2010 (10) TMI 854 - HC - Income Tax

Deduction claimed u/s 80P(2)(a)(iii) - disallowance on the ground that law has been amended with retrospective effect when the issue of validity of retrospective amendment is pending before the Hon ble Supreme Court in the appellants own case - Held that - As assessee claimed deduction of income from marketing produce of the farmers without showing that the said produce was grown by the farmers. In view of the amendment which has been upheld by Hon ble Supreme Court in National Agricultural Co-operative Marketing Federation 2003 (3) TMI 3 - SUPREME Court the assessee was not entitled to the deduction - in favour of the revenue.

Summary

Issues:
1. Challenge to the amendment of section 80P(2)(a)(iii) of the Income-tax Act, 1961.
2. Disallowance of deduction claimed under section 80P(2)(a)(iii) for a specific amount.
3. Classification of rent received from godowns as income from "business" or "income from house property."
4. Validity of rectification order for assessment year 1994-95.
5. Interpretation of exemption under section 80P(2)(a)(iii) for various assessment years.

Analysis:

1. Challenge to Amendment of Section 80P(2)(a)(iii):
The challenge was against the amendment of section 80P(2)(a)(iii) of the Income-tax Act, 1961, which substituted the word "of" with "grown by." This amendment affected the deduction allowed to the assessee from income from marketing of agricultural produce 'of members.' The court noted that the deduction was no longer available unless the produce was 'grown by' the members. The amendment was upheld by the Hon'ble Supreme Court in a previous judgment, leading to the dismissal of the writ petitions.

2. Disallowance of Deduction Claimed under Section 80P(2)(a)(iii):
In one case, the assessee claimed a deduction under section 80P(2)(a)(iii) for a specific amount. The Tribunal disallowed this deduction, citing a retrospective amendment in the law. The issue of the validity of the retrospective amendment was pending before the Hon'ble Supreme Court in the appellant's own case. However, the counsel for the appellant acknowledged that the issue was covered against the assessee by the previous judgment of the Hon'ble Supreme Court, leading to the dismissal of the appeal.

3. Classification of Rent Received from Godowns:
Another issue pertained to the classification of rent received from godowns as income from "business" rather than "income from house property." The Tribunal upheld this classification, and the counsel for the appellant conceded that this issue was also covered against the assessee by a previous judgment of the Court. Consequently, the appeal on this issue was dismissed.

4. Validity of Rectification Order for Assessment Year 1994-95:
The validity of a rectification order for the assessment year 1994-95 was questioned. The Tribunal had upheld the rectification order, which was based on a debatable issue. However, the counsel for the assessee acknowledged that the rectification order was in line with the judgment of the Hon'ble Supreme Court in a previous case. As the rectification was done within the limitation, the appeal on this issue was dismissed.

5. Interpretation of Exemption under Section 80P(2)(a)(iii) for Various Assessment Years:
For various assessment years, the question arose regarding the exemption under section 80P(2)(a)(iii) of the Income-tax Act, 1961. The Tribunal found that the assessee had claimed a deduction without showing that the produce was grown by the farmers. In light of the upheld amendment by the Hon'ble Supreme Court, the assessee was not entitled to the deduction. Consequently, the references related to these assessment years were disposed of in favor of the revenue.

This detailed analysis covers the various issues addressed in the judgment by the High Court of Punjab and Haryana, providing a comprehensive overview of the legal implications and outcomes for each specific issue involved.