ELOOKARA SERVICE CO OEPRATIVE BANK LTD. vs. THE CENTRAL BOARD OF DIRECT TAXES

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WP(C)/9221/2021HC KeralaKLHC01024348202113 April 2021Author: HONOURABLE MR.JUSTICE MURALI PURUSHOTHAMAN4 pages
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What did the High Court hold?

The High Court, in light of the judgments referred to by the petitioner, directed the Commissioner of Income Tax (Appeals) to consider and pass orders on the petitioner's appeal (Ext.P2) expeditiously. Furthermore, the Court directed the respondents to keep the recovery proceedings initiated pursuant to the assessment order (Ext.P1) in abeyance until the appeal is disposed of. The Court did not decide the substantive issue of eligibility for deduction under Section 80(p) but focused on procedural relief pending the appellate decision. The ratio of this judgment lies in granting a stay on recovery proceedings and directing expeditious disposal of appeals when a substantial question of law, as decided by the Supreme Court, is involved.

What were the facts?

The petitioner, Elookara Service Co-operative Bank Ltd., is a primary agricultural credit society. The petitioner is aggrieved by an assessment order (Ext.P1) which denied its claim for deduction under Section 80(p) of the Income Tax Act. The petitioner has filed a statutory appeal (Ext.P2) against this order before the Commissioner of Income Tax (Appeals). Despite the pending appeal, the Income Tax Officer is initiating coercive steps for recovery of the demand raised in Ext.P1. The petitioner relies on the Supreme Court's decision in Mavilayi Service Co-operative Bank Ltd. v. Commissioner of Income Tax and a common judgment of the Kerala High Court in W.P.(C) No.8610 of 2021 and connected cases, which directed the disposal of appeals and stayed recovery proceedings.

What were the issues?

1. Whether the petitioner, a Co-operative Society, is eligible for deduction under Section 80(p) of the Income Tax Act, 1961, in light of the Supreme Court's decision in Mavilayi Service Co-operative Bank Ltd. v. Commissioner of Income Tax? Assessee's Contentions: The petitioner argues that its eligibility for deduction under Section 80(p) is squarely covered by the Supreme Court's decision in Mavilayi Service Co-operative Bank Ltd. v. Commissioner of Income Tax. The petitioner also relies on a common judgment of the Kerala High Court in W.P.(C) No.8610 of 2021 and connected cases, wherein similar directions were issued to the Commissioner of Income Tax to dispose of statutory appeals and stay recovery proceedings pending disposal. Revenue's Contentions: The judgment records that the counsel for the respondents was heard, but their specific contentions are not detailed.

Which sections of the Income-tax Act were involved?

Section 80(p)

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Heard together (2 matters)

WP(C).No.9221 OF 2021
W.P.(C) No.8610 of 2021

Read from the judgment's own cause title. This page is filed under one of them.

Cause title — parties, addresses and appearances
IN THE HIGH COURT OF KERALA AT ERNAKULAM PRESENT THE HONOURABLE MR.JUSTICE MURALI PURUSHOTHAMAN TUESDAY, THE 13TH DAY OF APRIL 2021 / 23RD CHAITHRA, 1943 WP(C).No.9221 OF 2021(C) PETITIONER/S: ELOOKARA SERVICE CO OEPRATIVE BANK LTD. NO.1765, ELOOKARA, P.O.MUPPATHADAM, ALUVA, ERNAKULAM-683 110, REPRESENTED BY ITS SECRETARY, BENNAKUMARI.K.S. BY ADVS. DR.K.P.PRADEEP SHRI.HAREESH M.R. SRI.T.T.BIJU SMT.T.THASMI RESPONDENT/S: 1 THE CENTRAL BOARD OF DIRECT TAXES DEPARTMENT OF REVENUE,MINISTRY OF FINANCE, GOVERNMENT OF INDIA, NORTH BLOCK, NEW DELHI-110 001, REPRESENTED BY ITS CHAIRMAN 2 INCOME TAX OFFICER,WARD 2, AAYAKKAR BHAVAN, INCOME TAX, KAP COMMERCIAL COMPLEX, O/O ADDITIONAL COMMISSIONER OF INCOME TAX, ALUVA RANGE, R.S.ROAD, ALUVA, ERNAKULAM-683 101 3 COMMISSIONER OF INCOME TAX (APPEALS), OFFICE OF THE COMMISSIONER OF INCOME TAX (APPEALS), AAYAKAR BHAVAN, INCOME TAX OFFICE, PANAMPILLY NAGAR, KOCHI, ERNAKULAM-682 036 OTHER PRESENT: SRI CHRISTOPHER ABRAHAM SC THIS WRIT PETITION (CIVIL) HAVING COME UP FOR ADMISSION ON 13.04.2021, THE COURT ON THE SAME DAY DELIVERED THE FOLLOWING: WP(C).No.9221 OF 2021(C) ..2.. JUDGMENT Dated this the 13th day of April 2021 The petitioner is a Co-operative Society and a primary Agricultural Credit Society, registered under the provisions of the Kerala Co-operative Societies Act, 1969. The petitioner is aggrieved by Ext.P1 assessment order wherein, the claim of the petitioner for deduction under Section 80(p) of the Income Tax Act is denied. Challenging Ext.P1 assessment order, the petitioner has preferred Ext.P2 statutory appeal before the 3rd respondent. However, the 2nd respondent is taking coercive steps to recover the amount demanded in Ext.P1 assessment order. According to the petitioner, the eligibility of the petitioner for deduction under Section 80(p) of the Income Tax Act is covered by the decision of the Hon'ble Supreme Court in Mavilayi Service Co-operative Bank Ltd. v. Commissioner of Income Tax reported in [2021(1) KHC 303]. The counsel for the petitioner also relied on the common judgment of this Court in W.P.(C) No.8610 of 2021 and connected cases WP(C).No.9221 OF 2021(C) ..3.. wherein, this Court, taking note of the decision in Mavilayi Service Co-operaitve Bank's case (supra) directed the Commissioner of Income Tax to consider and dispose of the statutory appeals filed by the Co-operative Societies therein, and till then not to proceed with recovery steps . 2. Heard the counsel for the petitioner and the counsel for the respondents. 3. In the light of the judgments referred to above, there will be a direction to the 3rd respondent to consider and pass orders on Ext.P2 appeal, expeditiously and till then the respondents are directed to keep the recovery proceedings pursuant to Ext.P1 assessment order in abeyance. The writ petition is disposed of with the above directions. Sd/- MURALI PURUSHOTHAMAN, JUDGE SB WP(C).No.9221 OF 2021(C) ..4.. APPENDIX PETITIONER'S/S EXHIBITS: EXHIBIT P1

NO.AAABT3684M/2017-18 DATED 30.12.2019 ISSUED FOR THE YEAR 2017-18 EXHIBIT P2OF THE APPEAL DATED 28.01.2020 FOR THE YEAR 2018-19 EXHIBIT P3OF THE STAY APPLICATION FILED ON 10.02.2020 BEFORE THE 3RD RESPONDENT IN EXT P2 APPEAL EXHIBIT P4OF THE DEMAND NOTICE NO.AAABT3684M/2017-18 DATED 30.12.2019 ISSUED FOR THE YEAR 2017-18 EXHIBIT P5OF THE DEMAND NOTICE NO.AAABT3684M/2017-198 DATED 24.03.2021 ISSUED FOR THE YEAR 2017-18 //// P.A to Judge

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