2023 (1) TMI 783

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....as raised following substantial questions of law for consideration :- i) Whether on the facts and in the circumstances of the case the Learned Income Tax Appellate Tribunal has erred in law in quashing the order passed under Section 263 of the Income Tax Act, 1961 without considering the fact that the Hon'ble Supreme Court in the case of M/s. Totagars Co-Operative Ltd. SLN (C.N. 7572 of 2009) had held that interest income from surplus fund invested in the deposits with the bank and government securities would come under income from other sources under Section 56 of the Income Tax Act, 1961 and such interest does not qualify for deduction under Section 80P of the Income Tax Act, 1961 ? ii) Whether on the facts and in the circumstances of....

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....come is Rs.26,96,495/- and the balance if Rs.5,35,081/- is on account of short term capital gain and thus restricted the deduction under Section 80P of the act to the amount of Rs.26,96,495/- which relates to the business income. The PCIT exercised its jurisdiction under Section 263 of the Act primarily by placing reliance on the decision of the Hon'ble Court in the case of TOTAGARS CO-OPERATIVE LTD. CP No. 7572 of 2022 and held interest income from surplus fund invested in the deposits with banks and Government Securities which comes in the category of income from other sources under Section 56 of the Act, which does not qualify for deduction under Section 80P of the Act. The assessee submitted an elaborate reply to the notice issued under....

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....t, the learned Tribunal has also extensively gone into the manner in which the assessing officer completed the assessment by conducting inquiry after issuing a questionnaire on the deduction claimed by the assessee under Section 80P(2)(a)(i) and also taking note of the detailed report filed by the assessee. Furthermore, on facts the Tribunal noted that the documents placed by the assessee before it clearly demonstrates the nature of activity carried on by the assessee resulting in different business income which is covered by the Tribunal of 80P(2)(a)(i). In this regard reliance was placed on High Court of Bombay in the case of GABRIEL INDIA LTD. 1993 203 ITR 108 (Bom). Further as to the justification on the part of the PCIT to invoke its p....