PRINCIPAL COMMISSIONER OF INCOME TAX vs. M/S RAJASTHAN STATE INDUSTRIAL DEVELOPMENT AND INVESTMENT CORPORATION LTD

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ITA/201/2018HC Rajasthan23 January 2025Bench: INDERJEET SINGH, VINOD KUMAR BHARWANI2 pages
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What did the High Court hold?

The High Court admitted the appeal on two substantial questions of law. The first question concerns whether the ITAT was justified in quashing reassessment proceedings as a change of opinion, when the Revenue argued that the deduction under Section 80IA on interest income was not examined in the original assessment under Section 143(3) and an excessive deduction was allowed. The second question relates to whether the ITAT was justified in allowing deduction under Section 80IA on interest income, including penal interest and other income, despite the Revenue's contention that these lacked a direct nexus with the business profits. The Court has not yet rendered a decision on these issues; it has only admitted the appeal for further hearing. The operative directions are to list the appeal for hearing in the first week of April, 2025. No specific findings or reasoning on the merits of the case have been provided in this excerpt.

What were the facts?

The appeal is filed by the Principal Commissioner of Income Tax (Revenue) against the order of the Income Tax Appellate Tribunal (ITAT). The assessee is M/s Rajasthan State Industrial Development And Investment Corporation Ltd. The assessment year(s) are not explicitly stated in the provided text. The challenge is to the ITAT's decision to quash reassessment proceedings and allow deduction under Section 80IA of the Income Tax Act, 1961, on interest income. The Revenue contends that the reassessment was valid as it was not a mere change of opinion, and the deduction on interest income was wrongly allowed as it lacked a direct nexus with the business profits. The procedural history indicates that the ITAT had previously decided in favor of the assessee, leading to the present appeal before the High Court.

What were the issues?

The Tribunal had to decide the following substantial questions of law: 1. Whether, in the facts and circumstances of the case and in law, the ITAT was justified in quashing the reassessment proceedings by treating the same as a change of opinion, ignoring the fact that the issue of allowance of deduction under Section 80IA of the Act on interest income had not been examined in the proceedings under Section 143(3), and as excessive deduction had clearly been allowed, thus it cannot be taken as a change of opinion. - **Assessee's Contention:** Not recorded in the provided text. - **Revenue's Contention:** The reassessment was valid as it was not a change of opinion because the issue of deduction under Section 80IA on interest income was not examined during the original assessment under Section 143(3), and an excessive deduction was allowed. 2. Whether, in the facts and circumstances of the case and in law, the ITAT was justified in allowing deduction under Section 80IA on interest income (including penal interest income and other income) ignoring the fact that these have no direct nexus with the profit and gains of the business. - **Assessee's Contention:** Not recorded in the provided text. - **Revenue's Contention:** Deduction under Section 80IA should not be allowed on interest income, including penal interest and other income, as these items do not have a direct nexus with the profit and gains of the business.

Which sections of the Income-tax Act were involved?

Section 80IA,Section 143(3)

AI-generated summary — verify with the full judgment below

HIGH COURT OF JUDICATURE FOR RAJASTHAN BENCH AT JAIPUR D.B. Income Tax Appeal No. 201/2018 Principal Commissioner Of Income Tax ----Appellant Versus M/s Rajasthan State Industrial Development And Investment Corporation Ltd ----Respondent For Appellant(s) : Mr. Anuroop Singhi Mr. N.S. Bhati Mr. Aditya Khandelwal For Respondent(s) : Mr. Rohan Chattar on behalf of Mr. Siddharth Ranka HON'BLE MR. JUSTICE INDERJEET SINGH HON'BLE MR. JUSTICE VINOD KUMAR BHARWANI Order 23/01/2025 Heard. This appeal is admitted on the following substantial questions of law:- "1. Whether in the facts and circumstances of the case and in law the ITAT is justified in quashing

the

reassessment treating the same as change of opinion ignoring the fact g that the issue of allowance of deduction u/s. 80IA of the Act on interest income had not been examined in the proceeding u/s. 143(3)

and

excessive deduction had clearly been allowed, thus cannot be taken as change

opinion. 2. Whether in the facts and circumstances of the case and in law the ITAT is justified in allowing deduction u/s. 80IA on interest income (including penal interest income and other (Uploaded on 27/01/2025 at 10:31:26 AM) (Downloaded on 30/10/2026 at 10:22:06 AM)

(2 of 2) [ITA-201/2018] income) ignoring the fact that these have no direct nexus with the profit and gains of the business." List this appeal in the first week of April, 2025. (VINOD KUMAR BHARWANI),J (INDERJEET SINGH),J Upendra Pratap Singh /93 Powered by TCPDF (www.tcpdf.org) (Uploaded on 27/01/2025 at 10:31:26 AM) (Downloaded on 30/10/2026 at 10:22:06 AM)

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