THE NJEEZHOOR SERVICE CO-OPERATIVE BANK LTD. V. THE INCOME TAX OFFICER

WP(C)/22434/2014

AI Insights

The case involves the Njeezhoor Service Co-operative Bank Ltd., which contested an income tax assessment order that disallowed certain exemptions. The bank argued that it qualified as a 'Primary Agricultural Credit Society' under the Income Tax Act, 1961, and thus was eligible for specific tax exemptions. However, the tax authorities contended that the bank did not meet the statutory definition as it engaged in non-agricultural lending. The High Court of Kerala, after considering the arguments and the applicable legal definitions, decided not to interfere with the appellate authority's decision, which had allowed a partial stay on the tax recovery proceedings.

• Counselvise Citation: [2014] 140 COUNSELVISE.COM (IT) 755734 (HC-KERALA)
• Appeal Type: Others
• Pronouncement Date: 27-08-2014
• Assessment Year: misc
• Other Referred Cases: WP(C) No.14290 of 2014
• Laws Referred To: Income Tax Act, 1961, Banking Regulation Act, 1949, Kerala Co-operative Societies Act, 1969
• Result in Favour of: Revenue
• Court: HIGH COURT
• Department Lawyers: JOSE JOSEPH
• Assessee Lawyers: RAMESH JOHN
• Keywords: Assessment; Conditional Order; Exemption; Income Tax; Primary Agricultural Credit Society; Stay of collection
• Section: 143(3)

Judgement Text

"IN THE HIGH COURT OF KERALA AT ERNAKULAM PRESENT: THE HONOURABLE MR.JUSTICE K.VINOD CHANDRAN WEDNESDAY, THE 27TH DAY OF AUGUST 2014/5TH BHADRA, 1936 WP(C).No. 22434 of 2014 (D) ---------------------------- PETITIONER : -------------------- THE NJEEZHOOR SERVICE CO-OPERATIVE BANK LTD. NO. 136, THIRUVAMPADY P.O., NEEZHOOR, KOTTAY AM REPRESENTED BY ITS SECRETARY MRS. AMBIKA DEVI BY ADV. SRI.RAMESH CHERIAN JOHN RESPONDENTS : ------------------------- 1. THE INCOME TAX OFFICER, WARD IV, OFFICE OF THE ADDITIONAL COMMISSIONER OF INCOME TAX KOTTAYAM RANGE, KOTTAY AM - 686 001. 2. THE COMMISSIONER OF INCOME TAX (APPEALS) V., VITH FLOOR, KERA BHAVAN, SRVHS ROAD COCHIN - 11. R1 & R2 BY STANDING COUNSEL FOR GOVT. OF INDIA (TAXES) SRI.JOSE JOSEPH THIS WRIT PETITION (CIVIL) HAVING COME UP FOR ADMISSION ON 27-08-2014, THE COURT ON THE SAME DAY DELIVERED THE FOLLOWING: Mn ...2/- WP(C).No. 22434 of 2014 (D) --------------------------------------- APPENDIX PETITIONERS' EXHIBITS : ------------------------------------- EXHIBIT P1 : TRUE COPY OF THE CERTIFICATE ISSUED BY THE ASSISTANT REGISTRAR OF CO-OPERATIVE SOCIETY DATED 13.12.2013. EXHIBIT P2 : TRUE COPY OF THE ORDER OF ASSESSMENT DATED 16.01.2014 COMPLETED BY THE 1ST RESPONDENT UNDER SECTION 143(3) OF THE ACT. EXHIBIT P3 : TRUE COPY OF THE FORM OF APPEAL AND GROUNDS OF APPEAL. EXHIBIT P4 : TRUE COPY OF THE PETITION FOR STAY OF COLLECTION OF TAX DATED 26.05.2014. (*SUBSTITUTED) *EXHIBIT P4 IN : THE COPY OF THE STAY PETITION FILED BEFORE THE 2ND IA.NO.11816/14 RESPONDENT. *THE EXHIBIT P4 IN THE WPC IS SUBSTITUTED WITH THE EXHIBIT PRODUCED IN THE IA 11816/14 AS PER THE ORDER DATED 27/8/14 IN IA NO. 11816/14. EXHIBIT P5 : TRUE COPY OF THE JUDGMENT IN WP(C) NO.14290 OF 2014. EXHIBIT P6 : TRUE COPY OF THE NOTICE DATED 01.07.2014 POSTING THE APPEAL BY THE 2ND RESPONDENT. EXHIBIT P7 : TRUE COPY OF THE LETTER DATED 15.07.2014. EXHIBIT P8 : TRUE COPY OF THE LETTER DATED 28.07.2014 WITH SUMMARY OF ARGUMENTS FILED BEFORE THE 2ND RESPONDENT. EXHIBIT P9 : TRUE COPY OF THE ORDER DATED 29.07.2014 PASSED BY THE 2ND RESPONDENT. RESPONDENT(S)' EXHIBITS : NIL ------------------------------------------------------- //TRUE COPY// P.S. TO JUDGE Mn K.Vinod Chandran, J. -------------------------------------- W.P.(C).No.22434 of 2014-D -------------------------------------- Dated this the 27 th day of August, 2014 JUDGMENT The petitioner is aggrieved by the conditional order passed, at Exhibit P9, wherein the petitioner was directed to satisfy 25% of the total demand for keeping in abeyance the recovery proceedings. 2. The petitioner contends that, the petitioner is a Primary Agricultural Credit Society, as is evidenced by Exhibit P1, and the disallowance made by the 1 st respondent is not proper. The learned counsel points out that, on a bare reading of Exhibit P2, it is very evident that the disallowance was made primarily on the ground that, out of the total loans granted by the society, to the tune of Rs.26,85,15,486/-; only Rs.9,77,56,511/- was granted for agricultural purposes and the balance was for business, education, housing, and so on and so forth. In such circumstance, the petitioner prays for stay of further proceedings pursuant to Exhibit P2 till the disposal of Exhibit P3 appeal. WP(C).No.22434 of 2014 - 2 - 3. The learned Standing Counsel for Government of India (Taxes), however, contends that, the petitioner is ineligible for any exemption, since the petitioner does not come under the definition of Primary Agricultural Credit Society, as defined under the Income Tax Act, 1961, which definition is adopted from the Banking Regulation Act, 1949. It is also pointed out that there is substantial difference in that definition from that of the Kerala Co-operative Societies Act, 1969. It is further submitted that, several assessments were made, disallowing exemption to those societies which were classified as “Primary Agricultural Credit Society” by the State Co-operative Department, which were upheld by the Tribunal. 4. Taking into consideration the totality of circumstances, this Court is not inclined to interfere with the discretion exercised by the first appellate authority in Exhibit P9. It is to be noticed that the first appellate authority has directed payment of only 1/4 th of the total tax demanded and also directed payment in four equal monthly instalments, starting from August, 2014. There is no compelling reason why this Court should invoke the extra-ordinary jurisdiction under Article 226 of the Constitution WP(C).No.22434 of 2014 - 3 - to interfere with the discretion exercised by the first appellate authority. In any event, considering the hardship pleaded by the petitioner, the instalments directed in Exhibit P9 shall start from 26.09.2014 and followed up on or before the 26 th of each succeeding month. The appeal shall be considered on merits, untrammelled by the observations made herein, which are only in the nature of recording the submission of either parties. The writ petition is dismissed, however, with the above observation. Sd/- K.Vinod Chandran, Judge vku. ( true copy ) "