VADAVUCODE FARMERS SERVICE CO-OPERATIVE BANK LTD., NO.651 vs. INCOME TAX OFFICER,
What did the High Court hold?
The High Court allowed the writ petitions. The Court noted that the primary issue pending before the appellate authority was the entitlement of the petitioner co-operative societies to deduction under Section 80(P) of the Income Tax Act, which had been denied by the Assessing Officer. The Court relied on the Supreme Court's decision in Mavilayi Service Co-operative Bank Ltd. and subsequent judgments of the Kerala High Court, including a Division Bench judgment in W.A.No. 1536/2019 and a Single Judge's decision in W.P.(C) No. 5234/2020. The ratio of these judgments indicated that recovery and collection of taxes should be kept in abeyance until the statutory appeals are decided. Consequently, the Court directed the Commissioner of Income Tax (Appeals) to decide the pending appeals expeditiously. Until such disposal, the recovery proceedings pursuant to the assessment orders were ordered to be kept in abeyance.
What were the facts?
The petitioners are three Service Co-operative Banks (Poothrikka Service Co-operative Bank Ltd., Mamala Service Co-operative Bank Ltd., and Vadavucode Farmers Service Co-operative Bank Ltd.). They are challenging actions by the Income Tax Department during the pendency of their statutory appeals before the Commissioner of Income Tax (Appeals). The Assessing Officer had denied the benefit of Section 80(P) of the Income Tax Act to these banks. While the appeals were pending, the Assessing Officer communicated that the petitioners must pay 20% of the demand to apply for a stay. The petitioners argue this is contrary to Supreme Court and High Court judgments.
What were the issues?
1. Whether the action of the respondents in demanding payment of 20% of the tax demand as a pre-condition for considering a stay application, while statutory appeals against denial of Section 80(P) benefits are pending, is contrary to law and established precedents? (Question of law and fact, concerning principles of natural justice and procedural fairness). Assessee's contentions: The petitioners contend that the demand for 20% of the tax before considering a stay application is illegal and contrary to the Supreme Court's judgment in Mavilayi Service Co-operative Bank Ltd. v. Commissioner of Income Tax, Calicut, and subsequent judgments of the Kerala High Court. They argue that such a demand is not permissible when the core issue of eligibility for Section 80(P) deduction is under appeal. Revenue's contentions: The revenue, through the learned Standing Counsel, submits that the petitioners can at most prefer stay petitions and seek stay of the impugned orders.
Which sections of the Income-tax Act were involved?
Section 80(P)
AI-generated summary — verify with the full judgment below
Heard together (3 matters)
Read from the judgment's own cause title. This page is filed under one of them.
Cause title — parties, addresses and appearances
JUDGMENT (W.P.(C) Nos.8610 of 2021,8642 of 2021 and 8652 of 2021) Dated this the 31st day of March 2021 Heard the learned counsel appearing for the petitioners in these writ petitions.
It is argued by the learned counsel appearing for the petitioners that petitioners are the co-operative banks and they are entitled for the benefits of Section 80(P)of the Income Tax Act. The learned counsel for petitioners submit that the assessment order denying the benefit of Section 80(P)of the Income Tax Act has been challenged by the petitioners by filing statutory appeals before the 2nd respondent, the Commissioner of the Income Tax (Appeals). However, during pendency of those appeals, the Assessing Officer has communicated to the petitioners that the petitioners should pay 20% of the demand and then apply for stay of demand. This course of action adopted by the respondents, in submission of the learned counsel for the petitioners is contrary to the judgment by the WP(C).Nos.8610 OF 2021 AND CONNECTED CASES 5 Hon'ble Supreme COurt in the matter of Mavilayi Service Co-operative Bank Ltd. v. Commissioner of Income Tax, Calicut, reported in [2019(2) KHC 287]. It is further argued that this Court in a series of judgments has quashed such action on the part of the respondents.
The learned Standing Counsel takes notice for respondents and argues that the petitioners can at the most prefer stay petitions and can seek stay in the impugned orders.
I have considered the submissions in advance.
The question which is pending for adjudication before the appellate authority is whether the petitioners who are co-operative Societies are entitled for deduction under Section 80 (P) of the Income Tax Act. The Assessing Officer has denied the benefit of Section 80 (P) of the Income Tax Act to the petitioner societies. In the matter of Mavilayi Service Co-operative Bank Ltd.
WP(C).Nos.8610 OF 2021 AND CONNECTED CASES 6 the question regarding liability of the co-operative societies to pay the income tax assess was decided. The Division Bench of this Court relying on the said judgment in W.A.No. 1536/2019 dated 01-07-2019, has quashed the action on the part of respondents with the direction that the Commissioner of the Income Tax should consider and dispose of the statutory appeals filed by the appellant co-operative societies at the earliest taking note of Full Bench decision in the matter of Mavilayi Service Co-operative Bank Ltd. and till then the recovery and collection of taxes should be kept in abeyance. Similar is the judgment of the learned Single Judge in W.P.(C) No. 5234/2020, the Electricity Board Employees Co-operative Society Ltd. v. Income Tax Officer decided on 26-02-2020. In this view of the matter, in the light of ratio of judgment of this Court, in the matter of The Angadipuram Service Co-operative Bank Ltd. v. The Commissioner of Income Tax (Appeals), the writ petitions are allowed. The 2nd respondent is directed
WP(C).Nos.8610 OF 2021 AND CONNECTED CASES 7 to decide the pending appeals expeditiously and till then the respondents are directed to keep the recovery proceedings pursuant to the assessment order in abeyance. A.M.BADAR JUDGE SSK/31/03
WP(C).Nos.8610 OF 2021 AND CONNECTED CASES 8
Appendix — schedule of exhibits
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