K.MOHANDAS V. UNION OF INDIA

WP(C)/17231/2010

AI Insights

The case involves a group of employees from the Thrikaripur Farmers Service Co-operative Bank Ltd, who filed writ petitions against orders issued by the Income Tax Officer (TDS). These orders were directed at their employer, the Co-operative Bank, treating it as an assessee in default for not deducting adequate tax at source from payments made to the employees. The core issue was whether the contributions made to the provident fund, which were governed by the Co-operative Societies Act, qualified for exemption under Section 80C of the Income Tax Act, 1961. The Income Tax authorities contended that these were unrecognised provident funds and thus did not qualify for the said exemption. The court held that the employees lacked the standing to challenge the orders affecting their employer and that the contributions to the provident fund did not meet the criteria for deductions under Section 80C.

• Counselvise Citation: [2014] 140 COUNSELVISE.COM (IT) 745104 (HC-KERALA)
• Appeal Type: Others
• Pronouncement Date: 08-12-2014
• Assessment Year: misc
• Laws Referred To: Income Tax Act, 1961
• Result in Favour of: Revenue
• Court: HIGH COURT
• Department Lawyers: P K R MENON; JOSE JOSEPH
• Assessee Lawyers: M THAMBAN; T SUDHAMANI
• Keywords: Co-operative Banks; Income Tax; Provident fund; Recognised provident fund; Tax deduction at source
• Section: 201; 80C; 201(1A)

Judgement Text

"IN THE HIGH COURT OF KERALA AT ERNAKULAM PRESENT: THE HONOURABLE MR. JUSTICE A.K.JAYASANKARAN NAMBIAR MONDAY, THE 8TH DAY OF DECEMBER 2014/17TH AGRAHAYANA, 1936 WP(C).No. 17231 of 2010 (D) ---------------------------- PETITIONER(S): -------------------------- 1. K.MOHANDAS, ASSISTANT SECRETARY THRIKARIPUR FARMERS SERVICE CO-OPERATIVE BANK LTD P.O.THRIKARIPUR, KASARAGOD DISTRICT. 2. JOLLY ABRAHAM CHIEF ACCOUNTANT THRIKARIPUR FARMERS SERVICE CO-OPERATIVE BANK LTD P.O.THRIKARIPUR, KASARAGOD DISTRICT. 3. T.MADHANAN ,PEON, THRIKARIPUR FARMERS SERVICE CO-OPERATIVE BANK LTD P.O.THRIKARIPUR, KASARAGOD DISTRICT. 4. K.VIJAYAN, PEON THRIKARIPUR FARMERS SERVICE CO-OPERATIVE BANK LTD P.O.THRIKARIPUR, KASARAGOD DISTRICT. 5. E.V.GANESHAN ,ACCOUNTANT THRIKARIPUR FARMERS SERVICE CO-OPERATIVE BANK LTD P.O.THRIKARIPUR, KASARAGOD DISTRICT. 6. K.SASI, BRANCH MANAGER THRIKARIPUR FARMERS SERVICE CO-OPERATIVE BANK LTD P.O.THRIKARIPUR, KASARAGOD DISTRICT. 7. GEETHA C.M, BRANCH MANAGER THRIKARIPUR FARMERS SERVICE CO-OPERATIVE BANK LTD P.O.THRIKARIPUR, KASARAGOD DISTRICT. 8. RAJAN U, RETIRED BRANCH MANAGER THRIKARIPUR FARMERS SERVICE CO-OPERATIVE BANK LTD EVENING BRANCH, RESIDING AT UTHAMANDIL HOUSE THANKAYAM , P.O.THRIKARIPUR, KASARGOD DISTRICT. 9. A.V .PADMANABHAN RETIRED ASSISTANT SECRETARY, THRIKARIPUR FARMERS SERVICE CO-OPERATIVE BANK LTD RESIDING AT OLAVARA PO, UDUMBUMTHALA, SOUTH THRIKARIPUR KASARAGOD DISTRICT. 10. K.V.MUKUDAN RETIRED PEON, THRIKARIPUR FARMER'S SERVICE C0-OPERATIVE BANK LTD, RESIDING AT PEDAKAM P.O.THRIKARIPURA, NORTH THRIKARIPUR VILLAGE KASARAGOD DISTRICT. 11. V.GOPALAN , RETIRED ACCOUNTANT, THRIKARIPUR FARMER'S SERVICE CO-OPERATIVE BANK LTD RESIDING AT VAIKKATH HOUSE, NEAR RAMVILLAM TEMPLE KAROLAM, PO, ELAMBACHI, SOUTH THRIKARIPUR, KASARAGOD DISTRICT. 12. P.NARAYANAN ,RETIRED PEON, THRIKARIPUR FARMER'S SERVICE CO-OPERATIVE BANK LTD RESIDING AT KAROLAM PO, ELAMBACHI, KASARAGOD DISTRICT. BY ADVS.SRI.M.THAMBAN SMT.T.SUDHAMANI RESPONDENT(S): ---------------------------- 1. UNION OF INDIA REPRESENTED BY SECRETARY TO GOVERNMENT MINISTRY OF FINANCE, NEW DELHI. 2. THE JOINT COMMISSIONER OF INCOME TAX (TDS) C.R.BULDING , I.S.PRESS ROAD, COCHIN. 3. THE INCOME TAX OFFICER (TDS) AAYKAR BAHVAN, KANNOTHUMCHAL, KANNUR. 4. THE STATE OF KERALA, REPRESENTED BY SECREATARY TO GOVERNMENT, DEPARTMENT OF CO-OPERATION SECRETARIAT, THIRUVANANTHAPURAM. R,R1-3 BY ADV. SRI.P.K.R.MENON,SR.COUNSEL, GOI(TAXES) R,R1-3 BY ADV. SRI.JOSE JOSEPH, SC, FOR INCOME TAX THIS WRIT PETITION (CIVIL) HAVING BEEN FINALLY HEARD ON 08-12-2014 ALONG WITH W.P.( C).NO.19003/2010, THE COURT ON THE SAME DAY DELIVERED THE FOLLOWING: W.P.(C).NO.17231/2010 APPENDIX PETITIONER'S EXHIBITS: EXT.P1: COPY OF THE NOTICE DATED 20.2.2010. EXT.P2 & P3: COPY OF THE ORDER AND NOTICE OF DEMAND FOR THE ASSESSMENT YEAR 2007-08 AND 2008-09. EXT.P4 & P4(A): COPY OF THE INTERIM ORDERS IN W.P.(C).NO.20711/09 AND W.P. (C).NO.22209/2009. RESPONDENTS EXHIBITS: NIL. //TRUE COPY// P.S. TO JUDGE A.K.JAYASANKARAN NAMBIAR, J. ------------------------------- W.P.(C).NO.17231 OF 2010 (D) & W.P.(C).NO.19003 OF 2010 (A) ----------------------------------- Dated this the 8th day of December, 2014 J U D G M E N T As these writ petitions involve a common issue, they are taken up together for consideration and disposed by this common judgment. 2. The petitioners in both the writ petitions are employees of Co-operative Banks and they are stated to be aggrieved by orders passed by the Income Tax Officer (TDS) under Sections 201 and 201 (1A) of the Income Tax Act, 1961, hereinafter referred to as the “IT Act”. The facts in both the writ petitions would indicate that, in respect of deductions claimed under Section 80C of the IT Act, the respondent authorities under the IT Act had taken a stand that contributions made to the provident fund in terms of the Co-operative Societies Act, would not qualify for exemption under Section 80C of the IT Act since the said provident fund was not a recognised provident fund for the purposes of the IT Act. The orders that were passed by the Income Tax Officer, against the employer Co-operative W.P.(C).NO.17231/2010 & 2 W.P.(C).NO.19003/2010 Banks, were essentially orders that treat the employer Bank as an assessee in default for not effecting adequate deduction of tax at source from payments that were made to the employees. In that view of the matter, the orders passed were against the employer Co-operative Banks, and not against the employees thereof. The employees of the said Banks are not persons who have the locus standi to challenge the said orders through writ petitions preferred under Article 226 of the Constitution of India. 3. It is also clear from the statement filed on behalf of the Income Tax authorities, that the contributions made were to unrecognised provident funds and therefore, would not qualify for the deductions contemplated under Section 80C of the IT Act. The stand of the Income Tax authorities, being in accordance with the provisions of the IT Act, cannot be said to be illegal. If the orders are to be challenged, it is the employer banks who have to impugn the orders passed against them under the IT Act, since the orders have the effect of treating them as assessees in default for the purposes of the IT Act. The petitioners are not affected by the orders passed against the W.P.(C).NO.17231/2010 & 3 W.P.(C).NO.19003/2010 employer bank and, at any rate, even if any tax is deducted from payments made to them by the employer, credit of the same would be given to them in their individual assessments under the IT Act. It would also be open to the petitioners to claim, in their assessment proceedings, that their contributions to the provident fund would qualify for deduction from taxable income under the IT Act. In the light of the above observations, the writ petitions, in their challenge against the orders passed against the employers of the petitioners, are dismissed as not maintainable. A.K.JAYASANKARAN NAMBIAR JUDGE prp "