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The High Court held that Ext. P8 Office Memorandum does not contain an absolute interdiction against issuing vigilance clearance when a final report has been filed in a case where the applicant is an accused. The OM only states that vigilance clearance can be withheld if a charge has been filed in court by the investigating agency. Since the 1st respondent had already granted permission for the petitioner to travel abroad for ten days, the denial of vigilance clearance based on Ext. P8 was deemed unjustified. The Court directed the 2nd respondent to issue the vigilance clearance certificate immediately upon production of the judgment. Subsequently, the 1st respondent was to issue the no-objection certificate. No issue was expressly left undecided.
The High Court of Kerala disposed of the writ petition by directing the 1st respondent, the Commissioner of Income Tax (Appeals), to consider and pass orders on the petitioner's appeal (Ext.P3). This decision is to be made after affording an opportunity of hearing to the petitioner. The Court also directed that any demand arising from the rectification order (Ext.P1) and the demand notice (Ext.P2) shall be kept in abeyance until the 1st respondent passes an order on the petitioner's appeal. The Court noted that similar matters have been disposed of by directing coercive steps to be kept in abeyance until a decision is taken on statutory appeals. The specific finding on the entitlement to Section 80P exemption was not made by the High Court, as it was remanding the matter for adjudication by the appellate authority.
The High Court disposed of the writ petition by directing the first respondent (Commissioner of Income Tax (Appeals)) to consider and pass orders on the petitioner's appeal (Ext.P3) after affording an opportunity of hearing. The Court further directed that any demand arising from the rectification order (Ext.P1) and the demand notice (Ext.P2) shall be kept in abeyance until orders are passed on the appeal. The Court did not decide the merits of the Section 80P claim but ensured that coercive steps would be withheld pending the statutory appeal's disposal. The principle is that statutory appeals should be decided expeditiously, and coercive recovery should be stayed during the pendency of such appeals, especially when a favorable precedent is cited.
The High Court held that the findings recorded by the Assessing Officer, Commissioner of Income-Tax (Appeals), and the Tribunal did not conform to the principles laid down by the Supreme Court, including the judgment relied upon by the Revenue in Maxopp Investment Ltd. v. CIT. The Court emphasized that only expenditure incurred in relation to income that does not form part of the total income should be disallowed. If an expenditure has no causal connection with exempt income, it should be allowed as business expenditure. The Court found that the lower authorities' conclusions were unsustainable as they did not adequately examine whether dividend income was received and the source of investments. Consequently, the substantial questions of law were answered in favour of the assessee for statistical purposes. The matter was remitted to the Assessing Officer for fresh consideration of issues arising under Sections 10(34) and 14A read with Rule 8D. The assessee was granted liberty to file additional details/evidence within eight weeks.
The High Court of Kerala, while not deciding the merits of the appeal, disposed of the writ petition by directing the Commissioner of Income Tax (Appeals) to consider and pass orders on the petitioner's appeal (Ext.P3) after providing an opportunity of hearing. Crucially, the Court directed that any demand arising from the rectification order (Ext.P1) and the demand notice (Ext.P2) shall be kept in abeyance until a decision is taken on the statutory appeal. This approach is consistent with how the Court has dealt with similar matters, aiming to prevent coercive steps against the assessee pending the resolution of their statutory appeals. The principle is to allow the statutory appellate authority to decide the appeal on merits without the assessee facing immediate recovery actions.
The High Court of Kerala, considering the facts and the pendency of the statutory appeal, disposed of the writ petition. The Court directed the first respondent (Commissioner of Income Tax (Appeals)) to consider and pass orders on the petitioner's appeal (Ext.P3) after providing an opportunity of hearing. Crucially, the Court ordered that any demand arising from the rectification order (Ext.P1) and demand notice (Ext.P2) shall be kept in abeyance until a decision is taken on the appeal. The Court did not decide on the merits of the Section 80P claim but ensured that coercive steps would be withheld pending the appellate authority's decision.
The Tribunal held that the explanation to Section 133A, as amended, includes any place where business documents are kept, even if it's a residence. Therefore, the survey was validly conducted.
The High Court held that the survey conducted at the residential premises of Sri Riyaz was valid. The Court referred to the Explanation appended to Section 133A(1) of the Income Tax Act, which was introduced by the Finance Act, 2017, with effect from April 1, 2017. This explanation clarifies that a place where business is carried on also includes any other place where books of account or other documents relating to the business are kept, even if business is not actively carried on there. The Court found that excluding a residence from the scope of survey would defeat the purpose of Section 133A. The Court also noted that the assessee had not provided sufficient material to establish Riyaz's resignation. The Tribunal's finding that the survey was conducted at an 'office room of Shri Riyas M @ Veliyaparambil House, Pulliparamba' was considered. The Court concluded that the ground raised under Section 133A was not sustainable and answered the question in favour of the Revenue. Consequently, the appeals were dismissed.
The High Court held that the survey conducted at the residential premises of Sri Riyaz was valid. The Court referred to the Explanation appended to Section 133A(1) of the Income Tax Act, which was introduced by the Finance Act, 2017, with effect from April 1, 2017. This explanation clarifies that a place where business is carried on also includes any other place where books of account or other documents relating to the business are kept, even if business is not actively carried on there. The Court found that excluding a residence from the scope of survey would defeat the purpose of Section 133A. The Court also noted that the assessee had not provided sufficient material to establish Riyaz's resignation. The Tribunal's finding that the survey was conducted at an 'office room of Shri Riyas M @ Veliyaparambil House, Pulliparamba' was considered. The Court concluded that the ground raised under Section 133A was not sustainable and answered the question in favour of the Revenue. Consequently, the appeals were dismissed.
The High Court held that the doctrine of mutuality applies to members' clubs, meaning transactions between the club and its members are not taxable as there is no supply between two distinct persons. However, tax liability under Section 4(2A) of the Kerala Tax on Luxuries Act was affirmed.
The High Court held that the survey conducted at the premises of Sri Riyaz was valid. The Court interpreted Section 133A(1) of the Income Tax Act, particularly its Explanation, which broadens the definition of a 'place' to include any location where business-related documents are kept, irrespective of whether business is actively conducted there. The Court noted that the Tribunal had found no material evidence from the assessee to establish that Riyaz had resigned or that the premises were solely residential. The description of the surveyed location as an 'office room of Shri Riyas M @ Veliyaparambil House, Pulliparamba' was considered significant. The Court concluded that the ground raised under Section 133A was not sustainable and answered the question in favour of the Revenue. Consequently, the appeals were dismissed.
The Tribunal held that the explanation to Section 133A, as amended, includes any place where business documents are kept, even if it's a residence. Therefore, the survey was validly conducted.
The High Court held that the survey conducted at the residential house of Sri Riyaz was valid. The Court referred to the Explanation to Section 133A(1) of the Income Tax Act, which was introduced to clarify that a place where business is carried on also includes any other place where books of account or other documents relating to the business are kept, irrespective of whether business is actively conducted there. The Court found that the assessee failed to provide material to establish that Riyaz had resigned from their employment. Furthermore, the Court noted that the description of the surveyed location as 'Chelembra, Malappuram, Office room of Shri Riyas M @ Veliyaparambil House, Pulliparamba' indicated that the place was used for keeping business-related documents. The Court concluded that the ground raised under Section 133A was not sustainable and answered the question in favour of the Revenue. Consequently, the appeals were dismissed.
The High Court held that the survey conducted at the residential house of Sri Riyaz was valid. The Court referred to the Explanation to Section 133A(1) of the Income Tax Act, which was introduced to clarify that a place where business is carried on also includes any other place where books of account or other documents relating to the business are kept, irrespective of whether business is actively conducted there. The Court found that the assessee failed to provide material to establish that Riyaz had resigned from their employment. Furthermore, the Court noted that the description of the surveyed location as 'Chelembra, Malappuram, Office room of Shri Riyas M @ Veliyaparambil House, Pulliparamba' indicated that the place was used for keeping business-related documents. The Court concluded that the ground raised under Section 133A was not sustainable and answered the question in favour of the Revenue. Consequently, the appeals were dismissed.
The High Court held that the survey conducted at the residential premises of Sri Riyaz was valid under Section 133A of the Income Tax Act. The Court referred to the Explanation to Section 133A(1), which clarifies that a 'place' also includes any other place where books of account or other documents relating to the business are kept, even if business is not actively carried on there. The Court found that the assessee had not provided sufficient material to establish that Riyaz had resigned or that the surveyed premises were exclusively his residence unrelated to the assessee's business. The Court noted that the description of the surveyed place as an 'Office room of Shri Riyas M @ Veliyaparambil House, Pulliparamba' indicated a connection to the business. Therefore, the Court concluded that the ground raised under Section 133A was not sustainable and answered the question in favour of the Revenue. Consequently, the appeals were dismissed.
The Tribunal held that the explanation to Section 133A, as amended, includes any place where business documents are kept, even if it's a residence. Therefore, the survey was validly conducted.
The High Court held that the survey conducted at the residential house of Sri Riyaz was valid under Section 133A of the Income Tax Act. The Court referred to the explanation appended to Section 133A, which clarifies that a 'place' also includes any other place where business-related documents are kept, even if business is not actively carried on there. The Court noted that the assessee failed to provide material to establish that Riyaz had resigned or that the surveyed premises were exclusively a residence. The description of the surveyed place as 'Chelembra, Malappuram, Office room of Shri Riyas M @ Veliyaparambil House, Pulliparamba' indicated it could be considered a place where business documents were kept. Therefore, the ground raised under Section 133A was not sustainable. The question was answered in favour of the Revenue and against the assessee. Consequently, ITA No. 247/2019 and all connected appeals were dismissed.
The High Court held that the Tribunal correctly interpreted Section 133A of the Income Tax Act, including its Explanation. The Explanation clarifies that a place where business is carried on also includes any other place where books of account or documents relating to the business are kept, regardless of whether business is actively conducted there. The Court noted that the assessee failed to provide material to establish that Riyaz had resigned or that the surveyed premises were solely a residence and not used for business-related record-keeping. The description of the surveyed place as 'Chelembra, Malappuram, Office room of Shri Riyas M @ Veliyaparambil House, Pulliparamba' indicated it was considered an office room within a residence. Therefore, the ground raised under Section 133A was not sustainable. The question was answered in favour of the Revenue and against the assessee. Consequently, the appeals were dismissed.
The Tribunal held that the explanation to Section 133A, as amended, includes any place where business documents are kept, even if it's a residence. Therefore, the survey was validly conducted.
The Court noted that no orders were required in the matter as submitted by the counsel for the Official Liquidator. Consequently, the application was closed.
The High Court of Kerala directed the second respondent to consider the petitioner's applications (Exts.P2 and P3) for an NOC for passport renewal and to take a decision thereon expeditiously, and at any rate within one week. The court reasoned that the competent courts had permitted the petitioner to renew his passport. Furthermore, it considered the Office Memo dated 18.02.2020, which states that vigilance clearance can only be withheld if the officer is under suspension or if a charge sheet has been filed. The court found it appropriate for the respondents to consider the request promptly, especially given the petitioner's submission regarding his travel plans by November 1, 2022. No issue was expressly left undecided.
The High Court disposed of the writ petitions by quashing the impugned orders and notices (Ext.P14 in WP(C)No.7360 of 2009 and Ext.P13 in WP(C)No.22751 of 2008) specifically concerning the assessment year 1992-93. This was based on the submission that the entire demand for this year had been settled under the Direct Tax Vivad Se Vishwas Rules, 2020. For the assessment year 1993-94, all other contentions raised in the writ petitions were left open. The department was permitted to take appropriate steps based on the decision of the appellate tribunal, and the petitioners were also granted liberty to take appropriate steps in accordance with law based on the tribunal's decision. No specific finding was made on the merits of the dispute for the assessment year 1993-94.
The High Court directed the 1st respondent (Commissioner of Income Tax (Exemptions)) to consider and pass orders on the petitioner's application for condonation of delay in filing Form 10B within three months from the date of receipt of a certified copy of the judgment, after affording an opportunity of hearing to the petitioner. Crucially, the Court ordered that any demand raised pursuant to the Section 143(1) intimation shall be kept in abeyance until such time as orders are passed on the condonation application. This decision provides interim relief to the petitioner by preventing the immediate enforcement of the tax demand while their application for condoning the delay in filing a mandatory audit report is being processed.
The High Court held that the determination of whether expenditure is revenue or capital is a question of fact, to be decided by applying broad principles. The Court observed that the consideration by the Tribunal was not by applying the principles and tests laid down by binding precedents regarding revenue expenditure. Instead, the finding was recorded based on the applicability of Sections 30-36. Following the principle laid down in Assam Bengal Cement Co. Ltd. v. Commissioner of Income Tax, West Bengal, the Court found that the Tribunal's findings did not conform to the principles laid down by binding precedents. Therefore, the matter required reconsideration. The Court answered the substantial questions of law, for statistical purposes, in favour of the assessee and against the Revenue. The order under appeal was set aside, and the matter was remanded to the Tribunal for fresh consideration and decision in accordance with the law.
The High Court of Kerala, considering the submissions of the counsel for the petitioner and respondents, was of the opinion that the writ petition could be disposed of with a direction. The Court directed the 3rd respondent (Commissioner of Income Tax (Appeals), NFAC) to consider and pass orders on the stay petition (Ext.P4) within a period of two months from the date of receipt of a copy of the judgment. Furthermore, the Court ordered that until such orders were passed on the stay petition, the demand raised by the assessment order (Ext.P3) shall be kept in abeyance. The writ petition was disposed of in terms of this direction.
The High Court noted that the determination of whether expenditure is revenue or capital is a question of fact, to be decided by applying broad principles. The Court observed that the consideration by the Tribunal was not by applying the principles and tests laid down by binding precedents to decide if the claim merited acceptance as revenue expenditure. Instead, a finding was recorded based on the applicability of Sections 30-36. Following the principle laid down in Assam Bengal Cement Co. Ltd. v. Commissioner of Income Tax, West Bengal, the Court found that the Tribunal's findings did not conform to the principles laid down by binding precedents. Therefore, the matter required reconsideration. The substantial questions of law were answered, for statistical purposes, in favour of the assessee and against the Revenue. The order under appeal was set aside, and the matter was remanded to the Tribunal for consideration and decision afresh, in accordance with law.
The High Court of Kerala disposed of the writ petition by directing the National Faceless Appeal Centre (NFAC) to consider and pass orders on the appeals (Exts.P3 and P4) filed by the petitioner against the penalty orders (Exts.P1 and P2). The NFAC was directed to afford an opportunity of hearing to the petitioner and pass orders in accordance with law within three months from the date of receipt of a certified copy of the judgment. Crucially, the Court ordered that any proceedings for recovery of amounts under Exts.P1 and P2 shall remain suspended until orders are passed on Exts.P3 and P4. The Court did not decide on the merits of the penalty orders themselves, but rather on the procedural aspect of ensuring timely disposal of the appeals and providing interim relief from recovery.
The High Court disposed of the writ petition by directing the National Faceless Appeal Centre to provide a link to the petitioner for uploading stay petitions within one month of receiving a copy of the judgment. If the petitioner files stay applications within 10 days of the link being provided, the recovery steps for amounts due under the assessment orders for assessment years 2012-2013 and 2018-2019 will remain suspended until a decision is taken on the stay petitions. The court did not decide on the merits of the Section 80P deduction claim or the validity of the assessment orders themselves, but rather focused on the procedural aspect of enabling the petitioner to file stay applications and suspending recovery pending a decision on those applications. The ratio is that in cases where appeals are pending and stay applications are to be filed, recovery should be deferred until the stay applications are decided, provided the petitioner acts promptly.
The High Court granted the petitioner's request to withdraw the writ petition. Consequently, the writ petition was dismissed as withdrawn. No decision was made on the merits of any underlying tax dispute. The court's reasoning was solely based on the petitioner's expressed desire to withdraw the case. The operative direction was to dismiss the petition as withdrawn.
The High Court of Kerala, in its judgment, noted the submissions made by the learned Standing Counsel for the respondent department. The department clarified that the petitioner has time until December 31, 2022, to file the return of income for the assessment year 2022-2023. Crucially, the department stated that if the return is filed on or before December 31, 2021, it would be processed, notwithstanding that it is filed beyond the due date, in relation to the deceased assessee. The court found that no further directions were necessary in the writ petition based on these submissions. The petition was closed, recording the submissions made by the respondent department. The court did not make any specific findings on the merits of the petitioner's claim beyond accepting the department's procedural clarification.
The High Court, referencing Supreme Court and its own previous judgments, held that the questions regarding the entitlement to Section 80P deduction and the classification of interest income were covered. The matter was remitted to the Assessing Officer for fresh assessment.
The High Court, referencing Supreme Court and its own previous judgments, held that the entitlement to deduction under Section 80P and the classification of income (business vs. other sources) require fresh consideration. The matter was remitted to the Assessing Officer for a de novo assessment.
The High Court held that the principal question is no longer res integra, citing the Apex Court's decision in Mavilayi Service Co-operative Bank Ltd v. Commissioner of Income Tax. The Court observed that the ancillary argument regarding includable interest earned by the assessee from members or non-members, or income from a registered Co-operative Society or Treasury Bank, does not lead to a cascading effect or limit the Department's discretion in subsequent assessment years. The Court noted that the Supreme Court in its order dated 04.10.2018 in Civil Appeal No.7526/2011, while giving effect to Circular No.3/2019 dated 11.07.2018, granted liberty to the Revenue to seek review. The Court further stated that the value in the appeal is less than the limit prescribed by the CBDT Circular, and the Supreme Court judgment in S.C. Naregal v. Commissioner of Income Tax, which considered the effect of CBDT Circulars and dismissed appeals falling within their purport, is applicable. Therefore, the High Court concluded that the appeal could be dismissed as coming within the monetary limit prescribed in Circular No.3/2018, subject to the observations in the order dated 04.10.2018 in Civil Appeal No.7526/2011. The operative direction is the dismissal of the appeal.
The High Court of Kerala, considering the facts and circumstances, disposed of the Writ Petition. It ordered that all steps for recovery of amounts due under the assessment order (Ext.P1), as confirmed by the first appellate order (Ext.P2), shall remain stayed until the Income Tax Appellate Tribunal passes an order on the stay petition (Ext.P4). The Tribunal's decision on the stay petition is awaited. The High Court did not decide the merits of the appeal itself but provided interim relief by staying recovery proceedings.
The High Court, following Supreme Court and its own previous judgments, held that the assessee is entitled to deduction under Section 80P(2)(d) on interest earned from the Alleppey District Co-operative Bank. The bank was considered a co-operative society, and the interest income qualified for deduction.
The High Court of Kerala did not decide the merits of the appeal. Instead, it directed the appellate authority (2nd respondent, National Faceless Appeal Centre) to consider and pass appropriate orders on the petitioner's appeal (Ext.P2) expeditiously, within a period of 2 months from the date of receipt of the judgment. The Court also ordered that no coercive steps shall be initiated against the petitioner pursuant to the assessment order (Ext.P1) until the appeal is disposed of. It was clarified that the appeal would be considered on merits only if the appellate authority decided to condone any delay in filing the appeal. The writ petition was disposed of with these directions.
The High Court held that the questions raised by the assessee were abstract and out of context with the scheme of the Income Tax Act. The court found the authorities' reasoning to be correct and justified.
The High Court, following Supreme Court and its own previous judgments, held that the assessee is entitled to deduction under Section 80P(2)(d) on interest earned from the Alleppey District Co-operative Bank. The bank was considered a co-operative society, and the interest income qualified for deduction.
The High Court disposed of the writ petition by directing the Income Tax department to provide a link for uploading documents necessary for the transfer of TDS credit from the managing partner to the firm's account, subject to the petitioner complying with all procedural formalities. The Court noted the submission by the department regarding Rule 37BA(2) of the Income Tax Rules, which allows for such a transfer upon compliance. Proceedings initiated against the petitioner for recovery of amounts due under an assessment order (Ext.P1) were ordered to be kept in abeyance for two months to allow the petitioner to avail the option under Rule 37BA(2). The Court did not decide on the merits of any assessment but facilitated the procedural remedy.
The High Court held that the appeal is maintainable based on exceptions to circulars, but ultimately dismissed it. The court applied the Supreme Court's decision in S.C. Naregal, stating the appeal falls within the monetary limit of the CBDT circular.
The High Court held that the appeal is maintainable and could be dismissed as coming within the monetary limit prescribed by the CBDT Circular. The court relied on Supreme Court judgments regarding the application of such circulars.
The High Court held that the appeal could be dismissed as it fell within the monetary limit prescribed by CBDT Circular No. 3/2018. The court referred to Supreme Court judgments regarding the applicability of such circulars.
The High Court held that the principal question was no longer res integra, citing the Supreme Court's decision in Mavilayi Service Co-operative Bank Ltd v. Commissioner of Income Tax. The Court found that the ancillary argument to bring the case under exceptions was related to the includable interest earned by the assessee from members, non-members, or other sources. The Court reasoned that the consideration of the appeal would not have a cascading effect or limit the Department's discretion in subsequent assessment years. Referring to the Supreme Court's order in Civil Appeal No. 7526/2011, which allowed the Revenue liberty to seek review, and the judgment in S.C. Naregal v. Commissioner of Income Tax, which dismissed appeals within the purport of CBDT circulars, the High Court concluded that the appeal should be dismissed as it fell within the monetary limit prescribed by Circular No. 3/2018. The dismissal was subject to the observations made in the Supreme Court's order dated October 4, 2018.
The High Court held that questions 1 and 2 are covered by the principles laid down in Mavilayi Service Co-operative Bank Ltd. and Peroorkada Service Co-operative Bank Ltd. It was determined that the Assessing Officer has an obligation to independently consider whether the benefit under Section 80P(2) is limited only to income falling within its purview. Consequently, these questions were answered in favour of the Revenue for statistical purposes, and the matter was remitted to the Assessing Officer for passing a fresh assessment order, keeping in view the aforementioned judgments. Regarding question 3, it was considered academic in light of the answer to questions 1 and 2. For questions 4 and 5, which pertain to the extent of deduction for interest income from fixed deposits, the Court followed Peroorkada Service Co-operative Bank Ltd., answering them in favour of the Revenue for statistical purposes. The matter was remitted to the Assessing Officer for determining the actual income assessable to tax under the applicable head. The Tribunal's order, the Appeal order, and the Assessment Order were set aside, and the matter was remitted to the Assessing Officer for fresh disposal.
The High Court held that questions 1(i) and (ii) are covered by the principles laid down in Mavilayi Service Co-operative Bank Ltd and Peroorkada Service Co-operative Bank Ltd, concerning the entitlement to benefit under Section 80P(2) and the obligation to independently consider if the deduction is limited to income falling within the purview of these judgments. Consequently, these questions were answered in favour of the Revenue for statistical purposes, and the matter was remitted to the Assessing Officer for a fresh assessment. Question 1(iii) was also answered in favour of the Revenue for statistical purposes in view of the answer to questions 1(i) and (ii), with the matter remitted to the Assessing Officer. Question 2 was answered in favour of the Revenue for statistical purposes, with the matter remitted to the Assessing Officer, in view of the answer to questions 1(i) and (ii). For questions 3 and 4, the parties submitted that they need not be independently considered given the view taken on the preceding questions. The Tribunal's order, the appeal order, and the assessment order were set aside, and the matter was remitted to the Assessing Officer for disposal afresh in accordance with law. No issue was expressly left undecided.
The High Court addressed the questions based on previous judgments. For Question 1(a), concerning the eligibility for deduction under Section 80P(2), the Court held that the issue is no longer res integra in light of Mavilayi Service Co-operative Bank Ltd. The question was answered in favour of the Revenue and against the assessee, remitting the matter to the Assessing Officer. Regarding Questions 1(b), (c), and (d), the counsels for both parties submitted that these questions were ancillary or academic and need not be considered. For Question 2, regarding the classification of interest from surplus funds as 'Income from business' versus 'Income from other sources', the Court, following its decision in Principal Commissioner of Income Tax v. Peroorkada Service Co-operative Bank Ltd (which considered Mavilayi Service Co-operative Bank Ltd), held that the questions are answered in favour of the Revenue for statistical purposes. The matter is remitted to the Assessing Officer for determining the actual income assessable under these heads. Consequently, the Tribunal's order, appeal order, and assessment order were set aside, and the matter was remitted to the Assessing Officer for fresh disposal.
The High Court held that the principal question is no longer res integra, citing the Supreme Court's decision in Mavilayi Service Co-operative Bank Ltd v. Commissioner of Income Tax. The Court found that the ancillary argument to bring the case under exceptions regarding includable interest earned by the assessee from members or non-members, or income from a registered Co-operative Society or Treasury Bank, does not warrant a different approach. The Court observed that the consideration of the appeal by referring to the Circular would not have a cascading effect or limit the Department's discretion in subsequent assessment years. The Court noted that the Supreme Court in its order dated 04.10.2018 in Civil Appeal No.7526/2011, while giving effect to Circular No.3/2019 dated 11.07.2018, granted liberty to the Revenue to seek review. However, the valuation in the present appeal is less than the limit prescribed by the CBDT Circular. The Court referred to the Supreme Court judgment in S.C. Naregal v. Commissioner of Income Tax, which considered the effect of CBDT Circular and dismissed an appeal coming within its purport. Therefore, as the valuation of the subject appeal is less than the limit stipulated by the CBDT Circular, the judgment in S.C. Naregal is applicable. The Court concluded that by a combined reading of the reported decisions and the Supreme Court order dated 04.10.2018, the appeal could be dismissed as coming within the monetary limit prescribed in Circular No.3/2018, subject to the observations in the order dated 04.10.2018 in Civil Appeal No.7526/2011. The operative direction is the dismissal of the appeal.
The High Court held that the principal question is no longer res integra, citing the Supreme Court's decision in Mavilayi Service Co-operative Bank Ltd. v. Commissioner of Income Tax. The Court found that the ancillary argument regarding exceptions to the CBDT circulars, concerning includable interest earned by the assessee, did not demonstrate a cascading effect or limit the Department's discretion in subsequent assessment years. The Court noted that the Supreme Court in its order dated October 4, 2018, in Civil Appeal No. 7526/2011, while giving effect to Circular No. 3/2019, granted liberty to the Revenue to seek review if the tax effect exceeded Rs. 1 Crore. Since the valuation of the subject appeal was less than the limit stipulated by CBDT Circular No. 3/2018, the judgment in S.C. Naregal v. Commissioner of Income Tax was applicable. Therefore, the Court concluded that the appeal could be dismissed as coming within the monetary limit prescribed in Circular No. 3/2018, subject to the observations in the Supreme Court's order dated October 4, 2018.
The High Court held that the appeal was maintainable based on exceptions cited by the Revenue. However, considering the tax effect was below the monetary limit and applying Supreme Court judgments, the appeal was dismissed.
The High Court addressed the substantial questions of law. For questions 1(a) to (d) concerning the eligibility of deduction under Section 80P(2), the Court noted that the central issue is no longer res integra in view of the principle laid down in Mavilayi Service Co-operative Bank Ltd. Consequently, these questions were answered in favour of the Revenue and against the assessee. The matter was remitted to the Assessing Officer. Regarding question 2, concerning whether interest from surplus funds is "Income from business" or "Income from other sources," the learned counsel for the parties submitted that this question need not be independently considered in light of the decision on the previous questions. Resultantly, the Tribunal's order, the Appeal order, and the Assessment Order were set aside, and the matter was remitted to the Assessing Officer for fresh disposal. The appeal was allowed as indicated.