INCOME TAX ACT, 1961

Section 154

Rectification under section 154 - Rectification on basis of subsequent High Court decision - Maintainability -

Assessee claimed deduction under section 80P. AO passed order, disallowing the claim of deduction under section 80P on the ground that assessee was doing the business of banking, and therefore, in view of insertion of section 80P(4) of the Income Tax Act with effect from 1-4-2007, assessee will not be entitled to the deduction under section 80P(2). CIT(A) allowed the appeal by holding that assessee was eligible for deduction under section 80P. Subsequently, CIT(A) issued notice under section 154 proposing to rectify his order passed, in view of judgment of High Court in the case of The Mavilayi Service Co-operative Bank Ltd. v. CIT in (ITA No. 97/2016 Order, dated 19-3-2019) : 2019 TaxPub(DT) 4909 (Ker-HC). Held: CIT(A) had initially allowed the appeals of assessee and granted deduction under section 80P(2). Subsequently, CIT(A) passed orders under section 154 wherein the claim of deduction under section 80P was denied. CIT(A) ought not to have rejected the claim of deduction under section 80P(2) without examining the activities of assessee-society. Therefore, matter was remanded back to AO to examine the activities of assessee and accordingly, grant deduction under section 80P(2).

REFERRED : The Mavilayi Service Co-operative Bank Ltd. v. CIT in (ITA No. 97/2016 Order, dated 19-3-2019) : 2019 TaxPub(DT) 4909 (Ker-HC).

FAVOUR : Against the assessee

A.Y. :

INCOME TAX ACT, 1961

Section 80P(2)

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