PCIT-1 Vs Kutch District Co. Op. Milk Producers Union Ltd (Gujarat High Court)
In the matter abovementioned Gujarat HC have dismissed appeal filed by the revenue against the order passed by ITAT quashing the order u/s 263. The Assessee, a co-operative society, filed its return for AY 2017-18 at Rs. 2,47,97,470/- after claiming a deduction of Rs. 5,85,90,142/- u/s 80P. The case was selected for complete scrutiny and assessment was concluded under Section 143(3) at Rs. 2,61,44,050/, by making an addition of Rs. 13,46,581/- u/s 36(1)(va) r.w.s. Section 2(24)(x). During the relevant assessment year, the assessee derived interest income from Co-operative Banks amounting to Rs. 5,60,55,842/- and claimed a deduction under Section 80(2)(d). Based on this, remedial action was initiated u/s 263. As a result, the Principal CIT-1, Rajkot, passed an order u/s 263, holding that the assessment order was erroneous in relation to the issue of deduction on interest income u/s 80(2)(d). ITAT allowed appeal filed by the assessee and quashed order u/s 263. Revenue preferred appeal before high court.
It is argued on behalf of revenue that it is apparent from the assessment order that AO had not applied his mind regarding the claim of the Assessee for deduction u/s Section 80(P)(2)(d). Therefore, the assessment Order must be held to have been passed without due verification /inquiry by the then AO. Therefore, the present case should be squarely covered by Clause (a) and Clause (d) to explanation 2 of Section 263.
