DHARMAVEER SAMBHAJI NAGARI SAHAKARI PAT MARYADIT,PUNE V. PCIT, PUNE

ITA 1217/PUN/2025

AI Insights

The case revolves around the appeal by Dharmaveer Sambhaji Nagari Sahakari Pat Maryadit against the order of the Principal Commissioner of Income Tax (PCIT), Pune-3, which was passed under section 263 of the Income Tax Act, 1961. The PCIT's order was based on the grounds that the assessment order passed by the Assessing Officer was erroneous and prejudicial to the interests of the Revenue concerning the deduction claimed under section 80P of the Act on interest income. The Tribunal examined whether the PCIT was justified in setting aside the assessment order and found that the Assessing Officer had adequately addressed the issues during the assessment proceedings, thus not warranting the invocation of section 263.

• Counselvise Citation: [2026] 140 COUNSELVISE.COM (IT) 829443 (ITAT-PUNE)
• Duration Of Justice: 8 month(s) 4 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 16-01-2026
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: Pune
• Assessment Year: misc
• Appeal Filed On: 12-05-2025
• Other Referred Cases: Totgars Co-operative Sales Society Ltd. Vs. ITO
• Laws Referred To: Income Tax Act, 1961
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: AMOL KHAIRNAR
• Assessee Lawyers: SANDIP ARGADE
• Keywords: Set aside; Business income; Difference of opinion; Change of opinion; Rule of consistency; Assessment record; Revision of order; Co-operative Credit Society
• Section: 143(3); 263; 56

Judgement Text

"IN THE INCOME TAX APPELLATE TRIBUNAL PUNE BENCH “A”, PUNE BEFORE SHRI R. K. PANDA, VICE PRESIDENT AND Ms. ASTHA CHANDRA, JUDICIAL MEMBER ITA No.1217/PUN/2025 Assessment year : 2020-21 Dharmaveer Sambhaji Nagari Sahakari Pat Maryadit A/P Manchar, Tal-Ambegaon, Dist. Pune – 410503 Vs. PCIT-3, Pune PAN: AAAAD5228N (Appellant) (Respondent) Assessee by : Shri Sandip Argade Department by : Shri Amol Khairnar, CIT-DR Date of hearing : 13-01-2026 Date of pronouncement : 16-01-2026 O R D E R PER R.K. PANDA, V.P: This appeal filed by the assessee is directed against the order dated 13.03.2025 passed u/s 263 of the Income Tax Act, 1961 (hereinafter referred to as ‘the Act’) by the Ld. PCIT, Pune-3 relating to assessment year 2020-21. 2. Although a number of grounds have been raised by the assessee, however, these all relate to the validity of 263 proceedings initiated by the Ld. PCIT. 3. Facts of the case, in brief, are that the assesse is a co-operative credit society registered under the Maharashtra Co-Op. Societies Act carrying on the business of providing credit facilities to its members. It filed its return of income for the impugned assessment year on 15.02.2021 declaring total income at Nil after Printed from counselvise.com 2 ITA No.1217/PUN/2025 claiming deduction of Rs.51,98,918/- u/s 80P of the Income Tax Act, 1961 (hereinafter referred to as ‘the Act’). The return was processed u/s 143(1) of the Act. Subsequently the return was selected for scrutiny under CASS under the ‘limited scrutiny’ category for examination of the following issues: i) Investments / Advances / Loans ii) Deduction from total income under Chapter VI-A 4. The Assessing Officer completed the assessment u/s 143(3) r.w.s. 144B of the Act on 23.09.2022 determining the total income of the assessee at Rs.14,95,729/- after disallowing deduction claimed u/s 80P of the Act to that extent. 5. Subsequently the Ld. PCIT examined the record and noted that the assessee had made substantial investments / deposits with other banks including co- operative banks and has admittedly earned interest income on such investments / deposits to the tune of Rs.1,66,30,919/-. He observed that during the course of assessment proceedings, on a query raised by the Assessing Officer on the admissibility of deduction u/s 80P of the Act in respect of interest received on deposits / investments kept with the co-operative and other banks, the assessee had stated that the profit to the extent of Rs.37,03,189/- was earned out of the activity of providing credit facilities to its members whereas an amount of Rs.14,95,729/- was earned by way of interest / dividend derived from its investments with the other co-operative societies. The Assessing Officer has accepted the above contention of the assessee and restricted the deduction claimed by the assessee u/s Printed from counselvise.com 3 ITA No.1217/PUN/2025 80P to the extent of profit earned from the activity of providing credit facilities to its members. 6. The Ld. PCIT noted that the case of the assessee was selected for scrutiny to examine large claim of deduction under Chapter VI-A. Since the assessee is a cooperative society, it is eligible for deduction either under the provisions of section 80P(2)(a)(i) or 80P(2)(d) of the Act. He referred to the decision of Hon’ble Supreme Court in the case of Totgars Co-operative Sales Society Ltd. Vs. ITO reported in (2010) 322 ITR 283 (SC) wherein it has been held that the interest income which has been earned by investing surplus funds would come in the category of ‘Income from other sources’ taxable u/s 56 and would not qualify for deduction as business income u/s 80P(2)(a)(i) of the Act. He observed that the Assessing Officer has not considered this decision and has merely accepted the arguments of the assessee that only a portion of Rs.14,95,729/- represented interest income received from investments with other banks whereas the assessee had earned interest income of Rs.1,66,30,919/- on investments with other banks during the year. He, therefore, was of the opinion that the Assessing Officer has not conducted any enquiry to determine whether the interest income earned by the assessee is related to its core business or residual income which is required to be taxed under the head ‘Income from other sources’. Thus, the order passed by the Assessing Officer has become erroneous and prejudicial to the interests of the Revenue. He, therefore, issued a show cause notice u/s 263 of the Act asking the assessee to explain as to why the order passed by the Assessing Officer should not Printed from counselvise.com 4 ITA No.1217/PUN/2025 be set aside. Rejecting the various explanations given by the assessee, the Ld. PCIT held that the order passed by the Assessing Officer is erroneous in so far as it is prejudicial to the interests of the Revenue. He, therefore, partly set aside the order to the file of the Assessing Officer for the limited purpose of examining the following issues and to pass a fresh assessment order in the light of enquiries made: i) The A.O shall examine the eligibility of deduction available to the assessee u/s.80P(2)(a) of the Act in the light of decision of the Hon'ble Supreme Court in the case of Totgars Co-operative Sales Society Ltd. Vs. ITO, (SC) (322 ITR 283)(2010) ii) The A.O shall also examine whether the interest income received by the assessee is related to its core business or is a residual income which is required to be taxed under the head \"Other Sources\". iii) The AO shall examine whether the assessee is ineligible for deduction u/s 80P in view of specific provision of section 80P(2)(d) r.w.s. section 80P (4) of the Act. 7. Aggrieved with such order of the Ld. PCIT, the assessee is in appeal before the Tribunal by raising the following grounds: 1. Whether on the facts and in the circumstances of the case and in law, the Ld. Pr. Commissioner of Income Tax-3, Pune erred in assuming jurisdiction u/s 263 of the Act in order to substitute his subjective view in place of judicious view taken by the Assessing Officer on the same set of facts and materials on records, for the deduction claimed u/s 80P(2)(d) of the Act on the interest income earned by the Society on the deposits of its surplus funds in a Co-operative Bank, by holding that the order passed u/s 143(3) r.w.s. 144B of the I. T. Act dated 23.09.2022 was erroneous in so far as it is prejudicial to the interest of the revenue and being unsustainable in law? 2. Whether on the facts and in the circumstances of the case and in law, the Ld. Pr. Commissioner of Income Tax-3, Pune erred in assuming jurisdiction u/s 263 of the Act for directing the Assessing Officer to deny the deduction claimed u/s 80P(2)(d) of the Act on the interest income earned by the Society on the deposits of its surplus funds in a Co-operative Bank, as allowed in the assessment order u/s 143(3) r.w.s. 144B of the I. T. Act dated 23.09.2022, passed after due inquiry and in-depth verification of Printed from counselvise.com 5 ITA No.1217/PUN/2025 the relevant provisions of the Act and the claim made by the Society by duly calling for various details/documents from the assessee and therefore, the order u/s 263 of the Act passed by the Ld. Pr. Commissioner of Income Tax-3, Pune, being without jurisdiction, bad in law and deserves to be quashed? 3. Whether on the facts and in the circumstances of the case and in law, the Ld. Pr. Commissioner of Income Tax-3, Pune has grossly failed to appreciate in the right and proper perspective that, the explanations substantiated with the cogent, credible and authentic evidences, documents, accounts, materials, etc. submitted during the course of assessment proceedings and more so, placed on the assessment records, for the claim of deduction u/s 80P(2)(d) of the Act, without appreciating the fact that the order u/s 143(3) r.w.s. 144B of the I. T. Act dated 23.09.2022 passed by the Assessing Officer was neither prejudicial to the interest of the revenue nor an erroneous and hence, the order u/s 263 of the Act is liable to be quashed? 4. Without any prejudice to the above, on the facts and in the circumstances of the case and in law, the order of the learned Pr. Commissioner of Income Tax-3, Pune u/s 263 of the Act suffers from serious illegalities in as much as, according to the settled position of law and in consideration of the same set of facts in existence consistently allowing the deduction claimed u/s 80P(2)(d) of the Act by the AO and therefore, the order passed u/s 263 of the Act invoking clause (a)/(b) of the Explanation 2 of Section 263 of the Act patently in violation of \"rule of consistency\" is bad in law, without jurisdiction, arbitrary, invalid and hence, liable to be quashed? 5. The Appellant craves leave to alter, amend, withdraw or substitute any ground or grounds or to add any new ground or grounds of appeal. 8. The Ld. Counsel for the assessee at the outset submitted that the case of assessee society was selected for scrutiny under CASS and the Assessing Officer during the course of assessment proceedings had called for various details in response to which the assessee has duly submitted the details. The Assessing Officer after considering the submissions of the assessee has disallowed the deduction u/s 80P of the Act to the extent of Rs.14,95,730/- out of total deduction claimed u/s 80P of the Act of Rs.51,98,919/-. Referring to the copy of assessment Printed from counselvise.com 6 ITA No.1217/PUN/2025 order, the Ld. Counsel for the assessee drew the attention of the Bench to the observations of the Assessing Officer at para 9 which read as under: “9. Hence a show cause notice dated 24.03.2022 issued asking why the deduction claimed u/s 80P of the Act should not be disallowed and added to total income of the assessee. In response thereto the assessee filed its submission on 28.03.2022. In its submission assessee states that the assessee society has been continuously in the business of providing credit facilities to its members only and the said facilities are not provided to general public at large. The assessee society has no nominal members. The assessee society has given bifurcation of the deduction claimed u/s 80P of the Act the excerpt of which is reproduced. “The society has earned profit of Rs.37,03,189/- (71.23% of Rs.51,98,918/-) from its activity of providing credit facilities to its members. The said amount is eligible for deduction u/s 80P(2)(a)(i) of the Act. Further, the society derived net income of Rs.14,95,729/- (28.77% of Rs.51,98,918/-) by way of interest/dividend derived from its investments with any other co-operative society. The said amount is eligible for deduction u/s 80P(2)(d) of the Act. In short, the society has claimed deduction u/s 80P(2)(a)(i) of Rs.37,03,189/- and deduction u/s 80P(2)(d) of Rs.14,95,729/-” The assessee society has earned interest income on deposits made with the co-operative Banks as discussed in above paras. Also assessee society has failed to establish that interest income earned from Co-operative Bank is attributable to the business operation of the Society as decided in the case of The Totagars Co- Operative Sale Society. Hence the interest income earned of Rs.14,95,729/- on which the assessee has claimed deduction u/s 80P(2)(d) is disallowed and treated as income from Other Sources and added back to total income of the assessee. Penalty proceedings u/s. 270A(9)(a) of the IT Act are initiated separately for under reporting of income.” 9. He submitted that the Assessing Officer after considering the decision of Hon’ble Supreme Court in the case of Totgars Co-operative Sales Society Ltd. Vs. ITO (supra) only has disallowed an amount of Rs.14,95,729/-. He accordingly submitted that the observations of the Ld. PCIT that the Assessing Officer while passing the assessment order has allowed the claim of deduction u/s 80P of the Act without making suitable enquiries and without considering the decisions of Printed from counselvise.com 7 ITA No.1217/PUN/2025 Hon’ble Supreme Court in the case of Totgars Co-operative Sales Society Ltd. Vs. ITO (supra) is incorrect. 10. The Ld. Counsel for the assessee in his next plank of argument submitted that the Assessing Officer during the course of assessment proceedings while examining the claim of deduction u/s 80P of the Act has called for various details which were submitted by the assessee. After considering the issue and due examination of the details submitted by the assessee the Assessing Officer after due application of mind has taken a plausible view to disallow the deduction u/s 80P of the Act to the extent of net interest income. 11. Relying on the following decisions he submitted that when the Assessing Officer has taken a plausible view on an issue, the Ld.PCIT cannot assume jurisdiction u/s 263 of the Act to revise the said order on the same grounds as it would amount to change of opinion: i) CIT v. Chawla Trunk House, (1983) 139 ITR ii) CIT v. Kanda Rice Mills (1989) 178 ITR 464 iii) Baljees v. ACIT, (2004) 85 TTJ (Chd.) 543 iv) Malabar Industrial Company Ltd. v. CIT (2000) 243 ITR 83 v) Amrik Singh v. Income Tax Officer, (2003) 127 taxman (Trib.) 87 vi) Smt. Neena Khullar, Samrala v. The CIT-II, Ludhiana, in ITA No. 443/Chandi/2012 dated 24.09.2012 vii) CIT v. Anil Kumar Sharma [2011] 235 ITR 83 viii) CIT v. Rajiv Agnihotri, [2011] 332 ITR 608 Printed from counselvise.com 8 ITA No.1217/PUN/2025 12. The Ld. Counsel for the assessee submitted that in the instant case the Assessing Officer has conducted due enquiries while partly disallowing the claim of deduction u/s 80P of the Act and it is not a case of lack of enquiry or no enquiry. It is not a case where no enquiry has been conducted by the Assessing Officer with respect to the claim under consideration. Relying on various decisions he submitted that when the Assessing Officer has decided an issue after due application of mind, merely because the Ld. PCIT does not agree with the view of the Assessing Officer which is a plausible view, he cannot invoke the provisions of section 263 of the Act. The Ld. Counsel for the assessee submitted that the assessee society is engaged in the business of providing credit facilities to its members only. The society collects / accepts / raises funds in the form of share capital, deposits from members and provides credit facilities to the members only, and the society invests the surplus funds as per the provisions of section 66, 70 and rules 54 and 55 and the bye laws of the society. He submitted that the total funds which are contributed/collected from members or generated in the activity or business of society has to be utilized by the society in the following manner and priorities: a) To provide credit facilities to its members within the framework of the Act, Rules & Bye Laws of the Society. b) To invest the statutory Reserve & funds as per the provisions of section 66 & 70 of the Maharashtra State Co-operatives Societies Act and Rules 54 & 55 and provisions of the bye-laws of our society. c) To keep Cash and Bank Balances and liquid investment to meet the working capital requirement of the Society. Printed from counselvise.com 9 ITA No.1217/PUN/2025 13. He further submitted that the interest income derived by a co-operative society from its investments held with a Nationalized or Co-operative banks, would be entitled for claim of deduction under Sec.80P(2)(d) of the Act. 14. Referring to the following decisions he submitted that the interest income received from investments made with Nationalised and Co-operative Banks is allowable as deduction u/s 80P of the Act: 1) Mahatma Phule Gramin Bigar Sheti Sahakari Pat Sanstha Vs. ITO, Ward- 2, Pandharpur (ITA No.541/PUN/2018) dated 22/02/2019 2) Shri Laxmi Narayan Nagari Sahakari Pat Sanstha Maryadit Vs. ITO (ITA No.604/PN/2014) 3) ITO Vs. Sureshdada Jain Nagari Sahakari Pat Sanstha (ITA No.589/PN/2016) dated 28.11.2018 4) Dhanshree Multistate Credit Co-operative Society Ltd. VS. ITO (ITA No.1250/PUN/2018) dated 01.03.2019 5) ITO Vs. Niphad Nagari Sahakari Pat Sanstha Ltd. (ITA No. 1336/PUN/2011) dated 31.07.2013. 6) Sugarcane Producers Vividh Karyakari Sah. Society Ltd. Vs. ITO (ITA No. 2537/PUN/2017) dated 26.10.2018. 7) Chandraprabhu Gramin Bigar Sheti Sahakari Pat Sanstha Maryadit Vs. ITO (ITA No. 1352/PN/2016) dated 29.07.2016 8) Hon'ble Gujarat High Court in case of Surat Vankar Sahakari Sngangh Ltd. - 72 taxmann.com 169 9) Rajkot ITAT in case of M/s. Surendranagar District Cooperative Milk Producers Union Ltd. vs. DCIT-111 taxmann.com 69 10) Hon'ble Karnataka High Court in case of PCIT vs. Totagars Co-operative Sale Society-78 taxmann.com 169 11) Gurumauli Nagari Sahkari Pat Sanstha vs. PCIT order dated 13.01.2022 (Pune Trib.). 12) Tumkur Merchants Souharda Credit Cooperative Ltd. vs. ITO 230 Taxman 309 (Kar-HC). Printed from counselvise.com 10 ITA No.1217/PUN/2025 13) Sureshdada Jain Nagari Sahakari Patsanstha Maryadit (ITA No.713/PUN/2016). 14) Nasik Road Nagri Sahakari Patsanstha (ITA No.1700/PUN/2017 order dated 27.12.2021) 15) Jainhind Nagari Sahakari Pat Sanstha (ITA No.542/PUN/2023 order dated 06.06.2023) 16) ITO vs Shri Laxmi Narayan Nagari Sahakari Pathsanstha (ITA No.2827/PUN/2016 order dated 19.09.2018). 17) Sant Motiram Maharaj Patsanstha Ltd. vs. ITO, 120 taxmann.com 10. 15. Referring to various other decisions placed in the paper book the Ld. Counsel for the assessee submitted that after considering the decision of Hon’ble Supreme Court in the case of Totgars Co-operative Sales Society Ltd. Vs. ITO (supra), the claim of deduction u/s 80P(2)(d) of the Act of interest income earned by the cooperative societies on the deposits of surplus funds with the cooperative banks has been allowed. He accordingly submitted that the Ld. PCIT was not justified in invoking his revisionary powers u/s 263 of the Act. He accordingly submitted that the grounds raised by the assessee be allowed. 16. The Ld. DR on the other hand heavily relied on the order of the Ld. PCIT. He submitted that the Assessing Officer should have conducted proper enquiries before allowing the claim of deduction u/s 80P of the Act. He submitted that the Ld. PCIT has passed a speaking order on this issue, therefore, the same should be upheld and the grounds raised by the assessee be dismissed. Printed from counselvise.com 11 ITA No.1217/PUN/2025 17. We have heard the rival arguments made by both the sides, perused the orders of the Assessing Officer and Ld. PCIT and the paper book filed on behalf of the assessee. We have also considered the various decisions cited before us. We find the assessee in the instant case filed its return of income declaring Nil income after claiming deduction of Rs.51,98,918/- u/s 80P of the Act. We find the Assessing Officer completed the assessment determining the total income of the assessee at Rs.14,95,729/- after disallowing the deduction claimed u/s 80P of the Act to that extent on the ground that the above amount was earned by way of interest / dividend derived from its investments with other cooperative societies. He, however, allowed the claim of deduction u/s 80P to the extent of Rs.37,03,189/- on the ground that the same was earned out of the activity of providing credit facilities to its members. We find the Ld. PCIT was of the opinion that when the assessee had earned interest income of Rs.1,66,30,919/- on its investments with other banks / cooperative societies during the year, therefore, the Assessing Officer should have considered the entire interest income of Rs.1,66,30,919/- as ‘Income from other sources’ and re-worked the deduction admissible u/s 80P of the Act in the light of the decision of Hon’ble Supreme Court in the case of Totgars Co-operative Sales Society Ltd. Vs. ITO (supra). According to him the Assessing Officer has not conducted any enquiry to determine whether the interest income earned by the assessee is related to its core business or its residual income which is required to be taxed under the head ‘Income from other sources’. Since the Assessing Officer in the instant case has not conducted any Printed from counselvise.com 12 ITA No.1217/PUN/2025 enquiry, therefore, the Ld. PCIT set aside the assessment to the file of the Assessing Officer with certain directions. 18. It is the submission of the Ld. Counsel for the assessee that the Assessing Officer, during the course of assessment proceedings, has made proper enquiries before disallowing the claim of deduction u/s 80P of the Act to the extent of Rs.14,95,729/-. Further, the issue stands decided in favour of the assessee by various decisions. It is also his submission that it is not a case of lack of enquiry or no enquiry. Since the Assessing Officer in the instant case after considering the various submissions made by the assessee to the specific queries raised by him has taken a plausible view, therefore, merely because the Ld. PCIT does not agree with the view of the Assessing Officer, the same cannot be a ground for invoking the revisionary powers u/s 263 of the Act since it will amount to change of opinion. 19. We find some force in the above arguments of the Ld. Counsel for the assessee. A perusal of the assessment order shows that the Assessing Officer had in the instant case conducted due enquiries and the assessee has given the details as per para 4 of the assessment order. We find the Assessing Officer at para 5 of the order has mentioned that he has verified the Balance Sheet, Profit and Loss Account and has observed that the society has invested surplus funds with PDCC Bank and with other banks. He has discussed the provisions of section 80P(2)(d) of the Act at para 5 of the assessment order. Thereafter, the Assessing Officer from para 6 onwards of the order has observed as under: Printed from counselvise.com 13 ITA No.1217/PUN/2025 “6. The conditions essential to qualify as a cooperative banks are satisfied by the assessee i.e. (1) the primary object or principal business of which is the transaction of banking business, (2) the paid up share capital and reserves of the assessee are not less than one lakhs of rupees. Therefore, it is clear that assessee society can be treated as a Co-operative Bank and also nature of the activity shows that it has taken the character of the Co-operative banks which are not eligible for deduction u/s 80P by virtue of share capital and surplus reserves and surpluses which are invested in banks other than mentioned in section 80P(2)(d). 7. The principle of mutuality cannot be invoked in the facts and circumstances of the case as the basic requirements of mutuality are missing. 8. The Appeal No.100069 of 2016 dated 05-01-2017 in the case of Karnataka High Court vs. The Totagars Co-Operative Sale Society, the Hon'ble Court has decided whether for the purpose of Section 80P(2)(d) of the Act, a Co-operative Bank should be considered as a Co-operative Society or not. However, the Appeal No.100066/2016 & Connected cases dated 16-06-2017, the Hon'ble Court has discussed the provisions of Section 80P as a whole and held that it is the character and nature of Income which determines its taxability or exemption from taxability and the income which is clearly held to be not exempt and not deductible under Section 80P(2)(a) of the Act by the Hon'ble Supreme Court in the case of respondent assessee, cannot be contrarily held as exempted and deductible merely because the depository bank, with whom the investments were made by the respondent assessee happens to be a co-operative bank. The income by way of interest earned by deposit or investment of Idle or surplus funds does not change its character irrespective of the fact whether such income of interest is earned from a schedule bank or a co-operative bank and thus, clause(d) of Section 80P(2) of the Act would not apply in the facts and circumstances of the present case. The person or body corporate from which such interest income is received will not change its character, viz. Interest income not arising from its business operations, which made it ineligible. I find that the issues are squarely covered by the Hon'ble Supreme Court of India and Hon'ble Karnataka High Court in the case of The Totagars Co-Operative Sale Society. 9. Hence a show cause notice dated 24.03.2022 issued asking why the deduction claimed u/s 80P of the Act should not be disallowed and added to total income of the assessee. In response thereto the assessee filed its submission on 28.03.2022. In its submission assessee states that the assessee society has been continuously in the business of providing credit facilities to its members only and the said facilities are not provided to general public at large. The assessee society has no nominal members. The assessee society has given bifurcation of the deduction claimed u/s 80P of the Act the excerpt of which is reproduced. “The society has earned profit of Rs.37,03,189/- (71.23% of Rs.51,98,918/-) from its activity of providing credit facilities to its members. The said amount is eligible for deduction u/s 80P(2)(a)(i) of the Act. Further, the society derived net income of Rs.14,95,729/- (28.77% of Rs.51,98,918/-) by way of interest/dividend derived from its investments with any other co-operative society. The said amount is eligible for deduction u/s 80P(2)(d) of the Act. In short, the society has claimed Printed from counselvise.com 14 ITA No.1217/PUN/2025 deduction u/s 80P(2)(a)(i) of Rs.37,03,189/- and deduction u/s 80P(2)(d) of Rs.14,95,729/-” The assessee society has earned interest income on deposits made with the co- operative Banks as discussed in above paras. Also assessee society has failed to establish that interest income earned from Co-operative Bank is attributable to the business operation of the Society as decided in the case of The Totagars Co- Operative Sale Society. Hence the interest income earned of Rs.14,95,729/- on which the assessee has claimed deduction u/s 80P(2)(d) is disallowed and treated as income from Other Sources and added back to total income of the assessee. Penalty proceedings u/s. 270A(9)(a) of the IT Act are initiated separately for under reporting of income. (Addition of Rs.14,95,729/-)” 20. Thus, the Assessing Officer in the instant case after considering the various submissions made by the assessee to the queries raised by him and after due application of mind has disallowed an amount of Rs.14,95,729/- on which the assessee has claimed deduction u/s 80P(2)(d) of the Act. Therefore, it is not a case of lack of enquiry or no enquiry. The various decisions relied on by the Ld. Counsel for the assessee shows that the issue of deduction claimed u/s 80P of the Act on the interest income received from the investments made with the nationalized and cooperative banks has been decided in favour of the assessee. Since in the instant case the Assessing Officer after due verification of the details filed by the assessee has taken a plausible view, therefore, merely because the Ld. PCIT does not agree with the view taken by the Assessing Officer, he cannot invoke the powers conferred upon him u/s 263 of the Act. Further, it has been held in various decisions that for applying the provisions of section 263 of the Act, the twin conditions namely the order is erroneous and the order is prejudicial to the interests of the Revenue must be fulfilled. In the instant case although the order may be prejudicial to the interests of the Revenue in view of the order of the Ld. Printed from counselvise.com 15 ITA No.1217/PUN/2025 PCIT, however, the same cannot be considered as erroneous since the issue in hand is covered by various decisions relied on by the Ld. Counsel for the assessee, copies of which are placed in the paper book. Therefore, the twin conditions are not satisfied for invoking the jurisdiction u/s 263 of the Act. In view of the above discussion, we hold that the Ld. PCIT is not justified in invoking the proceedings u/s 263 of the Act. Therefore, the same is set aside and the grounds raised by the assessee are accordingly allowed. 21. In the result, the appeal filed by the assessee is allowed. Order pronounced in the open Court on 16th January, 2026. Sd/- Sd/- (ASTHA CHANDRA) (R. K. PANDA) JUDICIAL MEMBER VICE PRESIDENT पुणे Pune; दिन ांक Dated : 16th January, 2026 GCVSR आदेश की प्रतितिति अग्रेतिि/Copy of the Order is forwarded to: 1. अपील र्थी / The Appellant; 2. प्रत्यर्थी / The Respondent 3. 4. The concerned Pr.CIT, Pune DR, ITAT, ‘A’ Bench, Pune 5. ग र्ड फ ईल / Guard file. आदेशानुसार/ BY ORDER, // True Copy // Assistant Registrar आयकर अपीलीय अदिकरण ,पुणे / ITAT, Pune Printed from counselvise.com 16 ITA No.1217/PUN/2025 S.No. Details Date Initials Designation 1 Draft dictated on 13.01.2026 Sr. PS/PS 2 Draft placed before author 14.01.2026 Sr. PS/PS 3 Draft proposed & placed before the Second Member JM/AM 4 Draft discussed/approved by Second Member AM/AM 5 Approved Draft comes to the Sr. PS/PS Sr. PS/PS 6 Kept for pronouncement on Sr. PS/PS 7 Date of uploading of Order Sr. PS/PS 8 File sent to Bench Clerk Sr. PS/PS 9 Date on which the file goes to the Office Superintendent 10 Date on which file goes to the A.R. 11 Date of Dispatch of order Printed from counselvise.com "