| The Tax Publishers2019 TaxPub(DT) 0152 (Kol-Trib) INCOME TAX ACT, 1961
Section 263
Where any disallowance even if it was to be made towards provision for gratuity fund and provision for bad and doubtful debts would only go to increase the business income of the assessee society and in turn, would automatically result in enhanced claim of deduction under section 80P, the revisional order passed under section 263 setting aside assessment was erroneous, as no prejudice was caused to the interests of the revenue and entire exercise was revenue neutral.
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Revision under section 263 - Erroneous and prejudicial order - Disallowance going to increase deductible amount under section 80P this being revenue neutral -
Assessee was a co-operative society and its income was eligible for deduction under section 80P. For relevant year, it filed its return declaring nil income. Subsequently, after completion of assessment under section 143(3) by AO, the Commissioner noticed that the assessee had debited certain amount towards provisions for gratuity and provision for bad and doubtful advances, which was required to be disallowed. CIT, however, passed a revisional order under section 263 setting aside assessment. Aggrieved by the same, assessee preferred appeal. Assessee contended that any disallowance will go to increase income of society, which is eligible for section 80P deduction hence entire exercise is revenue neutral. Held: Since any disallowance even if it was to be made towards provision for gratuity fund and provision for bad and doubtful debts would only go to increase the business income of the assessee society and in turn, would automatically result in enhanced claim of deduction under section 80P, it became revenue neutral as no prejudice was caused to the interests of the revenue. Accordingly, issue pointed out by Commissioner became erroneous, as twin conditions of section 263 were not cumulatively satisfied. Hence, revision proceedings initiated under section 263 were quashed.
Relied:Malabar Industries Co. Ltd. v. CIT (2000) 243 ITR 83 (SC) : 2000 TaxPub(DT) 1227 (SC)
REFERRED : Income Tax Officer v. Keval Construction (2013) 33 taxmann.com 277 (Guj.) : 2013 TaxPub(DT) 1595 (Guj-HC) Commissioner of Income Tax v. Sunil Vishwambharnath Tiwari (2016) 63 taxmann.com 241 (Bom.) : 2015 TaxPub(DT) 3661 (Bom-HC) Principal CIT, Kanpur v. Surya Merchants Ltd. (2016) 72 taxmann.com 16 (All.) : 2018 TaxPub(DT) 5539 (All-HC)
FAVOUR : In assessee's favour
A.Y. : 2012-13
IN THE ITAT, KOLKATA 'C' BENCH
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