Posun Credit Co. Op. Society Limited Vs PCIT (ITAT Ahmedabad)
The Income Tax Appellate Tribunal (ITAT) Ahmedabad ruled in favor of Posun Credit Co-Operative Society Limited in its appeal against the Principal Commissioner of Income Tax (PCIT) regarding the assessment for the 2018-19 financial year. The dispute arose after the PCIT invoked Section 263 of the Income Tax Act, 1961, declaring the original assessment order under Section 143(3) as erroneous and prejudicial to the interest of the revenue. The primary issue concerned the assessee’s claim for deduction under Section 80P(2)(d) on interest income earned from cooperative banks, which was allowed by the Assessing Officer (AO) but questioned by the PCIT.
The PCIT observed that the AO did not conduct adequate inquiries regarding the deduction claimed on interest income from Kaira District Central Co-operative Bank amounting to ₹15,70,347. The PCIT contended that the AO should have considered Section 80P(4), which limits deductions for cooperative societies. Consequently, the PCIT set aside the AO’s assessment and directed a fresh review. However, Posun Credit argued that the deduction was thoroughly examined during the assessment, and the decision was aligned with existing judicial precedents in favor of the assessee, citing case law in support of their position.
