C.I.T. PATIALA vs. M/S PUNJAB STATE COOP. SUPPLY & MK.FED.

PDF · subscribers
ITR/210/1995HC Punjab & HaryanaPHHC01032274199506 November 2006Author: MR. JUSTICE ADARSH KUMAR GOEL,MR. JUSTICE RAJESH BINDAL3 pages
AI SummaryAllowed

What did the High Court hold?

The High Court held that the share income of the assessee is not liable to be excluded for the purposes of gross total income. The statutory provisions clearly show that share income is part of the income computed before making deductions under Chapter VI-A. Therefore, the rectification order under Section 154 was not erroneous, and the view taken by the Tribunal was in conformity with the law. The Court clarified that it was not adjudicating on the scope of deductions under Section 80P(2)(a), but only on the includibility of share income in the gross total income. The questions referred were answered against the revenue and in favour of the assessee. The reference was disposed of accordingly.

What were the facts?

The assessee, M/s. Punjab State Cooperative Supply & Marketing Federation, Chandigarh, had income from business and share income from Punjab Fertilizers, Ludhiana. For assessment year 1972-73, the Assessing Officer, while giving effect to a Tribunal order, did not include the share income in the gross total income before allowing deductions under Section 80P. The assessee's rectification application was rejected. The CIT(A) directed the inclusion of share income. The revenue appealed to the Tribunal, which dismissed the appeal. The High Court is considering questions of law referred by the Tribunal.

What were the issues?

1. Whether, on the facts and in the circumstances of the case, the Tribunal was right in law in holding that the share income derived by the assessee from Punjab Fertilizers, Ludhiana, was to be included in the gross total income of the assessee before allowing deductions under section 80P(2)(a) of the Income Tax Act, 1961? Revenue's contention: The appellate authority and the Tribunal erred in including the share income in addition to business income in the gross total income for the purposes of deduction under Section 80P. Assessee's contention: There was no warrant for excluding any income from the gross total income. Deductions under Sections 80C to 80U are to be allowed from 'gross total income', defined under Section 80B(5) as income computed before making any deduction under Chapter VI-A. Total income under Section 2(45) refers to income under Section 5. 2. Whether, on the facts and in the circumstances of the case, the Tribunal was right in law in upholding the order of the CIT(A) that deduction claimed by the assessee under section 80P (2) could be allowed by a rectification order under section 154 of the Income Tax Act, 1961?

Which sections of the Income-tax Act were involved?

Section 80P(2)(a),Section 154,Section 80B(5),Section 2(45),Section 5

AI-generated summary — verify with the full judgment below

Cause title — parties, addresses and appearances
ITR No.210 of 1995 1 IN THE HIGH COURT OF PUNJAB AND HARYANA AT CHANDIGARH ITR No.210 of 1995 Date of decision:6.11.2006 The Commissioner of Income Tax, Patiala ....Petitioner versus M/s. Punjab State Cooperative Supply & Marketing Federation, Chandigarh. ....Respondent CORAM: HON'BLE MR. JUSTICE ADARSH KUMAR GOEL HON'BLE MR. JUSTICE RAJESH BINDAL Present: Mr. SK Garg Narwana, Advocate, for the revenue. Mr. ML Garg, Advocate, for the respondent.

JUDGMENT: Following questions of law have been referred for the opinion of this Court by the Income Tax Appellate Tribunal, Chandigarh Bench, Chandigarh (for short, 'the Tribunal'), arising out of its order dated 30.7.1993 in ITA No.49 of 1987, for the assessment year 1972-73:- “1. Whether, on the facts and in the circumstances of the case, the Tribunal was right in law in holding that the share income derived by the assessee from Punjab Fertilizers, Ludhiana, was to be included in the gross total income of the assessee before allowing deductions under section 80P(2) (a) of the Income Tax Act, 1961?

2.

Whether, on the facts and in the circumstances of the case, the Tribunal was right in law in upholding the order of the CIT(A) that deduction claimed by the assessee under section 80P (2) could be allowed by a rectification order under section 154 of the Income Tax Act, 1961?” The assessee derived income from its business activities and also from share income from Punjab Fertilizers, Ludhiana. The Assessing Officer while giving appeal effect to the order passed by the Tribunal did not take into consideration share income from Punjab Fertilizers as part of gross total income while granting deduction under section 80P of the Act. Application for rectification filed by the assessee to correct the error was rejected. The appellate authority directed the Assessing Officer to include the share income in the gross total income. The revenue filed appeal before the Tribunal, which has been dismissed.

We have heard learned counsel for the revenue and perused the findings recorded. Learned counsel for the revenue submitted that the appellate authority and the Tribunal erred in including share income of the assessee also in addition to business income in the gross total income for the purposes of deduction under section 80P of the Act. Learned counsel for the assessee submitted that there was no warrant for excluding any income out of the gross total income. The deductions as per sections 80C to 80U of the Act are to be allowed from “gross total income”, which is defined under section 80B(5) of the Act as income computed before making any deduction under this Chapter. Total income was defined in Section 2(45) of the Act as income referred to under section 5 of the Act. Statutory provisions referred to above clearly show that share income of the assessee is not liable to be excluded for purposes of gross total income and, therefore, rectification order under section 154 of the Act was erroneous and view taken by the Tribunal is in conformity with law. It is, however, made clear that we are not going into the question as to what is the scope of deductions under section 80P(2)(a) as the scope of the question referred is confined only to includibility of share income in gross total income and not about allowability or otherwise of deductions under section 80P(2)(a) of the Act.

In view of the above, the questions referred are answered against the revenue and in favour of the assessee. Reference is disposed of accordingly. (Adarsh Kumar Goel) Judge November 6, 2006 (Rajesh Bindal) 'gs' Judge

More judgments on Section 80P(2)(a)

All 78 judgments and leading authorities on Section 80P(2)(a) →

Recent GST High Court judgments

Search GST case law →