The Punjab State Cooperative Federation of House Building Societies Ltd. Chandigarh V. Commissioner of Income Tax-II, Chandigarh and another

ITA/40/2016

AI Insights

The case involves The Punjab State Cooperative Federation of House Building Societies Ltd. Chandigarh, the appellant, contesting various decisions made by the Income Tax Appellate Tribunal regarding the assessment year 2011-2012. The primary issues revolved around the classification of certain income types and the applicability of deductions under the Income Tax Act, 1961. The Tribunal had dismissed the appellant's appeal and partly allowed the respondents' appeal, leading to this appeal in the High Court. The High Court examined several substantial questions of law concerning the classification of income as business income or income from other sources, and the corresponding tax implications and deductions applicable under the Act.

• Counselvise Citation: [2016] 140 COUNSELVISE.COM (IT) 794182 (HC-CHANDIGARH)
• Appeal Type: Others
• Pronouncement Date: 07-12-2016
• Assessment Year: misc
• Other Referred Cases: The Punjab State Cooperative Federation of House Building Societies Ltd., Chandigarh Vs Commissioner of Income Tax-II, Chandigarh and another, The Commissioner of Income Tax-I, Chandigarh Vs M/s Punjab State Cooperative Agricultural Development Bank Ltd., Chandigarh
• Laws Referred To: Income Tax Act, 1961
• Result in Favour of: Partly Allowed
• Court: HIGH COURT
• Department Lawyers: URVASHI DHUGGA
• Assessee Lawyers: M R SHARMA
• Keywords: Assessment Year 2011-2012; Business income; Income from other sources; Income Tax; Interest income; Tax Deduction
• Section: 56; 48; 57; 80P(2)(a)(i)

Judgement Text

"IN THE HIGH COURT OF PUNJAB AND HARYANA AT CHANDIGARH ITA-40-2016 (O&M) Date of decision:- 07.12.2016 The Punjab State Cooperative Federation of House Building Societies Ltd. Chandigarh. ...Appellant Versus Commissioner of Income Tax-II, Chandigarh and another ...Respondents CORAM: HON'BLE MR. JUSTICE S.J. VAZIFDAR, CHIEF JUSTICE HON’BLE MR. JUSTICE DEEPAK SIBAL Present:- Mr. M.R. Sharma, Advocate, for the appellant. Ms. Urvashi Dhugga, Advocate, for the respondents. * * * * S.J. VAZIFDAR, C.J. (ORAL) This is an appeal against the order of the Income Tax Appellate Tribunal dismissing the appellant/assessee’s appeal and partly allowing the respondents/revenues’ appeal. The matter pertains to the assessment year 2011-2012. 2. According to the appellant, the following substantial questions of law arise in this appeal:- “(i) Whether in the facts and circumstances of the case the orders (Annexure A-1), (Annexure A-3) and partly (Annexure A-2) are legally sustainable? (ii) Whether on the facts and in the circumstances of the case, the learned Income Tax Appellate Tribunal is right in law in holding that the gross total income earned from banks other than cooperative banks as interest on its bank accounts as Amodh Sharma 2016.12.09 14:52 I attest to the accuracy and authenticity of this document chandigarh ITA-40-2016 (O&M) 2 income from other sources being attributable to its business income and thereby not allowing deduction u/s 80P(2)(a)(i) of the Income Tax Act, 1961? (iii) Whether in the facts and in the circumstances of the case the learned Income Tax Appellate Tribunal has grossly erred in upholding the order of the Assessing officer and reversing the order of the Commissioner of Income Tax (Appeals), Chandigarh treating gross interest income of Rs. 15,11,996/- received by the appellant as interest on the loans advanced to its employees for housing and conveyance as a condition precedent of its service rules more so when the earlier order of the Tribunal was a reasoned order based on various judgements of the Supreme Court of India and has not been even distinguished while passing the order appealed against? (iv) Whether in the facts and in the circumstances of the case the learned Income Tax Appellate Tribunal has grossly erred in passing the order appealed against without distinguishing the earlier order of its co-equal bench dated 21.03.2009 with regard to the gross interest income of Rs. 15,11,996/- as income from other sources instead of business income received by the appellant as interest on the loans advanced to its employees for housing and conveyance as a condition precedent of its service rules more so when it has been treated as business income in the earlier 25 years? (v) Whether in the facts and in the circumstances of the case, the Tribunal was right in law in holding that the income by way of interest on deposits held with scheduled banks was chargeable to tax u/s 56 under Amodh Sharma 2016.12.09 14:52 I attest to the accuracy and authenticity of this document chandigarh ITA-40-2016 (O&M) 3 the head ‘income from other sources’ without allowing any deduction in respect of cost of funds and proportionate administrative and other expenses u/s 57? (vi) Whether in the facts and in the circumstances of the case the learned Income Tax Appellate Tribunal grossly erred in upholding the order of the Assessing Officer and also the order of the Commissioner of Income Tax (Appeals) holding income as business income instead of income from long term capital gain as claimed by the appellant being the income as profits on the sale of old properties and thereby disallowing the necessary deductions u/s 48 and levy of tax at special rate of tax thereof? (vii) That the appellant assessee craves leave to alter, amend, delete or add to any of the above substantial questions of law during the pendency of the present appeal.” 3. Questions (i) and (vii) are only general in nature and do not require consideration. 4. Question (ii) is admittedly covered against the appellant in view of the judgement of a Division Bench of this Court dated 10.05.2016 in ITA-17-2016 titled as The Punjab State Cooperative Federation of House Building Societies Ltd., Chandigarh Vs Commissioner of Income Tax-II, Chandigarh and another. Question (ii) is, therefore, decided against the appellant. 5. Question (iii) is covered against the appellant by virtue of our order and judgement dated 11.11.2016 in ITA-638-2009 titled as The Commissioner of Income Tax-I, Chandigarh Vs M/s Punjab State Cooperative Agricultural Development Bank Ltd., Chandigarh. Amodh Sharma 2016.12.09 14:52 I attest to the accuracy and authenticity of this document chandigarh ITA-40-2016 (O&M) 4 6. Question (vi) is covered against the appellant by virtue of our order and judgement passed today in ITA-158-2016 titled as The Punjab State Cooperative Federation of House Building Societies Ltd., Chandigarh Vs Commissioner of Income Tax-II, Chandigarh and another. 7. Re: Questions (iv) and (v) The appellant does not appear to have claimed the deduction under Section 57 of the Income Tax Act (in short the Act) in view of the contention before the authorities that the gross interest income ought to be considered as business income. It was treated by the authorities as income from other sources. The ends of justice would be met by permitting the appellant to raise this contention before the Tribunal. It is only for this limited purpose that the appeal on this question is remitted to the Tribunal. It is open to the Tribunal to consider the issue itself or to remit it further. 8. The appeal is accordingly disposed of so far as question (v) is concerned. 9. The appeal as regards the other questions is dismissed. (S.J. VAZIFDAR) CHIEF JUSTICE (DEEPAK SIBAL) JUDGE 07.12.2016 Amodh Whether speaking/reasoned Yes/No Whether reportable Yes/No Amodh Sharma 2016.12.09 14:52 I attest to the accuracy and authenticity of this document chandigarh "