2015 (11) TMI 1002 - HC - Income Tax

Disallowance of claim under Section 80P(2)(a)(iii) - Held that - The Tribunal had relied upon the decision of this Court in the case of Karnal Cooperative Sugar Mills Ltd s case (2001 (9) TMI 78 - PUNJAB AND HARYANA High Court) to deny the benefit of deduction under Section 80P(2)(a)(iii) of the Act to the assessee. However, Full Bench of this Court in The Budhewal Co-op. Sugar Mills Ltd s case (2009 (5) TMI 63 - PUNJAB AND HARYANA HIGH COURT) had overruled the said judgment against which the Supreme Court in Deputy Commissioner of Income-Tax v. Budhewal Co-operative Sugar Mills Ltd. (2015 (8) TMI 520 - SUPREME COURT) following its judgment in Morinda Co-operative Sugar Mills Ltd. v. Commissioner of Income Tax (2012 (9) TMI 847 - SUPREME COURT ) remanded the matter back for adjudicating the issue afresh. Thus the matter is remitted to the Tribunal to adjudicate the issue afresh in accordance with law after affording an opportunity of hearing to the parties. The appeals stand disposed of accordingly.

Summary

Issues:
1. Appeal against ITAT order regarding assessment year 2003-04.
2. Legality of orders passed by Assessing Officer and CIT(A).
3. Taxability of grant-in-aid received.
4. Disallowance of expenses and depreciation.
5. Deduction under Section 80P(2)(a)(iii) of the Income Tax Act.

Analysis:
1. The appellant filed two appeals against the ITAT order for the assessment year 2003-04, challenging various issues. The Tribunal consolidated the cases as the issues were identical. The primary questions of law raised included the legality of the orders, taxability of grant-in-aid received, disallowance of expenses and depreciation, and denial of deduction under Section 80P(2)(a)(iii) of the Income Tax Act.

2. The appellant initially declared a net loss in the return of income for the assessment year 2003-04. However, the Assessing Officer reopened the assessment and made additions, disallowing expenses and depreciation while taxing the grant-in-aid received. The CIT(A) upheld the Assessing Officer's order, leading to the appellant's appeal before the Tribunal, which also ruled against the appellant.

3. The appellant argued that a Full Bench of the Court had overruled the legal position on which the case was decided, referring to a specific case law. The Tribunal had relied on a previous judgment to deny the deduction under Section 80P(2)(a)(iii) of the Act. The Supreme Court had remanded a similar case back for fresh adjudication, indicating a need for reconsideration in light of the updated legal position.

4. Considering the legal developments and the overruling of the previous judgment by a Full Bench and subsequent Supreme Court decisions, the High Court remitted the matter back to the Tribunal for fresh adjudication in accordance with the law. The appeals were disposed of accordingly, providing an opportunity for both parties to present their case before the Tribunal for a reconsideration of the issues raised.

This detailed analysis of the judgment provides a comprehensive overview of the issues involved, the legal arguments presented, and the court's decision to remit the matter back to the Tribunal for fresh adjudication.