H U Gugale Nagari Sahakari Patsanstha Maryadit, Ahmednagar V. Principal Commissioner of Income Tax, Pune-1, Pune

ITA 218/PUN/2023

AI Insights

The case involves H U Gugale Nagari Sahakari Patsanstha Maryadit, a cooperative society engaged in banking activities, which appealed against the order of the Pr. Commissioner of Income Tax, Pune -1. The dispute centered on the deduction of \\u20b982,04,967 under section 80P(2)(i) of the Income-tax Act, 1961, which the AO had allowed after a thorough inquiry during the assessment year 2018-19. The Pr. Commissioner sought to revise this decision, arguing that the interest income from term deposits with other banks should be taxed under section 56 as it was not directly related to the society's banking operations. The ITAT, referencing the Supreme Court's decision in 'Malabar Industrial Co. Ltd. v. CIT', held that the AO's decision was a plausible view and quashed the revisionary order.

• Counselvise Citation: [2023] 140 COUNSELVISE.COM (IT) 136243 (ITAT-PUNE)
• Duration Of Justice: 1 month(s) 27 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 17-04-2023
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: A
• Next Hearing Date: 17-04-2023
• Assessment Year: 2018-2019
• Appeal Filed On: 21-02-2023
• Other Referred Cases: Totgars Co-operative Sale Society Vs ITO, Malabar Industrial Co. Ltd. v. CIT
• Laws Referred To: Income-tax Act, 1961
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Keywords: Revision of order; Assessment record
• Section: 56; 263; 143(3); 80P

Judgement Text

॥ आयकर अपीलीय न्यायाधिकरण, पुणे “ए” न्यायपीठ, पुणे में ॥ ITAT-Pune Page 1 of 5 IN THE INCOME TAX APPELLATE TRIBUNAL, PUNE “A” BENCH, PUNE BEFORE SHRI PARTHA SARATHI CHAUDHURY, JUDICIAL MEMBER AND SHRI G. D. PADMAHSHALI, ACCOUNTANT MEMBER आयकर अपऩल सं. / ITA No. 218/PUN/2023 निर्धारण वर्ा / Assessment Year : 2018-19 H U Gugale Nagari Sahakari Patsanstha Maryadit, Beed Rd., Jamkhed, Dist.-Ahmednagar, Pin – 413201 PAN: AAAAH6035P . . . . . . . अपऩलधथी / Appellant बनाम / V/s Pr. Commissioner of Income Tax, Pune -1 . . . . . . . प्रत्यथी / Respondent द्वारा / Appearances Assessee by : Shri Prasad Bhandari Revenue by : Shri Keyur Patel सपिवधई की तधरऩख / Date of conclusive Hearing : 18/04/2023 घोर्णध की तधरऩख / Date of Pronouncement : 18/04/2023 आदेश / ORDER PER G. D. PADMAHSHALI, AM; This appeal of the assessee for the assessment year [for short ‘AY’] 2018-19 is assailed against the order of the Pr. Commissioner of Income Tax -1, dt. 13/02/2023 passed u/s 263 of the Income-tax Act, 1961 [for short ‘the Act’], which ascended out of assessment order dt. 19/04/2021 passed u/s 143(3) r.w.s 144B by the National e-Assessment Centre, Delhi, [for short ’AO’] H U Gugale Nagari Sahakari Patsanstha Maryadit, ITA No.218/PUN/2023 A.Y. 2018-19 ITAT-Pune Page 2 of 5 2. The solitary issue under the present appeal revolves around the correctness of deduction allowed u/s 80P of chapter VI-A of Act and thereby leaving no room to Ld. PCIT to revise u/s 263 of the Act. 3. We have heard both the parties to dispute and perused the case records in the light of rule 18 of ITAT Rules, 1963 and noted that, the Ld. PCIT after having perused the assessment records sought to revise the action of Ld. AO in allowing the deduction of ₹82,04,967/- u/c VI-A of the Act in the light of Hon’ble Apex Court decision in ‘Totgars Co-operative Sale Society Vs ITO’ for the want of no-inquiry into the eligibility of the claim. Whereas the appellant has set- up the case contending that, the very reason the case of the assessee was subjected scrutiny under CASS was to verify the claim of deduction made u/c VI-A of the Act, and thus the subject matter was duly inquired into and only upon full satisfaction the Ld. AO following judicial precedents has rightly allowed the deduction for interest income u/s 80P(2)(i) of the Act, hence the revisionary power cannot be invoked. H U Gugale Nagari Sahakari Patsanstha Maryadit, ITA No.218/PUN/2023 A.Y. 2018-19 ITAT-Pune Page 3 of 5 4. We find that, the appellant is a co-operative Society, registered under Maharashtra Co-operative Societies Act, 1960 and is engaged in carrying on the business of accepting deposits from its members and providing credit facilities and banking facilities to its members. The assessee’s claim of deduction u/s 80P(2)(i) u/c VI-A of the Act for sum of ₹ 82,04,967/- after a due inquiry therein was accepted in the course of regular assessment framed u/s 143(3) r.w.s. 144(B) of the Act. 5. At this stage, it is pertinent to mention that the ‘interest income’ under question was not the interest received from the members of the assessee society in the course of its business operation but interest accrued / received on the term deposits made by it with other banks or co-operative societies. And for such bullet reason the Ld. PCIT sought this interest to be taxed u/s 56 of the Act holding it as income arising from the surplus funds of the business which were not immediately required for banking business or credit operation of the appellant assessee, hence ineligible for deduction u/s 80P of the Act. H U Gugale Nagari Sahakari Patsanstha Maryadit, ITA No.218/PUN/2023 A.Y. 2018-19 ITAT-Pune Page 4 of 5 6. In the light of aforestated fact and circumstances and after considering the set judicial precedents, we could see hardly any merits in the case and in the argument of Ld. DR, as admittedly the Ld. AO while framing the assessment after his due inquiry into the subject matter had taken a plausible view and allowed the appellant’s claim for deduction u/s 80P(2)(i) of the Act on the interest income earned on investments / deposits with other banks. Therefore exercising the revisional jurisdiction u/s 263 of the Act for dislodging the same by substituting his views is impermissible. Since the view taken by the Ld. AO in allowing the deduction is one of the plausible views and is in consonance with the views solidified by the orders of benches of Tribunal across the country, the 263 revisionary jurisdiction makes no room to enter therein. Therefore following the judicial precedent laid by Hon’ble Apex Court in ‘Malabar Industrial Co. Ltd. v. CIT’ reported in 243 ITR 83 (SC), we find no justification in the action the Ld. PCIT, ergo we quash the revisionary order as unwarranted. H U Gugale Nagari Sahakari Patsanstha Maryadit, ITA No.218/PUN/2023 A.Y. 2018-19 ITAT-Pune Page 5 of 5 7. In result, the appeal of the assessee is ALLOWED. In terms of rule 34 of ITAT Rules, the order pronounced in the open court on this Tuesday 18 th day of April, 2023. -S/d- -S/d- PARTHA SARATHI CHAUDHURY G. D. PADMAHSHALI JUDICIAL MEMBER ACCOUNTANT MEMBER पुणे / PUNE ; दिन ांक / Dated : 25 th day of April, 2023. Ashwini आदेश की प्रधिधलधप अग्रेधिि / Copy of the Order forwarded to : 1.अपील र्थी / The Appellant. 2. प्रत्यर्थी / The Respondent. 3. The Pr.CIT, -1, Pune (MH-India) 4. The ITO-Wd, 2, A’nagar (MH-India) 5. DR, ITAT, Pune Bench ‘A’, Pune 6. ग र्डफ़ इल / Guard File. आिेश नुस र / By Order वररष्ठ दनजी सदिव / Sr. Private Secretary आयकर अपीलीय न्य य दिकरण, पुणे / ITAT, Pune.