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

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WP(C)/9054/2020HC KeralaKLHC01022977202023 March 2020Author: HONOURABLE MR.JUSTICE K.VINOD CHANDRAN3 pages
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What did the High Court hold?

The High Court held that recovery proceedings should be stayed until the appeal is disposed of by the first appellate authority. The Court noted that the issue regarding the petitioner's coverage under Section 80P of the Income Tax Act, 1961, needs 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)]. The Court disposed of the writ petition with a direction to stay recovery until the appeal is decided, without making any observations on the merits of the case. The operative direction is a stay of recovery.

What were the facts?

The petitioner, The Varadiam Service Co-operative Bank Ltd., filed a writ petition challenging recovery proceedings initiated by the respondents, the Commissioner of Income Tax (Appeals) and the Income Tax Officer, for the assessment year 2017-2018. The core of the dispute concerns the petitioner's eligibility for deduction under Section 80P of the Income Tax Act, 1961. The petitioner had filed an appeal (Exhibit P3) and a stay petition (Exhibit P4) before the first appellate authority, which were pending adjudication. The writ petition was filed to prevent recovery while the appeal was still under consideration.

What were the issues?

1. Whether recovery proceedings can be initiated against the petitioner for assessment year 2017-2018 while an appeal and stay petition are pending before the first appellate authority, concerning the eligibility for deduction under Section 80P of the Income Tax Act, 1961? Assessee's Contention: The petitioner argued that recovery should be stayed until the appeal is disposed of, as the matter involves a significant dispute regarding tax liability under Section 80P. Revenue's Contention: The judgment does not record any specific contentions made by the revenue in response to the writ petition. However, the initiation of recovery proceedings implies the revenue's position that such action is permissible.

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 K.VINOD CHANDRAN MONDAY, THE 23RD DAY OF MARCH 2020 / 3RD CHAITHRA, 1942 WP(C).No.9054 OF 2020 PETITIONER: THE VARADIAM SERVICE CO-OPERATIVE BANK LTD. NO.575, AVANOOR, VARADIAM, THRISSUR - 680 541, REPRESENTED BY ITS SECRETARY. BY ADV. SRI.P.C.SASIDHARAN RESPONDENTS: 1 THE COMMISSIONER OF INCOME TAX (APPEALS), AAYAKAR BHAVAN, S.T.NAGAR, THRISSUR - 68001. 2 THE INCOME TAX OFFICER, WARD 2 (3), THRISSUR, AAYAKAR BHAVAN, SHAKTHANTHAMPOURAM NAGAR, THRISSUR -680 001. SRI.JOSE JOSEPH, SC, IT THIS WRIT PETITION (CIVIL) HAVING COME UP FOR ADMISSION ON 23.03.2020, THE COURT ON THE SAME DAY DELIVERED THE FOLLOWING: W.P.(C) No.9054 of 2020 2

JUDGMENT The writ petition is against the recovery initiated while appeal is 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 year 2017-2018. Exhibit P3 appeal and Exhibit P4 stay petition are pending before the first appellate authority. In the circumstance of the case, I am of the opinion that there shall be a stay of recovery till the appeal is disposed of. The writ petition is disposed of with the above direction, without any observation on the merits of the matter. K.VINOD CHANDRAN pkk JUDGE

W.P.(C) No.9054 of 2020 3 APPENDIX PETITIONER'S EXHIBITS: EXHIBIT P1OF THE ASSESSMENT ORDER DATED 17/12/2019. EXHIBIT P2OF DEMAND NOTICE DATED 17/12/2019. EXHIBIT P3OF THE APPEAL DATED 15/1/2020. EXHIBIT P4OF THE STAY PETITION DATED 15/1/2020. EXHIBIT P5OF THE JUDGMENT DATED 1/7/2019 IN W.A.1536 OF 2019.

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