General Insurance Employees Co-operative Credit Society Ltd. V. Commissioner of Income Tax, Mysore and Asst. Commissioner of Income Tax, Circle-1

WP/6968/2014

AI Insights

The case involves the General Insurance Employees Co-operative Credit Society Ltd., which filed a writ petition against the Commissioner of Income Tax and the Assistant Commissioner of Income Tax, challenging a tax demand. The petitioner, a multi-state co-operative society, argued that their income is exempt under Section 80P(2)(a)(i) of the Income Tax Act, and contested the assessment that treated them as a primary co-operative society, disallowing the claimed deduction. The court's decision to stay the tax demand was based on the pending appeal and stay application before the appellate authority, emphasizing the need to preserve the petitioner's right to appeal.

• Counselvise Citation: [2014] 140 COUNSELVISE.COM (IT) 671399 (HC-KARNATAKA)
• Appeal Type: Others
• Pronouncement Date: 18-02-2014
• Assessment Year: misc
• Laws Referred To: Co-operative Societies Act, 1959, Multi-State Co-operative Societies Act, 2002, Income Tax Act
• Result in Favour of: Others
• Court: HIGH COURT
• Department Lawyers: K V ARAVIND; PADMABHUSHAN
• Assessee Lawyers: MAHESH UPPIN
• Keywords: Certiorari; Certiorari; Income tax exemption; Stay Application; Tax demand; Writ petition; Multi-State Co-operative Society
• Section: 80-P(2)(a)(i); 220(3)

Judgement Text

" 1 IN THE HIGH COURT OF KARNATAKA AT BANGALORE DATED THIS THE 18TH DAY OF FEBRUARY 2014 BEFORE THE HON’BLE Dr.JUSTICE JAWAD RAHIM W.P. Nos. 6968/2014 C/W 6691/2014 AND 6585/2014 (T-IT) IN W.P. NO. 6968/2014 BETWEEN: GENERAL INSURANCE EMPLOYEES CO-OPERATIVE CREDIT SOCIETY LTD., HEAD OFFICE: “KRISHNA” AJJARKAD, COURT BACK ROAD UDUPI – 576101 REPRESENTED BY ITS MANAGING DIRECTOR SRI. PRABHAKARA K.S. ... PETITIONER (BY SRI. MAHESH R. UPPIN, ADV.,) AND 1. COMMISSIONER OF INCOME TAX THE COMMISSIONER OF MYSORE – 570001 2. ASST. COMMISSIONER OF IMCOME TAX CIRCLE-1, AAYAKAR BHAVAN MALPE ROAD, ADI-UDUPI UDUPI – 576103. ... RESPONDENTS (BY SRI PADMABHUSHAN, ADV., FOR SRI. K.V. ARAVIND, SR. COUNSIL FOR R1 & R2) 2 THIS WRIT PETITION IS FILED PRAYING TO QUASH THE ORDER DTD: 03.02.2014 ISSUED BY THE R-2 MARKED AS ANNEX-G. ETC., IN W.P. 6691/2014 BETWEEN KANCHAN CREDIT SOUDHARDA SAHAKARI LTD., HEAD OFFICE, HONNAKATTE N.H. 66, KULAI MANGALORE (D.K. DISTRICT) REPRESENTED BY ITS SECRETARY MR. PRASHANTH …PETITIONER (BY SRI. MAHESH R. UPPIN, ADV., FOR SRI. PADMABHUSHAN, ADV) AND 1. COMMISSIONER OF INCOME TAX MYSORE – 570001 2. INCOME TAX OFFICER WARD – 2, AAYAKAR BHAVAN ADI-UDUPI, UDUPI - 576101 ... RESPONDENTS (BY SRI. K.V. ARAVIND, FOR R1 & R2) THIS WP IS FILED PRAYING TO. QUASH THE ORDER DTD.3.2.2014 ISSUED BY THE R-2 MARKED AS ANNEX-G. IN W.P. NO. 6585/2014 BETWEEN BADAGABETTU CREDIT CO-OPERATIVE SOCIETY LTD., HEAD OFFICE: CHETANA BUILDING L.M.H. ROAD 3 UDUPI – 576101 REPRESENTED BY ITS GENERAL MANAGER SRI. JAYAKAR SHETTY INDRALI …PETITITIONER (BY SRI. MAHESH R. UPPIN, ADV., ) AND 1. COMMISSIONER OF INCOME TAX MYSORE – 570001 2. INCOME TAX OFFCER WARD-2, AAYAKAR BHAVAN ADI-UDUPI, UDUPI – 576101 …RESPONDENTS (BY SRI. PADMABHUSHAN, ADV., FOR SRI K.V. ARAVIND, SR.COUNSIL FOR R1 & R2) THIS W.P. IS FILED PRAYING TO QUASH THE ORDER DT: 17.01.2014 ISSUED BY THE R-2 MARKED AS ANNX-G BY ISSUING A WRIT IN THE NATURE OF CERTIORARI THESE PETITIONS ARE COMING ON FOR PRELIMINARY HEARING IN ‘B; GROUP THIS DAY, THE COURT MADE THE FOLLOWING: O R D E R Petitioner, a credit co-operative society registered under the Co-operative Societies Act, 1959, which is now converted as Multi-State Co-operative Societies Act, 2002, seeks a writ in the nature of certiorari to quash the direction issued by the 2nd respondent vide Annexure-G dated 23.1.2014 in F No.Stay/ITO/Wd-1(1)/2013-14 by 4 which the petitioners were directed to pay certain amount as tax. 2. Learned counsel Mr.Padmabhushan has entered appearance for the respondents. 3. Petitioner's case is, being a registered multi-state co- operative society under the Act, the entire income derived from its activity is exempted from Section 80(p)(2)(a)(i) of the Income Tax Act. Referring to the said provision, it is urged, despite petitioner filing return of income along with tax as required under the Act to the assessing authority within the prescribed time and claiming benefit, respondent no.2 has treated the petitioner as primary co- operative society and has disallowed the benefit of deduction under Section 80P of the Act. The entire net profit of Rs.25,10,405/- along with the difference in depreciation was added to the returned income and Rs.16,95,710/- is shown as outstanding. The authority has raised demand on 27.12.2013 vide Annexure-B which order is contrary to the mandate of law. Thus the 5 petitioner has preferred the appeal before the 1st respondent on 28.2.2014 along with the application for stay vide Annexures-D and E. It has also filed an application under Section 220(3) before the 2nd respondent on 3.2.2014 to keep the tax demanded in abeyance till disposal of the appeal by the 1st respondent. That application is at Annexure-F. 4. Despite such demands made by the petitioner, 2nd respondent is proceeding to enforce the demand. 5. On behalf of the respondents, it is not in dispute aggrieved by the assessment order vide Annexure-A, petitioner society is already in appeal before the statutory appellate authority. The appeal is pending vide Annexure- D and the application for stay vide Annexure-E has not been considered. In the circumstances, I am satisfied if the 2nd respondent is allowed to enforce the demand vide Annexure-A, it will deprive the appeal remedy available to the petitioner, and in the fitness of things, the said 6 application should have been considered by the appellate authority. 6. In the circumstances, I am satisfied petitioner has made out a case for grant of relief sought to a limited extent. Hence the writ petition is allowed. The impugned order at Annexures-B and G issued in pursuance to Annexure-A be, and the same is hereby stayed till the appellate authority considers the stay application vide Annexure-E. 7. Mr.S.V.Girikumar, Addl.Govt.Advocate is permitted to file memo of appearance for the respondents. Sd/- JUDGE vgh* "