VADASINOR PRAGATI SAMAJ CO-OP.CREDIT SOCIETY LTD., MUMBAI V. PR. CIT -18 , MUMBAI

ITA 2539/MUM/2019

• Counselvise Citation: [2019] 111 COUNSELVISE.COM (IT) 9996 (ITAT-MUMBAI)
• Duration Of Justice: 7 month(s) 19 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 13-12-2019
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: F
• Assessment Year: 2014-2015
• Appeal Filed On: 24-04-2019
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: SUSHIL KUMAR PODDAR
• Assessee Lawyers: SANJAY S PARIKH
• Keywords: Co-operative Credit Society
• Section: 143(3); 142(1); 80P; 201; 143(2); 13; 263

Judgement Text

IN THE INCOME-TAX APPELLATE TRIBUNAL F BENCH MUMB AI BEFORE SHRI PAWAN SINGH JUDICIAL MEMBER AND SHRI S. RIFAUR RAHMAN, ACCOUNTANT MEMBER ITA NO. 2539/MUM/2019 (ASSESSMENT YEAR 2014-15 ) M/S VADASINOR PRAGATI SAMAJ CO-OPERATIVE CREDIT SOCIETY LTD. 45/49, 1 ST FLOOR, BABU GENU ROAD, KALBADEVI, MUMBAI- 400002. PAN: AAAAV6905G VS. PRINCIPAL COMMISSIONER OF INCOME TAX 18 MUMBAI. APPELLANT RESPONDE NT APPELLANT BY : SHRI SANJAY S. PARIKH (AR) RESPONDENT BY : SHRI SUSHIL KUMAR PODDAR (CIT-DR) DATE OF HEARING : 04.12.2019 DATE OF PRONOUNCEMEN T : 13.12.2019 ORDERUNDER SECTION 254(1)OF INCOME TAX ACT PER PAWAN SINGH, JUDICIAL MEMBER ; 1. THIS APPEAL BY ASSESSEE IS DIRECTED AGAINST THE ORD ER OF LD. PRINCIPAL COMMISSIONER OF INCOME TAX-18 (LD. PCIT), MUMBAI DA TED 05.03.2019 PASSED UNDER SECTION 263 OF THE INCOME TAX ACT (THE ACT). THE ASSESSEE HAS RAISED THE FOLLOWING GROUNDS OF APPEAL: A) REVISION O/S. 263 1) THE LEARNED PRINCIPAL COMMISSIONER OF INCOME TAX - 18, MUMBAI (PCIT) ERRED ON FACTS AND IN LAW IN HOLDING THAT THE ASSES SMENT ORDER IS ERRONEOUS IN SO FAR AS IT IS PREJUDICIAL TO THE INTERESTS OF REV ENUE AND DIRECTING THE AO TO RE-ASSESS THE INCOME OF THE APPELLANT BY DISALLOWIN G THE DEDUCTION U/S. 80P(2)(D) OF RS.12,87,629/-. 2) THE LEARNED PCIT FAILED TO APPRECIATE THAT THE O RDER OF THE AO WAS NEITHER ERRONEOUS NOR PREJUDICIAL TO THE INTERESTS OF THE REVENUE AND HENCE, COULD NOT BE REVISED U/S. 263. ITA NO. 2539 MUM 201 9-M/S VADASINOR PRAGATI SAMAJ CO-OPERATIVE CREDIT S OCIETY LTD. 2 3) THE LEARNED PCIT FAILED TO APPRECIATE THAT THE O RDER OF THE AO WAS IN LINE IN CERTAIN DECISIONS WHEREIN IT WAS HELD THAT DEDUC TION U/S. 80P(2)(D) WAS ALLOWABLE AND AS TWO VIEWS WERE POSSIBLE ON THE SAI D ISSUE AND THE AO HAVING ADOPTED ONE OF THE VIEWS, THE ORDER OF THE A O COULD NOT BE CONSIDERED TO BE ERRONEOUS. 4) THE APPELLANT PRAYS THAT THE ORDER U/S. 263 MAY BE HELD TO BE BAD IN LAW AND THE DIRECTION OF THE PC IT TO REASSESS THE INCO ME OF THE APPELLANT BY EXCLUDING THE DEDUCTION CLAIMED BY THE APPELLANT U/ S. 80P(2)( D) OF RS. 12,87,629/- MAY BE DELETED. 2. FACTS IN BRIEF AS GATHERED FROM THE ORDERS OF LOWER AUTHORITIES ARE THAT ASSESSEE IS A CO-OPERATIVE SOCIETY, FILED ITS RETUR N OF INCOME FOR ASSESSMENT YEAR 2014-15 ON 27.09.2014 DECLARING NIL INCOME. THE CASE WAS SELECTED FOR SCRUTINY AND AFTER SERVING ST ATUTORY NOTICE UNDER SECTION 143(2) AND 142(1) OF THE ACT. THE ASSESSMEN T WAS COMPLETED UNDER SECTION 143(3) OF THE ACT ACCEPTING THE RETUR N OF INCOME WITHOUT ANY VARIANCE. SUBSEQUENTLY, THE ASSESSMENT WAS REVI SED BY LD. PCIT VIDE ITS ORDER DATED 05.03.2019. 3. BEFORE REVISING THE ASSESSMENT ORDER, THE LD. PCIT BY SHOW-CAUSE NOTICE DATED 05.02.2019. THE OPERATIVE PART OF SHOW -CAUSE NOTICE IS EXTRACTED IN PARA-2 OF THE ORDER. IN THE SHOW-CAUSE NOTICE, THE LD. PCIT NOTED THAT ASSESSING OFFICER HAS ERRONEOUSLY ALLOWE D THE DEDUCTION UNDER SECTION 80P(2)(D) ON THE INTEREST RECEIVED OF M/S VADASINOR PRAGATI SAMAJ CO-OPERATIVE CREDIT SOCIETY LTD. RESU LTING INTO UNDER ASSESSMENT OF TAX. THE ASSESSEE FILED ITS REPLY DAT ED 12.02.2019. THE ESSENCE OF REPLY OF ASSESSEE IS RECORDED BY LD. PCI T IN PARA-3 OF ITS ITA NO. 2539 MUM 201 9-M/S VADASINOR PRAGATI SAMAJ CO-OPERATIVE CREDIT S OCIETY LTD. 3 ORDER AS UNDER. THE MAIN CONTENTS OF THE REPLY OF T HE ASSESSEE ARE AS UNDER; (I) THAT THE ASSESSEE IS A CREDIT CO-OPERATIVE SOCI ETY AND NOT A CO- OPERATIVE BANK WITHIN THE MEANING OF EXPLANATION TO SECTION 80P(4) OF THE ACT. IT DOES NOT OPERATE LIKE A BANK INASMUCH AS IT DOES NOT ACCEPT FUNDS FROM NON-MEMBERS OR ISSUE CHE QUE BOOKS OR CARRY OUT ANY ACTIVITIES THAT BANKS CARRY OUT. IT A CCEPTS FIXED DEPOSITS AND RECURRING DEPOSITS ONLY FROM ITS MEMBE RS AND GIVES LOANS TO NEEDY MEMBERS UNDER-VARIOUS SCHEMES. THE SURPLUS, IF ANY, OF IDLE FUNDS ARE INVESTED WITH CO-OPERATIVE B ANKS. (II) THAT BOTH MAHARASHTRA STATE CO-OPERATIVE BANK & MUMBAI DISTRICT CENTRAL CO-OPERATIVE BANK ARE ALSO CO-OPER ATIVE SOCIETIES, GOVERNED BY MAHARASHTRA STATE CO-OPERATIVE SOCIETY ACT, 1960. THIS BEING SO, THE ASSESSEE IS QUALIFIED FOR DEDUCT ION U/S 80P(2)(D) IN RESPECT OF ITS INTEREST INCOME DERIVED FROM ITS INVESTMENTS WITH OTHER CO-OPERATIVE SOCIETIES. (III) THAT, WITHOUT PREJUDICE TO THE ABOVE, THE PRO VISIONS OF SECTION 263 OF THE INCOME-TAX ACT DO NOT APPLY IN THIS CASE BECAUSE THE ASSESSING OFFICER HAD FULLY VERIFIED THE FACTS OF T HE CASE BEFORE ALLOWING DEDUCTION U/S 80P(2)(D). (IV) THAT MERELY BECAUSE THE PRINCIPAL COMMISSIONER 'S VIEW IS DIFFERENT FROM THE VIEW HELD BY THE ASSESSING OFFIC ER, THE CONCLUSION CANNOT BE THAT THE LATTER HAS ERRONEOUSL Y ALLOWED DEDUCTION U/S 80P(2)(D) OF THE ACT. WHERE TWO VIEWS ARE POSSIBLE, AND THE ASSESSING OFFICER HAS TAKEN ONE VIEW WITH W HICH THE COMMISSIONERS DOES NOT AGREE, THE ORDER CANNOT BE T REATED AS ERRONEOUS AND PREJUDICIAL TO THE INTERESTS OF REVEN UE. ITA NO. 2539 MUM 201 9-M/S VADASINOR PRAGATI SAMAJ CO-OPERATIVE CREDIT S OCIETY LTD. 4 4. THE REPLY OF ASSESSEE WAS NOT ACCEPTED BY LD. PCIT BY TAKING VIEW THAT IT IS WELL SETTLED RULE OF INTERPRETATION THAT MAY NOT BE OF LEGISLATURE SHOULD BE READ OR USED BY PARLIAMENT SHOULD BE REND ERED NUGATORY. IF THE TERM CO-OPERATIVE SOCIETY IS TO BE READ AS A CO- OPERATIVE BANK, IT WOULD RENDER THE ENTIRE PROVISION REDUNDANT AND NUG ATORY. THE DEDUCTION UNDER SECTION 80P(2)(D) IS ALLOWABLE TO T HE CO-OPERATIVE SOCIETY IN RESPECT OF ANY INCOME BY WAY OF INTEREST OR DIVIDEND DERIVED BY A CO-OPERATIVE SOCIETY FROM ITS INVESTMENT WITH ANY OTHER CO- OPERATIVE SOCIETY. THUS, DEDUCTION IS ALLOWABLE ON INTEREST INCOME, WHICH IS DERIVED FROM INVESTMENT WITH A CO-OPERATIV E SOCIETY AND NOT A CO-OPERATIVE BANK. THE LD. PCIT AFTER DISCUSSING TH E VARIOUS CASE LAW ON THE RATIO THAT AS AND WHEN THE ASSESSING OFFICE R FAILED TO APPLY HIS MIND ON THE FACTUAL ASPECT AVAILABLE ON RECORD, TH E ASSESSMENT ORDER PASSED BY HIM IS ERRONEOUS. THE ASSESSMENT ORDER WA S TREATED AS ERRONEOUS AND PREJUDICIAL TO THE INTEREST OF REVENU E. THE ASSESSMENT WAS SET-ASIDE ON THE ISSUE OF ALLOWABILITY OF DEDUCTION OF INTEREST OF RS. 12,87,629/- UNDER SECTION 80P. THE ASSESSING OFFICE R WAS DIRECTED TO PASS THE ASSESSMENT ORDER AFRESH AFTER FOLLOWING TH E DUE PROCESS AND GRANT OPPORTUNITY TO THE ASSESSEE. AGGRIEVED BY THE ORDER OF LD. PCIT, THE ASSESSEE HAS FILED THE PRESENT APPEAL BEFORE TH IS TRIBUNAL. 5. WE HAVE HEARD THE SUBMISSION OF LD. AUTHORIZED REPR ESENTATIVE (AR) OF THE ASSESSEE AND LD. DEPARTMENTAL REPRESENTATIVE (D R) FOR THE REVENUE ITA NO. 2539 MUM 201 9-M/S VADASINOR PRAGATI SAMAJ CO-OPERATIVE CREDIT S OCIETY LTD. 5 AND PERUSED THE MATERIAL AVAILABLE ON RECORD. THE L D. AR OF THE ASSESSEE SUBMITS THAT THE ASSESSING OFFICER DURING THE ASSES SMENT RAISED QUERY WITH REGARD TO DEDUCTION UNDER SECTION 80P. THE ASS ESSEE FILED ITS DETAILED REPLY BEFORE THE ASSESSING OFFICER, COPY O F WHICH IS PLACED ON RECORD VIDE PAID NO. 14 & 15 OF THE PAPER BOOK. THE LD. AR FOR THE ASSESSEE FURTHER SUBMITS THAT AFTER CONSIDERING THE EXPLANATION OF THE ASSESSEE, THE ASSESSING OFFICER ALLOWED THE DEDUCTI ON OF INTEREST FROM INVESTMENT WITH OTHER CO-OPERATIVE SOCIETY NAMELY M AHARASHTRA STATE CO-OPERATIVE BANK AND MUMBAI DISTRICT CO-OPERATIVE BANK. BOTH THE BANKS/INSTITUTIONS GOVERNED BY MAHARASHTRA CO-OPERA TIVE SOCIETIES ACT AND ACCORDINGLY, THE ASSESSEE IS ENTITLED FOR DEDUC TION UNDER SECTION 80P. 6. THE LD. AR OF THE ASSESSEE FAIRLY SUBMITS THAT THOU GH THERE IS NO DISCUSSION IN THE ASSESSMENT ORDER ABOUT THE DEDUCT ION ALLOWED IN FAVOUR OF ASSESSEE, HOWEVER, THE ORDER WAS PASSED A FTER DUE APPLICATION OF MIND AND THAT THE ORDER IS NEITHER ERRONEOUS NOR PREJUDICIAL TO THE INTEREST OF REVENUE. THE LD. AR OF THE ASSESSEE SUB MITS THAT IN A NUMBER OF DECISIONS INCLUDING SPECIAL BENCH OF AHMEDABAD T RIBUNAL IN ACIT VS. PEOPLES CO-OPERATIVE CREDIT SOCIETY HELD THAT A CO-OPERATIVE SOCIETY PROVIDING CREDIT FACILITY TO ITS MEMBER CAN NOT BE SAID TO BE CARRYING OF BANKING BUSINESS AND THEREFORE, CANNOT BE DENIED BENEFIT UNDER SECTION 80P(2)(A)(I) BY INVOKING THE PROVISIO N OF SECTION 80P(4). ITA NO. 2539 MUM 201 9-M/S VADASINOR PRAGATI SAMAJ CO-OPERATIVE CREDIT S OCIETY LTD. 6 IN SUPPORT OF HIS SUBMISSION, THE LD. AR OF THE ASS ESSEE RELIED UPON THE FOLLOWING DECISIONS: MALABAR INDUSTRIAL CO. LTD. VS. CIT [2000] 243 ITR 83(SC), CIT VS. MAX INDIA LTD. [2007] 295 ITR 282 (SC), QUEPEM URBAN CO-OPERATIVE CREDIT SOCIETY LTD. VS. A CIT [2015] 377 ITR 272 (BOM. HC). PCIT VS. GOA PWD STAFF CO-OPERATIVE CREDIT SOCIETY LTD. [2016] 242 TAXMAN 0422 (BOM. HC.) CIT VS. GABRIEL INDIA LTD. [1993] 203 ITR 108 (BOM. ) CIT VS. JAFARI MOMIN VIKASH CO-OP. CREDIT SOCIETY L TD. [2014] 362 ITR 331 (GUJ. HC. ACIT VS. METROCITY CRIMINAL COURTS EMPLOYEES MUTUAL LY AIDED CO- OP. CREDIT SOCIETY LTD. [2015] 39 ITR (TRIB.) HYDER ABAD. IN LADY RATAN TOWER COOPERATIVE HOUSING SOCIETY LTD . ACIT VS. PEOPLES CO-OPERATIVE CREDIT SOCIETY LTD. [2019] 180 DTR (AHD) (SB) (TRIB.) 444. 7. ON THE OTHER HAND, THE LD. DR FOR THE REVENUE SUPPO RTED THE ORDER OF LD. PCIT. THE LD. DR FOR THE REVENUE INVITED OUR ATTENT ION ON THE CONTENTS OF ASSESSMENT ORDER AND WOULD SUBMIT THAT THERE IS NO REFERENCE OR CONSIDERATION ABOUT THE ISSUE RAISED BY LD. PCIT, A BOUT SHOW-CAUSE NOTICE ON THE ISSUE OF ALLOWABILITY OF CLAIM UNDER SECTION 80P. FURTHER, THE ASSESSMENT ORDER IS SILENT ABOUT THE ALLOWANCE OF DEDUCTION UNDER SECTION 80P. THE RELIANCE OF LD. AR OF THE ASSESSEE ON THE ALLEGED EXPLANATION FURNISHED IN THE QUERY RAISED BY ASSESS ING OFFICER. THE LD DR FOR THE REVENUE SUBMITS THAT PERUSAL OF COPY OF THE ALLEGED WHICH IS ITA NO. 2539 MUM 201 9-M/S VADASINOR PRAGATI SAMAJ CO-OPERATIVE CREDIT S OCIETY LTD. 7 AVAILABLE AT PAGE NO. 14 & 15 OF THE PAPER BOOK, T HERE IS NO ACKNOWLEDGEMENT OF ASSESSING OFFICER OR PROOF OF FI LING THE SAME BEFORE THE ASSESSING OFFICER. THIS REPLY DOES NOT B EAR THE DATE OR SIGNATURE OF ASSESSING OFFICER ON ITS ACKNOWLEDGEME NT. THE LD. DR FURTHER SUBMITS THAT THE ASSESSMENT ORDER IS PASSED WITHOUT EXAMINING THE ISSUE. THE LD. PCIT IN ITS ORDER HAS CLEARLY SP ELT OUT BY REFERRING THE DECISION OF GEE VEE ENTERPRISES VS. ADDL. CIT (99 I TR 375) THAT ASSESSING OFFICER IS NOT ONLY ADJUDICATOR BUT ALSO AN INVESTIGATOR, CANNOT REMAIN PASSIVE IN THE FACE OF A RETURN WHICH IS APP ARENTLY IN ORDER BUT CALLS FOR FURTHER INQUIRY IN THE FACTS AND CIRCUMST ANCES OF THE CASE, THE WORD ERRONEOUS PRESCRIBED IN SECTION 263 INCLUDES THE FAILURE TO MAKE SUCH AN ENQUIRY BY ASSESSING OFFICER. THE ASSESSING OFFICER HAS NOT APPLIED HIS MIND ON FACTUAL ASPECT OF THE RECORD AN D ALLOWED THE DEDUCTION WITHOUT ENQUIRY AND THE ASSESSMENT ORDER IS NOT ONLY ERRONEOUS AND PREJUDICIAL TO THE INTEREST OF REVENU E. THE LD. DR SUBMITS THAT THE TWIN CONDITION AS ENUNCIATED BY CELEBRATED CASE OF MALABAR INDUSTRIAL CO. LTD. VS. CIT (243 ITR 83) ARE CLEARL Y MADE OUT IN THE PRESENT CASE. THE LD. CIT-DR PRAYED FOR DISMISSAL O F APPEAL. 8. IN THE REJOINDER SUBMISSION, THE LD. AR OF THE ASSE SSEE SUBMITS THAT LD. PCIT WHILE ISSUING SHOW-CAUSE NOTICE UNDER SECTION 263 DATED 05.02.2019 HAS CLEARLY WRITTEN IN ITS SHOW-CAUSE NO TICE THAT THE ASSESSING OFFICER ERRONEOUSLY ALLOWED THE DEDUCTION . THUS, THE ITA NO. 2539 MUM 201 9-M/S VADASINOR PRAGATI SAMAJ CO-OPERATIVE CREDIT S OCIETY LTD. 8 LANGUAGE OF SHOW-CAUSE NOTICE ITSELF SUGGESTS THAT THE ISSUE OF DEDUCTION UNDER SECTION 80P WAS CONSIDERED BY ASSESSING OFFIC ER WHILE PASSING THE ASSESSMENT ORDER. NOW, THE QUESTION IS IF THE D EDUCTION UNDER SECTION 80P IS ALLOWED WITHOUT EXAMINING THE ISSUE OR ALLOW ED ERRONEOUSLY. 9. THE LD. AR OF THE ASSESSEE FURTHER SUBMITS THAT THE HONBLE JURISDICTIONAL HIGH COURT CIT VS. GABRIEL INDIA LTD . (2103 ITR 108 (BOM) HELD THAT IF THE ASSESSING OFFICER ACTING IN ACCORDANCE WITH LAW MAKES A CERTAIN ASSESSMENT, THE SAME CANNOT BE BRAN DED AS ERRONEOUS BY LD. PCIT SIMPLY BECAUSE OF ACCORDING TO HIM, THE OR DER SHOULD HAVE BEEN WRITTEN MORE ELABORATELY. THIS SECTION DOES NO T VISUALIZE THE CASE OF THE JUDGMENT OF THE LEARNED COMMISSIONER FOR THA T OF INCOME TAX OFFICER, WHO PASSED THE ORDER, UNLESS THE DECISION IS HELD TO BE ERRONEOUS. IT WAS FURTHER HELD THAT WHEN THE ITO EX AMINED THE ACCOUNTS, MAKE ENQUIRY APPLIED HIS MIND TO THE FACT AND DETER MINED THE INCOME EITHER BY ACCEPTING THE ACCOUNTS OR BY MAKING SOME ESTIMATION HIMSELF. AND THE COMMISSIONER ON PERUSAL IS OF OPINION THAT THE ESTIMATION MADE BY OFFICER IS ON THE LOWER SIDE AND LEFT TO THE COM MISSIONER, HE WOULD HAVE ESTIMATED THE FIGURE ON HIGHER SIDE, THE ORDER OF ASSESSING OFFICER CANNOT BE SUBSTITUTED BY COMMISSIONER. THE LD. AR O F THE ASSESSEE FURTHER SUBMITS THAT ON MERIT/DEDUCTION UNDER SECTI ON 80P THIS CASE IS CLEARLY COVERED BY THE DECISION OF TRIBUNAL. ITA NO. 2539 MUM 201 9-M/S VADASINOR PRAGATI SAMAJ CO-OPERATIVE CREDIT S OCIETY LTD. 9 PCIT VS. GOA PWD STAFF CO-OPERATIVE CREDIT SOCIETY LTD. [2016] 242 TAXMAN 0422 (BOM. HC.) CIT VS. JAFARI MOMIN VIKASH CO-OP. CREDIT SOCIETY L TD. [2014] 362 ITR 331 (GUJ. HC. ACIT VS. METROCITY CRIMINAL COURTS EMPLOYEES MUTUAL LY AIDED CO- OP. CREDIT SOCIETY LTD. [2015] 39 ITR (TRIB.) HYDER ABAD. ACIT VS. PEOPLES CO-OPERATIVE CREDIT SOCIETY LTD. [2019] 180 DTR (AHD) (SB) (TRIB.) 444. 10. WE HAVE CONSIDERED THE SUBMISSION OF THE LEARNED RE PRESENTATIVE OF THE PARTIES AND HAVE GONE THROUGH THE ORDERS OF AUTHORI TIES BELOW. IN THE RETURN OF INCOME, THE ASSESSEE CLAIMED INTEREST INC OME UNDER THE HEAD INCOME FROM OTHER SOURCES OF RS. 12,87,629/- AND AF TER SETTING UP OF LOSS OF RS. 2,87,471/-, THE ASSESSEE CLAIMED DEDUCT ION UNDER CHAPTER- VA OF RS. 10,00,158/-. THE INCOME UNDER THE HEAD I NCOME FROM OTHER SOURCES THE ASSESSEE CLAIMED IT AS DEDUCTABLE UNDE R SECTION 80P AS INTEREST INCOME FROM COOPERATIVE SOCIETIES. THE ASS ESSING OFFICER WHILE PASSING THE ASSESSMENT ORDER ACCEPTED THE RET URN OF INCOME. ADMITTEDLY, NO DISCUSSION ON THE DISALLOWANCE UNDER CHAPTER-VA, INCLUDING THE DEDUCTION UNDER SECTION 80P IN THE AS SESSMENT ORDER. THE LD. PCIT ISSUED SHOW-CAUSE NOTICE UNDER SECTION 263 FOR PROPOSED REVISION OF ASSESSMENT ORDER VIDE NOTICE DATED 05.0 2.2019. IN THE SHOW- CAUSE NOTICE APART FROM THE OTHER CONTENTS, THE LD. PCIT HAS MENTIONED THAT ASSESSING OFFICER HAS ERRONEOUSLY ALLOWED TH E DEDUCTION UNDER SECTION 80P(2)(D) ON INTEREST RECEIVED FROM M/S. VA DASINOR PRAGATI ITA NO. 2539 MUM 201 9-M/S VADASINOR PRAGATI SAMAJ CO-OPERATIVE CREDIT S OCIETY LTD. 10 SAMAJ CO-OPERATIVE CREDIT SOCIETY LTD. (SUPRA). THE ASSESSEE FILED ITS DETAILED REPLY VIDE REPLY DATED 12.02.2019, SUMMARY OF WHICH IS ALREADY CORRECTLY RECORDED BY LD. PCIT AS WE HAVE REFERRED ABOVE IN PARA-14 & 15. THE CONTENTION OF ASSESSEE WAS NOT ACCEPTED BY PCIT BY TAKING VIEW THAT AFTER INSERTION OF SUB-SECTION (4) OF SECTION 80P W.E.F. 01.04.2007, THE LEGISLATURE HAS EXCLUDED CO-OPERATIVE BANK FROM THE AMBIT OF SECTION 80P, WHICH DEALS WITH THE DEDUCTION IN RESP ECT OF CO-OPERATIVE SOCIETIES. THE LD. PCIT ALSO OPINED THAT THE MANDAT E OF LEGISLATURE SHOULD BE READ THAT NO WORD USED BY PARLIAMENT SHOU LD BE RENDERED NUGATORY AND IF THE WORD CO-OPERATIVE SOCIETY IS TO BE READ AS CO- OPERATIVE BANK, IT WOULD BE RENDERED THE ENTIRE PRO VISION NUGATORY. IT IS FURTHER HELD THAT DEDUCTION UNDER SECTION 80P(2)(D) IS ALLOWABLE TO THE CO-OPERATIVE SOCIETY IN RESPECT OF INTEREST OR DIVI DEND BY A CO-OPERATIVE SOCIETY FROM ITS INVESTMENT WITH OTHER CO-OPERATIVE SOCIETY. 11. THE HONBLE JURISDICTIONAL HIGH COURT IN QUEPEM URB AN CO-OPERATIVE CREDIT SOCIETY LTD. VS. ACIT (377 ITR 272) HELD THA T CO-OPERATIVE SOCIETY COULD NOT BE REGARDED AS A CO-OPERATIVE BAN K, MERE FACT THAT INSIGNIFICANT PROPORTION OF REVENUE WAS COMING FROM NON-MEMBERS AND WAS ENTITLED FOR DEDUCTION UNDER SECTION 80P(2)((A) (I). 12. FURTHER, THE COORDINATE BENCH OF MUMBAI TRIBUNAL IN LADY RATAN TOWER C-OPERATIVE HOUSING SOCIETY LTD VS ITO (SUPRA), WHI LE FOLLOWING THE DECISION OF COORDINATE BENCH IN KALIANDAS UDYOG BHA VAN PREMISES CO- ITA NO. 2539 MUM 201 9-M/S VADASINOR PRAGATI SAMAJ CO-OPERATIVE CREDIT S OCIETY LTD. 11 OP. SOCIETY LTD. (ITA NO. 6547/MUM/2017 DATED 25.04 .2018) HELD THAT INCOME BY WAY OF INTEREST DERIVED BY ASSESSEE FROM ITS INVESTMENT HELD THAT OTHER CO-OPERATIVE SOCIETY SHALL BE DEDUCTED I N COMPUTING THE TOTAL INCOME. WE HAVE FURTHER NOTED IN KALIANDAS UDYOG B HAVAN PREMISES CO-OP. SOCIETY LTD.(SUPRA) THE DECISION WAS RENDERE D BY MAKING RELIANCE UPON THE DECISION OF HONBLE KARNATAKA IN PCIT & ANR VS. TOTAGARS COPERATIVE SALE SOCIETY (392 ITR 74) AND H ONBLE GUJARAT HIGH COURT IN SBI VS. CIT (389 ITR 578 (GUJ.) ALSO HELD THAT INTEREST INCOME EARNED BY ASSESSEE ON INVESTMENT HELD THAT A CO-OPERATIVE BANK WOULD BE ELIGIBLE FOR CLAIM OF DEDUCTION UNDER SECT ION 80P(2)(D). 13. CONSIDERING THE AFORESAID LEGAL PREPOSITION, WE ARE OF THE VIEW THAT ASSESSEE IS ENTITLED FOR DEDUCTION ON INTEREST EARN ED FROM CO-OPERATIVE BANK WHICH ARE PRIMARILY A CO-OPERATIVE SOCIETY, TH US, IN OUR VIEW, THE DEDUCTION ALLOWED BY ASSESSING OFFICER ARE IN ACCOR DANCE WITH VARIOUS JUDICIAL PRONOUNCEMENT, WHICH CANNOT BE BRANDED AS ERRONEOUS. THE JURISDICTIONAL HIGH COURT IN GABRIEL INDIA LTD. (SU PRA) HELD THAT POWER OF SUO-MOTO REVISION UNDER SECTION 263 OF THE ACT, IS IN THE NATURE OF SUPERVISORY JURISDICTION AND CAN BE EXERCISED, IF T HE CIRCUMSTANCES SPECIFIED THEREIN EXIST. TWO CIRCUMSTANCES MUST EXI ST TO ENABLE THE COMMISSIONER TO EXERCISE THE POWER OF REVISION UNDE R THIS SUB-SECTION VIZ. (I) THE ORDER SHOULD BE ERRONEOUS; AND (II) BY VIRTUE OF THE ORDER BEING ERRONEOUS AND PREJUDICIAL MUST HAVE BEEN CAUS ED TO THE INTEREST OF ITA NO. 2539 MUM 201 9-M/S VADASINOR PRAGATI SAMAJ CO-OPERATIVE CREDIT S OCIETY LTD. 12 REVENUE. FURTHER, THE ORDER CANNOT BE TERMED AS ERR ONEOUS UNLESS IT IS NOT IN ACCORDANCE WITH LAW, IF THE ASSESSING OFFICER AC TING IN ACCORDANCE WITH LAW MAKE CERTAIN ASSESSMENT, THE SAME CANNOT B E BRANDED AS ERRONEOUS BY COMMISSIONER SIMPLY BECAUSE, ACCORDING TO HIM, HE ORDER SHOULD HAVE BEEN WRITTEN MORE ELABORATELY. 14. AS WE HAVE NOTED ABOVE, THE ORDER PASSED BY ASSESSI NG OFFICER, THOUGH NOT SPEAKING, HOWEVER, IS IN ACCORDANCE WITH LAW, S O FAR AS DEDUCTION UNDER SECTION 80P IS CONCERNED. THEREFORE, IN OUR C ONSIDER VIEW, THE TWIN CONDITION AS ENUNCIATED UNDER SECTION 263 ARE NOT FURNISHED IN THE PRESENT CASE. THEREFORE, THE LD. PCIT WAS NOT JUSTI FIED IN TREATING THE ASSESSMENT ORDER FOR REVISING IT BY EXERCISING POWE R UNDER SECTION 263. 15. SO FAR AS OBJECTION/STATEMENT OF CIT-DR IS CONCERNE D THAT THE ASSESSING OFFICER HAS NOT MADE PROPER ENQUIRY OR THE ORDER IS SILENT ABOUT THE DEDUCTION CLAIMED AND ALLOWED TO THE ASSESSEE UNDER SECTION 80P. AS WE HAVE NOTED EARLIER THAT LD. PCIT WHILE ISSUING SHOW -CAUSE NOTICE HIMSELF HAS RECORDED IN THE SHOW-CAUSE NOTICE ITSELF THAT A SSESSING OFFICER HAS ERRONEOUSLY ALLOWED THE DEDUCTION UNDER SECTION 80P (2)(D) ON INTEREST RECEIVED FROM A CREDIT CO-OPERATIVE SOCIETY. HENCE, WE ARE NOT CONVINCED WITH THE SUBMISSION THAT ISSUE WAS NOT EX AMINED BY ASSESSING OFFICER AS THE LANGUAGE OF SHOW-CAUSE NOT ICE ITSELF SUGGEST THAT ASSESSING OFFICER ERRONEOUSLY ALLOWED THE DEDU CTION. HENCE, THE ITA NO. 2539 MUM 201 9-M/S VADASINOR PRAGATI SAMAJ CO-OPERATIVE CREDIT S OCIETY LTD. 13 GROUNDS OF APPEAL RAISED BY ASSESSEE ARE ALLOWED, R ESULTANTLY, THE REVISION ORDER PASSED BY LD. PCIT IS QUASHED. 16. IN THE RESULT, APPEAL OF THE ASSESSEE IS ALLOWED. ORDER PRONOUNCED IN THE OPEN COURT ON 13/12/2019. SD/- SD/- S. RIFAUR RAHMAN PAWAN SINGH ACCOUNTANT MEMBER J UDICIAL MEMBER MUMBAI, DATE: 13.12.2019 SK COPY OF THE ORDER FORWARDED TO : 1. ASSESSEE 2. RESPONDENT 3. THE CONCERNED CIT(A) 4. THE CONCERNED CIT 5. DR F BENCH, ITAT, MUMBAI 6. GUARD FILE BY ORDER, DY./ASST. REGISTRAR ITAT, MUMBAI