2010 (8) TMI 1109 - HC - Income Tax

Summary

Issues Involved:
1. Deduction u/s 80-I of the Income-tax Act, 1961.
2. Maintainability of appeal u/s 260A against an order passed by the Tribunal for rectification of mistake u/s 254(2).

Summary:

Issue 1: Deduction u/s 80-I of the Income-tax Act, 1961
The dispute pertains to the assessment year 1992-93 where the assessee claimed a deduction u/s 80-I of the Income-tax Act, 1961. The Assessing Officer disallowed the deduction, which was upheld by the CIT (Appeal) for dividend income but allowed for interest income. The Tribunal concurred with the CIT (Appeal).

Issue 2: Maintainability of Appeal u/s 260A
The revenue filed a misc. application for rectification of the Tribunal's order, which was rejected. The appeal was admitted on two substantial questions of law:
1. Whether the Tribunal was right in allowing deduction u/s 80-I on interest income, ignoring Supreme Court judgments.
2. Whether an appeal u/s 260A is maintainable against an order passed by the Tribunal for rectification of mistake u/s 254(2) without challenging the original order.

The court decided to address the second question first. It was argued that an appeal u/s 260A is maintainable against every order passed by the Tribunal. However, the court held that an order rejecting a rectification application u/s 254(2) does not decide the substantial question of law or issue involved between the parties, as the issue had already been decided in the original order u/s 254(1).

The court cited various judgments, including those from the Supreme Court and High Courts, to support the view that an appeal u/s 260A is not maintainable against an order rejecting a rectification application u/s 254(2). The only recourse for the aggrieved party is to approach the High Court under writ jurisdiction.

The appeal was dismissed as not maintainable, with liberty to the appellant to invoke writ jurisdiction. The questions were answered in favor of the assessee and against the Revenue regarding maintainability. No finding was recorded on the merits of the controversy.