TaxTMI 
TaxTMI 
2023 (8) TMI 1183
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....nt Year 2018-19. 2. The assessee has taken the following grounds of appeals:- "1. The grounds of appeal mentioned hereunder are without prejudice to one another. 2. The order passed by Pr. Commissioner of Income-tax, Rajkot-1 [hereinafter referred as to the "PCIT"] is bad in law, invalid and requires to be quashed, the same may kindly be quashed. 3. The learned PCIT has failed to appreciate that the impugned issue was duly examined by the assessing officer by way of specific inquiry/notice and reply thereto, while finalizing assessment proceedings u/s. 143(3) of the Act and case of your appellant was taken up specifically for verification of deduction u/s. 80P of the Act in respect of interest income earned fro....
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.... Section 80P(2) of the Act as claimed in the return of income. According to the Ld. PCIT, in view of the decision of Totgars Cooperative Society 188 taxman 282 such interest income could not be said to be attributable to the activities of society carrying on business of providing credit facilities to its members. Accordingly, the Ld. PCIT set-aside the assessment order on the ground that Assessing Officer erred in allowing the claim of deduction under Section 80P(2) of the Act with respect to the aforesaid income. 4. The assessee is in appeal before us against the order passed by Ld. PCIT setting-aside the assessment order as being erroneous and prejudicial to the interest of the Revenue. The arguments of the Ld. Counsel for the assessee....
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....rt in the case of Katlary Kariyana Merchant Sahkari Sarafi Mandali Ltd. 140 taxman.com 602 (Gujarat), has clearly opined that interest earned from Cooperative Banks is not eligible for claim of deduction under Section 80P(2) of the Act. Therefore, in light of the aforesaid decision rendered by the Gujarat High Court on the specific issue, the assessment order is clearly erroneous and prejudicial to the interest of the Revenue. 6. We have heard the rival contentions and perused the material on record. We observe that the Assessing Officer vide notice dated 22.09.2019 (Page 7 to 9 of Paper-Book) had specifically enquired into this aspect of eligibility for claim of deduction under Section 80P(2) of the Act. Further, the assessee also filed....
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....or deduction under Section 80P. The Hon'ble Gujarat High Court in the case of State Bank of India Vs. CIT (2016) 389 ITR 578 (Guj), held that the interest income earned by a co-operative society on its investments held with a co-operative bank would be eligible for claim of deduction under Sec.80P(2)(d) of the Act. The Hon'ble Gujarat High Court made following observations in respect of interest earned from deposits kept with a cooperative bank: "Therefore, it is only the interest derived from the credit provided to its members which is deductible under section 80P(2)(a)(i) of the Act and the interest derived by depositing surplus funds with the State Bank of India not being attributable to the business carried on by the appellant,....
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....case of Amore Commercial Premises Co-Op Society Ltd. Vs Central Processing Centre (ITAT Mumbai) in ITA No.2873 & 2874 /M/2022, the ITAT held that Section 80P(2)(d) deduction eligible to co-op society on Interest income on investment of fund with co-op banks. 8. Accordingly, in so far as this issue with respect eligibility for deduction under Section 80P(2)(d) is concerned, in our view, the order passed by the Assessing Officer is not erroneous and prejudicial to the interests of the Revenue for the reason that firstly, the Assessing Officer had examined this issue during the course of assessment proceedings and secondly, various judicial precedents as highlighted above have also adjudicated on this issue in favour of the assessee includi....
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....tended by the Explanation. Howsoever wide the scope of Explanation 2(a) may be, its limits are implicit in it. It is only in a very gross case of inadequacy in inquiry or where inquiry is per se mandated on the basis of record available before the AO and such inquiry was not conducted, the revisional power so conferred can be exercised to invalidate the action of AO. The AO in the present case has not accepted the submissions of the assessee on various issues summarily but has shown appetite for inquiry and verifications. The AO has passed after making due enquiries issues involved impliedly after due application of mind. Therefore, the Explanation 2 to section 263 of the Act do not, in our view, thwart the assessment process in the facts a....