Ia No.ga/1/2023, Ga/2/2023Principal Commissioner Of Income Tax -9, Kolkata v. M/S. Steel Authority Of India Employees’ Co-Operativecredit Society Ltd

IN THE HIGH COURT AT CALCUTTASPECIAL JURISDICTION (INCOME TAX)ORIGINAL SIDE ITAT/62/2023 IA NO.GA/1/2023, GA/2/2023PRINCIPAL COMMISSIONER OF INCOME TAX -9, KOLKATA VS. M/S. STEEL AUTHORITY OF INDIA EMPLOYEES’ CO-OPERATIVECREDIT SOCIETY LTD. ITAT/63/2023IA NO.GA/1/2023, GA/2/2023 PRINCIPAL COMMISSIONER OF INCOME TAX -9, KOLKATA VS. M/S. STEEL AUTHORITY OF INDIA EMPLOYEES’ CO-OPERATIVECREDIT SOCIETY LTD., KOLKATA ITAT/64/2023IA NO.GA/1/2023, GA/2/2023PRINCIPAL COMMISSIONER OF INCOME TAX -9, KOLKATA VS.M/S. STEEL AUTHORITY OF INDIA EMPLOYEES’ CO-OPERATIVECREDIT SOCIETY LTD. BEFORE : THE HON’BLE ACTING CHIEF JUSTICE T.S. SIVAGNANAMAndTHE HON’BLE JUSTICE HIRANMAY BHATTACHARYYADate : 10[th] April, 2023 Appearance :Ms. Smita Das De, Adv.…for the appellantMr. Saumya Kejriwal, Adv.Mr. G.S. Gupta, Adv.…for the respondent The Court : We have heard Ms. Smita Das De, learned standing counselfor the appellant and Mr. Saumya Kejriwal, learned counsel for the respondent.There is a delay of 168 days in filing these appeals. We have perused the affidavit filed in support of the petition forcondonation of delay and we find that sufficient cause has been shown for notpreferring the appeal within the period of limitation. Hence the applications forcondonation of delay are allowed. Delay in filing the appeal is condoned. These appeals have been filed by the revenue under Section 260A of theIncome Tax Act, 1961 (the Act) challenging the common order dated 18[th] April,2022 passed by the Income Tax Appellate Tribunal, `B’ Bench, Kolkata in I.T.ANo. 426 to 428/Kol/2020 and 268 to 269/Kol/2021 for the assessment year2012-13, 2013-14 and 2014-15. The revenue has raised the followingsubstantial questions of law for consideration :- a)Whether in the facts and circumstances of the case the Tribunal wasjustified in law to hold that any disallowances under Section 14A of thesaid Act was not applicable on the exempt income earned by the assessee?justified in law to hold that any disallowances under Section 14A of thesaid Act was not applicable on the exempt income earned by the assessee? b)Whether in the facts and circumstances of the case the Tribunal wasjustified in law to treat the transaction of sale and investment in equityand mutual funds as business income instead of capital in nature despitethe settled proposition of law as held by the Hon’ble Apex Court in thecase of Totagars Co-operative Sales Society Ltd. reported in (2010) 188Taxmann 282 Supreme Court ?justified in law to treat the transaction of sale and investment in equityand mutual funds as business income instead of capital in nature despitethe settled proposition of law as held by the Hon’ble Apex Court in thecase of Totagars Co-operative Sales Society Ltd. reported in (2010) 188Taxmann 282 Supreme Court ? c)Whether in the facts and circumstances of the case the Tribunal wasjustified in law to dismiss the appeal of the Revenue relating todisallowances of expenditure incurred in relation to exempt income earnedby the assessee by invoking sub-rule 2(ii) of Rule 8D of the Income TaxRules 1962 ?justified in law to dismiss the appeal of the Revenue relating todisallowances of expenditure incurred in relation to exempt income earnedby the assessee by invoking sub-rule 2(ii) of Rule 8D of the Income TaxRules 1962 ? The first issue which arises for consideration is with regard to whether theaction of the Assessing Officer in accepting the assessee’s treatment of incomefrom sale of mutual funds and shares as income from business should beaccepted. The learned Tribunal has affirmed the view taken by theCommissioner of Income tax (Appeals) and has specifically noted that thedepartment is required to maintain a consistent stand why the issue which wasa recurrent issue and departure can be made only when fresh material isavailable to do so. The first issue which arises for consideration is with regard to whether theaction of the Assessing Officer in accepting the assessee’s treatment of incomefrom sale of mutual funds and shares as income from business should beaccepted. The learned Tribunal has affirmed the view taken by theCommissioner of Income tax (Appeals) and has specifically noted that thedepartment is required to maintain a consistent stand why the issue which wasa recurrent issue and departure can be made only when fresh material isavailable to do so. We find that revenue has consistently accepted the stand of the assesseethat it is a trader of shares and mutual funds for the assessment years 2005-06to 2007-08 and in the year 2008-09 the Assessing Officer deviated and suchorder was reversed by the Commissioner of Income tax (Appeals). Subsequentlythe Assessing Officer had again treated the assessee’s income as a capital gainfrom the investments for the assessment year 2011-12, which was reversed bythe CIT(A) and it was held to be business income and that order passed by theCIT(A) has not been challenged by the department and has been allowed toattain finality. Thus, the Tribunal rightly noted the decisions of the Hon’bleSupreme Court in Radha Swamy Satsang vs. CIT, (1992)193 ITR 321(SC) andheld that the principle of rule of consistency has to be applied in the assessee’scase. Thus, we find that the order passed by the Tribunal was just and properand does not call for any interference. The second issue is whether the order of the Assessing Officer disallowingthe expenditure by invoking Section 14A of the Act, read with Rule 80P(2),80P(2)(a)(i) and 3(i)and Income tax Rules, 1962. On going through the orderpassed by the Tribunal, we find that the relevant decision on the point has been noted and the case has been decided in favour of the respondent assessee. Theissue is fully covered by the decisions of the Supreme Court in the case of SouthIndian Bank of India Ltd. vs. CIT, (2021) 438 ITR 1 (SC). Thus, the Tribunalrightly answered the said issue in favour of the respondent assessee. In the result, the appeals filed by the revenue are dismissed and thesubstantial questions of law are answered against the revenue.The stay applications are closed. (T.S. SIVAGNANAM, J.) ACTING CHIEF JUSTICE (HIRANMAY BHATTACHARYYA, J.) SN/S.Pal