INCOME TAX ACT, 1961

Section 263

Revision under section 263 - Erroneous and prejudicial order - Decision of jurisdictional High Court forming the precedence -

The assessee, being a Co-operative Credit Society, was subjected to scrutiny under section 143(3). Subsequently, Pr.CIT, on examination of records found that the AO erroneously allowed interest income from savings account and other deposits with Co-operative Banks under section 80P(2) which was contrary to the principles enunciated by the Karnataka High Court in one case. However, the assessee submitted that on the similar issue, the jurisdictional High Court took a contrary view. However, Pr. CIT was not convinced and passed order under section 263, having directed the AO to pass assessment order de novo after taking into consideration the lacunae, pointed out supra. Held: Once the issue was verified by the AO and the deduction of the interest income under section 80P(2) had been allowed in line with the decision of the jurisdictional High Court on similar issue in some other case, even though contrary to verdict of some other High Court, there remained hardly any scope for the Pr.CIT to invoke revisional jurisdiction under section 263. Thus, the order of the Pr.CIT under section was set aside.

Followed:The Pr. CIT, ITO Vs. The Totagars Co-Operative Sale Society (2017) 83 Taxmann.com 140 (Karnataka) : 2017 TaxPub(DT) 1748 (Karn-HC), State Bank of India (SBI) Vs. CIT (2016) 72 Taxmann.com 64 (Guj) and The People Co-op. Credit Society Ltd. Vs. The ITO [ITA No. 384/Ahd/2020, dt. 21-2-2022]

REFERRED :

FAVOUR : In favour of the assessee.

A.Y. :

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