POOTHRIKKA SERVICE CO-OPERATIVE BANK LTD. vs. INCOME TAX OFFICER
What did the High Court hold?
The High Court allowed the writ petitions. The Court noted that the core 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, a benefit denied by the Assessing Officer. The Court referred to the Supreme Court's decision in Mavilayi Service Co-operative Bank Ltd. and its own subsequent judgments, including a Division Bench decision in W.A.No. 1536/2019 and a Single Judge decision in W.P.(C) No. 5234/2020. These judgments had quashed similar actions by the revenue, directing the Commissioner of Income Tax to dispose of the appeals expeditiously and keep recovery in abeyance until then. Following this ratio, the High Court directed the 2nd respondent (Commissioner of Income Tax (Appeals)) to decide the pending appeals expeditiously. Until the appeals are decided, the respondents were directed to keep recovery proceedings pursuant to the assessment orders in abeyance. No issue was expressly left undecided.
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. The assessment years are not specified. The dispute concerns the denial of Section 80(P) benefits and the demand for pre-payment of tax.
What were the issues?
1. Whether the action of the respondents in demanding 20% of the tax demand as a pre-condition for considering a stay application, while statutory appeals against the denial of Section 80(P) benefits are pending, is contrary to established legal principles? (Question of law and fact, concerning Section 80(P) and principles of natural justice). Assessee's Contentions: - The petitioners are co-operative banks entitled to the benefits of Section 80(P) of the Income Tax Act. - The demand for 20% of the tax demand as a condition for stay is contrary to the Supreme Court judgment in Mavilayi Service Co-operative Bank Ltd. v. Commissioner of Income Tax, Calicut. - This Court has previously quashed similar actions by the respondents in a series of judgments. Revenue's Contentions: - 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.
IN THE HIGH COURT OF KERALA AT ERNAKULAM PRESENT THE HONOURABLE MR. JUSTICE A.M.BADAR WEDNESDAY, THE 31ST DAY OF MARCH 2021 / 10TH CHAITHRA, 1943 WP(C).No.8610 OF 2021(A) PETITIONER: POOTHRIKKA SERVICE CO-OPERATIVE BANK LTD. NO.E 344, KOLENCHERY P.O., ERNAKULAM, PIN-682 311, REPRESENTED BY ITS SECRETARY. BY ADV. SRI.C.A.JOJO RESPONDENTS: 1 INCOME TAX OFFICER, WARD-2, INCOME TAX OFFICE, R S ROAD, ALUVA, ERNAKULAM-683 101. 2 COMMISSIONER OF INCOME TAX (APPEALS)-2, OFFICE OF THE COMMISSIONER OF INCOME TAX, CENTRAL REVENUE TOWER, KOCHI-682 018. 3 ADDITIONAL COMMISSIONER, NATIONAL E-ASSESSMENT CENTRE, NEW DELHI – 110 005. R1-3 BY SRI.CHRISTOPHER ABRAHAM, SC THIS WRIT PETITION (CIVIL) HAVING COME UP FOR ADMISSION ON 31.03.2021, ALONG WITH WP(C).8642/2021(E), WP(C).8652/2021(F), THE COURT ON THE SAME DAY DELIVERED THE FOLLOWING:
WP(C).Nos.8610 OF 2021 AND CONNECTED CASES 2 IN THE HIGH COURT OF KERALA AT ERNAKULAM PRESENT THE HONOURABLE MR. JUSTICE A.M.BADAR WEDNESDAY, THE 31ST DAY OF MARCH 2021 / 10TH CHAITHRA, 1943 WP(C).No.8642 OF 2021(E) PETITIONER: MAMALA SERVICE CO-OPERATIVE BANK LTD. NO.2799, MAMALA P.O., ERNAKULAM,PIN-682 035, REPRESENTED BY ITS SECRETARY. BY ADV. SRI.C.A.JOJO RESPONDENTS: 1 INCOME TAX OFFICER, WARD-2,INCOME TAX OFFICE, R.S.ROAD, ALUVA, ERNAKUAM-683 101. 2 COMMISSIONER OF INCOME TAX (APPEALS)-2, OFFICE OF THE COMMISSIONER OF INCOME TAX, CENTRAL REVENUE TOWER, KOCHI-682 018. R1-2 BY SRI. CHRISTOPHER ABRAHAM, STANDING COUNSEL THIS WRIT PETITION (CIVIL) HAVING COME UP FOR ADMISSION ON 31.03.2021, ALONG WITH WP(C).8610/2021(A), WP(C).8652/2021(F), THE COURT ON THE SAME DAY DELIVERED THE FOLLOWING:
WP(C).Nos.8610 OF 2021 AND CONNECTED CASES 3 IN THE HIGH COURT OF KERALA AT ERNAKULAM PRESENT THE HONOURABLE MR. JUSTICE A.M.BADAR WEDNESDAY, THE 31ST DAY OF MARCH 2021 / 10TH CHAITHRA, 1943 WP(C).No.8652 OF 2021(F) PETITIONER: VADAVUCODE FARMERS SERVICE CO-OPERATIVE BANK LTD. NO.651, VADAVUKODE P.O., ERNAKULAM, PIN-682 310, REPRESENTED BY ITS MANAGING DIRECTOR. BY ADV. SRI.C.A.JOJO RESPONDENTS: 1 INCOME TAX OFFICER, WARD-3, INCOME TAX OFFICE, R.S.ROAD, ALUVA, ERNAKULAM-683 101. 2 COMMISSIONER OF INCOME TAX (APPEALS)-2, OFFICE OF THE COMMISSIONER OF INCOME TAX, CENTRAL REVENUE TOWER, KOCHI-682 018. 3 ADDITIONAL COMMISSIONER, NATIONAL E-ASSESSMENT CENTRE, NEW DELHI-110 005. R1-3 BY SRI. CHRISTOPHER ABRAHAM, STANDING COUNSEL. THIS WRIT PETITION (CIVIL) HAVING COME UP FOR ADMISSION ON 31.03.2021, ALONG WITH WP(C).8610/2021(A), WP(C).8642/2021(E), THE COURT ON THE SAME DAY DELIVERED THE FOLLOWING:
WP(C).Nos.8610 OF 2021 AND CONNECTED CASES 4 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. 2. 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. 3. 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. 4. I have considered the submissions in advance. 5.
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. Sd/- A.M.BADAR JUDGE SSK/31/03
WP(C).Nos.8610 OF 2021 AND CONNECTED CASES 8 APPENDIX OF WP(C) No.8610/2021 PETITIONER'S EXHIBITS: EXHIBIT P1 A TRUE COPY OF THE CERTIFICATE IN THIS REGARD
ISSUED
THE
ASSISTANT REGISTRAR(GENERAL)
KUNNATHUNADU
DATED 23.05.2017. EXHIBIT P2 A TRUE COPY OF THE ASSESSMENT ORDER FOR AY 2018-19 DATED 09.02.2021 ISSUED BY THE 3RD RESPONDENT. EXHIBIT P3 A TRUE COPY OF THE DEMAND NOTICE FOR AN AMOUNT OF RS. 70,79,119/- U/S. 156 DATED 09.02.2021 ISSUED BY THE 3RD RESPONDENT. EXHIBIT P4 A TRUE COPY OF THE APPEAL FOR AY 2018-19 BEFORE THE 2ND RESPONDENT DATED 18.12.2019. EXHIBIT P5 A TRUE COPY OF THE STAY PETITION FOR AY 2018-19 BEFORE THE 2ND RESPONDENT DATED 24.03.2021. EXHIBIT P6 A TRUE COPY OF THE NOTICE OF DEMAND DEMANDING 20% OF TAX DATED 24.03.2021 FOR AYS 2018-19 ISSUED BY THE 1ST RESPONDENT. EXHIBIT P7 A TRUE COPY OF THE JUDGMENT IN WA 1536 OF 2019 DATED 01.07.2019. EXHIBIT P8 A TRUE COPY OF THE JUDGMENT IN WP(C) 5234 OF 2020 DATED 26.02.2020. RESPONDENT'S EXHIBITS:NIL SSK //TRUE COPY// PA TO JUDGE
WP(C).Nos.8610 OF 2021 AND CONNECTED CASES 9 APPENDIX OF WP(C) No.8642/2021 PETITIONER'S EXHIBITS: EXHIBIT P1 A TRUE COPY OF THE CERTIFICATE IN THIS REGARD ISSUED BY THE ASSISTANT REGISTRAR (GENERAL) KUNNATHUNADU DATED 14.12.2016. EXHIBIT P2 A TRUE COPY OF THE ASSESSMENT ORDER FOR AY- 2017-18 DATED 29.12.2019 ISSUED BY THE 1ST RESPONDENT. EXHIBIT P3 A TRUE COPY OF THE DEMAND NOTICE FOR AN AMOUNT OF RS.1,45,27,306/- U/S. 156 DATED 30.12.2019 ISSUED BY THE 1ST RESPONDENT. EXHIBIT P4 A TRUE COPY OF THE APPEAL FOR AY 2017-18 BEFORE THE 2ND RESPONDENT DATED 22.01.2020. EXHIBIT P5 A TRUE COPY OF THE STAY PETITIONER FOR AY 2017-18 BEFORE THE 2ND RESPONDENT DATED 24.03.2021. EXHIBIT P6 A TRUE COPY OF THE NOTICE OF DEMAND DEMANDING 20 % OF TAX DATED 24.03.2021 FOR AYS 2017-18 ISSUED BY THE 1ST RESPONDENT. EXHIBIT P7 A TRUE COPY OF THE JUDGMENT IN WA 1536 OF 2019 DATED 01.07.2019. EXHIBIT P8 A TRUE COPY OF THE JUDGMENT IN WP(C) 5234 OF 2020 DATED 26.02.2020. RESPONDENT'S EXHIBITS:NIL SSK //TRUE COPY// PA TO JUDGE
WP(C).Nos.8610 OF 2021 AND CONNECTED CASES 10 APPENDIX OF WP(C) No.8652/2021 PETITIONER'S EXHIBITS: EXHIBIT P1 A TRUE COPY OF THE CERTIFICATE OF REGISTRATION ISSUED BY THE ASSISTANT REGISTRAR PERUMBAVOOR DATED 4.10.2018. EXHIBIT P2 A TRUE COPY OF THE ASSESSMENT ORDER FOR AY 2017-18 DATED 31.12.2019 ISSUED BY THE 1ST RESPONDENT. EXHIBIT P3 A TRUE COPY OF THE DEMAND NOTICE FOR AN AMOUNT OF RS.8,36,62,521/- U/S 156 DATED 31.12.2019 ISSUED BY THE 1ST RESPONDENT. EXHIBIT P4 A TRUE COPY OF THE APPEAL FOR AY 2017-18 BEFORE THE 2ND RESPONDENT DATED 13.1.2020. EXHIBIT P5 A TRUE COPY OF THE STAY PETITION FOR AY 2017-18 BEFORE THE 2ND RESPONDENT DATED 24.3.2021. EXHIBIT P6 A TRUE COPY OF THE ASSESSMENT ORDER FOR AY 2018-19 DATED 17.2.2021 ISSUED BY THE 3RD RESPONDENT. EXHIBIT P7 A TRUE COPY OF THE DEMAND NOTICE FOR AN AMOUNT OF RS.1,90,97,273/- U/S 156 DATED 17.2.2021 ISSUED BY THE 3RD RESPONDENT. EXHIBIT P8 A TRUE COPY OF THE APPEAL FOR AY 2018-19 BEFORE THE 2ND RESPONDENT DATED 8.3.2021. EXHIBIT P9 A TRUE COPY OF THE STAY PETITION FOR AY 2018-19 BEFORE THE 2ND RESPONDENT DATED 24.3.2021. EXHIBIT P10 A TRUE COPY OF THE NOTICE OF DEMAND DEMANDING 20% OF TAX DATED 24.3.2021 FOR AYS 2017-18 AND 2018-19 ISSUED BY THE 1ST RESPONDENT. EXHIBIT P11 A TRUE COPY OF THE JUDGMENT IN W.A.1536 OF 2019 DATED 1.7.2019. RESPONDENT'S EXHIBITS:NIL SSK //TRUE COPY// PA TO JUDGE
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