MANGALAM SERVICE CO-OPERATIVE BANK LIMITED NO 9701 V. THE INCOME TAX OFFICER

WA/234/2013

AI Insights

The case involves Mangalam Service Co-operative Bank Limited and Edarikode Service Co-operative Bank Ltd, appellants, who challenged the notices issued by the Income Tax Department under various sections of the Income Tax Act, 1961. The primary contention was whether the appellants, as cooperative societies, qualified as 'persons' under Section 2(31) of the Act, which would subject them to the statutory obligations of filing returns and providing information. The High Court of Kerala, after examining the definitions and relevant sections of the Income Tax Act, 1961, and considering precedents, concluded that the appellants are indeed 'persons' as defined by the Act and dismissed the writ appeal.

• Counselvise Citation: [2013] 140 COUNSELVISE.COM (IT) 755858 (HC-KERALA)
• Appeal Type: Others
• Pronouncement Date: 13-02-2013
• Assessment Year: misc
• Other Referred Cases: Abdu Rahiman v. District Collector, Malappuram (2009 (4) KLT 485)
• Laws Referred To: Income Tax Act, 1961, Kerala Co-operative Societies Act
• Result in Favour of: Revenue
• Court: HIGH COURT
• Department Lawyers: JOSE JOSEPH
• Assessee Lawyers: P RAMAKRISHNAN; C ANILKUMAR
• Keywords: Assessment; Co-operative Bank; Income Tax; Notice; Legal Juridical Person; Section 142; Section 133
• Section: 144; 142(1); 133(6); 80P; 9; 2(31); 194A(viia); 194A(iiia)

Judgement Text

"IN THE HIGH COURT OF KERALA AT ERNAKULAM PRESENT: THE HONOURABLE MR.JUSTICE K.M.JOSEPH & THE HONOURABLE MR. JUSTICE K.RAMAKRISHNAN WEDNESDAY, THE 13TH DAY OF FEBRUARY 2013/24TH MAGHA 1934 WA.No. 234 of 2013 () IN WP(C).30626/2012 ------------------------------------------- AGAINST THE ORDER/JUDGMENT IN WP(C).NO.30626/2012 OF HIGH COURT OF KERALA DATED 02-01-2013 ... APPELLANT(S):PETITIONERS: --------------------------------------------- 1. MANGALAM SERVICE CO-OPERATIVE BANK LIMITED NO. 9701, P.O. MANGALAM, MALAPPURAM 676 561, REPRESENTED BY ITS SECRETARY, ABDUL MAJEED V.M. 2. EDARIKODE SERVICE CO-OPERATIVE BANK LTD NO.F.10739, EDARIKODE P.O, MALAPPURAM 676 501, REPRESENTED BY ITS SECRETARY, ABDUL JALEEL K. BY ADVS.SRI.P.RAMAKRISHNAN SRI.C.ANIL KUMAR RESPONDENT(S):RESPONDENTS: --------------------------------------------------- 1. THE INCOME TAX OFFICER, WARD III, TIRUR, OFFICE OF THE INCOME TAX OFFICER, TARIFF BAZAR, TOWN HALL ROAD, TIRUR, MALAPPURAM 676 101. 2. THE ASSISTANT COMMISSIONER OF INCOME TAX, OFFICE OF THE ASSISTANT COMMISSIONER OF INCOME TAX OFFICER, TARIFF BAZAR, TOWN HALL ROAD, TIRUR, MALAPPURAM 676 101. 3. THE COMMISSIONER OF INCOME TAX (CIB), KOCHI,ERNAKULAM 682 031. 4. UNION OF INDIA, REPRESENTED BY THE SECRETARY TO GOVERNMENT OF INDIA, MINISTRY OF FINANCE, NEW DELHI 110 001. R1 TO R3 BY ADV. SRI.JOSE JOSEPH, SC, INCOME TAX THIS WRIT APPEAL HAVING COME UP FOR ADMISSION ON 13-02-2013, THE COURT ON THE SAME DAY DELIVERED THE FOLLOWING: Kss K.M.JOSEPH & K.RAMAKRISHNAN, JJ. ------------------------------------------------------------ W.A.No.234 of 2013 ----------------------------------------- Dated, this the 13th day of February, 2013 J U D G M E N T K.M.Joseph, J. Appellants are the writ petitioners. Appellants are Primary Co-operative Credit Societies registered under the Kerala Co-operative Societies Act. The prayer in the writ petition was to quash Exts.P3, P5, P7, P8 and P9 and not to proceed against the petitioners pursuant to Ext.P (Details not given in the writ petition). The further prayer is to hold that respondents are not liable to proceed against the petitioners till a final decision is taken in SLP ( C) No.3976/2010. Ext.P3 is the notice issued under Section 142(1) of the Income Tax Act, 1961 calling to submit returns of income. Ext.P5 is yet another notice directing to comply with the directions or to face proceedings under Section 144 of the Act. Ext.P7 is the further notice sent by the Ist respondent to the Ist appellant requiring the Ist appellant to specify the category of person in which the Ist appellant would be called in the light of definition of 'person' under Section 2 (31) of the Act. The Ist appellant submitted detailed explanation. Ext.P8 and Ext.P9 are the notices issued by the Ist respondent to the 2nd appellant seeking information under Section 142 of the Act. We find from the W.A.No.234 of 2013 2 judgment of the learned Single Judge that in support of the contention that the appellants are not persons contemplated under Section 142 (1) it is contended that notices were issued invoking the power under Section 133 (6) of the Act and those notices were challenged before this Court by some other persons and notices were upheld by the Single Bench and Division Bench of this Court and that in an SLP filed, the Apex Court has issued notice and stayed the proceedings. The learned Single Judge took the view that a combined reading of Section 142 (1) and Section 2 (31) would show that co-operative societies like the appellants are also 'persons' as defined in the Act and it could not therefore be held that the notices issued were without jurisdiction. Learned Single Judge also took the view that the terms of Section 133 (6) and Section 142 (1) are incomparable and therefore the pending proceedings before the Apex Court cannot be of any assistance to the appellants. It is further held that even if it is assumed that the proceedings are of any relevance, the Single Judge was bound by the Division Bench, the fact that the Apex Court has stayed the judgment is no reason to entertain the writ petition. This legal position was found to be clarified by a Division Bench of this Court in the judgment in Abdu Rahiman v. District Collector, Malappuram (2009 (4) KLT 485) and the writ petition was dismissed. W.A.No.234 of 2013 3 2. We heard the learned counsel for the appellants and the learned Standing counsel for the Revenue. Section 2 (31) of the Income Tax Act, 1961, defines a person. “2 (31). “person” includes-- (i) an individual, (ii) a Hindu undivided family, (iii) a company, (iv) a firm, (v) an association of persons or a body of individuals, whether incorporated or not, (vi) a local authority, and (vii) every artificial juridical person, not falling within any of the preceding sub-clauses. {Explanation.--For the purposes of this clause, an association of persons or a body of individuals or a local authority or an artificial juridical person shall be deemed to be a person, whether or not such person or body or authority or juridical person was formed or established or incorporated with the object of deriving income, profits or gains.} “ Section 133 confers power on the officer concerned to call for information. Section 142 contemplates inquiry before assessment. Under Section 142 in respect of a person who has filed return or not filed return, the officer has power to call for information obviously for the purpose of making correct assessment. A perusal of the definition of the word 'person' would show that it includes within its sweep all juridical W.A.No.234 of 2013 4 persons. Appellants are cooperative societies. Indisputably they are registered under the Co-operative Societies Act. Section 9 of the Kerala Co-operative Societies Act reads as follows. “9. Co-operative Societies to be bodies corporate:--The registration of a society shall render it a body corporate by the name under which it is registered, having perpetual succession and a common seal and with power to hold property, enter into contracts, institute and defend suits and other legal proceedings and to do all things necessary for the purposes for which it was constituted. {provided that the Government and the Registrar shall have power to regulate and control the working of a society for the economic and social betterment of its members and the general public}.” Therefore, appellants are co-operative societies which have been registered and which are treated as bodies corporate vide section 9 of the Kerala Co-operative Societies Act. 3. Learned Standing Counsel for the Revenue also submits that appellants are really estopped from denying they are persons for the reason that under Section 80P of the Act the income of the co-operative W.A.No.234 of 2013 5 society is exempted and they are claiming benefit under Section 194A (viia) . It is submitted by the learned Standing counsel for the Revenue that the objection filed by the appellants itself would show that they are claiming benefit under Section 194A (iiia) of the Act. Section 194A speaks about any person, not being an individual or a Hindu undivided family. Therefore, the definition clause except to the extent it is otherwise provided in the Section would necessarily apply, runs the argument. 4. Learned Standing Counsel for the Revenue also has a case that the appellants society would fall within the four corners of the definition 'person' under Section 2 (31) for the reason that it is an association of persons. We would think that, at any rate, under Section 2 (31) a person comprehends juristic entity. Having regard to the fact that appellants are registered under the Co-operative Societies Act appellants must be treated as bodies corporate, therefore juristic person capable of exercising all the rights of natural person as provided in the Act. It would therefore make them persons. No doubt, the learned counsel for the appellants would point out that the Apex Court has admitted the SLP and an order of stay is granted. He also brought to our notice the judgment of the Division Bench of this Court rendered in the case of some other co-operative societies directing proceedings to be kept in abeyance. But, he fairly concedes that W.A.No.234 of 2013 6 the said litigation relates to proceedings under Section 133 (6). We are not inclined to stall proceedings under the Act on the score that the appellants are not persons. The proceedings are taken admittedly under Section 142 as already noted. Therefore, we are not inclined to interfere. The appeal fails, and it is dismissed. (K.M.JOSEPH) JUDGE. ( K.RAMAKRISHNAN) JUDGE. MS "