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

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WP(C)/9178/2020HC KeralaKLHC01023332202023 March 2020Author: HONOURABLE MR.JUSTICE K.VINOD CHANDRAN7 pages
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What did the High Court hold?

The High Court of Kerala held that recovery proceedings should be stayed until the appeals are disposed of by the Income Tax Appellate Tribunal. The Court noted that the issue of coverage under Section 80P of the Income Tax Act, 1961, was to be adjudicated based on the Full Bench decision in Mavilayil Service Co-Operative Bank Limited v. Commissioner of Income Tax, Calicut [2019 (2) KHC 287 (FB)]. However, the Court explicitly stated that the writ petitions were disposed of with the direction for a stay of recovery without any observation on the merits of the matter. The operative direction was a stay of recovery pending the disposal of the appeals before the Tribunal.

What were the facts?

The petitioner, The Mankara Service Co-Operative Bank Ltd., filed three writ petitions (WP(C) Nos. 9163, 9178, and 9179 of 2020) before the High Court of Kerala. These petitions challenged recovery actions initiated by the Income Tax Officer (respondent 1) while appeals were pending before the Income Tax Appellate Tribunal (respondent 3). The assessment years in dispute were 2016-17, 2010-11, and 2015-16. The core issue revolved around the petitioner's eligibility for deduction under Section 80P of the Income Tax Act, 1961. The petitioner had filed second appeals and stay petitions before the Tribunal, which were pending.

What were the issues?

1. Whether the recovery proceedings initiated by the Income Tax Officer are valid when second appeals and stay petitions are pending before the Income Tax Appellate Tribunal, concerning the assessment years 2016-17, 2010-11, and 2015-16? 2. Whether the petitioner, The Mankara Service Co-Operative Bank Ltd., is eligible for deduction under Section 80P of the Income Tax Act, 1961? Assessee's Contentions: The assessee argued that recovery should be stayed as appeals on the merits, including the crucial issue of Section 80P eligibility, were pending before the Tribunal. They relied on the pendency of their second appeals and stay petitions. Revenue's Contentions: The judgment does not record specific contentions from the revenue regarding the stay of recovery or the merits of the Section 80P issue. The revenue was represented by their standing counsel.

Which sections of the Income-tax Act were involved?

Section 80P

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Heard together (3 matters)

WP(C).No.9163 OF 2020
WP(C).9178/2020
WP(C).9179/2020

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 K.VINOD CHANDRAN MONDAY, THE 23RD DAY OF MARCH 2020 / 3RD CHAITHRA, 1942 WP(C).No.9163 OF 2020 PETITIONER/S: THE MANKARA SERVICE CO-OPERATIVE BANK LTD., NO.P-363, MANKARA, PALAKKAD - 678 613, REPRESENTED BY ITS SECRETARY-IN-CHARGE, K.K.RADHAKRISHNAN, AGED 46, S/O.LATE P.K.KRISHNANKUTTY. BY ADVS. SRI.HARISANKAR V. MENON SMT.MEERA V.MENON RESPONDENT/S: 1 THE INCOME TAX OFFICER, WARD 1 AND TPS, AYAKAR BHAVAN, PALAKKAD - 678 014. 2 THE COMMISSIONER OF INCOME TAX (APPEALS) THRISSUR - 680 021. 3 THE INCOME TAX APPELLATE TRIBUNAL, AYAKAR BHAVAN, KAKKANADU, KOCHI - 682 030, REPRESENTED BY ITS REGISTRAR. OTHER PRESENT: R1 & R2 BY SRI.JOSE JOSEPH, SC, IT THIS WRIT PETITION (CIVIL) HAVING COME UP FOR ADMISSION ON 23.03.2020, ALONG WITH WP(C).9178/2020, WP(C).9179/2020, THE COURT ON THE SAME DAY DELIVERED THE FOLLOWING: WP(C).No.9163 of 2020 & - 2 - connected cases IN THE HIGH COURT OF KERALA AT ERNAKULAM PRESENT THE HONOURABLE MR.JUSTICE K.VINOD CHANDRAN MONDAY, THE 23RD DAY OF MARCH 2020 / 3RD CHAITHRA, 1942 WP(C).No.9178 OF 2020 PETITIONER/S: THE MANKARA SERVICE CO-OPERATIVE BANK LTD. NO.P-363, MANKARAI, PALAKKAD - 678 613, REPRESENTED BY ITS SECRETARY IN CHARGE, K. K. RADHAKRISHNAN, AGED 46, S/O. LATE P. K. KRISHNANKUTTY. BY ADVS. SRI.HARISANKAR V. MENON SMT.MEERA V.MENON SMT.K.KRISHNA RESPONDENT/S: 1 THE INCOME TAX OFFICER, WARD 1, AYAKAR BHAVAN, PALAKKAD - 678 014. 2 THE COMMISSIONER OF INCOME TAX (APPEALS) THRISSUR - 680 021. 3 THE INCOME TAX APPELLATE TRIBUNAL AYAKAR BHAVAN, KAKKANADU, KOCHI - 682 030, REPRESENTED BY ITS REGISTRAR. OTHER PRESENT: R1 & R2 BY SRI.JOSE JOSEPH, SC, IT THIS WRIT PETITION (CIVIL) HAVING COME UP FOR ADMISSION ON 23.03.2020, ALONG WITH WP(C).9163/2020, WP(C).9179/2020, THE COURT ON THE SAME DAY DELIVERED THE FOLLOWING: WP(C).No.9163 of 2020 & - 3 - connected cases IN THE HIGH COURT OF KERALA AT ERNAKULAM PRESENT THE HONOURABLE MR.JUSTICE K.VINOD CHANDRAN MONDAY, THE 23RD DAY OF MARCH 2020 / 3RD CHAITHRA, 1942 WP(C).No.9179 OF 2020 PETITIONER/S: THE MANKARA SERVICE CO-OPERATIVE BANK LTD., NO.P-363, MANKARAI, PALAKKAD - 678 613, REPRESENTED BY ITS SECRETARY IN CHARGE, K. K. RADHAKRISHNAN, AGED 46, S/O. LATE P. K. KRISHNANKUTTY. BY ADVS. SRI.HARISANKAR V. MENON SMT.MEERA V.MENON RESPONDENT/S: 1 THE INCOME TAX OFFICER WARD 1, AYAKAR BHAVAN, PALAKKAD - 678 014. 2 THE COMMISSIONER OF INCOME TAX (APPEALS) THRISSUR - 680 021. 3 THE INCOME TAX APPELLATE TRIBUNAL AYAKAR BHAVAN, KAKKANADU, KOCHI - 682 030, REPRESENTED BY ITS REGISTRAR. OTHER PRESENT: R1 & R2 BY SRI.JOSE JOSEPH, SC, IT THIS WRIT PETITION (CIVIL) HAVING COME UP FOR ADMISSION ON 23.03.2020, ALONG WITH WP(C).9163/2020, WP(C).9178/2020, THE COURT ON THE SAME DAY DELIVERED THE FOLLOWING: WP(C).No.9163 of 2020 & - 4 - connected cases K. Vinod Chandran, J. ------------------------------------- W.P(C) No.9163, 9178 and 9179 of 2020 ------------------------------------- Dated this the 23rd day of March, 2020

JUDGMENT These writ petitions are against the recovery initiated while appeals are pending. The issue is also with respect to the coverage of the petitioner under Section 80P of the Income Tax Act, 1961, which has to be adjudicated on the basis of the Full Bench decision in Mavilayil Service Co - operative Bank Limited v. Commissioner of Income Tax, Calicut [2019 (2) KHC 287 (FB)].

2.

In the present case, the demand is with respect to assessment years 2016-17, 2010-11 and 2015-16. Exhibit P3 second appeal along with Exhibit P4 stay petition in the respective writ petitions are pending before the Tribunal. In the circumstance of the case, I am of the opinion that there shall be a stay of recovery till the appeals are disposed of. The writ petitions are disposed of with the above direction, without any observation on the merits of the matter. K.VINOD CHANDRAN JUDGE Vku/- - 5 - connected cases APPENDIX OF WP(C) 9163/2020 PETITIONER'S/S EXHIBITS: EXHIBIT P1 COPY OF ASSESSMENT ORDER ISSUED BY THE 1ST RESPONDENT FOR THE YEAR 2016-17. EXHIBIT P2 COPY OF APPELLATE ORDER ISSUED BY THE 2ND RESPONDENT FOR THE YEAR 2016-17. EXHIBIT P3 COPY OF APPEAL FILED BY THE PETITIONER BEFORE THE 3RD RESPONDENT 2016-17. EXHIBIT P4 COPY OF STAY PETITION FILED BY THE PETITIONER BEFORE THE 3RD RESPONDENT. connected cases APPENDIX OF WP(C) 9178/2020 PETITIONER'S/S EXHIBITS: EXHIBIT P1 COPY OF ASSESSMENT ORDER ISSUED BY THE 1ST RESPONDENT FOR THE YEAR 2010-11. EXHIBIT P2 COPY OF APPELLATE ORDER ISSUED BY THE 2ND RESPONDENT FOR THE YEAR 2010-11. EXHIBIT P3 COPY OF APPEAL FILED BY THE PETITIONER BEFORE THE 3RD RESPONDENT 2010-11. EXHIBIT P4 COPY OF STAY PETITION FILED BY THE PETITIONER BEFORE THE 3RD RESPONDENT. connected cases APPENDIX OF WP(C) 9179/2020 PETITIONER'S/S EXHIBITS: EXHIBIT P1 COPY OF ASSESSMENT ORDER ISSUED BY THE 1ST RESPONDENT FOR THE YEAR 2015-16. EXHIBIT P2 COPY OF APPELLATE ORDER ISSUED BY THE 2ND RESPONDENT FOR THE YEAR 2015-16. EXHIBIT P3 COPY OF APPEAL FILED BY THE PETITIONER BEFORE THE 3RD RESPONDENT 2015-16. EXHIBIT P4 COPY OF STAY PETITION FILED BY THE PETITIONER BEFORE THE 3RD RESPONDENT. []

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