Section 80P deduction on fixed deposit interest sustained, and revision under section 263 was quashed.

Interest income from fixed deposits with banks was treated as eligible for deduction under section 80P on the governing facts and the coordinate bench view. Because the deduction was correctly allowed, the assessment could not be regarded as erroneous and prejudicial to the interests of the revenue, and the conditions for revision under section 263 were not met. The revisionary order was therefore quashed and the original assessment restored.

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Issues: Whether deduction under section 80P of the Income-tax Act, 1961 was allowable on interest income earned from fixed deposits with banks, and whether the revision order under section 263 of the Income-tax Act, 1961 was justified.

Analysis: The assessee's claim for deduction on the impugned interest income was found to be covered by the coordinate bench view on identical facts. The interest was treated as eligible for deduction, and there was no change in facts or law to depart from that view. Once the deduction was correctly allowed, the assessment order could not be characterised as erroneous and prejudicial to the interests of the revenue, so the conditions for invoking revision under section 263 were not satisfied.

Conclusion: The deduction under section 80P on the impugned interest income was held allowable, and the revision under section 263 was held not justified. The revision order was quashed and the original assessment was restored.

Final Conclusion: The assessee succeeded in challenging the revisionary order, and the assessment as originally framed stood revived.

Ratio Decidendi: Where the assessee's interest income is held eligible for deduction under section 80P on the governing facts and law, the assessment cannot be treated as erroneous and prejudicial to the interests of the revenue so as to sustain revision under section 263.

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