2021 (9) TMI 453 - AT - Income Tax

Rectification of mistake u/s 254 - period of limitation - period of limitation for filing of Miscellaneous Petition u/s. 254(2) - non granting deduction of interest earned from co-operative bank claimed u/s. 80P(2)(d) - HELD THAT - In the present case, the order was passed on 30th January, 2020, therefore, the limitation for filing of Miscellaneous Petition u/s. 254(2) starts from 1st Feb, 2020 to 31st July, 2020. However, the Miscellaneous Application has been filed by the assessee on 1st Sep, 2020 in spite of the fact that as per record the order of the ITAT dated 30th Jan, 2020 was received by the assessee on 19th Feb, 2020. Miscellaneous Petition of the assessee is beyond the period of limitation as provided u/s. 254(2) is not maintainable. Accordingly, the same is dismissed being barred by limitation.

Issues Involved:
1. Error apparent in dismissing the appeal for not granting deduction of interest earned from a co-operative bank under section 80P(2)(d).
2. Maintainability of the Miscellaneous Application filed beyond the prescribed time limit.

Issue-Wise Detailed Analysis:

1. Error Apparent in Dismissing the Appeal:

The assessee sought the recall of the ITAT order dated 30th January 2020, arguing that an error was apparent in dismissing the appeal for not granting a deduction of interest of ?1,66,385 earned from a co-operative bank under section 80P(2)(d) of the Income Tax Act. The assessee cited the judgment of the Hon’ble Jurisdictional High Court in the case of CIT-II vs. Sabarkanta District Co-operative Milk Ltd.

The ITAT considered the specific facts and judicial findings referred by the assessee. It noted that the case laws relied upon by the assessee were distinguishable on facts. In the Sabarkantha District Co-operative Milk Producers Union case, the issue pertained to the disallowance of expenditure under section 14A, whereas the current case involved the deduction of interest income earned on idle funds placed with a co-operative bank. The ITAT referenced the Hon’ble High Court of Gujarat's decision in SBI vs. CIT, which held that interest income on deposits with commercial banks is not entitled to deduction under section 80P(2)(a)(i). The ITAT concluded that interest income earned from idle funds, whether from a scheduled bank or a co-operative bank, does not change its character and is not eligible for deduction under section 80P(2)(d).

The ITAT also referred to similar cases adjudicated by the Co-ordinate Bench, which held that interest income from nationalized or co-operative banks is not entitled to deduction under section 80P(2)(d). The ITAT reiterated that the nature and character of the income do not change based on the type of bank, and such income is not operational income from providing credit facilities to members.

2. Maintainability of the Miscellaneous Application:

The ITAT examined whether the Miscellaneous Application filed by the assessee was within the prescribed time limit under section 254(2) of the Act. The application was filed on 1st September 2020, beyond the six-month period from the end of the month in which the order was passed (30th January 2020). The limitation period for filing the Miscellaneous Petition was from 1st February 2020 to 31st July 2020. Therefore, the application was barred by limitation.

The ITAT emphasized that the power of rectification under section 254(2) can only be exercised for an obvious patent mistake apparent from the record and not for mistakes requiring argument or long reasoning. The ITAT cited the decision of ITAT Pune, which held that the Tribunal has no jurisdiction to amend any order after the expiry of the prescribed time limit, and the Tribunal cannot condone the delay in filing a Miscellaneous Application under section 254(2).

In conclusion, the ITAT dismissed the Miscellaneous Application as it was filed beyond the period of limitation and was not maintainable. The appeal of the assessee was dismissed, and the order was pronounced in the open court on 07-09-2021.

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