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Facts
The assessee, Nityanand Baug Co-operative Society Limited, claimed a deduction of Rs. 14,24,038/- under Section 80P(2)(d) for AY 2018-19 on interest income earned from investments in cooperative banks. The Assessing Officer (AO) allowed this deduction. However, the Principal Commissioner of Income Tax (PCIT) initiated revision proceedings under Section 263, holding that the AO's order was erroneous and prejudicial to the revenue.
Held
The Tribunal held that the PCIT was not justified in invoking revisionary powers under Section 263. The AO had taken a possible view by allowing the deduction, and the reliance by the PCIT on the Supreme Court's KSCARDB judgment was considered distinguishable. The Tribunal found that interest income earned by a cooperative society from investments in a cooperative bank is eligible for deduction under Section 80P(2)(d) based on various High Court judgments.
Key Issues
Whether the PCIT was justified in initiating revision proceedings under Section 263 when the AO allowed deduction under Section 80P(2)(d) for interest income earned from cooperative banks, and whether such income is eligible for deduction.
Sections Cited
263, 80P(2)(d), 143(3), 119, 2(19)
AI-generated summary — verify with the full judgment below
Income Tax Appellate Tribunal, MUMBAI BENCH “B”, MUMBAI
Before: SHRI. BR BASKARAN & SHRI. RAJ KUMAR CHAUHAN
IN THE INCOME TAX APPELLATE TRIBUNAL MUMBAI BENCH “B”, MUMBAI BEFORE SHRI. BR BASKARAN, ACCOUNTANT MEMBER AND SHRI. RAJ KUMAR CHAUHAN, JUDICIAL MEMBER ITA NO. 2209/MUM/2024(A.Y: 2018-19) Nityanand Baug Co-operative Vs. Principal Commissioner of Society Limited Income Tax Plot No. 80/83, Nity Anand Baug, R. Tower No. 6, Vashi Railway C. Marg, Chembur, Mumbai – 400 Station, Commercial Complex, 074. Vashi Navi Mumbai – 400 PAN: AAAAN6410C 703. (Appellant) (Respondent)
Assessee Represented by : Shri. Dinesh R. Shah & Shri. B. R. Vyas Department Represented by : Shri. Dr. Mahesh Akhade, CIT DR. Date of conclusion of Hearing : 01.07.2024 Date of Pronouncement : 19.07.2024
O R D E R PER RAJ KUMAR CHAUHAN (J.M.): 1. This appeal is filed by the appellant/assessee against the order dated 29.03.2024 of Learned Principal Commissioner of Income Tax, (PCIT), Mumbai – 27 [hereinafter referred to as the “PCIT”], passed under section
ITA No. 2209/Mum/2024 Nityanand Baug Co-operative Housing Society Ltd; A.Y. 2018-19 263 of the Income Tax Act, 1961 [hereinafter referred to as “the Act”] it pertains to the A.Y. 2018-19.
The brief facts as culled out from the proceedings before these lower authorities are that the assessee has claimed itself to be a co-operative society has filed return of income on 20.09.2018 declaring total income of Rs. 28,450/- for A.Y. 2018-19. The case was selected for scrutiny, accordingly, notice u/s.143(2) dated 22.09.2019 was issued and served through NeFAC on the assessee e-mail. The Notice u/s.142(1) has been issued on 27.10.2020 but the same was not complied. Lastly, the show cause notice dated 12.03.2021 along with draft Assessment Order was issued to the assessee for compliance on or before 29/03/2021 stating as to why Rs.26,67,611/- should not be disallowed and treated as income of the assessee on account of non-submission of documentary evidence in support of deduction under chapter VI-A for the year under consideration. The assessee replied to the said show cause notice by uploading it on e-filing portal and the same is examined and deduction claimed by the assessee u/s. 80P(2)(d) of Rs. 14,24,038 was considered.
Notice u/s. 263 of “the Act” was issued on 26.03.2024 by the Ld. PCIT observing that the Ld. AO has allowed deduction u/s. 80P (2)(d) of “the Page | 2
ITA No. 2209/Mum/2024 Nityanand Baug Co-operative Housing Society Ltd; A.Y. 2018-19 Act” for a sum of Rs. 14,24,038/- of the interest income from co-operative banks and therefore the order passed by the Ld. AO for the A.Y. 2018-19 is erroneous in so far as it is prejudicial to the interest of revenue. In response to the show cause notice, the assessee filed reply on 28.03.2024 claiming that the income earned from investment made in Co-operative Bank which is eligible for deduction u/s. 80P(2)(d) on account of various judicial pronouncements.
The Ld. PCIT was of the opinion that for the allowance of this amount as deduction u/s 80P(2)(d) of “the Act”, the interest or dividend must have been earned from a cooperative society and not from the cooperative bank and has relied upon the judgment of the Hon’ble Supreme Court in the case of Kerala State Cooperative Agricultural and Rural Development bank Ltd. (KSCARDB) vs. The Assessing Officer, Trivandrum & Ors., in Civil Appeal Nos. 10069 of 2016 dated 14.09.2023, stating that the Hon’ble Supreme Court has held that the cooperative bank is not a cooperative society and as such interest earned on investment made in the cooperative bank is not an income from other society and not eligible for deduction u/s. 80P(2)(d) of “the Act”. It was therefore held that the Ld. AO has failed to properly examine the issue and the assessment order was erroneous and prejudicial to the interest of revenue. Page | 3
ITA No. 2209/Mum/2024 Nityanand Baug Co-operative Housing Society Ltd; A.Y. 2018-19 5. Aggrieved by this order of the Ld. PCIT, the assessee is in appeal before us and has challenged the order of the Ld. PCIT on the following summarized grounds:
a. The order passed u/s. 263 of “the Act” is without jurisdiction because the Ld. PCIT has not considered the written submissions and various latest case laws of Mumbai Income Tax Tribunal and without appreciating the facts of the case of Hon’ble Supreme Court i.e., K.S.C.O. Agricultural and Rural Development Bank Ltd V/s The AO Trivandrum Civil Appeal No. 5005 to 5007 of 2019; that the said case is not applicable to the facts and circumstances of the case of the assessee. b. The order of the Ld. AO is neither erroneous nor prejudicial to the interest of the revenue because the Ld. AO has taken one of the possible views on this matter after considering the various judicial pronouncements and has allowed the deduction u/s. 80P(2)(d) lawfully. c. The legal position is settled by various pronouncements that the interest received in the hand of cooperative society is exempt u/s. 80P(2)(d) of “the Act” and the Ld. PCIT has passed the order u/s. 263 of “the Act” in haste without proper application of mind and on account of misinterpretation of law laid down by the Hon’ble Supreme Court in case of KSCARDB (supra). 6. We have heard the Ld. AR on behalf of the assessee and Ld. DR on behalf of the revenue. The Ld. AR has also filed written submissions and has argued that the order of the Ld. AO cannot be treated as prejudicial to the interests of the Revenue. When an Income Tax Officer adopted one of the courses permissible in law and it has resulted in loss of Revenue or where two views are possible and the Income Tax Officer has taken one view with which the Commissioner does not agree, it cannot be treated as an
ITA No. 2209/Mum/2024 Nityanand Baug Co-operative Housing Society Ltd; A.Y. 2018-19 erroneous order prejudicial to the interest of the Revenue unless the view taken by the Income Tax Officer is unsustainable in law (P)83. In support of his argument, he relied upon various cases as follows:
a. Malabar Industrial Co. Ltd. v/s CIT(2000)243 ITR 83/109 Taxman 66(SC) b. CIT v/s Arvind Jeweller 259 ITR 502 c. CIT v/s Power Finance Corporation (2015)/378 ITR 619 (Delhi) d. Bongoigaon Refinery & Petrochemicals Ltd. v/s Union of India (Gauhati HC) 287 ITR 120 e. CIT v/s Pathy Cine Enterprises 292 ITR 495 f. CIT v/s Mepсо Industries Ltd 294 ITR 121(Section 159) 7. Secondly, it is argued that as per various judgements if one Co-operative Society invests funds in/with other Co-operative Society including Co- operative Bank, the Assessee is entitled to deduction u/s 80P(2)(d). The Ld. AR simply relied upon the following citations:
a. Pathare Prabhu Co. H. S. Ltd. v/s ITO 22(2)(1) (2023)202ITD 464 b. ITO v/s Casa Grande Co-op. H. S. Ltd. ITA No. 1259/M/2023 c. Laxmi Co-op. Н. S. Ltd. v/s ITO 22(2)(3) ITA/1745/M/2023 d. Principal CIT v/s Totagers Co- operative Sales Society e. Karnataka State Co-operative Federation v/s Assistant CIT (2021)186 ITD 750
ITA No. 2209/Mum/2024 Nityanand Baug Co-operative Housing Society Ltd; A.Y. 2018-19 f. Bank of Baroda v/s H. C. Shrivastva (2002)122 Taxman 330 Bombay HН.С. 8. The Ld. AR on behalf of the assessee has therefore argued that the order of the Ld. PCIT is not legally sustainable as it amounts to improper and unlawful usurpation of the jurisdiction by the Ld. PCIT u/s. 263 of "the Act" and prayed for setting aside of the same.
The Ld. DR on the other had relied upon judgment of the Ld. PCIT stating that the same is perfectly legal, apt, and apposite as the same is supported by the pronouncements of the Hon’ble Supreme Court’s judgment in KSCARDB case (supra) wherein it has been held that cooperative society and cooperative bank are different entity and one cannot be substituted for the other. It was further argued that the order of the Ld. AO has been rightly set aside by the Ld. PCIT as the Ld. AO has not followed the circular issued by the CBDT u/s. 119 of "the Act". The Ld. DR has taken us to the explanation 2(c) u/s. 263 of "the Act" which provides that the order passed by the Ld. AO shall be deemed to be erroneous if the order has not been made in accordance with any order, directions or institutions issued by the board u/s. 119 of the Act. It is therefore vehemently argued that the order passed by the Ld. AO is erroneous in so far as it was prejudicial to the interest of revenue and has been rightly set aside u/s. 263 of "the Act". Page | 6
ITA No. 2209/Mum/2024 Nityanand Baug Co-operative Housing Society Ltd; A.Y. 2018-19 10. In order to proceed we have examined the power of revision u/s. 263 of "the Act".
The Hon'ble High Court of Bombay in Commissioner to Income Tax Vs. Gabriel India Ltd. [1993] 71 Taxman 585 (Bombay) dated 15.04.1993 had the occasion to interpret Section 263(1) and elaborated the meaning of word erroneous and prejudicial to the interest of revenue. Para 13 of the said case is relevant and reproduced as under:-
“13. We, therefore, hold that in order to exercise power under sub-section (1) of section 263 there must be material before the Commissioner to consider that the order passed by the ITO was erroneous insofar as it is prejudicial to the interests of the revenue. We have already held what is erroneous. It must be an order which is not in accordance with the law or which has been passed by the ITO without making any enquiry in undue haste. We have also held as to what is prejudicial to the interests of the revenue. An order can be said to be prejudicial to the interests of the revenue if it is not in accordance with the law in consequence whereof the lawful revenue due to the State has not been realised or cannot be realised. There must be material available on the record called for by the Commissioner to satisfy him prima facie that the aforesaid two requisites are present. If not, he has no authority to initiate proceedings for revision. Exercise of power of suo motu revision under such circumstances will amount to arbitrary exercise of power. It is well-settled that when exercise of statutory power is dependent upon the existence of certain objective facts, the authority before exercising such power must have materials on record to satisfy it in that regard. If the action of the authority is challenged before the Court, it would be open to the Courts to examine whether the relevant objective factors were available from the records called for and examined by such authority. Our aforesaid conclusion gets full support from a decision of Sabyasachi Mukharji, J. (as his Lordship then was) in Russell Properties (P.) Ltd. v. A. Chowdhury, Addl. CIT [1977] 109 ITR 229 Page | 7
ITA No. 2209/Mum/2024 Nityanand Baug Co-operative Housing Society Ltd; A.Y. 2018-19 (Cal.). In our opinion, any other view in the matter will amount to giving unbridled and arbitrary power to the revising authority to initiate proceedings for revision in every case and start re- examination and fresh enquiries in matters which have already been concluded under the law. As already stated, it is a quasi-judicial power hedged in with limitation and has to be exercised subject to the same and within its scope and ambit. So far as calling for the records and examining the same is concerned, undoubtedly, it is an administrative act, but on examination 'to consider' or in other words, to form an opinion that the particular order is erroneous insofar as it is prejudicial to the interests of the revenue, is a quasi- judicial act because on this consideration or opinion the whole machinery of re-examination and reconsideration of an order of assessment, which has already been concluded and controversy which has been set at rest, is set again in motion. It is an important decision and the same cannot be based on the whims or caprice of the revising authority. There must be materials available from the records called for by the Commissioner.” 12. Para 6 of the Ld. PCIT’s order concludes as to how the Ld. AO’s order was erroneous and prejudicial to the interest of revenue and the said para reads as under:-
“6. In the assessee’s case, it is abundantly clear that the Assessing Officer has failed to properly examine the issue as per para 4.3, which has rendered the assessment order erroneous in so far as it is prejudicial to the interest of revenue. In view of the above facts and circumstances of the case, it is held that the assessment order dated 09.04.2021 passed u/s is erroneous in so far as it is prejudicial to the interest of the revenue within the meaning of Sec. 263 of the Act and, as the Assessing Officer failed to conduct proper inquires, investigation and examination, the assessment order is set aside to the Assessing Officer with the direction to pass a fresh assessment order considering the issues raised in the notice u/s. 263 of the Act in accordance with law and after affording an opportunity of being heard to the assessee.”
ITA No. 2209/Mum/2024 Nityanand Baug Co-operative Housing Society Ltd; A.Y. 2018-19 13. We have examined the Ld. AO’s order wherein he had allowed the benefit of exemption to the assessee u/s. 80P(2)(d) of Rs.14,24,038/-. The said portion is relevant and reproduced as under:
“In view of natural justice, the assessee was provided one more opportunity vide show-cause letter dated 12/03/2021 along with draft Assessment Order was issued to the assessee for compliance on or before 29/03/2021, to why Rs.26,67,611/- mentioned in above para should not be disallowed and treated as income of the assessee on account of non- submission of documentary evidence in support of deduction under chapter VI-A for the year under consideration. In response to the above show cause the assessee has been uploaded his reply on e-filling portal. The reply has been examined and deduction claimed under chapter VIA by the assessee U/s 80P(2)(d) of Rs.14,24,038/- has been considered.” 14. Now it is to be seen whether the above order of the Ld. AO is suffering from the lack of enquiry or the examination of the issue as per law before reaching to the conclusions of giving benefit to the assessee. The Hon'ble High Court of Delhi recently in PCIT -2 Delhi Vs. M/s. Clix Finance India Pvt. Ltd., ITA No. 1428/2018, order dated 01.03.2024 while relying on the case of Malabar Industrial Co. Ltd referred (supra) has held that "the phrase "prejudicial to the interests of the Revenue" has to be read in conjunction with an erroneous order passed by the Assessing Officer. Every loss of revenue as a consequence of an order of the Assessing Officer cannot be treated as prejudicial to the interests of the Revenue, for example, when an Income Tax Officer adopted one of the Page | 9
ITA No. 2209/Mum/2024 Nityanand Baug Co-operative Housing Society Ltd; A.Y. 2018-19 courses permissible in law and it has resulted in loss of revenue; or where two views are possible and the Income Tax Officer has taken one view with which the Commissioner does not agree, it cannot be treated as an erroneous order prejudicial to the interests of the Revenue unless the view taken by the Income Tax Officer is unsustainable in law."
The Hon'ble High Court of Delhi was further pleased to hold in para no. 27 of the same judgment that “inadequacy of enquiry by the AO with respect to certain claims would not in itself be a reason to invoke the powers enshrined in Section 263 of "the Act".
On perusal of the Ld. AO’s order, it is to be noticed that the Ld. AO while giving the benefit u/s. 80P(2)(d) to the assessee has concluded that “in response to the above show cause the assessee has uploaded his reply on e-filling portal. The reply has been examined and deduction claimed under chapter VIA by the assessee U/s 80P(2)(d) of Rs.14,24,038/- has been considered”. These observations of the Ld. AO shows that he has examined the reply of the assessee which was uploaded on the e-filing portal. These facts shows that the Ld. AO has passed the assessment order after diligently carrying out the assessment and there is no reason to assail the same on the ground of non-application of mind. Thus, it is not a case Page | 10
ITA No. 2209/Mum/2024 Nityanand Baug Co-operative Housing Society Ltd; A.Y. 2018-19 of lack of enquiry and even if the enquiry would have been inadequate, that would not by itself give occasion to the Ld. Principal Commissioner to pass the order u/s. 263 of "the Act" reliance can be safely placed upon the judgment of Commissioner of Income Tax Vs. Sunbeam Auto Ltd. (2009) SCC Online Delhi 4237, dated 11.09.2009 and also Hon’ble High Court of Delhi in ITA No. 1428/2018 (supra).
In view of the above facts, we are of the considered opinion that the Ld. PCIT was not justified in invoking revision power u/s. 263 of the Act on the ground that the Ld. AO has failed to properly examined the issue before allowing benefit u/s. 80P(2)(d) to the assessee.
Now we proceed further examine the issue to find out if the benefit of Section 80P(2)(d) allowed by the Ld. AO was legally sustainable and has been done lawfully by the Ld. AO. The Ld. PCIT in the impugned order was of the opinion that the Ld. AO has failed to follow the decision of the Hon'ble Supreme Court in KSCARDB case referred (supra). The issue whether the interest earned by a cooperative society from the investment in a cooperative bank would be entitled to the exemption u/s. 80P(2)(d) or not has arisen before the Coordinate Bench recently in the case of ITAT Pune Bench “SMC”, titled Shree Parashar Vividh Kary Kari Sahakari Page | 11
ITA No. 2209/Mum/2024 Nityanand Baug Co-operative Housing Society Ltd; A.Y. 2018-19 Vikas Sanstha Maryadit Vs. Income Tax Officer Ward -1, Maharashtra, [2024] 206 ITD 663/161 taxmann.com 208 (Pune-Trib.), dated 20.03.2024. The Ld. Coordinate Bench has duly considered all the aspects of the issue and the relevant portion of the finding is reproduced as under:
“We find that the term "co-operative society" had been defined under Sec. 2(19) of the Act, as under:- "(19) "Co-operative society" means a cooperative society registered under the Co-operative Societies Act, 1912 (2 of 1912), or under any other law for the time being in force in any state for the registration of co-operative societies;" We are of the considered view, that though the cooperative banks pursuant to the insertion of subsection (4) to Sec. 80P would no more be entitled for claim of deduction under Sec. 80P of the Act, but as a cooperative bank continues to be a co- operative society registered under the Co-operative Societies Act, 1912 (2 of 1912), or under any other law for the time being in force in any State for the registration of co-operative societies, therefore, the interest income derived by a co- operative society from its investments held with a co-operative bank would be entitled for claim of deduction under Sec.80P(2)(d) of the Act. 9. In so far the judicial pronouncements that have been relied upon by the ld. A.R are concerned, we find that the issue that a co-operative society would be entitled for claim of deduction under Sec. 80P(2)(d) on the interest income derived from its investments held with a co- operative bank is covered in favour of the assessee in the following cases: (i) M/s Solitaire CHS Ltd. v. Pr. CIT, ITA No. 3155/Mum/2019; dated 29.11.2019 (ITAT "G" Bench, Mumbai); (ii) Majalgaon Sahakari Sakhar Karkhana Ltd. v. ACIT, Circle- 3, Aurangabad, ITA No, 308/Pun/2018 (ITAT Pune) Page | 12
ITA No. 2209/Mum/2024 Nityanand Baug Co-operative Housing Society Ltd; A.Y. 2018-19 (iii) Kaliandas Udyog Bhavan Pemises Co-op. Society Ltd. v. ITO , 21(2)(1), Mumbai We further find that the Hon'ble High Court of Karnataka in the case of Pr. Commissioner of Income Tax and Anr. v. Totagars Cooperative Sale Society [2017] 78 taxmann.com 169/392 ITR 74 (Karnataka) and Hon'ble High Court of Gujarat in the case of State Bank Of India v. CIT [2016] 72 taxmann.com 64/290 CTR 129/389 ITR 578/241 Taxman 163 (Gujarat), had held, that the interest income earned by the assessee on its investments with a co-operative bank would be eligible for claim of deduction under Sec. 80P(2)(d) of the Act. Still further, we find that the CBDT Circular No. 14, dated 28.12.2006 also makes it clear beyond any scope of doubt that the purpose behind enactment of sub-section (4) of Sec. 80P was that the co-operative banks which were functioning at par with other banks would no more be entitled for claim of deduction under Sec. 80P(4) of the Act. Although, in all fairness, we may herein observe that the Hon'ble High Court of Karnataka in the case of Pr. CIT v. Totagars co-operative Sale Society [2017] 83 taxmann.com 140/297 CTR 158/395 ITR 611 (Karnataka), as had been relied upon by the ld. D.R before us, had held, that a co-operative society would not be entitled to claim deduction under Sec. 80P(2)(d); but then, the Hon'ble High Court in the case of Pr. Commissioner of Income Tax and Anr. v. Totagars Cooperative Sale Society [2017] 78 taxmann.com 169/392 ITR 74 (Karnataka) and Hon'ble High Court of Gujarat in the case of State Bank Of India v. CIT [2016] 72 taxmann.com 64/290 CTR 129/389 ITR 578/241 Taxman 163 (Gujarat), had observed, that the interest income earned by a co-operative society on its investments held with a co-operative bank would be eligible for claim of deduction under Sec.80P(2) (d) of the Act. Backed by the aforesaid conflicting judicial pronouncements, we may herein observe, that as held by the Hon'ble High Court of Bombay in the case of K. Subramanian and Anr. v. Siemens India Ltd. and Anr [1983] 36 CTR 197/[1985] 156 ITR 11/[1983] 15 Taxman 594 (Bombay), where there is a conflict between the decisions of non-jurisdictional High Court's, then a view which is in favour of the assessee is to be preferred as against that taken against him. Accordingly, taking support from the aforesaid judicial pronouncement of Page | 13
ITA No. 2209/Mum/2024 Nityanand Baug Co-operative Housing Society Ltd; A.Y. 2018-19 the Hon'ble High Court of jurisdiction, we respectfully follow the view taken by the Hon'ble High Court of Karnataka in the case of Pr. Commissioner of Income Tax and Anr. v. Totagars Cooperative Sale Society [2017] 78 taxmann.com 169/392 ITR 74 (Karnataka) and that of the Hon'ble High Court of Gujarat in the case of State Bank Of India v. CIT [2016] 72 taxmann.com 64/290 CTR 129/389 ITR 578/241 Taxman 163 (Gujarat), wherein it was observed that the interest income earned by a co-operative society on its investments held with a cooperative bank would be eligible for claim of deduction under Sec.80P(2)(d) of the Act. 10. Be that as it may, in our considered view, as the A.O while framing the assessment had taken a possible view, and allowed the assessee's claim for deduction under Sec. 80P(2)(d) on the interest income earned on its investments/deposits with co-operative banks, therefore, the Pr. CIT was in error in exercising his revisional jurisdiction u/s 263 of the Act for dislodging the same. Accordingly, finding no justification on the part of the Pr. CIT, who in exercise of his powers under Sec. 263 of the Act, had dislodged the view that was taken by the A.O as regards the eligibility of the assessee towards claim of deduction under Sec. 80P(2)(d), we set-aside his order and restore the order passed by the A.O under Sec. 143(3), dated 07.03.2016." 19. In our considered view, the finding of the Ld. Coordinate Bench is mutatis mutandis applicable to the facts and circumstances of the case in hand before us. With due respect to their Lordships the facts and circumstances of the case of the Hon'ble Supreme Court i.e., Kerala State Cooperative Agricultural and Rural Development bank Ltd. (KSCARDB) vs. The Assessing Officer, Trivandrum & Ors., in Civil Appeal Nos. 10069 of 2016 dated 14.09.2023relied by the Ld. CIT are distinguishable from the facts
ITA No. 2209/Mum/2024 Nityanand Baug Co-operative Housing Society Ltd; A.Y. 2018-19 in issue before us and therefore the reliance by the Ld. CIT on the said judgment seems to be misplaced.
Ld. DR also submitted that the revenue has filed SLP against the Karnataka High Court judgment i.e., Principal Commissioner of Income Tax & Ors. Vs. Totagars Cooperative Sale Society [2017] 78 taxmann.com 169/392 ITR 74 (Karnataka) and Hon'ble High Court of Gujarat in the case of State Bank of India v. CIT [2016] 72 taxmann.com 64/290 CTR 129/389 ITR 578/241 Taxman 163 (Gujarat), therefore, the AO should not have allowed the benefit to the assessee u/s. 80P(2)(d) because the issue of entitlement of benefits of the interest earned from the investment in cooperative bank has not yet attained finality. We have considered the said submissions of Ld. DR and in our considered view advancing of such arguments is contrary to the judicial discipline. The principle of law laid down by the High Court is a binding precedent upon the jurisdictional subordinate courts/Tribunal and has legally persuasive value for the other courts/Tribunals of the country unless and until the said law is set aside by the Hon’ble Supreme Court. We understand the anxiety and zeal of the Ld. DR’s arguments, but his anxious canvassing need not disturb the calmness of our thought process which is duly guided by the settled principle of law, we are bound to follow. For the above reasons, the arguments of Ld. DR that the Page | 15
ITA No. 2209/Mum/2024 Nityanand Baug Co-operative Housing Society Ltd; A.Y. 2018-19 judgment of Hon’ble Karnataka High Court and Gujrat High Court (supra) which favours the assessee need not be followed by Ld. AO is a fallacious argument and is liable to be rejected outrightly. Our view is fortified by the decision of the Hon'ble Allahabad High Court, K. N. Agarwal Vs. Commissioner of Income Tax, order dated 11.01.1991, [1991] 189 ITR 769B (ALL) which says, “Indeed, the orders of the Tribunal and the High Court are binding upon the Assessing Officer and since he acts in a quasi-judicial capacity, the discipline of such functioning demands that he should follow the decision of the Tribunal or the High Court, as the case may be. He cannot ignore it merely on the ground that the Tribunal's order is the subject-matter of revision in the High Court or that the High Court's decision is under appeal before the Supreme Court. Permitting him to take such a view would introduce judicial indiscipline, which is not called for even in such cases.”
For the above discussions, we are of the considered opinion that the order of the Ld. AO was neither erroneous nor prejudicial to the interest of revenue and the Ld. PCIT has erred in exercising power u/s. 263 of "the Act". We therefore find the order of the Ld. PCIT apparently perverse and the same is, accordingly set aside.
ITA No. 2209/Mum/2024 Nityanand Baug Co-operative Housing Society Ltd; A.Y. 2018-19 22. For the above reasons, all the grounds taken in the appeal are allowed in the favour of the assessee and against the revenue.
In the result, appeal is allowed in the above terms.
Order pronounced in the open court on 19.07.2024
Sd/- Sd/- (BR BASKARAN) (RAJ KUMAR CHAUHAN) (ACCOUNTANT MEMBER) (JUDICIAL MEMBER) Mumbai / Dated 19.07.2024 Karishma J. Pawar, (Stenographer)
Copy of the Order forwarded to: 1. The Appellant 2. The Respondent. 3. CIT 4. DR, ITAT, Mumbai 5. Guard file. //True Copy// BY ORDER
(Asstt. Registrar) ITAT, Mumbai