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Kerala Dinesh Beedi Workers, Central Co-Operative Society Ltd., 'Dinesh Bhavan Payyambalam, Kannur, Rep. By Its Secretary C. Rajan Vs. Commissioner Of Income Tax, Kannur. - Court Judgment

LegalCrystal Citation
CourtKerala High Court
Decided On
Case NumberITA. NO. 43 OF 2011
Judge
AppellantKerala Dinesh Beedi Workers, Central Co-Operative Society Ltd., 'Dinesh Bhavan Payyambalam, Kannur, Rep. By Its Secretary C. Rajan
RespondentCommissioner Of Income Tax, Kannur.
Excerpt:
income tax act, section 263 –.....with the order issued by the commissioner under section 263 of the income tax act directing the assessing officer to reconsider assessee's entitlement for deduction of interest earned on deposit made in other societies under section 80p(2) of the income tax act. we have heard counsel for the appellant and standing counsel for respondent. 2. after hearing both sides and on going through the orders of the tribunal and that of the commissioner and also the assessment order, what we notice is that the assessment was completed granting deduction of the entire amount claimed under section 80p(2) of the act which is interest income earned by the assessee on deposit made in another society. however, the commissioner on going through the assessment order noticed that the assessing officer has.....
Judgment:

Ramachandran Nair, J.

1. The short question arising in the appeal filed by the assessee is whether the Tribunal was justified in declining to interfere with the order issued by the Commissioner under Section 263 of the Income Tax Act directing the Assessing Officer to reconsider assessee's entitlement for deduction of interest earned on deposit made in other societies under Section 80P(2) of the Income Tax Act. We have heard counsel for the appellant and Standing Counsel for respondent.

2. After hearing both sides and on going through the orders of the Tribunal and that of the Commissioner and also the assessment order, what we notice is that the assessment was completed granting deduction of the entire amount claimed under Section 80P(2) of the Act which is interest income earned by the assessee on deposit made in another society. However, the Commissioner on going through the assessment order noticed that the Assessing Officer has not considered application of Section 80AB which provides certain restrictions in regard to deduction admissible under Chapter VI A of the Income Tax Act. On facts the finding is that assessee has claimed deduction of expenditure on interest which is more than the amount claimed as deduction under Section 80P(2) of the Act. It is in this context the Commissioner set aside the assessment with direction to the Assessing Officer to consider correctness of the deduction allowed under Section 80P(2) with specific reference to the provisions of 80AB, keeping in mind the interest liability debited by the assessee for the previous year.

It is obvious from the assessment order that the Assessing Officer has not considered the scope of Section 80AB in respect of the claim made by the assessee under Section 80P(2), particularly in the light of the fact that interest liability incurred by the assessee is more than the interest earned by it. We further notice that none of the authorities have decided the case on merits which was also raised by the assessee before us by stating that the interest earned is on pension fund deposit. When both the Tribunal as well as the Commissioner gave freedom to the assessee to convince the Assessing Officer about the entitlement of full debit of interest liability incurred and admissibility of the claim in full under Section 80P(2), we see no reason for this court to consider the claim on merits. Further, we do not find any merit in the challenge against the jurisdiction of the Commissioner in interfering with the assessment under Section 263 because if the Commissioner's apprehension is correct, then the order was prejudicial to the interest of the Revenue. So much so, we uphold the order of the Tribunal and that of the Commissioner but leave the matter to be considered by the Assessing Officer without being influenced by anything said by any of the two lower authorities. The observation of the Tribunal also should not weigh with the officer while passing orders based on Commissioner's order issued under Section 263 of the Act. The appeal is dismissed but with the above observations.


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