2017 (10) TMI 941 - HC - Income Tax

Review petition - assessee s challenge to the justifiability of initiation of re-assessment proceedings under Section 147/148 - Held that - This Court in para 25 has clearly observed that it remains an academic issue in view of the conclusions arrived at by this Court. Obviously, the judgment of this Court will be applicable only on the question of deduction at the rate of 100% under Section 80-P(2) of the Act to the assessee petitioner and it does not discuss the other issues or grounds for questioning the re-assessment proceedings under Section 147/148 of the Act.

Issues:
Review of judgment on Income Tax Appeals involving deduction under Section 80-P(2) of the Income Tax Act, 1961, consideration of previous Assessment Orders, relevance of Karnataka High Court judgment and CBDT Circular, challenge to re-assessment proceedings under Section 147/148 of the Act.

Analysis:

1. Review of Judgment on Deduction under Section 80-P(2):
The Review Petitions sought a review of the judgment on Income Tax Appeals regarding the deduction under Section 80-P(2) of the Income Tax Act, 1961. The counsel for the Review Petitioners argued that the Assessing Authority had allowed the deduction for previous Assessment Years, and relevant documents were submitted. However, the Court held that the petitioner was not entitled to 100% deduction under Section 80-P(2) even with reference to interest earned on deposits made with Co-operative Banks. The Court emphasized that the change of banks did not alter the character of income, citing a Supreme Court decision. The Court concluded that the petitioner was not entitled to the deduction under Section 80-P(2)(a) or (d) of the Act.

2. Consideration of Previous Assessment Orders and Legal Precedents:
The Review Petitioner highlighted the orders passed by the Assessing Authorities for preceding years and referred to a Karnataka High Court judgment and a CBDT Circular. However, the Court noted that the opinion could not rely on past decisions of the Assessing Authority. The Court clarified that the judgment was based on specific legal interpretations and was not influenced by previous orders or circulars. The Court emphasized that the Co-operative Banks were distinct from Co-operative Societies, leading to the denial of the deduction under Section 80-P(2).

3. Challenge to Re-assessment Proceedings under Section 147/148:
The Review Petitioner also raised concerns regarding the justifiability of re-assessment proceedings under Section 147/148 of the Act. The Court observed that this issue became academic due to the conclusions reached in the judgment. The Court specified that its decision pertained only to the deduction under Section 80-P(2) and did not address other grounds for challenging the re-assessment proceedings. The Review Petitioner was granted the option to challenge the decision before the Supreme Court.

4. Relevance of Karnataka High Court Judgment and CBDT Circular:
The Review Petitioner argued based on a Division Bench order and a CBDT Circular, contending that Co-operative Banks were not required to deduct tax at source. However, the Court found this argument lacking merit as the referenced order and circular did not pertain to the specific issue addressed in the judgment. Therefore, the Court dismissed the Review Petitions, stating that there were no sufficient grounds to review the decision delivered on 16/06/2017.

In conclusion, the Court dismissed the Review Petitions seeking a review of the judgment on Income Tax Appeals, emphasizing that the grounds raised did not warrant a review as they did not reveal any mistake apparent in the judgment. The Court maintained its decision regarding the deduction under Section 80-P(2) and clarified the limited scope of the judgment's applicability to the specific issue discussed.

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