COMMISSIONER OF INCOME TAX Vs. SRI BILURU GURUBASAVA PATTINA SAHAKARI SANGHA NIYAMITHA BAGALKOT

JUDGEMENT

(1.) THE Revenue has preferred this appeal against the order passed by the Tribunal setting aside the order passed by the Commissioner of Income -tax under section 263 of the Income -tax Act, 1961 (hereinafter referred to as "the Act"). The assessee is a credit co -operative society engaged in providing credit facilities to its members. It has filed returns of the income for the assessment year 2007 -08 claiming deduction under section 80P(2)(a)(i) amounting to Rs. 2,04,03,878 (rupees two crores four lakhs three thousand eight hundred and seventy -eight only). The Assessing Officer has passed assessment under section 143(3) of the Act on December 29, 2009, disallowing to the tune of Rs. 1,66,47,180 (rupees one crore sixty -six lakhs forty -seven thousands one hundred and eighty only) in respect of interest received from Gem Sugars Ltd., Bilagi Sugars Ltd. and Nirani Cements Ltd. However, the Assessing Officer allowed deduction under section 80P(2)(a)(i) to the extent of Rs. 1,93,73,000 (rupees one crore ninety -three lakh seventy -three thousand only).

(2.) THE Commissioner of Income -tax invoking his power under section 263 of the Act issued notice to the assessee calling upon him to show -cause as to why the order of assessment should not be set aside in view of section 80P(4) of the Act. After service of notice, the assessee entered appearance and brought to the notice of the authority that the assessee is not a co -operative bank and, therefore, section 80P(4) has no application to the case of the assessee. However, the revisional authority was of the view that the assessing authority has not considered the application of section 80P(4) which was inserted with effect from April 1, 2007, and, therefore, he set aside the order of assessment and remanded the matter back to the assessing authority to consider the applicability of the aforesaid provision.

(3.) THE Tribunal held that as the assessee is not a co -operative bank, section 80P(4) has no application. Moreover, the power under section 263 of the Act could be invoked by the revisional authority only if the order is erroneous and thereby is prejudicial to the interests of the Revenue. In the instant case, as the assessee is not a co -operative bank, i.e., there is no error committed by the assessing authority much less the said order was prejudicial to the interests of the Revenue and, therefore, the order passed by the revisional authority was set aside.