Court quashes revision order u/s 263, upholds deduction claim for co-op housing society

The revision order by the ld PCIT u/s 263 of the Act was quashed, and the appeal of the assessee, a co-operative housing society, was allowed. The court found that the ld AO had appropriately considered the deduction claim u/s 80P(2)(d) and had conducted necessary inquiries, leading to a nil income determination after allowing the deduction. The invocation of section 80P(4) was deemed incorrect. The order was pronounced on 12/10/2021.

---

---

Issues:
Validity of assumption of revision jurisdiction u/s 263 of the Act by ld PCIT.

Analysis:
The only issue to be decided was whether the ld PCIT validly assumed revision jurisdiction u/s 263 of the Act. The assessee, a co-operative housing society, claimed deduction u/s 80P of the Act for interest income from Co-operative Banks in the return of income for A.Y. 2015-16. The ld AO conducted limited scrutiny and completed the assessment u/s 143(3) of the Act, allowing the deduction. The ld PCIT sought to revise the assessment, alleging inadequate inquiries by the ld AO. The ld PCIT contended that the ld AO failed to determine the true nature of income, the business activity of the assessee, and the applicability of amended section 80P(4) of the Act.

Upon examination, it was found that the ld AO had conducted necessary inquiries on the issue of deduction u/s 80P. The ld AO considered the scrutiny assessment orders of the preceding years and applied the rule of consistency, leading to a nil income determination after allowing the deduction. The ld PCIT's claim of inadequate inquiries was dismissed as no fresh facts were presented to contradict the previous assessment decisions. Judicial precedents were cited to support the decision, emphasizing that the ld AO had appropriately considered the deduction claim u/s 80P(2)(d). The invocation of section 80P(4) was deemed incorrect as cooperative societies, not being cooperative banks, were entitled to the deduction.

In light of the above observations and legal precedents, the revision order by the ld PCIT u/s 263 of the Act was quashed, and the appeal of the assessee was allowed. The order was pronounced on 12/10/2021.

---