M/S.KARAKULAM SERVICE CO-OPERATIVE BANK LTD. V. THE INCOME TAX OFFICER, WARD-2(3), THIRUVANANTHAPURAM

WP(C)/22889/2017

AI Insights

The case involves M/S Karakulam Service Co-operative Bank Ltd., which challenged a conditional stay order issued by the Commissioner of Income Tax (Appeals) regarding an assessment order under the Income Tax Act for the assessment year 2014-15. The main issue was the eligibility for deduction under Section 80P of the Income Tax Act. The appellate authority had granted an unconditional stay for part of the tax liability related to income qualifying for deduction under Section 80P but imposed conditions for the payment of tax on income from other sources, which did not qualify for the same deduction. The petitioner contested the conditional stay, leading to this writ petition.

• Counselvise Citation: [2017] 140 COUNSELVISE.COM (IT) 755424 (HC-KERALA)
• Appeal Type: Others
• Pronouncement Date: 11-07-2017
• Assessment Year: misc
• Other Referred Cases: Chirackal Service Co-operative Bank Ltd. v. CIT
• Laws Referred To: Income Tax Act, Kerala Co-operative Societies Act
• Result in Favour of: Partly Allowed
• Court: HIGH COURT
• Department Lawyers: K M V PANDALAI
• Assessee Lawyers: T M SREEDHARAN; V P NARAYANAN; VANDANA MENON; DIVYA RAVINDRAN; MERLIN MANSY
• Keywords: Assessment Order; Conditional stay; Deduction under section 80-P; Income from other sources; Tax liability
• Section: 80(P); 220(6); 221(1)

Judgement Text

"IN THE HIGH COURT OF KERALA AT ERNAKULAM PRESENT: THE HONOURABLE MR. JUSTICE A.K.JAY ASANKARAN NAMBIAR TUESDAY , THE 11TH DAY OF JULY 2017/20TH ASHADHA, 1939 WP(C).No. 22889 of 2017 (I) ----------------------------------------- PETITIONER(S) : -------------------------- M/S.KARAKULAM SERVICE CO-OPERATIVE BANK LTD., KP-1/382, KARAKULAM P.O., NEDUMANGAD, TRIVANDRUM-695 564, REPRESENTED BY ITS SECRETARY, SMT.SREELATHA S. BY SRI.T.M.SREEDHARAN (SENIOR ADVOCATE) ADVS. SRI.V.P.NARAYANAN SMT.VANDANA MENON SMT.DIVYA RAVINDRAN SMT.MERLIN MANSY RESPONDENT(S) : ----------------------------- 1. THE INCOME TAX OFFICER, WARD-2(3), THIRUVANANTHAPURAM-695 003. 2. THE COMMISSIONER OF INCOME TAX (APPEALS), 2ND FLOOR, AAYAKAR BHAVAN, KOWDIAR, THIRUVANANTHAPURAM-695 003. BY ADV. SRI.K.M.V.PAN DALAI, S.C THIS WRIT PETITION (CIVIL) HAVING COME UP FOR ADMISSION ON 11-07-2017, THE COURT ON THE SAME DAY DELIVERED THE FOLLOWING: Msd. WP(C).No. 22889 of 2017 (I) ---------------------------------------- APPENDIX PETITIONER(S)' EXHIBITS : EXHIBIT P1 TRUE COPY OF THE CERTIFICATE OF REGISTRATION NO.E 17/2013 DATED 14-02-2013 GRANTED BY THE ASSISTANT REGISTRAR (GENERAL), NEDUMANGAD, UNDER THE KERALA CO-OPERATIVE SOCIETIES ACT. EXHIBIT P2 A TRUE COPY OF THE ASSESSMENT ORDER DATED 27-12-2016 ALONG WITH COMPUTATION OF INCOME AND DEMAND NOTICE PASSED BY THE 1ST RESPONDENT. EXHIBIT P3 TRUE COPY OF THE APPEAL FILED BEFORE THE SECOND RESPONDENT VIDE MEMORANDUM OF APPEAL DATED 17-1-2017. EXHIBIT P4 TRUE COPY OF THE STAY PETITION DATED 07-04-2017 PRAYING FOR STAY OF RECOVERY OF THE DEMAND PENDING DISPOSAL OF THE APPEAL. EXHIBIT P5 TRUE COPY OF THE NOTICE DATED 28-03-2017 ISSUED BY THE FIRST RESPONDENT, U/S 221(1) OF THE ACT. EXHIBIT P6 TRUE COPY OF THE PETITION U/S.220(6) DATED 03-04-2017 SUBMITTED BY THE PETITIONER BEFORE THE 1ST RESPONDENT. EXHIBIT P7 TRUE COPY OF THE JUDGMENT DATED 15-02-2016 IN ITA NO.156/2014 PASSED BY THIS HON'BLE HIGH COURT. EXHIBIT P8 TRUE COPY OF THE JUDGMENT DATED 11-04-2017 IN WP(C)NO.13259/2017 PASSED BY THIS HON'BLE HIGH COURT. EXHIBIT P9 TRUE COPY OF THE LETTER DATED 19-06-2017 SUBMITTED BY THE PETITIONER TO THE 2ND RESPONDENT. EXHIBIT P10 TRUE COPY OF THE STA Y ORDER IN ITA NO.183/EF/TVM/CIT(A), TVM/2016-17 DATED 05-07-2017 PASSED BY THE 2ND RESPONDENT. RESPONDENT(S)' EXHIBITS : NIL //TRUE COPY// P.A.TO JUDGE. Msd. A.K.JAYASANKARAN NAMBIAR, J. - - - - - - - - - - - - - - - - - - - - - - - - - - W.P.(C) No.22889 of 2017 - - - - - - - - - - - - - - - - - - - - - - - - - - Dated this the 11th day of July, 2017 JUDGMENT The petitioner has approached this Court aggrieved by Ext.P10 conditional order of stay, passed by the 2nd respondent, in an appeal preferred by the petitioner against an order of assessment, under the Income Tax Act, for the assessment year 2014-15. The main contention of the petitioner in the writ petition, in its challenge against Ext.P10 conditional order of stay, is that the 2nd respondent did not exercise his discretion validly while granting only a conditional order of stay, more so when there was a decision of this Court, in favour of the assessee, on the issue of eligibility for the benefit of deduction under Section 80 P of the Income Tax Act. 2. I have heard the learned counsel for the petitioner and the learned Standing Counsel for the Income Tax Department. 3. On a consideration of the facts and circumstances of the case and the submissions made across the bar, I find from a perusal of Ext.P10 order that, the appellate authority found that, the assessment against the petitioner had been completed by confirming amounts towards tax liability under two different heads. On the one hand, there was an amount that was found payable by W.P.(c).No..22889 of 2017 : 2 : the assessee, consequent to a dis-allowance of the deduction claimed under Section 80 P of the Income Tax Act. On the other hand , there was a separate amount of Rs.68,25,000/- that was confirmed against the petitioner assessee, consequent to a finding that the amount represented tax payable on amounts received by the petitioner under the head 'income from other sources' and therefore, would not qualify for deduction under Section 80 P of the Income Tax Act. While considering the stay application, filed along with the appeal against the assessment order in question, the 2nd respondent took note of the contention of the learned counsel for the petitioner that the tax amount demanded, in relation to income which qualified for deduction under Section 80 P of the Income Tax Act, could not be confirmed against the petitioner on account of the decision of this Court in Chirackal Service Co-operative Bank Ltd. v. CIT [ judgment dated 15.02.2016 in ITA No.212/2013). Accordingly, the 2nd respondent granted an unconditional stay of recovery of the tax amount under this head, pending disposal of the appeal. The 2nd respondent, thereafter, considered the tax liability of the petitioner under the other head that was confirmed against him, namely, the tax amount towards income that was classifiable under the head 'income from other sources'. On the said issue, the 2nd respondent found that, inasmuch as the said income would not qualify for deduction under W.P.(c).No..22889 of 2017 : 3 : Section 80 P of the Income Tax Act, the decision of this Court referred above, would not apply, and therefore, the petitioner could not claim exemption from the tax payable under the said head of income. The 2nd respondent, therefore, directed the petitioner to pay the demand confirmed against him under the said head in the assessment order, in six equal and successive monthly installments commencing from 18.07.2017, as a condition for the grant of stay of recovery of the balance amounts confirmed against the petitioner, in the assessment order. On a perusal of the reasoning in Ext.P10 conditional order, I am of the view that the said order, to the extent it directs the petitioner to make payment of the demand outstanding towards tax on income from other sources, does not call for any interference, save to the extent of the quantum that is demanded as a condition for the grant of stay. Taking note of the plea of financial hardship urged on behalf of the petitioner, I am of the view that, as against the tax liability of Rs.68,00,000/-, which the petitioner was directed to pay in six equal monthly installments starting from 18.07.2017, the petitioner ought to be directed to pay only an amount of Rs. 20,00,000/-, within a period of two months from the date of receipt of a copy of this judgment. Save for this limited modification to the directions in Ext.P10 order, the rest of the directions in the said order shall remain unaltered. W.P.(c).No..22889 of 2017 : 4 : Accordingly, this writ petition is disposed by modifying Ext.P10, to the limited extent of directing the petitioner to effect payment of Rs.20,00,000/-, within two months from the date of receipt of a copy of this judgment, as a condition for the grant of stay of recovery of the balance amounts confirmed against him, in the assessment order, pending disposal of the appeal by the 2nd respondent. The 2nd respondent shall also take steps to dispose the appeal itself within a period of four months from the date of receipt of a copy of this judgment. The petitioner shall produce a copy of the writ petition along with a copy of this judgment, before the 2nd respondent, for further action. Sd/- A.K.JAYASANKARAN NAMBIAR JUDGE sm/ "