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

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WP(C)/31539/2023HC KeralaKLHC01069964202326 September 2023Author: HONOURABLE MR. JUSTICE D. K. SINGH7 pages
AI SummaryRemanded

What did the High Court hold?

The High Court held that it would not embark on deciding the disputed question of fact regarding the deductibility of interest income under Section 80P(2)(d) of the Income Tax Act while exercising writ jurisdiction. The Court stated that this is a matter that needs to be examined by the second appellate authority, the Income Tax Appellate Tribunal. The petitioner has the responsibility to satisfy the ITAT with cogent and credible evidence. Consequently, the writ petition was disposed of with a direction to the 4th respondent (Assistant Registrar, ITAT) to decide the pending appeals expeditiously, preferably within three months. If the appeals cannot be decided within this period, the stay applications must be decided within the same timeframe. For a period of three months, the impugned recovery notices are not to be given effect to.

What were the facts?

The petitioner, Peroorkada Service Co-operative Bank Ltd., filed a writ petition challenging demand and recovery notices totaling Rs. 90,81,24,665/- for Assessment Years 2016-17, 2017-18, and 2018-19. The petitioner had appealed the assessment orders before the Commissioner of Income Tax (Appeals), who passed orders on the appeals. The petitioner then filed further appeals before the Income Tax Appellate Tribunal (ITAT) along with stay applications. The petitioner, a registered Co-operative Society, claims its income from interest earned on deposits in other Co-operative Societies is deductible under Section 80P(2)(d) of the Income Tax Act. The first appellate authority allowed deduction where satisfied, but disallowed it otherwise.

What were the issues?

1. Whether the High Court, in its writ jurisdiction, should decide a disputed question of fact regarding the deductibility of interest income under Section 80P(2)(d) of the Income Tax Act, 1961, when the matter is pending before the Income Tax Appellate Tribunal? Assessee's Contention: The petitioner argued that its income is from interest earned on deposits made in Co-operative Societies and is therefore deductible under Section 80P(2)(d) of the Income Tax Act. They claimed to have produced all relevant documents to support this. The petitioner contended that this is a disputed question of fact which the High Court should not examine in writ jurisdiction, and it needs to be decided by the second appellate authority, the ITAT. Revenue's Contention: The judgment does not record any specific arguments made by the revenue's counsel beyond their representation.

Which sections of the Income-tax Act were involved?

Section 80P(2)(d)

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 TUESDAY, THE 26TH DAY OF SEPTEMBER 2023 / 4TH ASWINA, 1945 WP(C) NO. 31539 OF 2023 PETITIONER/S: PEROORKADA SERVICE CO-OPERATIVE BANK LTD NO.T.1412, PEROORKADA P.O, THIRUVANANTHAPURAM DISTRICT, KERALA, REPRESENTED BY ITS SECRETARY, PIN - 695005 BY ADV C.A.JOJO RESPONDENT/S: 1 THE INCOME TAX OFFICER, INCOME TAX OFFICE, WARD-2(1) KOWDIAR, TRIVANDRUM, PIN - 695003 2 COMMISSIONER OF INCOME TAX (APPEALS)-1 2.OFFICE OF THE COMMISSIONER OF INCOME TAX (APPEALS), TRIVANDRUM, PIN - 695003 3 THE COMMISSIONER OF INCOME TAX (APPEALS) NATIONAL FACELESS ASSESSMENT CENTRE, NORTH BLOCK, NEW DELHI-110001, PIN - 110001 4 ASSISTANT REGISTRAR INCOME TAX APPELLATE TRIBUNAL 1ST FLOOR, BLOCK C-I & C II, KENDRIYA BHAVAN, KAKKANAD, PIN - 682307 OTHER PRESENT: JOS WINSON-SC-IT THIS WRIT PETITION (CIVIL) HAVING COME UP FOR ADMISSION ON 26.09.2023, THE COURT ON THE SAME DAY DELIVERED THE FOLLOWING: W.P.(C) No.31539/2023 -2-

J U D G M E N T

Heard Mr C A Jojo learned Counsel for the petitioner, and Mr Jos Winson learned Standing Counsel for the Department.

2.

The present writ petition has been filed challenging the demand and recovery notices in Exts.P12, P13 and P14 for recovery of tax assessed at Rs.90,81,24,665/- in respect of three Assessment Years 2016-17, 2017-18 and 2018-19 for the income of the petitioner. The petitioner had challenged the Assessment Orders before the Commissioner of Income Tax (Appeals), who is the first Appellate Authority. The first Appellate Authority had passed the orders in the appeals filed as Exts.P1, P6 and P9. The petitioner has impugned these orders passed by the first Appellate Authority before the Income Tax Appellate Authority by filing Exts. P2, P7 and P10, along with stay applications Exts.P3, P8 and P11. -3-

3.

The petitioner claims to be a registered Co- operative Society. Learned Counsel for the petitioner submits that the petitioner’s income is from interest earned on deposits made by the petitioner in Co-operative Societies. Therefore, it is deductible under the provisions of Section 80P(2)(d) of the Income Tax Act.

4.

From the perusal of the orders passed by the first Appellate Authority in appeals, it is evident that where the petitioner has been able to satisfy the first Appellate Authority that the interest earned by the petitioner is from the deposits made by the petitioner in Co-operative Societies, the interest has been deducted by the first Appellate Authority. However, where the Appellate Authority has not been satisfied regarding the claim of the petitioner, it has been disallowed.

5.

Learned Counsel for the petitioner submits that the petitioner has produced all the relevant documents to show -4-

that the interest income was from deposits in Co-operative Societies. This is a disputed question of fact, and this Court would not examine the books of account of the petitioner or the documents submitted by the petitioner. This is the case which needs to be examined by the second Appellate Authority, i.e., the Income Tax Appellate Tribunal. Therefore, I do not find this Court to embark on the juri iction of appeal to decide the disputed question of fact while exercising the writ juri iction. It is for the petitioner to satisfy the Income Tax Appellate Tribunal regarding its claim of deduction under Section 80P(2)(d) of the Income Tax Act by leading cogent and credible evidence in support thereof.

6.

Thus, the present writ petition is disposed of with a direction to the 4th respondent to decide the appeals expeditiously, preferably within a period of three months. However, if it is not possible to decide the appeals within a -5-

period of three months, at least the stay applications of the petitioner should be decided within a period of three months, in accordance with the law. For a period of three months, the impugned recovery notices shall not be given effect to. DINESH KUMAR SINGH JUDGE

jjj -6-

Appendix — schedule of exhibits
APPENDIX OF WP(C) 31539/2023 PETITIONER EXHIBITS Exhibit P1 A TRUE COPY OF THE ORDER U/S 250 FOR AY 2016-17 ISSUED BY THE 3RD RESPONDENT DATED 23.02.2023 Exhibit P2 A TRUE COPY OF THE APPEAL FOR AY 2016-17 FILED BEFORE THE 4TH RESPONDENT DATED 10.05.2023 Exhibit P3 A TRUE COPY OF THE STAY PETITION AY 2016-17 FILED BEFORE THE 4TH RESPONDENT DATED 23.09.2023 Exhibit P4 A TRUE COPY OF THE ORDER GIVING EFFECT ISSUED BY THE 1ST RESPONDENT DATED 31.03.2023 Exhibit P5 A TRUE COPY OF THE PETITION FOR RECTIFICATION OF MISTAKE APPARENT FROM RECORD FILED BEFORE THE 1ST RESPONDENT DATED 17.06.2023 Exhibit P6 A TRUE COPY OF THE ORDER U/S 250 FOR AY 2017-18 ISSUED BY THE 3RD RESPONDENT DATED 23.02.2023 Exhibit P7 A TRUE COPY OF THE APPEAL FOR AY 2017-18 FILED BEFORE THE 4TH RESPONDENT DATED 12.05.2023 Exhibit P8 A TRUE COPY OF THE STAY PETITION AY 2017-18 FILED BEFORE THE 4TH RESPONDENT DATED 22.09.2023 Exhibit P9 A TRUE COPY OF THE ORDER U/S 250 FOR AY 2018-19 ISSUED BY THE 3RD RESPONDENT DATED 23.02.2023 Exhibit P10 A TRUE COPY OF THE APPEAL FOR AY 2018-19 FILED BEFORE THE 4TH RESPONDENT DATED 12.05.2021 Exhibit P11 A TRUE COPY OF THE STAY PETITION AY 2018-19 FILED BEFORE THE 4TH RESPONDENT DATED 22.09.2023 Exhibit P12 A TRUE COPY OF THE DEMAND LETTER AY 2016-17 W.P.(C) No.31539/2023 -7- ISSUED BY THE 1ST RESPONDENT DATED 12.09.2023 Exhibit P13 A TRUE COPY OF THE DEMAND LETTER AY 2017-18 ISSUED BY THE 1ST RESPONDENT DATED 12.09.2023 Exhibit P14 A TRUE COPY OF THE DEMAND LETTER AY 2018-19 ISSUED BY THE 1ST RESPONDENT DATED 12.09.2023 Exhibit P15 A TRUE COPY OF THE REPLY LETTER AY 2016-17 SUBMITTED BEFORE THE 1ST RESPONDENT DATED 15.09.2023 Exhibit P16 A TRUE COPY OF THE REPLY LETTER FOR AY 2017-18 SUBMITTED BEFORE THE 1ST RESPONDENT DATED 15.09.2023 Exhibit P17 A TRUE COPY OF THE REPLY LETTER FOR AY 2018-19 SUBMITTED BEFORE THE 1ST RESPONDENT DATED 15.09.2023

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