2016 (10) TMI 1262 - HC - Income Tax

Deduction u/s 80P - HELD THAT - Questions under Section 80P can also be considered only in the light of the question whether interest derived by the society is income from other sources, we are of the view that it is necessary that the Tribunal re-considers all the issues arising for decision in these appeals, in particular, the applicability of circular No.18/2015 dated 02.11.2015 and the question of applicability of the ratio of the decision in Chirakkal Service Co-operative Bank Limited 2016 (4) TMI 826 - KERALA HIGH COURT as to the effect of Section 80P of the Income Tax Act on the appellants. To enable a comprehensive consideration by the Income Tax Appellate Tribunal of all the issues arising for decision in these appeals, in the appeals before the Tribunal, in the light of what we have stated above, the impugned orders of the Tribunal are vacated and the cases are remitted to the Tribunal for re-consideration. Parties are directed to mark appearance before the Tribunal on 15.11.2016

Summary

Issues Involved:
Applicability of Section 80P of the Income Tax Act, 1961; Interpretation of circular No.18/2015 dated 02.11.2015; Effect of the decision in Chirakkal Service Co-operative Bank Limited v. Commissioner of Income Tax [2016(2) KLT 535] on the appellants' case.

Applicability of Section 80P of the Income Tax Act, 1961:
The learned counsel for the appellants argued that the issue concerning the applicability of Section 80P of the Income Tax Act, 1961 to the appellants is settled by a previous decision of the Court. He emphasized that circular No.18/2015 dated 02.11.2015 provides sufficient clarification on the matters related to 'income from other sources' and 'profits and gains of business'. The Court, after considering the submissions from both sides, concluded that the Tribunal needs to re-examine all the issues, specifically focusing on the applicability of the circular and the impact of the earlier decision on the appellants. Consequently, the Court vacated the Tribunal's orders and remitted the cases for reconsideration.

Interpretation of circular No.18/2015 dated 02.11.2015:
The Court acknowledged the significance of circular No.18/2015 dated 02.11.2015 in addressing the issues raised regarding 'income from other sources' and 'profits and gains of business'. The learned counsel for the appellants highlighted the relevance of this circular in resolving the legal questions at hand. The Court, in its deliberation, emphasized the need for the Tribunal to thoroughly review all issues, including the interpretation and application of the circular, to ensure a comprehensive consideration of the case.

Effect of the decision in Chirakkal Service Co-operative Bank Limited v. Commissioner of Income Tax [2016(2) KLT 535]:
The learned counsel for the appellants referenced a prior judgment of the Court in Chirakkal Service Co-operative Bank Limited v. Commissioner of Income Tax [2016(2) KLT 535] to support their argument on the impact of Section 80P of the Income Tax Act on the appellants' situation. The Court recognized the relevance of this previous decision and directed the Tribunal to reevaluate all issues in light of the principles established in that case. By vacating the Tribunal's orders and remitting the cases for reconsideration, the Court ensured that the effect of the earlier judgment on the appellants' case is thoroughly examined by the Tribunal.

This detailed analysis of the judgment from the Kerala High Court provides a comprehensive overview of the issues involved, the arguments presented by the parties, and the Court's decision to remit the cases for reconsideration by the Tribunal.