TMI Blog2022 (12) TMI 216X X X X Extracts X X X X X X X X Extracts X X X X ..... raised before the PCIT, we are of the view that since the Act prescribes for taxing only the net income (i.e. total income minus the expenses incurred for earning such income), this plea of the assessee has to be necessarily entertained, especially in the light of the judgment of Totagars Sale Co-operative Society [Supra} - Accordingly, the case is restored to the files of the A.O. The A.O. is directed to examine whether assessee has incurred any expenditure for earning interest income, which is assessed under the head `income from other sources . If so, the same shall be allowed as deduction u/s 57 of the I.T.Act. The A.O. shall examine the aforesaid issue untrammeled by the direction of the PCIT in the impugned order passed u/s 263 - Appeal filed by the assessee is partly allowed for statistical purposes. - ITA No.887/Bang/2022 - - - Dated:- 2-11-2022 - Shri George George K, JM And Shri Laxmi Prasad Sahu, AM Appellant by : Sri.S.V.Ravishankar, Advocate Respondent by : Ms.Susan D George, CIT DR ORDER Per George George K, JM : This appeal at the instance of the assessee is directed against Principal Commissioner of Income-tax s (PCIT) order dated ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 2022) (Bombay) 3. The learned Departmental Representative was duly heard. 4. We have heard rival submissions and perused the material on record. On perusal of the reasons stated in the petition for condonation of delay for belated filing of the appeal before the Tribunal, we are of the view there is sufficient cause and no latches can be attributed to the assessee for belated filing of this appeal before the Tribunal. In this context, we rely on the judicial pronouncements, cited supra. Therefore, the delay of 115 days in filing this appeal before the Tribunal is condoned and we proceed to dispose of the same on merits. 5. The grounds raised read as follows:- 1. The order passed by the learned Principal Commissioner of Income Tax, Bengaluru-g, passed under section 263 of the Act is so far as it is against the, Appellant is opposed to law, weight of evidence, probabilities, facts and circumstances of the Appellant's case. 2. The notice issued for initiation of proceedings under section 263 of the Act is bad in law. 3. The Learned PCIT is not justified in law in invoking the jurisdiction under section 263 of the Act 'and setting aside the order of th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... f the impugned order of the PCIT. The contention raised by the assessee was rejected by the PCIT. The PCIT by following the judgment of the Hon ble Apex Court in the case of Totagar s Co-operative Sale Society Ltd. v. ITO reported in (2010) 322 ITR 283 (SC) and the judgment of the Hon ble jurisdictional High Court in the case of Pr.CIT Anr. v. Totagars Co-operative Sale Society Ltd. reported in (2017) 395 ITR 611 (Kar.), set aside the order of the A.O. dated 26.12.2017 as erroneous and prejudicial to the interest of the revenue. The PCIT directed the A.O. to bring to tax the aforesaid interest income by denying the claim u/s 80P of the I.T.Act, in view of the above judicial pronouncements, cited supra. 7. Aggrieved by the order of the PCIT, the assessee filed the present appeal before the Tribunal. The limited submission of the learned AR is that when income is sought to be assessed under the head `income from other sources , only the net interest income earned from scheduled banks ought to be brought to tax. In other words, the learned AR submitted that the administrative expenses and expenses to earn the said interest income, which is brought to tax u/s 56 of the I.T.Act, o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d counsel for the parties and perusing the records and in the light of the finding recorded by the Hon ble Supreme Court that the interest income earned by the appellant falls within the category of other income what falls for consideration is to answer the question as to whether the Tribunal was right in law in holding that the income by way of interest was chargeable to tax under Section 56 of the Income Tax Act without allowing deduction in respect of proportionate costs incurred as permissible under Section 57. 12. It is no doubt true that the appellant did initially claim deduction under Section 80P(2). Upon the pronouncement of the order by the Apex Court, in these appeals referred to supra, the income earned on the interest is declared as other income falling under Section 56 of the Income Tax Act. Then the next immediate question that follows is as to whether the entire fund i.e., in deposit with the Bank is taxable or the proportionate expenditure incurred by the appellant requires deduction. It is logical that when the Revenue is permitted to assess and recover taxes from assessee under Section 56 by treating the income earned by interest as income from other s ..... X X X X Extracts X X X X X X X X Extracts X X X X
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