PCIT Vs Ashwinkumar Arban Co Operative Society Ltd. (Gujarat High Court)
The Gujarat High Court considered Revenue appeals challenging the ITAT’s decision quashing revision proceedings initiated under Section 263 of the Income-tax Act, 1961 in relation to deduction claimed under Section 80P(2)(d) on interest earned by cooperative societies from investments made with cooperative banks. The Revenue contended that, in view of Section 80P(4), cooperative banks were excluded from the benefit of Section 80P and, therefore, such interest was not eligible for deduction. The assessees argued that Section 80P(4) applies only to cooperative banks claiming deduction for themselves and does not disentitle a cooperative society from claiming deduction under Section 80P(2)(d) on interest received from investments with a cooperative bank, which is itself a cooperative society. The High Court observed that the controversy was no longer res integra in light of earlier decisions of the Court and the Supreme Court. It held that the exclusion contained in Section 80P(4) applies only to cooperative banks claiming deduction under Section 80P and does not affect the entitlement of a cooperative society to deduction under Section 80P(2)(d). The Court further held that a cooperative bank being a cooperative society does not cease to be so for the purposes of Section 80P(2)(d), and in the absence of any amendment to that provision, deduction cannot be denied. Consequently, the Court held that the PCIT was not justified in invoking revisional jurisdiction under Section 263, as the assessment order was neither erroneous nor prejudicial to the interests of the Revenue. The ITAT had rightly set aside the revision order, the substantial questions of law were answered in favour of the assessees, and the Revenue’s tax appeals were dismissed.
