Assessee's exemption claim under 1922 Act rejected, section 297(2)(k)/(l) doesn't continue old exemptions under 1961 Act

The ITAT Rajkot dismissed the assessee's appeal challenging revision u/s 263. The assessee claimed exemption for interest and rental income under a 1922 Act order, arguing it continued under the 1961 Act via section 297(2)(k)/(l). The CIT(A) found the AO allowed deductions u/s 80P(2)(c)/(d) without proper verification. Following Gujarat HC precedent in Sri Gopal Gram Seva Sahakari Mandali Ltd., the tribunal rejected the assessee's claim that exemptions under the repealed 1922 Act persisted. The assessee's reliance on SC's Maharao Bhim Singh case was distinguished as factually different, involving section 10(19A) interpretation rather than general exemption continuation principles.

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Issues Involved:
1. Validity of the order passed by the Pr.CIT under section 263 of the Income Tax Act, 1961.
2. Error in setting aside the assessment order and directing a fresh assessment.
3. Consideration of the exemption for societies registered before the enactment of the Income Tax Act, 1961.
4. Direction to assess income under section SOP.
5. Consideration of the Part B States (Taxation Concessions) Order, 1950.

Summary of Judgment:

1. Validity of the Order Passed by the Pr.CIT under Section 263 of the Income Tax Act, 1961:
The Pr.CIT assumed jurisdiction for revision of the assessment order under section 263, noting that the AO had allowed the assessee's claim of deduction under section 80P(2)(c)/(d) without proper verification. The Pr.CIT issued a notice to the assessee, highlighting errors in the assessment order regarding the computation of rental income and the non-allowability of deductions on interest income and rental income.

2. Error in Setting Aside the Assessment Order and Directing a Fresh Assessment:
The Pr.CIT found that the AO had not examined the issue of claim of deduction on rental and interest income under section 80P(2) properly, causing prejudice to the Revenue. The Pr.CIT set aside the assessment order and directed the AO to verify the assessee's claim of deduction with respect to the incomes in terms of section 80P(2).

3. Consideration of the Exemption for Societies Registered Before the Enactment of the Income Tax Act, 1961:
The assessee contended that its income was exempt from tax as it was a registered housing cooperative society before 1.4.1950, under the Part B States (Taxation Concessions) Order, 1950. The Pr.CIT dismissed this contention, citing a similar issue decided by the Hon'ble Gujarat High Court in the case of Sri Gopal Gram Seva Sahakari Mandali Ltd., which rejected the exemption claim under the old notification.

4. Direction to Assess Income under Section SOP:
The Pr.CIT noted that the rental income should be assessed as income from house property, not eligible for deduction under section 80P(2)(c), and the interest income from fixed deposits with banks was not eligible for deduction under section 80P(2)(d).

5. Consideration of the Part B States (Taxation Concessions) Order, 1950:
The assessee relied on the ITAT decision in its own case for AY 1989-90 and the Supreme Court decision in the case of Maharao Bhim Singh of Kota, arguing that the exemption under the 1950 order still applied. The Tribunal found that the Supreme Court decision did not support the assessee's claim and upheld the Pr.CIT's order, finding no merit in the assessee's arguments.

Conclusion:
The Tribunal confirmed the order of the Pr.CIT, holding that the assessment order was erroneous and prejudicial to the interest of the Revenue. The appeal of the assessee was dismissed.

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