M.P. POLICE SAKH SANSTHA MARYADIT,UJJAIN vs. THE PCIT -1, INDORE

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ITA 119/IND/2022Status: DisposedITAT Indore20 December 2022AY 2017-184 pages

In favour of the assessee: the assessee's appeal was allowed. From the AI summary of this appeal.

AI SummaryAllowed

What did the Tribunal hold?

The Tribunal held that the AO was correct in allowing the deduction under Section 80P on the interest income, as it was covered by a coordinate bench's decision. Therefore, the assessment order was neither erroneous nor prejudicial to the revenue's interest.

What were the facts?

The assessee, a co-operative society, claimed deduction under Section 80P on interest income from fixed deposits. The Principal Commissioner of Income Tax (PCIT) initiated revision proceedings under Section 263, holding that the Assessing Officer (AO) had wrongly allowed this deduction.

What were the issues?

Whether interest income earned by a co-operative society from fixed deposits is eligible for deduction under Section 80P, and if the PCIT was justified in invoking revisionary powers under Section 263.

Which sections of the Income-tax Act were involved?

Section 80P,Section 263

AI-generated summary — verify with the full judgment below

Income Tax Appellate Tribunal, INDORE BENCH, INDORE

Before: SHRI CHANDRA MOHAN GARG & SHRI B.M. BIYANI

For Appellant: Shri Milind Wadhwani, CA
For Respondent: Shri P.K. Mishra, CIT-DR
Hearing: 17.11.2022Pronounced: 20.12.2022

Feeling aggrieved by revision-order dated 19.03.2022 passed by Ld. Principal Commissioner of Income Tax [“Ld. PCIT”] u/s 263 of the Income-Tax Act 1961 [“the Act”], which in turn arises out of assessment-order dated 26.11.2019 passed by Ld. ITO, Ward-2(3), Ujjain [“Ld. AO”] for assessment year [“AY”] 2017-18, the assessee has filed this appeal.

2.

Heard the learned Representatives of both sides and case-records perused.

3.

The facts leading to present appeal before us are such that the assessee is a co-operative society. It filed return of income of the relevant assessment-year after claiming deduction u/s 80P of Rs.

M.P. POLICE SAKH SAHKARI SANSTHA MARYADIT, UJJAIN Asst.Year: 2017-18 - 2 - 41,73,300/-. The Ld. AO subjected assessee’s case to scrutiny- assessment and being satisfied, allowed deduction as claimed by assessee. Subsequently, the Ld. PCIT examined the assessment-order and found that the assessee had earned interest of Rs. 13,70,890/- from fixed deposits with banks which is not eligible for deduction u/s 80P. Thus, the Ld. PCIT framed a view that the Ld. AO had wrongly allowed deduction u/s 80P qua the impugned interest income of Rs. 13,70,890/-, which has rendered the assessment-order as erroneous- cum-prejudicial to the interest of revenue. Holding so, the Ld. PCIT took revisionary action u/s 263 of the act whereby the assessment-order passed by Ld. AO was set aside with a direction to re-examine the issue of deduction and frame assessment de novo. Aggrieved by revision- order, the assessee has come in present appeal before us.

4.

The Ld. AR appearing for the assessee straightaway submitted that the issue of allowability of deduction u/s 80P qua the impugned interest income is squarely covered in assessee’s favour by the order passed by Hon’ble Co-ordinate Bench of ITAT, Indore in & 649/Ind/2019, M.P. Police Sakh Sahkarita Maryadit, Indore Vs. ITO-4(5) dated 17.12.2019, a copy placed before us. The relevant paragraph of the order reads thus:

9. In the present case, the undisputed fact is that the assessee society is required to deposit 25% of its profit as mandated by section 43(2) of the M.P./Chattisgarh Societies Act, 1960. Hence, the assessee is under legal obligation to keep 25% of its profits as reserves. Any interest accrued there on would certainly, in our considered view partake character of business income of the assessee. Hence, it would be eligible for deduction. Therefore, the A.O. is directed to allow deduction on the interest earned out of amount so reserved by the assessee i.e. 25% of profit transferred to reserves.

5.

The Ld. DR representing the revenue, with all his fairness, has not raised any serious objection.

M.P. POLICE SAKH SAHKARI SANSTHA MARYADIT, UJJAIN Asst.Year: 2017-18 - 3 -

6.

We do not find any reason to deviate from the view taken by Hon’ble Co-ordinate Bench in the absence of any change in facts or law. Respectfully relying upon the same, we hold that the Ld. AO was correct in giving deduction u/s 80P to the assessee qua the impugned interest income. That also brings us to conclude that the assessment-order passed by Ld. AO is neither erroneous non prejudicial to the interest of revenue and therefore the Ld. PCIT was not justified in invoking the revisionary-action u/s 263. Being so, we quash the revision-order passed by Ld. PCIT and restore the original assessment-order passed by Ld. AO.

7.

In the result, assessee’s appeal is allowed.

Order pronounced as per Rule 34 of ITAT Rules, 1963 on 20/12/2022.

Sd/- Sd/- (CHNADRA MOHAN GARG) (B.M. BIYANI) JUDICIAL MEMBER ACCOUNTANT MEMBER Indore; Dated 20/12/2022 S. K. Sinha, Sr. PS आदेश क� ��त�ल�प अ�े�षत/Copy of the Order forwarded to : 1. अपीलाथ� / The Appellant 2. ��यथ� / The Respondent. 3. संबं�धत आयकर आयु�त / Concerned CIT 4. आयकर आयु�त(अपील) / The CIT(A)- 5. �वभागीय��त�न�ध, / DR, ITAT, Indore 6. गाड�फाईल / Guard file. आदेशानुसार/ BY ORDER,

(Sr. Private Secretary) ITAT, Indore

M.P. POLICE SAKH SAHKARI SANSTHA MARYADIT, UJJAIN Asst.Year: 2017-18 - 4 -

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