2017 (11) TMI 1821 - HC - Income Tax

Deduction u/s 80P - disallowance of overdue interest - HELD THAT - By Common Order 2017 (9) TMI 1815 - TELANGANA AND ANDHRA PRADESH HIGH COURT this Court has allowed appeal filed by the respondent-assessee and held that the hierarchical orders including that of the Tribunal were erroneous and that the respondent is entitled to exemption under Section 80P(2) of the Income Tax Act 1961. Also as the respondent is held entitled to exemption from payment of tax a further question as to whether the overdue interest is allowable for deduction or not would not arise.

Summary

Issues:
- Disallowance of overdue interest
- Entitlement to exemption under Section 80P(2) of the Income Tax Act, 1961

Issue 1: Disallowance of overdue interest
The High Court heard an appeal filed by the Revenue against the Order of the Income Tax Appellate Tribunal, Visakhapatnam Bench, which had set aside the Order of the Commissioner of Income Tax (Appeals) for the assessment year 2008-2009. The Tribunal's decision pertained to the disallowance of overdue interest. The respondent-assessee argued that a previous Court order had allowed their appeals and held that the hierarchical orders, including that of the Tribunal, were erroneous. It was further contended that since the respondent was entitled to exemption under Section 80P(2) of the Income Tax Act, the question of whether the overdue interest is allowable for deduction did not arise. The Senior Standing Counsel for the Income Tax Department agreed that the appeal was liable to be dismissed in light of the previous Court order. Consequently, the High Court dismissed the appeal.

Issue 2: Entitlement to exemption under Section 80P(2) of the Income Tax Act, 1961
The respondent-assessee in this case was held entitled to exemption under Section 80P(2) of the Income Tax Act, 1961, as per a previous Court order. This entitlement to exemption was a crucial factor in the decision regarding the disallowance of overdue interest. The High Court's decision to dismiss the appeal was influenced by the respondent's entitlement to exemption, which rendered the question of overdue interest deduction irrelevant. The legal position under Section 80P(2) played a significant role in the overall judgment of the High Court, leading to the dismissal of the appeal filed by the Revenue.