PEROORKADA SERVICE CO-OPERATIVE BANK LTD vs. THE INCOME TAX OFFICER

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WP(C)/30899/2023HC KeralaKLHC01068310202321 September 2023Author: HONOURABLE MR. JUSTICE D. K. SINGH4 pages
AI SummaryRemanded

What did the High Court hold?

The High Court did not decide the merits of the appeal concerning the tax exemption under Section 80P. Instead, acknowledging that the petitioner was facing recovery proceedings and that the appeal was pending, the Court directed the third respondent (Commissioner of Income Tax (Appeals)) to decide the appeal expeditiously within a period of two months. If the appeal could not be decided within that timeframe, the stay petition (Exhibit P5) was to be considered within the same period. The Court explicitly stated it did not want to go into the merits of the matter. The ratio decidendi is that in cases of pending appeals and recovery proceedings, the appellate authority should be directed to decide the appeal expeditiously.

What were the facts?

The petitioner, Peroorkada Service Co-operative Bank Ltd., a primary Credit Co-operative Society, claims exemption under Section 80P of the Income Tax Act, 1961. The Assessing Officer completed the assessment for AY 2012-2013, determining total income at Rs. 71,98,44,040/- against a declared income of 'nil'. Consequently, a demand notice for Rs. 54,49,31,750/- was issued based on the assessment order dated 23.02.2023. The petitioner filed an appeal with a stay petition before the second respondent, which was transferred to the third respondent. The appeal had not yet been disposed of at the time of this judgment.

What were the issues?

1. Whether the petitioner's income, primarily interest from member deposits, is eligible for exemption under Section 80P of the Income Tax Act, 1961? (Question of law) The petitioner argued that its case is squarely covered by the decision of the High Court in Principal Commissioner v. Peroorkaa Service Co-operative Bank Ltd., [2022 442 ITR 141 (Ker.)] and that its income is solely derived from interest on member deposits. The revenue's contentions are not recorded in the judgment.

Which sections of the Income-tax Act were involved?

Section 80P,Section 156

AI-generated summary — verify with the full judgment below

Cause title — parties, addresses and appearances
IN THE HIGH COURT OF KERALA AT ERNAKULAM PRESENT THE HONOURABLE MR. JUSTICE DINESH KUMAR SINGH THURSDAY, THE 21ST DAY OF SEPTEMBER 2023 / 30TH BHADRA, 1945 WP(C) NO. 30899 OF 2023 PETITIONER: PEROORKADA SERVICE CO-OPERATIVE BANK LTD NO.T.1412, PEROORKADA P.O, THIRUVANANTHAPURAM DISTRICT, KERALA, REPRESENTED BY ITS SECRETARY, PIN – 695 005. BY ADV C.A.JOJO RESPONDENTS: 1 THE INCOME TAX OFFICER WARD-2(1), KOWDIAR, TRIVANDRUM, PIN – 695 003. 2 COMMISSIONER OF INCOME TAX (APPEALS)-1 OFFICE OF THE COMMISSIONER OF INCOME TAX (APPEALS), TRIVANDRUM, PIN – 695 003. 3 THE COMMISSIONER OF INCOME TAX (APPEALS), NATIONAL FACELESS ASSESSMENT CENTRE, NORTH BLOCK, NEW DELHI-110 001. SRI. CHRISTOPHER ABRAHAM, SC THIS WRIT PETITION (CIVIL) HAVING COME UP FOR ADMISSION ON 21.09.2023, THE COURT ON THE SAME DAY DELIVERED THE FOLLOWING: W.P.(C) No. 30899/2023 : 2 : DINESH KUMAR SINGH, J. --------------------------------------------------------- W.P.(C). No. 30899 of 2023 --------------------------------------------------------- Dated this the 21th day of September, 2023.

JUDGMENT

The petitioner is a primary Credit Co-operative Society engaged in the business of providing banking services and agricultural credit to its members. The petitioner claims that its income is exempted from the payment of income tax under the provisions of Section 80P of the Income Tax Act, 1961. The assessing authority has completed assessment for the assessment year 2012-2013 and had computed the total income at Rs.71,98,44,040/- as against the declared income of ‘nil’. A demand notice under Section 156 of the Act, 1961 for an amount of Rs.54,49,31,750/- was issued in pursuance to Exhibit P1 assessment order dated 23.02.2023. 2. The petitioner has filed an appeal along with an application to stay the recovery proceedings, before the second respondent and the same was transferred to the third respondent. The appeal has not yet been disposed of.

3.

The learned counsel for the petitioner submits that the petitioner’s case is squarely covered by the decision of this Court in : 3 : Principal Commissioner v. Peroorkaa Service Co-operative Bank Ltd., [2022 442 ITR 141 (Ker.)]. It is also submitted that the income of the petitioner is nothing but the interest from the deposits made by its members. This Court does not want to go into the merits of the matter. Since the petitioner is facing recovery proceedings pursuant to Exhibit P6 demand notice, it would be appropriate to direct the third respondent to decide the appeal expeditiously. In that view of the matter, the present writ petition is finally disposed of, with a direction to the third respondent to consider Exhibit P4 appeal filed by the petitioner and pass appropriate orders within a period of two months. It is made clear that if the third respondent is not in a position to decide the appeal within the aforesaid time limit, Exhibit P5 stay petition be considered within the aforesaid limit. DINESH KUMAR SINGH, JUDGE.

Rv : 4 :

Appendix — schedule of exhibits
APPENDIX OF WP(C) 30899/2023 PETITIONER’S EXHIBITS: Exhibit P1 A TRUE COPY OF THE ORDER U/S 250 ISSUED BY THE 3RD RESPONDENT DATED 23.02.2023 Exhibit P2 A TRUE COPY OF THE ORDER GIVING EFFECT ISSUED BY THE 1ST RESPONDENT DATED 17.04.2023 Exhibit P3 A TRUE COPY OF THE DEMAND NOTICE ISSUED BY THE 1ST RESPONDENT DATED 19.06.2023 Exhibit P4 A TRUE COPY OF THE APPEAL FILED BEFORE THE 3RD RESPONDENT DATED 18.09.2023 Exhibit P5 A TRUE COPY OF THE STAY PETITION FILED BEFORE THE 3RD RESPONDENT DATED 19.09.2023 Exhibit P6 A TRUE COPY OF THE DEMAND NOTICE ISSUED BY THE 1ST RESPONDENT DATED 12.09.2023 Exhibit P7 A TRUE COPY OF THE LETTER SUBMITTED TO THE 1ST RESPONDENT DATED 15.09.2023 RESPONDENTS’ EXHIBITS: NIL True Copy PS To Judge. rv

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