THE VARADIAM SERVICE CO-OPERATIVE BANK LTD NO. 575 vs. THE COMMISSIONER OF INCOME TAX (APPEALS)

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WP(C)/38972/2022HC KeralaKLHC01084301202205 December 2022Author: HONOURABLE MR. JUSTICE GOPINATH P.4 pages
AI SummaryRemanded

What did the High Court hold?

The High Court of Kerala, in its judgment dated 05.12.2022, did not decide the merits of the case. Instead, it acknowledged that the petitioner had already filed an appeal (Ext.P3) before the Commissioner of Income Tax (Appeals) (the first respondent) challenging the assessment order. The Court found it appropriate to dispose of the writ petition by directing the Appellate Authority to consider and pass appropriate orders on the pending appeal expeditiously. The Court also granted a stay on coercive steps against the petitioner pursuant to the assessment order until the disposal of the appeal. Therefore, no specific finding on the Section 80P deduction or the applicability of the Supreme Court judgment was made by the High Court in this order. The operative direction was to expedite the appeal process.

What were the facts?

The petitioner, The Varadiam Service Co-operative Bank Ltd, a Primary Agricultural Credit Society, received an assessment order dated 06.09.2022. The Assessing Officer rejected the petitioner's claim for deduction under Section 80P, stating there was no evidence that the petitioner met the criteria of a Primary Agricultural Credit Society as defined by the Kerala Co-operative Societies Act. The petitioner challenged this assessment order by filing an appeal before the Commissioner of Income Tax (Appeals), the first respondent. In this appeal, the petitioner argued that the Supreme Court's judgment in Mavilayi Service Co-operative Bank Ltd. and others v. Commissioner of Income Tax and another [2021 (1) KLT 485] governed the situation and rendered the assessment incorrect. The writ petition was filed before the High Court of Kerala seeking a direction for the timely disposal of the pending appeal.

What were the issues?

1. Whether the assessment order dated 06.09.2022, which rejected the petitioner's claim for deduction under Section 80P on the grounds of not satisfying the ingredients of a Primary Agricultural Credit Society, is legally sustainable, considering the Supreme Court's judgment in Mavilayi Service Co-operative Bank Ltd. and others v. Commissioner of Income Tax and another [2021 (1) KLT 485]? (Question of law) Contentions: Assessee: The petitioner contended that the Supreme Court's judgment in Mavilayi Service Co-operative Bank Ltd. and others v. Commissioner of Income Tax and another [2021 (1) KLT 485] governs the present case, implying that the assessment order rejecting the Section 80P deduction is incorrect. The petitioner has already filed an appeal (Ext.P3) before the first respondent (Commissioner of Income Tax (Appeals)) to address this issue. Revenue: The judgment does not record any specific contentions made by the revenue in response to the petitioner's arguments before the High Court. The revenue's representative appeared before the court.

Which sections of the Income-tax Act were involved?

Section 80P

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 GOPINATH P. MONDAY, THE 5TH DAY OF DECEMBER 2022 / 14TH AGRAHAYANA, 1944 WP(C) NO. 38972 OF 2022 PETITIONER: THE VARADIAM SERVICE CO-OPERATIVE BANK LTD NO. 575, AVANOOR, VARADIAM, THRISSUR – 680 541, REPRESENTED BY ITS SECRETARY. BY ADV P.C.SASIDHARAN RESPONDENTS: 1 THE COMMISSIONER OF INCOME TAX (APPEALS), NATIONAL FACELESS APPEAL CENTRE, ROOM NO.356, C.R. BUILDING, IP ESTATE, DELHI- 110 002. 2 THE PRINCIPAL COMMISSIONER OF INCOME TAX, O/O THE PRINCIPAL COMMISSIONER OF INCOME TAX, AYAKAR BHAVAN, MANANCHIRA, KOZHIKODE, KERALA – 673 001. 3 THE INCOME TAX OFFICER, WARD 2 (3), THRISSUR, AAYAKAR BHAVAN, SHAKTHANTHAMPOURAM NAGAR, THRISSUR – 680 001. BY ADV JOSE JOSEPH, SC, INCOME TAX DEPARTMENT, KERALA THIS WRIT PETITION (CIVIL) HAVING COME UP FOR ADMISSION ON 05.12.2022, THE COURT ON THE SAME DAY DELIVERED THE FOLLOWING: WP(C) NO. 38972 OF 2022 2

JUDGMENT Petitioner is a Primary Agricultural Credit Society registered under the Kerala Co-operative Societies Act, 1969. Ext.P1 order of assessment was issued against the petitioner on 06.09.2022. In the assessment order, petitioner's claim for deduction under Section 80P was rejected on the ground that there was no evidence to show that petitioner satisfied the ingredients of the Primary Agricultural Credit Society as contemplated under the Kerala Co-operative Societies Act.

2.

While assailing the assessment order before the 1st respondent, petitioner has sought to canvas that the judgment of the Supreme Court in Mavilayi Service Co- operative Bank Ltd. and others v. Commissioner of Income Tax and another [2021 (1) KLT 485] now governs the field thereby rendering the assessment itself as incorrect.

3.

Since the petitioner has already preferred an appeal as Ext.P3 and the same is pending consideration before the 1st respondent, I deem it fit that this writ petition be disposed of directing the Appellate Authority to consider the appeal in a time bound manner.

WP(C) NO. 38972 OF 2022 3

4.

Accordingly, there will be a direction to the 1st respondent to consider and pass appropriate orders on Ext.P3, as expeditiously as possible.

5.

Till the disposal of the appeal, no coercive steps shall be initiated against the petitioner pursuant to Ext.P1 assessment order. The writ petition is disposed of as above. GOPINATH P. JUDGE DK

WP(C) NO. 38972 OF 2022 4

Appendix — schedule of exhibits
APPENDIX OF WP(C) 38972/2022 PETITIONER EXHIBITS Exhibit P1 THE TRUE COPY OF THE ASSESSMENT ORDER DURING THE ASSESSMENT YEAR 2020-2021 DATED 6/09/2022 Exhibit P2 THE TRUE COPY OF THE DEMAND NOTICE DATED 6/09/2022 Exhibit P3 THE TRUE COPY OF THE APPEAL DATED 1/10/2022 Exhibit P4 THE TRUE COPY OF THE ACKNOWLEDGEMENT RECEIPT OF INCOME TAX FORMS SHOWING THE FILING OF THE APPEAL ON 1/10/2022 Exhibit P5 THE TRUE COPY OF THE STAY PETITION DATED 1/10/2022 FILED BY THE PETITIONER BEFORE THE 1ST RESPONDENT Exhibit P6 THE TRUE COPY OF THE JUDGMENT IN W.A.NO.1536 OF 2019 DATED 1/7/2019 Exhibit P7 THE TRUE COPY OF THE JUDGMENT IN W.P(C) NO.14282/2021 DATED 19/7/2021 Exhibit P8 THE TRUE COPY OF THE JUDGMENT IN W.P(C) NO. 34067/2022 DATED 27/10/2022

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