THE KODUVAYUR SERVICE CO-OPERATIVE BANK LTD. NO. P-756 V. THE ADDITIONAL/ JOINT/ DEPUTY/ ASST. COMMISSIONER OF INCOME TAX/ INCOME -TAX OFFICER,

WP(C)/8972/2021

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The case involves the Koduvayur Service Co-operative Bank Ltd., which appealed against an assessment order disallowing benefits under Section 80P(2)(a)(i) of the Income Tax Act. The petitioner argued that the recovery of the assessed amount should not be insisted upon during the pendency of the appeal and stay petition. The respondents contended that without a stay, the petitioner was required to remit the assessed amount. The court referenced the Supreme Court's decision in Mavilayi Service Co-operative Bank v. Commissioner of Income Tax, Calicut, which supported the petitioner's stance by advocating for a liberal interpretation of Section 80P, favoring the cooperative sector.

• Counselvise Citation: [2021] 140 COUNSELVISE.COM (IT) 753092 (HC-KERALA)
• Appeal Type: Others
• Pronouncement Date: 08-04-2021
• Assessment Year: misc
• Other Referred Cases: Mavilayi Service Co-operative Bank v. Commissioner of Income Tax, Calicut, Citizen Cooperative Society Ltd.
• Laws Referred To: Income Tax Act
• Result in Favour of: Others
• Court: HIGH COURT
• Department Lawyers: JOSE JOSEPH
• Assessee Lawyers: HARISANKAR MENON; MEERA MENON; K KRISHNA
• Keywords: Appeal; Assessment Order; Co-operative Bank; Income Tax; Stay Petition
• Section: 80P(2)(a)(i); 80P(4)

Judgement Text

"IN THE HIGH COURT OF KERALA AT ERNAKULAM PRESENT THE HONOURABLE MR. JUSTICE A.M.BADAR THURSDAY, THE 08TH DAY OF APRIL 2021 / 18TH CHAITHRA, 1943 WP(C).No.8972 OF 2021(V) PETITIONER: THE KODUVAYUR SERVICE CO-OPERATIVE BANK LTD. NO. P- 756 KODUVAYUR P.O. PALAKKAD 678 501, REPRESENTED BY ITS SECRETARY - IN- CHARGE, SUJEESH K.K., BY ADVS. SRI.HARISANKAR V. MENON SMT.MEERA V.MENON SMT.K.KRISHNA RESPONDENTS: 1 THE ADDITIONAL/ JOINT/ DEPUTY/ ASST. COMMISSIONER OF INCOME TAX/ INCOME -TAX OFFICER, NATIONAL E-ASSESSMENT CENTRE, DELHI 110 001. 2 NATIONAL FACELESS APPEAL CENTRE, DELHI 110 001, REPRESENTED BY THE PRINCIPAL CHIEF COMMISSIONER. OTHER PRESENT: SC- SRI JOSE JOSEPH THIS WRIT PETITION (CIVIL) HAVING COME UP FOR ADMISSION ON 08.04.2021, THE COURT ON THE SAME DAY DELIVERED THE FOLLOWING: WP(C).No.8972 OF 2021(V) 2 JUDGMENT Dated this the 8th day of April 2021 Heard the learned standing counsel who takes notice for the respondents and the learned counsel appearing for the petitioner. 2. The petitioner is a co-operative society carrying on business of providing credit facility to its members. The petitioner claimed benefit under Section 80P(2)(a)(i) of the Income Tax Act with respect to the alleged liability. However, the 1st respondent by an assessment order at Ext.P1, was pleased to disallow the benefits. Feeling aggrieved, the petitioner preferred an appeal at Ext.P3 along with stay petition at Ext.P3(a) before the 2nd respondent. Grievance of the petitioner is to the effect that during the pendency of the appeal along with stay petition, the 1st respondent has insisted for recovery of the amount determined as per the assessment order at Ext.P1. 3. The learned standing counsel appearing for the respondents opposed the petition by contending that the petitioner should remit the amount determined as there is no stay in favour of the petitioner. 4. I have considered the submissions so advanced. In the matter of Mavilayi Service Co-operative Bank v. Commissioner of Income Tax, Calicut, reported in AIR 2021 SC 612, the Hon'ble Apex Court has held thus in paragraph 45. WP(C).No.8972 OF 2021(V) 3 “45. To sum up, therefore, the ratio decidendi of Citizen Cooperative Society Ltd. (supra), must be given effect to. Section 80P of the IT Act, being a benevolent provision enacted by Parliament to encourage and promote the credit of the co- operative sector in general must be read liberally and reasonably, and if there is ambiguity, in favour of the assessee. A deduction that is given without any reference to any restriction or limitation cannot be restricted or limited by implication, as is sought to be done by the Revenue in the present case by adding the word “agriculture” into Section 80P(2)(a)(i) when it is not there. Further, section 80P(4) is to be read as a proviso, which proviso now specifically excludes co- operative banks which are co-operative societies engaged in banking business i.e. engaged in lending money to members of the public, which have a licence in this behalf from the RBI. Judged by this touchstone, it is clear that the impugned Full Bench judgment is wholly incorrect in its reading of Citizen Cooperative Society Ltd. (supra). Clearly, therefore, once section 80P(4) is out of harm’s way, all the assessees in the present case are entitled to the benefit of the deduction contained in section 80P(2)(a)(i), notwithstanding that they may also be giving loans to their members which are not related to agriculture. Also, in case it is found that there are instances of loans being given to non-members, profits attributable to such loans obviously cannot be deducted.” 5. This Court has also in several petitions following the ratio of the above referred ruling has directed the respondent to dispose of the appeal, without insisting for either pre-deposit or recovery as per the assessment order. WP(C).No.8972 OF 2021(V) 4 6. In this view of the matter, the petition is disposed of with the following direction. The 2nd respondent is directed to decide the pending appeal as well as stay petition, Ext.P3 and P3(a) expeditiously and till disposal of the appeal, the respondents are restrained from recovering the amount determined against the petitioner in pursuant to the assessment order at Ext.P1. The petitioner to co-operate with the respondent in disposal of the appeal expeditiously. SD/- Nsd //TRUE COPY// PA TO JUDGE A.M.BADAR JUDGE WP(C).No.8972 OF 2021(V) 5 APPENDIX PETITIONER'S/S EXHIBITS: EXHIBIT P1 COPY OF ASSESSMENT ORDER ISSUED BY THE 1ST RESPONDENT FOR THE YEAR 2018-19 DTD. 15.03.2021. EXHIBIT P2 TRUE COPY OF THE S.O. NO. 3296(E) ISSUED BY THE MINISTRY OF FINANCE NEW DELHI. DTD. 25.09.2020. EXHIBIT P2 (A) COPY OF THE S.O. NO. 3297(E) ISSUED BY THE MINISTER OF FINANCE, NEW DELHI DTD. 25.09.2020. EXHIBIT P3 COPY OF THE APPEAL FIELD BY THE PETITIONER BEFORE THE 2ND RESPONDENT DTD. 26.03.2021. EXHIBIT P3 (A) COPY OF STAY PETITION FILED BY THE PETITIONER BEFORE THE ADDITIONAL/JOINT/ASSISTANT COMMISSIONER OF INCOME TAX, COMMISSIONER OF INCOME TAX (APPEALS), NATIONAL FACELESS ASSESSMENT CENTRE, DELHI DTD. 26.3.2021. "