KADAKKARAPPALLY SERVICE CO OPERATIVE BANK LIMITED V. THE INCOME TAX OFFICER

WP(C)/2375/2016

AI Insights

The case involves Kadakkarappally Service Co-operative Bank Limited challenging the conditional stay orders issued by the Commissioner of Income Tax (Appeals) against the assessment orders for the years 2011-12 and 2012-13. The petitioner argued that the appellate authority did not validly exercise discretion in requiring a 50% deposit of the tax demand for the stay of recovery proceedings. The court examined the applicability of Section 80P of the Income Tax Act, which benefits co-operative societies, and found that the petitioner was entitled to this benefit, leading to the quashing of the stay orders and modification of the demand for the second assessment year.

• Counselvise Citation: [2016] 140 COUNSELVISE.COM (IT) 764772 (HC-KERALA)
• Appeal Type: Others
• Pronouncement Date: 16-02-2016
• Assessment Year: misc
• Other Referred Cases: WP(C)32053/15
• Laws Referred To: Income Tax Act, Section 80P of the Income Tax Act
• Result in Favour of: Partly Allowed
• Court: HIGH COURT
• Department Lawyers: P K R M MENON; JOSE JOSEPH
• Assessee Lawyers: C A JOJO; JACOB CHACKO; MATHEWS JOSEPH
• Keywords: Assessment Order; Co-operative Society; Conditional stay; Income Tax; Taxable income
• Section: 68; 80P

Judgement Text

"IN THE HIGH COURT OF KERALA AT ERNAKULAM PRESENT: THE HONOURABLE MR. JUSTICE A.K.JAYASANKARAN NAMBIAR TUESDAY, THE 16TH DAY OF FEBRUARY 2016/27TH MAGHA, 1937 WP(C).No. 2375 of 2016 (V) --------------------------- PETITIONER: ------------------- KADAKKARAPPALLY SERVICE CO-OPERATIVE BANK LIMITED, NO.1125, KADAKKARAPPALLY POST, CHERTHALA, REPRESENTED BY ITS SECRETARY, SRI. P.VENUGOPAL, S/O.PRABHAKARAN PILLAI, AGED 57 YEARS, RESIDING AT 'MAYALAYAM', KADAKKARAPPALLY, CHERTHALA, PIN - 688529. BY ADVS.SRI.C.A.JOJO SRI.JACOB CHACKO SRI.MATHEWS JOSEPH RESPONDENT(S): -------------------------- 1. THE INCOME TAX OFFICER, WARD NO.5, DEVASWAM BUILDING, ALAPPUZHA, PIN - 688011. 2. THE COMMISSIONER OF INCOME TAX (APPEALS), OFFICE OF THE COMMISSIONER OF INCOME TAX (APPEALS), 1ST FLOOR, KOTTAYAM PUBLIC LIBRARY BUILDING, SASTHRI ROAD, KOTTAYAM - 686001. BY SRI.P.K.R.MENON,(SENIOR COUNSEL) ADV. SRI.JOSE JOSEPH, SC THIS WRIT PETITION (CIVIL) HAVING COME UP FOR ADMISSION ON 16-02-2016, THE COURT ON THE SAME DAY DELIVERED THE FOLLOWING: mbr/ WP(C).No. 2375 of 2016 (V) -------------------------------------- APPENDIX PETITIONER(S)' EXHIBITS: ------------------------------------- P1: TRUE COPY OF THE ASSESSMENT ORDER 27.03.2015 FOR AY 2011-12 ISSUED BY THE 1ST RESPONDENT. P2: TRUE COPY OF THE ASSESSMENT ORDER 27.03.2015 FOR AY 2012-13 ISSUED BY THE 1ST RESPONDENT. P3: TRUE COPY OF THE DEMAND NOTICES DATED 27.03.2015. P4: TRUE COPY OF THE APPEAL FOR AY 2012-13 DATED 24.04.2015 BEFORE THE 2ND RESPONDENT. P5: TRUE COPY OF THE APPEAL FOR AY 2011-12 DATED 24.04.2015 BEFORE THE 2ND RESPONDENT. P6: TRUE COPY OF THE NOTICE ISSUED BY THE 2ND RESPONDENT DATED 24.11.2015. P7: TRUE COPY OF THE REPLY NOTICE SEND TO THE 2ND RESPONDENT DATED 07.12.2015. P8: TRUE COPY OF THE ORDER OF CONDITIONAL STAY BY THE 2ND RESPONDENT DATED 28.12.2015 IN THE ASSESSMENT YEAR 2011-12. P9: TRUE COPY OF THE ORDER OF CONDITIONAL STAY BY THE 2ND RESPONDENT DATED 28.12.2015 IN THE ASSESSMENT YEAR OF 2012-13. P10: TRUE COPY OF THE JUDGMNET OF THIS HON'BLE COURT IN A SIMILAR CASE GRANTING COMPLETE STAY OF RECOVERY PENDING DISPOSAL OF APPEAL DATED 20.11.2015 IN WP(C)32053/15. P11: TRUE COPY OF THE ITR-V FILED ON 26.10.2012 FOR AY 2012-13. P12 : TRUE COPY OF THE CBDT CIRCULAR NO.14 DATED 11.4.1955. RESPONDENT(S)' EXHIBITS: NIL --------------------------------------- //TRUE COPY// P.S. TO JUDGE mbr/ A.K.JAYASANKARAN NAMBIAR, J. - - - - - - - - - - - - - - - - - - - - - - - - - - W.P.(C) No.2375 of 2016 - - - - - - - - - - - - - - - - - - - - - - - - - - Dated this the 16th day of February 2016 JUDGMENT The challenge in the writ petition is against Exts.P8 and P9 conditional orders of stay passed in a stay application filed along with an appeal against the assessment orders under the Income Tax Act, for the assessment years 2011-12 and 2012-13 respectively. The grievance of the petitioner in the writ petition is essentially that, while passing Exts.P8 and P9 orders, the 2nd respondent appellate authority, did not exercise his discretion validly. 2. I have heard the learned counsel for the petitioner and the learned Government Pleader for the respondents. 3. On a consideration of the facts and circumstances of the case and the submissions made across the bar, I find from Exts.P8 and P9 orders, that the claim of the petitioner is essentially for the extension of the benefit of Section 80P of the Income Tax Act, while computing the taxable income under the Income Tax Act. In Ext.P8 order, the 2nd respondent appellate authority considered the case of W.P.(c).No.2375 of 2016 : 2 : the petitioner and found that the assessment of the petitioner had resulted in an assessment of positive income of the petitioner but despite this, the contention of the petitioner for the benefit of Section 80P, was turned down while requiring the petitioner to deposit 50% of the demand, till the disposal of the appeal. In my view, since the issue of entitlement of a Co-Operative society, such as the petitioner, for the benefit of Section 80P of the Income Tax Act, is stated to have been decided in favour of the assessees, by a decision of a Division Bench of this Court in Income tax appeals, that were pending before this Court, the petitioner also ought to be given the said benefit, in the stay petition. Resultantly, I am of the view that Ext.P8 order, inasmuch as it requires the petitioner to deposit 50% of the demand pending disposal of the appeal, cannot be legally sustained. I, accordingly, quash Ext.P8 order and direct the 2nd respondent to consider and pass orders in the appeal preferred by the petitioner, for the said assessment year, after hearing the petitioner, within a period of three months, from the date of receipt of a copy of this judgment. Recovery steps for recovery of amounts confirmed against the petitioner by the assessment order for the said assessment year (2011-12), shall be kept in abeyance, till such time as orders are passed by the 2nd respondent as directed and communicated to the petitioner. 4. As regards Ext.P9 order, which is also impugned in the writ W.P.(c).No.2375 of 2016 : 3 : petition, I find that the said order takes note of the fact that in the assessment order, that was passed against the petitioner for the assessment year 2012-13, the petitioner had initially returned a loss of income and by virtue of an addition made under Section 68 of the Income Tax Act, the petitioner was assessed on a total income Rs.2,94,94,385/-. Accordingly, a demand was also raised on the petitioner, for Rs.1,24,81,640/-. Although it is the case of the petitioner that during the said assessment year also, the petitioner would be entitled to the benefit of Section 80P, pursuant to the additions made by the Assessing Officer, I am of the view that inasmuch as it is not discernible at this stage as to whether the income that was added under Section 68 of the Income Tax Act, was income of the nature specified in Section 80P of the Income Tax Act, the petitioner cannot be granted the benefit of the judgment referred to above in relation to the benefit of Section 80P of the Income Tax Act. The learned counsel for the petitioner would submit that the direction to pay 50% of the demand confirmed against the petitioner would result in an undue hardship to the petitioner, whose financial position is bleak. Taking note of the said submission of the learned counsel for the petitioner, I modify Ext.P9 order of the 2nd respondent and make it clear that the petitioner shall pay only an amount of Rs.25,00,000/- towards the tax liability for the said assessment year, as a condition for stay of recovery of the balance amounts confirmed against the petitioner by the W.P.(c).No.2375 of 2016 : 4 : assessment order, for the assessment year 2012-13. On the petitioner paying the amount of Rs.25,00,000/-, in lieu of the 50% directed in Ext.P9 order, in the manner specified in the said order, the 2nd respondent shall proceed to consider the appeal preferred by the petitioner on merits, and pass orders thereon, within a period of four months thereafter. The respondent shall also ensure that recovery proceedings for recovery of the balance amounts confirmed against the petitioner by the assessment order for the assessment year 2012- 13, are kept in abeyance till such time as the 2nd respondent passes orders in the appeal, as directed. The 2nd respondent appellate authority shall also consider the books of accounts and other documents produced by the petitioner to substantiate his contention that the amounts which were added to the income of the petitioner for the said assessment year, represent deposits that were made by various members of the society. The writ petition is disposed as above. Sd/- A.K.JAYASANKARAN NAMBIAR JUDGE sm/ "