INCOME TAX: Where assessee a co-operative society claimed deduction under section 80P(2)(d) on interest income earned from deposits placed with a co-operative bank and Assessing Officer after due examination of facts allowed said claim, Principal Commissioner was not justified in invoking revisionary jurisdiction merely on ground that interest income was not earned from any other co-operative society but from scheduled commercial banks
INCOME TAX: Provisions of section 80P(4) is relevant only where assessee is a co-operative bank and claims deduction under section 80P and not where assessee is a co-operative society
[2024] 159 taxmann.com 1253 (Chandigarh – Trib.)
IN THE ITAT CHANDIGARH BENCH ‘B’
Jagadhri Co-operative Marketing Cum Processing Society Ltd.
v.
Principal Commissioner of Income-tax*
VIKRAM SINGH YADAV, ACCOUNTANT MEMBER
AND AAKASH DEEP JAIN, VICE PRESIDENT
IT APPEAL NO. 210 (CHD.) OF 2023
[ASSESSMENT YEAR 2018-19]
JANUARY 12, 2024
I. Section 80P of the Income-tax Act, 1961 – Deductions – Income of co-operative societies (Interest income) – Assessment year 2018-19 – Assessee was a co-operative society deriving income from marketing of agriculture produce service charges for purchase of wheat and paddy for HAFED, income from supplying weedicides and fertilizer to its members, interest income on FDRs, dividend income from KHRIBCO IFFCO etc. and rent from godowns etc. – It filed its return of income under section 139(1) declaring NIL income after claiming deduction under section 80P – Assessing Officer allowed deduction under section 80P(2)(d) in respect of interest income received from Co-operative bank – Commissioner invoked revisionary jurisdiction on ground that Assessing Officer had erred in not correctly appreciating that interest income was not earned from any specified co-operative activity but from investment of surplus and idle funds with Commercial and Co-operative Banks and thus, interest income was not eligible for deduction under section 80P(2)(d) – Whether since Assessing Officer had allowed claim of assessee under section 80P(2)(d) after due examination of facts he had rightly followed dicta laid down by jurisdictional High Court that nature and source of investment was not relevant for claiming deduction under section 80P(2)(d) and what was relevant to examine was whether there was any income derived by a co-operative society from any investment with another co-operative society – Held, yes – Whether therefore, impugned order passed by Assessing Officer could not be held as erroneous insofar as prejudicial to interest of revenue – Held, yes [Paras 22 and 25] [In favour of assessee]
II. Section 80P of the Income-tax Act, 1961 – Deductions – Income of co-operative societies (Interest income) – Assessment year 2018-19 – Whether provisions of section 80P(4) is relevant only where assessee is a co-operative bank and claims deduction under section 80P and not where assessee is a co-operative society – Held, yes [Para 24] [In favour of assessee]
In the context of Indian tax law, Section 263 should not be invoked to revise an AO’s order allowing a Section 80P deduction on interest income from deposits if the AO has thoroughly examined the facts. The rationale is that Section 263 is meant for correcting orders prejudicial to revenue, not for reassessing cases where the AO has made a considered decision. Judicial precedents support this view, emphasizing that mere existence of a different opinion is not grounds for revision under Section 263. Therefore, unless the order is shown to be erroneous in a way that harms revenue interests, the AO’s judgment should stand, respecting the principle of administrative finality – JSPCO
