PERINGOTTUKURUSSI SERVICE CO-OPERATIVE BANK LTD. NO.519 vs. THE INCOME TAX OFFICER

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ITA/198/2019HC KeralaKLHC01051586201908 January 2020Author: HONOURABLE MR.JUSTICE C.K.ABDUL REHIM,HONOURABLE MR. JUSTICE R. NARAYANA PISHARADI23 pages
AI SummaryDismissed

What did the High Court hold?

The High Court held that the assessees' contention regarding the CBDT circular is misconceived. Clarificatory circulars issued by government departments are binding on the department and its officers but do not bind the Court in interpreting statutory provisions. Such circulars cannot have primacy over a decision of the jurisdictional High Court. If a circular's interpretation runs contrary to a High Court's decision, it ceases to be valid. The Court cited Supreme Court judgments in Commissioner of Central Excise v. M/s Gurukripa Resins Private Limited and Commissioner of Central Excise v. M/s Ratan Melting Wire Industries, emphasizing that circulars are not binding on Courts or Tribunals when a superior court has declared the law. The Court also referred to Commissioner of Income Tax v. Hero Cycles, which held that circulars bind Income Tax Officers but not appellate authorities, Tribunals, Courts, or even the assessee. Therefore, the Tribunal was not bound to consider the circular, especially when it contradicted the High Court's binding precedent. The appeals were dismissed as misconceived, as no substantial question of law arose.

What were the facts?

The appellants are Co-operative Societies registered under the Kerala Co-operative Societies Act, 1969. They claimed deduction under Section 80P(2) of the Income Tax Act, 1961. The Assessing Officer denied this deduction, classifying them as Co-operative Banks rather than Primary Agricultural Credit Societies. The Commissioner of Income Tax (Appeals) allowed the societies' appeals, relying on a High Court judgment and the classification by the Registrar of Co-operative Societies. The Revenue appealed to the Income Tax Appellate Tribunal (Tribunal), which upheld the CIT(A)'s order. The assessees, despite the favorable outcome, filed these appeals to the High Court, arguing that the Tribunal did not consider a CBDT circular regarding the definition of a co-operative bank.

What were the issues?

1. Whether the Tribunal erred in not considering the effect of CBDT Circular No. 133/6 of 2007 dated 09.05.2007, which clarifies that for the purpose of Section 80P(4) of the Act, a co-operative bank should be understood as defined in Part V of the Banking Regulation Act, 1949, and not based on the criteria in the High Court's decision in Mavilayi (supra)? Assessee's contention: The assessees argued that the CBDT circular should be given effect to, as it provides a specific definition of a co-operative bank for Section 80P(4) and that this definition should supersede the criteria laid down by the High Court in Mavilayi (supra). Revenue's contention: The Revenue did not file any appeal or cross-objection challenging the Tribunal's order. The judgment does not record any specific contention from the Revenue regarding the circular.

Which sections of the Income-tax Act were involved?

Section 80P,Section 80P(2),Section 80P(4)

AI-generated summary — verify with the full judgment below

Income Tax Appellate Tribunal, COCHIN BENCH,

DATED 24.03.2016 ISSUED BY THE 1ST RESPONDENT. ANNEXURE B AOF THE APPELLATE ORDER DATED 31.07.2018 BY THE 2ND RESPONDENT. ANNEXURE C AOF THE ORDER OF THE HON'BLE TRIBUNAL, COCHIN BENCH DATED 29.11.2018. ANNEXURE D AOF THE CROSS OBJECTION DATED 22.11.2018 FILED BY THE APPELLANT. RESPONDENT'S EXHIBITS: NIL APPENDIX OF ITA 198/2019 PETITIONER'S EXHIBITS: ANNEXURE A AOF THE ASSESSMENT ORDER DATED 24.03.2016 ISSUED BY THE 1ST RESPONDENT. ANNEXURE B AOF THE APPELLATE ORDER DATED 19.07.2018 BY THE 2ND RESPONDENT. ANNEXURE C AOF THE ORDER OF THE HON'BLE TRIBUNAL, COCHIN BENCH DATED 29.11.2018. ANNEXURE D AOF THE CROSS OBJECTION DATED 29.11.2018 FILED BY THE APPELLANT. RESPONDENT'S EXHIBITS: NIL APPENDIX OF ITA 199/2019 PETITIONER'S EXHIBITS: ANNEXURE A AOF THE ASSESSMENT ORDER FOR AY 2010-11 DATED 22.03.2016 ISSUED BY THE 1ST RESPONDENT. ANNEXURE B AOF THE ASSESSMENT ORDER FOR AY 2013-14 DATED 22.03.2016 ISSUED BY THE 1ST RESPONDENT. ANNEXURE C AOF THE APPELLATE ORDER DATED 19.07.2018 BY THE 2ND RESPONDENT. ANNEXURE D AOF THE ORDER OF THE HON'BLE TRIBUNAL, COCHIN BENCH DATED 29.11.2018. ANNEXURE E AOF THE CROSS OBJECTION DATED 22.11.2018 FILED BY THE APPELLANT. RESPONDENT'S EXHIBITS: NIL APPENDIX OF ITA 202/2019 PETITIONER'S EXHIBITS: ANNEXURE A AOF THE ASSESSMENT ORDER FOR AY 2013-14 DATED 22.03.2016 ISSUED BY THE 1ST RESPONDENT. ANNEXURE B AOF THE APPELLATE ORDER DATED 19.07.2018 BY THE 2ND RESPONDENT ANNEXURE C AOF THE ORDER OF THE HON'BLE TRIBUNAL,COCHIN BENCH DATED 29.11.2018 ANNEXURE D AOF THE CROSS OBJECTION DATED 22.11.2018 FILED BY THE APPELLANT. RESPONDENT'S EXHIBITS: NILPS TO JUDGE

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