THE POOTHADY SERVICE CO-OPERATIVE BANK LTD NO F.1011 vs. THE INCOME TAX OFFICER

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WP(C)/8482/2014HC KeralaKLHC01054108201425 March 2014Bench: HONOURABLE MR.JUSTICE P.R.RAMACHANDRA MENON6 pages
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What did the High Court hold?

The High Court noted that the Appellate Authority, by dismissing the interim application for stay (Exhibit P6), had virtually accepted the Assessing Officer's finding. However, the Court recognized that the core merit of the appeal still needed to be adjudicated. The Court acknowledged the pendency of other appeals (I.T. Appeal Nos. 103 of 2011 and 137 of 2011) and the need for the Appellate Authority to pass appropriate orders on the merits of the case. Consequently, the Court directed the petitioner to satisfy one-third (1/3rd) of the disputed liability by April 15, 2014. Upon compliance, the appeal (Exhibit P4) against the assessment order (Exhibit P3) would be considered, and a final order would be passed expeditiously after hearing the petitioner. Coercive proceedings were to be kept in abeyance until the appeal was finalized. The Court did not decide the ultimate eligibility for Section 80P exemption, leaving that to the Appellate Authority.

What were the facts?

The petitioner, The Poothady Service Co-operative Bank Ltd, filed a writ petition challenging the order dated February 5, 2014 (Exhibit P6), passed by the Commissioner of Income Tax (Appeals), Kozhikode. This order dismissed the petitioner's application for a stay pending their appeal against an assessment order dated March 18, 2013 (Exhibit P3) passed by the Income Tax Officer. The Assessing Officer had rejected the petitioner's claim for exemption under Section 80P of the Income Tax Act, which the petitioner, identifying itself as a 'Primary Agricultural Credit Society', contested. The petitioner argued that similar issues were pending before the High Court in other appeals and referred to an interim order in an appeal (WA No. 1246/2013) that had modified a stay condition.

What were the issues?

1. Whether the petitioner, as a 'Primary Agricultural Credit Society', is entitled to exemption under Section 80P of the Income Tax Act, 1961, and if the dismissal of the stay application by the appellate authority was justified. Assessee's Contentions: The petitioner argued that the issue of Section 80P exemption for co-operative societies was pending before the High Court in other appeals (I.T. Appeals No. 103 of 2011 and 137 of 2011). They relied on an interim order in WA No. 1246/2013 (Exhibit P2) which had virtually dispensed with the condition of satisfying 50% of the disputed liability for the writ petitioner in that case, and stated that the final hearing of those appeals was nearing completion. Revenue's Contentions: The revenue contended that the petitioner's understanding of the pending appeals was incorrect, asserting that the issues involved in those appeals were entirely different and unrelated to the present case. The revenue also argued that the benefit of Section 80P could only be extended to those who filed returns, and the petitioner had not filed a return until notice was issued. Furthermore, a positive finding had been rendered against the petitioner, holding that it was not a 'Primary Agricultural Credit Society' and thus ineligible for the exemption.

Which sections of the Income-tax Act were involved?

Section 80P

AI-generated summary — verify with the full judgment below

Heard together (2 matters)

WP(C).No. 8482 of 2014
WA NO.1246/2013

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 HONOURABLE MR.JUSTICE P.R.RAMACHANDRA MENON TUESDAY, THE 25TH DAY OF MARCH 2014/4TH CHAITHRA, 1936 WP(C).No. 8482 of 2014 (I) --------------------------- PETITIONER(S): -------------------------- THE POOTHADY SERVICE CO-OPERATIVE BANK LTD NO F.1011, KENICHIRA, SULTHAN BATHERY, WAYANAD DISTRICT, PIN:673 596, REPRESENTED BY THE SECRETARY. BY ADV. SRI.GEORGE POONTHOTTAM RESPONDENT(S): ---------------------------- 1. THE INCOME TAX OFFICER, WARD NO.14, DEPARTMENT OF INCOME TAX, KOZHIKODE-673 001. 2. THE COMMISSIONER OF INCOME TAX (APPEALS), KOZHIKODE-673 001. R1 & R2 BY ADV. SRI.JOSE JOSEPH, SC, INCOME TAX THIS WRIT PETITION (CIVIL) HAVING COME UP FOR ADMISSION ON 25-03-2014, THE COURT ON THE SAME DAY DELIVERED THE FOLLOWING: Kss

WP(C).No. 8482 of 2014 (I) --------------------------------------- APPENDIX PETITIONER(S)' EXHIBITS: --------------------------------------- EXHIBIT P1: TRUE COPY OF THE JUDGMENT IN WPC NO.19600/2013 DATED 7.8.2013. EXHIBIT P2: TRUE COPY OF THE INTERIM ORDER IN WA NO.1246/2013 DATED 26.8.2013. EXHIBIT P3: TRUE COPY OF THE ORDER OF ASSESSMENT DATED 18.3.2013. EXHIBIT P4: TRUE COPY OF THE APPEAL DATED 18.4.2013 FILED BEFORE THE IST RESPONDENT BY LETTER DATED 19.4.2013. EXHIBIT P5: TRUE COPY OF THE STAY PETITION FILED BEFORE THE IST RESPONDENT DATED 13.12.2013. EXHIBIT P6: TRUE COPY OF THE ORDER DATED 5.2.2014 IN APPEAL NO.ITA- 89/R1/CIT/CLT/2013-14 THROUGH COMMUNICATION DATED 13.3.2014. RESPONDENT(S)' EXHIBITS: ------------------------------------------ N I L /TRUE COPY/ P.A.TO JUDGE Kss

P.R. RAMACHANDRA MENON, J. --------------------------------------- W.P.C. No.8482 OF 2014 --------------------------------------- Dated this the 25th day of March, 2014. JUDGMENT The petitioner Society is before this Court, challenging the correctness and sustainability of Ext.P6 order dated 05.02.2014 passed by the 2nd respondent, whereby the Interlocutory Application preferred by the petitioner for granting stay, during the pendency of the appeal has been dismissed. The sequence of events narrated in the writ petition shows that Ext.P3 assessment order was passed on 18.03.2013 by the 1st respondent, which is under challenge in Ext.P4 appeal, filed along with Ext.P5 petition for stay. 2. The claim of the petitioner for exemption under Section 80P of the Income Tax Act was considered and the same was rejected by the Assessing Officer; which in turn is under challenge before the Appellate Authority, stating that the petitioner is a 'Primary Agricultural Credit Society' and is entitled to have exemption under Section 80P of the Act. The version of the petitioner has been considered by the Appellate Authority but

W.P.C.No.8482 OF 2014 2 the same came to be rejected as per Ext.P6 order, which is sought to be interfered in this writ petition. 3. The learned counsel for the petitioner points out that, the issue is pending consideration in I.T. Appeals No.103 of 2011 and 137 of 2011 preferred at the instance of some other assessees and that, taking note of the factual position as above, a Division Bench of this Court, vide Ext.P2 order dated 26.08.2013 in W.A. No.1246 of 2013, has virtually dispensed with the condition imposed by the Single Bench in directing to satisfy 50% of the disputed liability by the concerned writ petitioner. It is stated that, final hearing of the appeals is almost over and result is awaited. 4. The learned Standing Counsel appearing for the Department submits that, the ideal understanding of the petitioner as to the scope of I.T. Appeals is wrong and misconceived. It is stated that, the issue involved in the said appeals is entirely different and that the same does not have any connection or significance in so far as the issue in the present case is concerned. It is also pointed out that the benefit of

W.P.C.No.8482 OF 2014 3 exemption under Section 80P of the 'Act' can be extended only to a person, who has filed the return and in the instant case, no such return had ever been filed by the petitioner Society, till notice was issued by the competent authority. It is also stated that, a positive finding has been rendered against the petitioner Society, based on the actual facts and figures, holding that the petitioner Society is not a 'Primary Agricultural Credit Society' and hence is not eligible for the benefit of Section 80P of the 'Act'. 5. After hearing both the sides, this Court finds that the finding of the Assessing Authority has been virtually accepted by the Appellate Authority by passing Ext.P6, while rejecting the I.A. for stay. But then, what remains to be considered in the appeal, is the point to be looked into by this Court. This Court finds that, the merit of the case involved in I.T. Appeal Nos.103 of 2011 and 137 of 2011 has to be finally adjudicated by the Appellate Authority by passing appropriate orders in accordance with the relevant provisions of law, so as to enable the petitioner to pursue further steps, if so necessitated.

W.P.C.No.8482 OF 2014 4 6. After taking note of the contentions raised from both the sides, this Court directs the petitioner to satisfy 1/3rd of the disputed liability on or before the 15th of April, 2014 subject to which, Ext.P4 appeal preferred by the petitioner against Ext.P3 order shall be considered and final order shall be passed after hearing the petitioner, as expeditiously as possible. Subject to satisfaction of the 1/3rd of the disputed liability as above, coercive proceedings shall be kept in abeyance, till finalisation of the appeal. The petitioner shall produce a copy of this judgment, along with a copy of the writ petition, before the concerned respondent, for further steps. The writ petition is disposed of.

P.R. RAMACHANDRA MENON, JUDGE sp

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