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

ITA/327/2011HC Punjab & HaryanaPHHC01095661201119 February 2013Author: MR. JUSTICE HEMANT GUPTA,MS. JUSTICE RITU BAHRI3 pages
AI SummaryDismissed

What were the facts?

The assessee, The Hoshiarpur Central Co-operative Bank Ltd., is in appeal against an order of the Income Tax Appellate Tribunal (ITAT) for the assessment year 1994-95. The original assessment under Section 143(3) was finalized on February 28, 2002, treating interest income from IDBI and PSEB bonds as income from other sources. The assessee filed a rectification application on February 23, 2005, seeking deduction under Section 80P(2)(a)(i) for this interest income, which was initially declined by the Assessing Officer on March 8, 2005. The Commissioner of Income Tax (Appeals) allowed the appeal, relying on previous Tribunal orders for other assessment years where similar investments were held eligible for deduction under Section 80P(2)(a)(i). The Revenue's appeal against those earlier orders was dismissed by the High Court.

What did the High Court hold?

The High Court held that no substantial question of law arose for consideration. The Court noted that the Revenue's appeal against the Tribunal's order dated February 4, 2005 (which allowed deduction under Section 80P(2)(a)(i) for similar investments in PSEB bonds and IDBI bonds) had already been dismissed by a Division Bench of the High Court in ITA No.187 of 2005 on December 12, 2005. In view of this prior decision by the High Court on identical issues, the present appeal was also dismissed. The Court did not separately address each of the substantial questions of law framed by the Revenue, as the dismissal was based on the binding precedent of its own earlier judgment. The operative direction was the dismissal of the appeal.

What were the issues?

The Tribunal had to decide the following substantial questions of law: 1. Whether the ITAT was right in granting relief under Section 154 on an issue that formed the basis of jurisdiction under Section 147, and if the assumption of jurisdiction under Section 147 can be challenged via rectification. 2. Whether the ITAT was right in dismissing the Revenue's appeal regarding the disallowance of deduction under Section 80P on interest earned from investments of surplus reserves, where such investments are not statutorily mandated for banking business. 3. Whether the ITAT was right in dismissing the Revenue's appeal regarding the disallowance of deduction under Section 80P on interest earned from the utilization of voluntary reserves (other than statutory reserves), considering the Supreme Court's decision in Mehsana District Co-op. Bank Ltd. v. ITO. Assessee's contentions: The assessee argued that the interest income from IDBI and PSEB bonds was eligible for deduction under Section 80P(2)(a)(i). They relied on the fact that identical issues for other assessment years had been decided in their favor by the Tribunal, and the Revenue's appeal against those decisions was dismissed by the High Court. Revenue's contentions: The Revenue contended that the ITAT erred in allowing rectification on an issue related to the assumption of jurisdiction under Section 147. They also argued against the deduction under Section 80P for interest earned on surplus and voluntary reserves, as these investments were not governed by statutory provisions for carrying on the banking business.

Which sections of the Income-tax Act were involved?

Section 260-A,Section 143(3),Section 154,Section 147,Section 80P,Section 80P(2)(a)(i)

AI-generated summary — verify with the full judgment below

-1- IN THE HIGH COURT OF PUNJAB AND HARYANA AT CHANDIGARH Date of Decision: February 19, 2013 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 juri iction under Section 147 and which amounts to propounding a position of law that the issue of assumption of juri iction under Section 147 can be challenged by w

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