2016 (3) TMI 168 - SC - Income Tax

Reopening of assessment - deduction under section 80P(2)(a)(i) of the Act was wrongly given inasmuch as the appellant is not a banking company registered under the Banking Regulation Act, 1949, and was not having any banking licence from the Reserve Bank of India - Held that - As the appellant-bank at the outset apprised the court about certain subsequent developments by submitting that after the aforesaid order was passed by the High Court, the Assessing Officer proceeded with the assessment holding that the appellant-assessee was not entitled to any deduction under the aforesaid provisions of the Act. Against that assessment order the appellant preferred an appeal before the Commissioner of Income-tax (Appeals) which was allowed by the Commissioner of Income-tax (Appeals). The order of the Commissioner of Income-tax (Appeals) was challenged by the Department before the Tribunal and that appeal has also been dismissed. In view of the aforesaid events, it is clear that the present appeals have become infructuous. We, thus, dispose of these appeals as infructuous leaving the question of law open.

Summary

Issues:
1. Reopening of assessment under section 147 of the Income-tax Act based on eligibility for exemption under section 80P(2)(a)(i).
2. Denial of deduction under section 80P(2)(a)(i) due to lack of banking company registration and banking license.
3. Rejection of objections by the appellant leading to a writ petition in the High Court.
4. Dismissal of the writ petition by the High Court.
5. Appeal against the High Court's decision leading to a special leave petition.
6. Subsequent developments in the case, including assessment by the Assessing Officer, appeal before the Commissioner of Income-tax (Appeals), and appeal before the Tribunal.
7. Dismissal of the appeal by the Department before the Tribunal.

Analysis:

1. The appellant, a banking entity, had been claiming tax exemption under section 80P(2)(a)(i) of the Income-tax Act for several years. However, for the assessment year 1999-2000, a notice was issued under sections 148 and 147 for reopening the assessment, contending that the appellant was not eligible for the deduction as it was not a banking company registered under the Banking Regulation Act, 1949, and lacked a banking license from the Reserve Bank of India. The appellant's objections to this claim were rejected, leading to a writ petition in the High Court, which was subsequently dismissed.

2. Post the High Court's decision, the Assessing Officer proceeded with the assessment, denying the appellant the deduction under section 80P(2)(a)(i). The appellant then appealed to the Commissioner of Income-tax (Appeals), who allowed the appeal. However, the Department challenged this decision before the Tribunal, which also dismissed the appeal.

3. Considering the developments in the case and the subsequent decisions by the Commissioner of Income-tax (Appeals) and the Tribunal, the Supreme Court found that the appeals had become infructuous. As a result, the Court disposed of the appeals as infructuous, leaving the question of law open for future consideration.