee is allowed.”
The aforesaid decision of Co-ordinate Bench of this Tribunal in the case of the People Co-op. Credit Society Ltd. (supra) has been followed by the Tribunal in the case of the Sardar Patel Co-op. Credit Society Ltd Vs. Pri. CIT in decided on 17.06.2022 as well and copy of the said order is also placed on record.
The issue involved in the present case is thus squarely covered by the decisions rendered by the Tribunal in the case of the People Co-op. Credit Society Ltd. (supra) and Sardar Patel Co-op. Credit Society Ltd (supra), wherein a similar issue involving identical facts and circumstances has been decided by the Tribunal in favour of the assessee and even the learned DR has not been able to dispute this position. We, therefore, follow the said decisions of the Coordinate Bench of this Tribunal and set aside the Shree Ashapura Co-op Credit So. Ltd Vs. Pr. CIT AY : 2014-15 5 impugned order passed by the PCIT under Section 263 of the Act restoring that of the Assessing Officer passed under Section 143(3) of the Act.
In the result, the appeal of the assessee is allowed.
Order pronounced in the Court on 6th July, 2022 at Ahmedabad.