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The Tax Publishers2020 TaxPub(DT) 4380 (Bang-Trib) INCOME TAX ACT, 1961
Section 263
Even though there was justification for invoking powers under section 263 to make verification as to whether the principle of mutuality as held in Citizen Co-operative Society Ltd. was satisfied in case of assessee, other directions of Pr. CIT were uncalled for and AO was granted liberty to adopt his line of enquiry while deciding issue in the set aside proceedings, limited to the ratio laid down by Supreme Court in Citizen Co-operative Society Ltd..
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Revision under section 263 - Validity of invoking powers under section 263 - Allowability of deduction under section 80P(2)(a)(i), whether erroneous and prejudicial to the interests of revenue - Consideration of Supreme Court's decision in Citizen Co-operative Society Ltd.
Issue was as regards validity of jurisdiction assumed by Pr. CIT in exercise of his powers under section 263. Pr. CIT held that order of AO in allowing deduction under section 80P(2)(a)(i) was erroneous and prejudicial to the interests of the revenue because while allowing deduction, AO did not consider decision of Supreme Court in Citizen Co-operative Society Ltd. It was held by Supreme Court that income derived from providing credit facilities to members who are primary members of the society alone would be eligible for deduction under section. 80P(2)(a)(i) and if the income is derived from providing credit facilities to nominal members, such deduction should not be allowed. Held: Though there was justification for invoking powers under section 263 to make verification as to whether the principle of mutuality was satisfied in case of assessee in the light of decision in Citizen Co-operative Society Ltd., other directions of Pr. CIT were uncalled for. Thus, it was directed that assessment vis-a-vis section 80P(2)(a)(i) would be a de novo assessment and AO would be free to adopt his line of enquiry while deciding issue in the set aside proceedings, limited to the ratio laid down by Supreme Court in Citizen Co-operative Society Ltd.
Relied:Citizen Co-operative Society Ltd. v. Astt. CIT (2017) 397 ITR 1 (SC) : 2017 TaxPub(DT) 2053 (SC).
REFERRED : Tumkur Merchants Souharda Credit Cooperative Limited v. ITO (2015) 55 Taxmann.com 447 (Karn) : 2015 TaxPub(DT) 2857 (Karn-HC) and CIT v. Biluru Gurubasava Pattina Sahakari Sangha Niyamitha Bagalkot (2015) 369 ITR 86 (Karn) : 2015 TaxPub(DT) 429 (Karn-HC).
FAVOUR : Partly in assessee's favour.
A.Y. : 2014-15
IN THE ITAT, BANGALORE BENCH
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