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of <h1>Tribunal upholds deduction for interest income from cooperative banks under Sec. 80P(2)(d)</h1> <h3>Pune Vibhag Madhyamik Shikshah Patsanstha Ltd. Versus The Pr. CIT-3, Pune</h3> Pune Vibhag Madhyamik Shikshah Patsanstha Ltd. Versus The Pr. CIT-3, Pune - TMI Issues Involved:1. Correctness of PCIT's revision directions regarding the assessee's sec. 80P deduction claim.2. Eligibility of the assessee for deduction under Sec. 80P(2)(d) on interest income derived from investments/deposits with cooperative banks.Summary:Issue 1: Correctness of PCIT's Revision DirectionsThe appeal concerns the PCIT, Pune-3, Pune's order dated 13.02.2023, which termed the sec. 143(3) regular assessment dated 18.01.2021 as erroneous, causing prejudice to the interest of Revenue. The PCIT's revision order directed a re-examination of the assessee's sec. 80P(2)(a)(i) deduction claim of Rs. 37,93,379/-. The Revenue supported the PCIT's order, arguing that the deduction claim needed re-evaluation.Issue 2: Eligibility for Deduction Under Sec. 80P(2)(d)The tribunal examined whether the assessee's income derived from deposits in various cooperative banks qualifies for deduction under sec. 80P(2)(d). Referring to a recent tribunal order (ITA.No.421/PUN./2022) for the preceding assessment year, which rejected the Revenue's stand, the tribunal noted that the interest income from fixed deposits in cooperative banks does not disqualify for sec. 80P relief. The tribunal cited several judicial precedents and found that the co-operative society's interest income from investments in cooperative banks is eligible for deduction under Sec. 80P(2)(d).The tribunal emphasized that the term 'co-operative society' includes cooperative banks, and thus, interest income derived from such banks qualifies for the deduction. The tribunal also referenced conflicting judicial pronouncements and decided to follow the view favoring the assessee, as per the principle established by the Hon'ble High Court of Bombay in K. Subramanian and Anr. Vs. Siemens India Ltd. and Anr (1985) 156 ITR 11 (Bom).ConclusionThe tribunal concluded that the Assessing Officer had taken a plausible view in allowing the assessee's claim for deduction under Sec. 80P(2)(d). Therefore, the PCIT's exercise of revisional jurisdiction under Sec. 263 was unjustified. The tribunal reversed the PCIT's revision directions and restored the Assessing Officer's assessment order dated 18.01.2021.Order pronounced in the open Court on 25.05.2023.
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