Ita/43/2011 Of Kerala Dinesh Beedi Workers Central Co-O v. Commissioner Of Income Tax, Kannur

IN THE HIGH COURT OF KERALA AT ERNAKULAM PRESENT: THE HONOURABLE MR.JUSTICE C.N.RAMACHANDRAN NAIR & THE HON'BLE MR. JUSTICE BABU MATHEW P.JOSEPH FRIDAY, THE 24TH DAY OF FEBRUARY 2012/5TH PHALGUNA 1933 ITA.No. 43 of 2011 ( ) ----------------------ITA.530/COCH/2008 of I.T.A.TRIBUNAL,COCHIN BENCH APPELLANT/APPELLANT: -------------------------------- KERALA DINESH BEEDI WORKERS, CENTRAL CO-OPERATIVE SOCIETY LTD., 'DINESH BHAVAN PAYYAMBALAM, KANNUR, REPRESENTED BY ITS SECRETARY SHRI.C.RAJAN. BY ADV. SRI.DALE P.KURIEN RESPONDENT/RESPONDENT: -------------- COMMISSIONER OF INCOME TAX, KANNUR. BY ADV. SRI.JOSE JOSEPH, SC, FOR INCOME TAX THIS INCOME TAX APPEAL HAVING BEEN FINALLY HEARD ON 24-02-2012, THE COURT ON THE SAME DAY DELIVERED THE FOLLOWING: APPENDIX ANNEXURE A: TRUE COPY OF ASSESSMENT ORDER DT.18.12.2007. ANNEXURE B: TRUE COPY OF REVISIONAL ORDER DT.27.2.2008. ANNEXURE C: TRUE COPY OF TRIBUNAL ORDER DT.29.1.2010. ANNEXURE D: TRUE OCPY OF CERTIFICATE DT.13.2.2008 ISSUED BY THE KANNURDISTRICT CO-OP. BANK LTD. ANNEXURE E: TRUE OCPY OF THE BYE LAWS OF KERALA DINESH BEEDI WORKER'SCENTRAL CO-OPERATIVE SOCIETY LTD. NO.S.IND.(C)61. ANNEXURE F: ENGLISH TRANSLATION OF MALAYALAM BYE LAW OF WELFARE CUMPENSION SCHEME OF KERALA DINESH BEEDI EMPLOYEES CO-OP. SOCIETY LTD. TRUE COPY P.S. TO JUDGE C.N.RAMACHANDRAN NAIR, &BABU MATHEW P. JOSEPH, JJ. .................................................................... I.T. Appeal No.43 of 2011 .................................................................... Dated this the 24th day of February, 2012. JUDGMENT Ramachandran Nair, J. The short question arising in the appeal filed by the assessee iswhether the Tribunal was justified in declining to interfere with theorder issued by the Commissioner under Section 263 of the Income Tax Act directing the Assessing Officer to reconsider assessee'sentitlement for deduction of interest earned on deposit made in othersocieties under Section 80P(2) of the Income Tax Act. We have heardcounsel for the appellant and Standing Counsel for respondent. 2. After hearing both sides and on going through the orders of theTribunal and that of the Commissioner and also the assessment order,what we notice is that the assessment was completed grantingdeduction of the entire amount claimed under Section 80P(2) of the Actwhich is interest income earned by the assessee on deposit made inanother society. However, the Commissioner on going through theassessment order noticed that the Assessing Officer has not considered ITA 43/2011 application of Section 80AB which provides certain restrictions inregard to deduction admissible under Chapter VI A of the Income TaxAct. On facts the finding is that assessee has claimed deduction ofexpenditure on interest which is more than the amount claimed asdeduction under Section 80P(2) of the Act. It is in this context theCommissioner set aside the assessment with direction to the AssessingOfficer to consider correctness of the deduction allowed under Section80P(2) with specific reference to the provisions of 80AB, keeping inmind the interest liability debited by the assessee for the previous year.It is obvious from the assessment order that the Assessing Officer hasnot considered the scope of Section 80AB in respect of the claim madeby the assessee under Section 80P(2), particularly in the light of thefact that interest liability incurred by the assessee is more than theinterest earned by it. We further notice that none of the authoritieshave decided the case on merits which was also raised by the assesseebefore us by stating that the interest earned is on pension fund deposit.When both the Tribunal as well as the Commissioner gave freedom tothe assessee to convince the Assessing Officer about the entitlement offull debit of interest liability incurred and admissibility of the claim in ITA 43/2011 ITA 43/2011 full under Section 80P(2), we see no reason for this court to considerthe claim on merits. Further, we do not find any merit in the challengeagainst the jurisdiction of the Commissioner in interfering with theassessment under Section 263 because if the Commissioner'sapprehension is correct, then the order was prejudicial to the interest ofthe Revenue. So much so, we uphold the order of the Tribunal and thatof the Commissioner but leave the matter to be considered by theAssessing Officer without being influenced by anything said by any ofthe two lower authorities. The observation of the Tribunal also shouldnot weigh with the officer while passing orders based onCommissioner's order issued under Section 263 of the Act. The appealis dismissed but with the above observations. C.N.RAMACHANDRAN NAIRJudge BABU MATHEW P. JOSEPHJudge