Revisional Jurisdiction not valid in absence of Error in Assessment Order, Claim of Deduction u/s 80P(2)(a)(i) allowable: ITAT [Read Order]

Revisional Jurisdiction not valid in absence of error in assessment order, the Ahmedabad Bench of the Income Tax Appellate Tribunal (ITAT) has held claim of deduction u/s 80P(2)(a)(i) of the Income Tax Act,1961 allowable.

M/s Laxmi Bachat Sharafi Sahkari Mandali Ltd, the assessee challenged the order passed by the Pr. Commissioner of Income [Pr.CIT] dated 20.3.2019 in the exercise of his revisionary jurisdiction under section 263 of the Income Tax Act, 1961 (the Act).

The assessee is a cooperative society engaged in the activity of providing loans and accepting deposits from its members and they filed the return of income declaring Nil income after claiming deduction u/s 80P of the Income Tax Act,1961 at Rs.24,87,788/- which was accepted by the Assessing Officer (AO) in the assessment framed u/s 143(3) of the Act, wherein minor addition of Rs.35,138/- was made on account of excess deduction claimed u/s 80P(2)(c)(ii) of the Act.

On verification of records, the PCIT noted that the assessee had received substantial interest on Fixed deposits from various banks including ADC Bank and Mehsana Urban Bank which did not qualify for deduction u/s 80P(2)(d) of the Act and he initiated revisionary proceedings u/s 263 of the Act.

 The PCIT dismissed the contentions of the assessee and held that the assessment order passed was erroneous and prejudicial to the interest of the Revenue since the AO had allowed the claim of the assessee for deduction of interest income u/s 80P(2)(a)( i) of the Act.

Shri Mehul Thakkar, the counsel for the assessee contended that the order passed under section 263 of the Act, without giving due opportunity of hearing to the assessee to explain its case, and when even the Pr.CIT was not sure if there is any error in the order of the AO in allowing the claim of deduction in respect of interest earned from the FDRs in the bank and without dealing with the claim of the assessee that the deduction was alternately allowable u/s 80P(2) (d) of the Act.

A Coram of Smt. Annapurna Gupta, Accountant Member and Smt. Madhumita Roy, Judicial Member observed that the assessee’s claim was found allowable under section 80P(2)(d) of the Act, the allowance of deduction u/s 80P(2)(a)(i) of the Act by the AO cannot be said to be to the prejudice of the Revenue.

The Tribunal while allowing the appeal, set aside the order passed under section 263 of the Act. Shri Alokkumar, CIT-DR appeared for the respondent.

To Read the full text of the Order CLICK HERE

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