2023 (1) TMI 1322 - AT - Income Tax

Deduction u/s 80P(2)(d) - claim denied on interest earned from investment made in any bank not being Cooperative society - HELD THAT - As perused the order of Division Bench of this Tribunal 2021 (8) TMI 1087 - ITAT SURAT wherein the order of ld. Pr.CIT passed under Section 263 dated 10/10/2018 was set aside. Considering the fact that once the revision order is quashed/set aside, consequent assessment order passed, while giving effect to revision order is thereafter void ab initio. Hence, do not find any merit in the grounds of appeal raised by the revenue and same is dismiss.

Summary

Issues: Appeal against the order of National Faceless Appeal Centre regarding the disallowance of deduction claimed under section 80P(2)(d) of the Income Tax Act for the Assessment year 2014-15.

Analysis:
1. The revenue appealed against the order of National Faceless Appeal Centre regarding the disallowance of deduction claimed under section 80P(2)(d) of the Income Tax Act amounting to Rs. 31,57,772. The revenue contended that the interest received from the Surat District Co Operative bank did not qualify for the deduction under section 80P(2)(d) of the Act. The revenue argued that the interest income on surplus and idle funds not immediately required for business should be taxable as income from other sources under section 56 of the Act, rather than as business income eligible for deduction under section 80P. The revenue also relied on judicial decisions to support its position, including the Hon'ble Supreme Court and High Court judgments. The revenue prayed for setting aside the order of the Commissioner of Income Tax (Appeals) and restoring that of the assessing officer.

2. The assessee, represented by the Authorized Representative, argued that the revenue's grounds of appeal were in favor of the assessee based on a previous Tribunal decision in the assessee's own case. The Authorized Representative highlighted that the addition in the assessment order was made pursuant to a direction under section 263 of the Act, which was later quashed by the Tribunal in a previous appeal. Therefore, the Authorized Representative contended that the addition made in the assessment order had become void ab initio. The Commissioner of Income Tax (Appeals) had deleted the addition following the Tribunal's decision in the previous appeal. The Authorized Representative submitted the copy of the Tribunal's decision in support of the assessee's position.

3. The Senior Departmental Representative for the revenue argued that the Tribunal's decision quashing the order dated 10/10/2018 was challenged before the High Court, and hence, the appeal was filed to keep the issue alive. The Senior Departmental Representative relied on the order of the Principal Commissioner of Income Tax dated 10/10/2018 and the assessment order dated 28/06/2018 to support the revenue's position.

4. The Judicial Member, after considering the submissions of both parties and reviewing the orders of the lower authorities, noted that the Tribunal had previously set aside the revision order dated 10/10/2018. The Judicial Member emphasized that once the revision order was quashed, the consequent assessment order was void ab initio. Therefore, the Judicial Member found no merit in the revenue's grounds of appeal and dismissed the appeal.

5. Consequently, the appeal by the revenue against the order of National Faceless Appeal Centre regarding the disallowance of deduction claimed under section 80P(2)(d) of the Income Tax Act for the Assessment year 2014-15 was dismissed by the Judicial Member.