KADALUNDI SERVICE CO-OP. BANK LTD vs. THE COMMISSIONER OF INCOME TAX

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WA/1957/2013HC KeralaKLHC01043192201315 January 2014Bench: HONOURABLE MR.JUSTICE A.M.SHAFFIQUE,HONOURABLE THE CHIEF JUSTICE DR. MANJULA CHELLUR3 pages
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What did the High Court hold?

The High Court held that no interference was required with the learned Single Judge's judgment. The Single Judge had exercised discretion by modifying the conditional order of stay, allowing the petitioner to pay one-third of the amount due as a condition for stay. However, taking into consideration the appellant's arguments, the Court directed the Commissioner of Income Tax (Appeals) to dispose of the appeal on its merits within three months from the date of receipt of a copy of the judgment. Crucially, the Court directed that the appeal be disposed of untrammeled by any of the observations made in the conditional stay order (Ext.P6). The ratio is that while a stay order should not decide the merits, a High Court can modify such conditions and direct expeditious disposal of the appeal on merits, ensuring the appellate authority's observations in the stay order do not prejudice the assessee.

What were the facts?

The appellant, Kadalundi Service Co-op. Bank Ltd., filed a writ petition challenging a conditional order of stay (Ext.P6) passed by the Commissioner of Income Tax (Appeals) on their stay petition (Ext.P5). The appeal before the Commissioner was against an assessment order by the Assessing Officer. The Commissioner had rejected the stay application. The learned Single Judge modified the Commissioner's order, allowing the petitioner to remit one-third of the disputed amount within one month as a condition for stay. The appellant argued they were entitled to exemption under Section 80(P) of the Income Tax Act, and the Commissioner's observation regarding tax liability in the stay order would prejudice their case.

What were the issues?

1. Whether the learned Single Judge was justified in modifying the conditional order of stay passed by the Commissioner of Income Tax (Appeals) by permitting the appellant to remit one-third of the disputed amount as a condition for stay, considering the appellant's claim for exemption under Section 80(P) of the Income Tax Act. Assessee's Contentions: The appellant contended that they are entitled to exemption under Section 80(P) of the Income Tax Act. They also argued that the Commissioner's findings regarding tax liability in the stay order would prejudice their appeal on merits. They relied on the principle that stay orders should not decide the merits of the case. Revenue's Contentions: The judgment does not record any specific contentions made by the revenue before the High Court.

Which sections of the Income-tax Act were involved?

Section 80(P)

AI-generated summary — verify with the full judgment below

Heard together (2 matters)

WA.No. 1957 of 2013
WP(C).21846/2013

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 HON'BLE THE CHIEF JUSTICE DR. MANJULA CHELLUR & THE HONOURABLE MR.JUSTICE A.M.SHAFFIQUE WEDNESDAY, THE 15TH DAY OF JANUARY 2014/25TH POUSHA, 1935 WA.No. 1957 of 2013 (E) IN WP(C).21846/2013 --------------------------------------------- AGAINST THE JUDGMENT IN WP(C) 21846/2013 DATED 03-09-2013 APPELLANT --------------- KADALUNDI SERVICE CO-OP. BANK LTD,F 1500 KADALUNDI POST, KADALUNDI, REP BY ITS SECRETARY BY ADV. SRI.O.D.SIVADAS RESPONDENT(S)/RESPONDENTS: ---------------------------------------------------- 1. THE COMMISSIONER OF INCOME TAX (APPEALS) I, AYAKAR BHAVAN, KOZHIKODE 2. THE INCOME TAX OFFICER, WARD 2(3), KOZHIKODE BY SRI.JOSE JOSEPH, SC, FOR INCOME TAX

THIS WRIT APPEAL HAVING COME UP FOR ADMISSION ON 15-01-2014, THE COURT ON THE SAME DAY DELIVERED THE FOLLOWING:

MANJULA CHELLUR C.J. & A.M.SHAFFIQUE, J. = = = = = = = = = = = = = = = = Writ Appeal No.1957 of 2013 = = = = = = = = = = = = = = = = = = = = = Dated this the 15 th day of January, 2014 JUDGMENT Shaffique, J This appeal is filed by the writ petitioner. The writ petition was filed challenging Ext.P6 conditional order of stay passed on Ext.P5 petition by the Commissioner of Income Tax (Appeals). The appeal was filed against an order of assessment passed by the Assessing Officer. By Ext.P6 the Appellate Authority had rejected the application for stay. When the matter was challenged, the learned Single Judge modified the said order by permitting the petitioner to remit one-third of the amount due under Ext.P3 order within a period of one month. 2. The learned counsel for the appellant would submit that the appellant-Society is entitled for exemption under Section 80 (P) of the Income Tax Act. However, this matter has to be considered by the appellate authority on merits. Learned

Writ Appeal No.1957 of 2013 2 counsel would further submit that while dismissing the said stay petition, the Appellate Authority had in fact come to the finding regarding the liability to pay tax which will affect further proceedings. 3. Having gone through the judgment of the learned Single Judge, we do not think that any interference is required to the said judgment as the learned Single Judge had exercised the discretion by modifying Ext.P6 order and permitting the petitioner to pay one-third of the amount as a condition for stay. 4.However, taking into consideration the arguments of the learned counsel for the appellant, we direct the 1st respondent to dispose of the appeal within a period of three months from the date of receipt of a copy of this judgment, untrammeled by any of the observations made at Ext.P6. This writ petition is disposed of as above. MANJULA CHELLUR, CHIEF JUSTICE A.M.SHAFFIQUE, JUDGE.

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