COMMISSIONEROF INCOME TAX-I, JALANDHAR V. HOSHIARPUR CENTRAL CO-OP. BANK LTD.

ITA/327/2011

AI Insights

The case involves an appeal by the Commissioner of Income Tax-I, Jalandhar, against The Hoshiarpur Central Co-operative Bank Ltd., concerning the disallowance of deduction under Section 80P of the Income Tax Act on interest earned from investments. The appeal was based on the grounds that the Income Tax Appellate Tribunal (ITAT) had incorrectly applied rectification under Section 154 for an issue that was fundamental to the jurisdiction under Section 147. The ITAT had previously ruled in favor of the bank, allowing deductions for interest income from investments in IDBI and PSEB bonds, which the Commissioner contested. The High Court dismissed the appeal, referencing a prior decision where similar issues were resolved in favor of the bank.

• Counselvise Citation: [2013] 140 COUNSELVISE.COM (IT) 718673 (HC-CHANDIGARH)
• Appeal Type: Others
• Pronouncement Date: 19-02-2013
• Assessment Year: misc
• Other Referred Cases: Mehsana District Co.-op. Bank Ltd. v. ITO 251 ITR 522
• Laws Referred To: Income Tax Act, 1961
• Result in Favour of: Others
• Court: HIGH COURT
• Department Lawyers: MUNISH KAPILA
• Assessee Lawyers: VIVEK SETHI
• Keywords: Assessment; Deduction; Income Tax; Interest income; Jurisdiction; Rectification
• Section: 147; 143(3); 154; 80P; 260-A

Judgement Text

"ITA No. 327 of 2011 (O&M) -1- IN THE HIGH COURT OF PUNJAB AND HARYANA AT CHANDIGARH Date of Decision: February 19, 2013 ITA No. 327 of 2011 (O&M) Commissioner of Income Tax-I, Jalandhar …Appellant Versus The Hoshiarpur Central Co-operative Bank Ltd. …Respondent CORAM: HON'BLE MR. JUSTICE HEMANT GUPTA HON’BLE MS. JUSTICE RITU BAHRI Present: Mr. Vivek Sethi, Advocate, for the appellant. Mr. Munish Kapila, Advocate for the respondent. 1 To be referred to the Reporters or not? 2 Whether the Judgment should be reported in the Digest HEMANT GUPTA, J. (Oral) The present appeal under Section 260-A of the Income Tax Act, 1961 (for short 'the Act') arising out of an order passed by the Income Tax Appellate Tribunal, Amritsar Bench, Amritsar (for Short “the Tribunal”) in respect of the assessment year 1994- 95. The Revenue has claimed the following substantial questions of law: “i) Whether ITAT is right in giving relief under Section 154 on an issue, which is the very basis of assumption of jurisdiction under Section 147 and which amounts to propounding a position of law that the issue of assumption of jurisdiction under Section 147 can be challenged by way of ITA No. 327 of 2011 (O&M) -2- rectification? ii) Whether the Hon'ble ITAT is right in dismissing the appeal of the revenue on the issue of disallowance of deduction under Section 80P on interest earned on investment of surplus reserves where such investment is not governed by any statutory provisions for carrying on the business of banking? iii) Whether the Hon'ble ITAT was right in dismissing the appeal of the revenue on the issue of disallowance of deduction under Section 80P on interest earned from utilization of voluntary reserves other than statutory reserves when the Hon'ble Supreme Court has set aside the similar issue to the file of CIT(A) in the case of Mehsana District Co.-op. Bank Ltd. v. ITO 251 ITR 522?” Initially, the assessment was finalized in terms of Section 143(3) of the Act on 28.02.2002. In the said order, the interest income earned from IDBI and PSEB bond was taken as income from other sources. The assessee made an application for rectification of the assessment order on 23.02.2005 for the reason that the assessee's claim for deduction under Section 80P(2)(a)(i) of the Act has been wrongly disallowed. The said rectification application was declined by the Assessing Officer vide order dated 8.3.2005. However, an appeal against the said was allowed. The Commissioner of Income Tax (Appeals) inter alia relied upon the fact that the identical issues in the assessment years 1991-92, 1993-94, 1996-97 and 1997-98 have been decided by the Tribunal vide common order passed on 04.02.2005. It was held that investment in PSEB bonds and IDBI bonds by the assessee were eligible for deduction under Section 80P(2)(a)(i) of the Act. ITA No. 327 of 2011 (O&M) -3- It may be noticed that Revenue's appeal against order dated 04.02.2005 has been dismissed by a Division Bench of this Court in ITA No.187 of 2005 decided on 12.12.2005. In view of the said fact and for the reasons mentioned in order dated 12.12.2005 passed by this Court, we do not find that any substantial question of law arises for consideration of this Court. Dismissed. (HEMANT GUPTA) JUDGE (RITU BAHRI) JUDGE 19.02.2013 Atul/Vimal "