Dharmaveer Sambhaji Nagari Sahakari Pat Maryadit Vs PCIT (ITAT Pune)
Revision Under Section 263 Quashed – ITAT Pune Upholds 80P Deduction on Bank Interest and Bars PCIT from Substituting His View
The Pune Bench of the ITAT allowed the assessee-society’s appeal and quashed the revisionary order passed u/s 263, holding that the Principal CIT had wrongly assumed jurisdiction by merely substituting his opinion for a plausible view already taken by the Assessing Officer.
The assessee, a co-operative credit society, had claimed deduction of ₹51.98 lakhs u/s 80P. During limited scrutiny, the AO examined investments, applied the Supreme Court ruling in Totgars, and disallowed ₹14.95 lakhs treating it as interest from surplus funds, while allowing deduction of ₹37.03 lakhs as income from providing credit facilities to members.
The PCIT invoked section 263 alleging lack of enquiry and directed fresh examination of the entire interest income of ₹1.66 crore under sections 80P(2)(a), 80P(2)(d) and 80P(4).
The Tribunal held that:
- The AO had made detailed enquiries, examined accounts, issued show-cause notice, considered Totgars and other case law, and consciously restricted the deduction.
- This was not a case of “no enquiry” or “lack of enquiry”, but a case of a plausible view taken after due application of mind.
- Section 263 cannot be invoked merely because the PCIT holds a different view or wants a deeper enquiry.
- Numerous Tribunal and High Court decisions support allowability of deduction u/s 80P(2)(d) on interest from co-operative banks.
Since the assessment order was neither erroneous nor prejudicial, the twin conditions of section 263 were not satisfied.
Accordingly, the ITAT set aside the PCIT’s revision order and restored the original assessment, fully allowing the assessee’s appeal.
FULL TEXT OF THE ORDER OF ITAT PUNE
