Itat/270/2022 Ia No: Ga/1/2022 Principal Commissioner Of Income Tax Asansol v. Gunja Samabay Krishi Unnayan Samity Ltd

OD–6 IN THE HIGH COURT AT CALCUTTASPECIAL JURISDICTION (INCOME TAX)ORIGINAL SIDE ITAT/270/2022IA NO: GA/1/2022PRINCIPAL COMMISSIONER OF INCOME TAX ASANSOLVS.GUNJA SAMABAY KRISHI UNNAYAN SAMITY LTD. BEFORE :THE HON’BLE JUSTICE T.S. SIVAGNANAMAndTHE HON’BLE JUSTICE HIRANMAY BHATTACHARYYADate : 13[th] January, 2023 Appearance :Mr. Prithu Dudheria, Adv...for appellant The Court : - Heard learned Counsel on behalf of the appellant. This appeal by the revenue filed under Section 260A of the Income Tax Act, 1961,(the Act) is directed against the order dated 28.6.2022 passed by the Income TaxAppellate Tribunal “B” Bench, Kolkata (the Tribunal) in ITA No.110/Kol/2021 for theassessment year 2016-2017. The revenue has raised following substantial questions oflaw for consideration :- i)Whether on the facts and in the circumstances of the case the LearnedIncome Tax Appellate Tribunal has erred in law in quashing the orderpassed under Section 263 of the Income Tax Act, 1961 withoutconsidering the fact that the Hon’ble Supreme Court in the case of M/s.Totagars Co-Operative Ltd. SLN (C.N. 7572 of 2009) had held that interestincome from surplus fund invested in the deposits with the bank andgovernment securities would come under income from other sources underSection 56 of the Income Tax Act, 1961 and such interest does not qualifyfor deduction under Section 80P of the Income Tx Act, 1961 ?Income Tax Appellate Tribunal has erred in law in quashing the orderpassed under Section 263 of the Income Tax Act, 1961 withoutconsidering the fact that the Hon’ble Supreme Court in the case of M/s.Totagars Co-Operative Ltd. SLN (C.N. 7572 of 2009) had held that interestincome from surplus fund invested in the deposits with the bank andgovernment securities would come under income from other sources underSection 56 of the Income Tax Act, 1961 and such interest does not qualifyfor deduction under Section 80P of the Income Tx Act, 1961 ?ii) Whether on the facts and in the circumstances of the case the LearnedIncome Tax Appellate Tribunal has erred in law in quashing the orderpassed under Section 263 of the Income Tax Act, 1961 based on judgmentIncome Tax Appellate Tribunal has erred in law in quashing the orderpassed under Section 263 of the Income Tax Act, 1961 based on judgment of Hon’ble Delhi high Court in the case of ITO Vs.DG Housing ProjectsLtd.[2012] 343 ITR 329 (Del) without considering the fact that duringproceeding under Section 263 before the PCIT, the assessee could notsubstantiate that the amount of Rs.39,44,212/- was not interest incomefrom surplus fund invested in the deposits with bank and the said interestincome qualifies for deduction under Section 80P of the Income Tax Act,1961 ? of Hon’ble Delhi high Court in the case of ITO Vs.DG Housing ProjectsLtd.[2012] 343 ITR 329 (Del) without considering the fact that duringproceeding under Section 263 before the PCIT, the assessee could notsubstantiate that the amount of Rs.39,44,212/- was not interest incomefrom surplus fund invested in the deposits with bank and the said interestincome qualifies for deduction under Section 80P of the Income Tax Act,1961 ? Though notice has been served on the respondent none appears forrespondent. The short question which falls for consideration before learned Tribunalwas whether assumption of jurisdiction by the Principal Commissioner of Income Tax,Asansol (PCIT) under Section 263 of the Act was justified. On perusal of the orderpassed by the learned Tribunal we find that on facts the learned Tribunal noted whilethe assessment proceeding was in progress the assessing officer issued a detailsquestionnaire under Section 142(1) of the Act calling upon the respondent/assessee tofurnish justification on claim of deduction under Section 80P of the Act. In response tosuch notice the assessee submitted a details reply which has been extracted by thelearned Tribunal in the impugned order. After considering the reply the assessing officerobserved that out of the total income of Rs.32,31,576/- the business income isRs.26,96,495/- and the balance if Rs.5,35,081/- is on account of short term capitalgain and thus restricted the deduction under Section 80P of the act to the amount ofRs.26,96,495/- which relates to the business income. The PCIT exercised its jurisdictionunder Section 263 of the Act primarily by placing reliance on the decision of the Hon’bleCourt in the case of TOTAGARS CO-OPERATIVE LTD. CP No. 7572 of 2022 and heldinterest income from surplus fund invested in the deposits with banks and GovernmentSecurities which comes in the category of income from other sources under Section 56of the Act, which does not qualify for deduction under Section 80P of the Act. Theassessee submitted an elaborate reply to the notice issued under Section 263 of the Act,in which they placed reliance o the decision of the High Court of Gujarat in the case ofCIT VS. M/s. JAFRI MOMIN VIKASH COOPERATIVE SOCIETY LTD. Tax Appeal No. 442 of 2013 dated 15.1.2014 and the decision of the Coordinate Bench of the BengaluruBench of the Tribunal in the case of SRI BASAVRAJ CFO PRIMARY AGRICULTURALCREDIT COOPERATIVE SOCIETY LTD. in ITA No. 867/Bang/2017 and the decision ofthe Co-ordinate Bench of the Ahmedabad Bench of the learned Tribunal in the case ofM/s. JAFRI MOMIN VIKASH COOPERATIVE SOCIETY LTD. (supra) in ITA No.1491/Ahd/2012. The learned Tribunal considering the submissions on either side andfound that the decision in TOTAGARS CO-OPERATIVE LTD.(supra) rendered by theHon’ble Supreme Court is clearly distinguishable on facts as the respondent society wasa primary cooperative agricultural society and also found that the facts in the case ofM/s. JAFRI MOMIN VIKASH COOPERATIVE SOCIETY LTD. of High Court of Gujaratwould squarely apply to the case on hand. Furthermore, the learned Tribunal took noteof the decision of the high Court of Karnataka in the case of GUTTI GEDERARA CO-OPERATIVE SOCIETY LTD.VS. ITO 377 ITR 464 (Karnataka) and held that when theamount which is deposited in the bank was not an amount due to members and it wasnot the liability of the society to the members then the interest earned from the depositsin the bank was held to be eligible for deduction under Section 80P (2)(a)(i) of the Act.That apart, the learned Tribunal has also extensively gone into the manner in which theassessing officer completed the assessment by conducting inquiry after issuing aquestionnaire on the deduction claimed by the assessee under Section 80P(2)(a)(i) andalso taking note of the detailed report filed by the assessee. Furthermore, on facts theTribunal noted that the documents placed by the assessee before it clearlydemonstrates the nature of activity carried on by the assessee resulting in differentbusiness income which is covered by the Tribunal of 80P(2)(a)(i). In this regard reliancewas placed on High Court of Bombay in the case of GABRIEL INDIA LTD. 1993 203 ITR108 (Bom). Further as to the justification on the part of the PCIT to invoke its powerunder Section 263 o the Act Tribunal took guidance from the decision of the High Courtat Delhi in the case of ITO Vs.DG HOUSING PROJECTS LTD. [2012] 343 ITR 329(Del),wherein it was held that in the case wrong opinion for finding on merit, the CIT has to come to the conclusion himself decided that the order is erroneous by conductingnecessary inquiry. Further, it was pointed out that CIT while exercising jurisdiction under Section263 of the Act should record a finding that the assessment order is erroneous andprejudicial to the interest of revenue and it is not sufficient to allege that theinvestigation was inadequate. On facts, the learned Tribunal formed that the PCIT hasnot carried out any enquiry of his own and merely set aside the assessment andremanded it to the Assessing Officer to pass a fresh assessment order on the issue ofclaim of deduction under Section 80B(2)(a)(i) of the Act and this being contrary to thedecision rendered in the case of DG Housing Projects Limited, allowed the appeal andquashed the order passed under Section 263 of the Act. Thus, we find that the learned Tribunal had rightly taken note of the legalposition and granted relief to the assessee. Hence, we are of the view that there is noerror in the order passed by the Tribunal for us to interfere and much less, there is nosubstantial question of law arising for consideration. In the result, the appeal fails and is dismissed. The application being IA No.GA/1/2022 is also dismissed. (T.S. SIVAGNANAM, J.) (HIRANMAY BHATTACHARYYA, J.)