THE OTTOOR SERVICE CO-OPERATIVE BANK LTD NO. 976 V. THE INCOME TAX OFFICER

WP(C)/38566/2017

AI Insights

The case involves The Ottoor Service Co-operative Bank Ltd, a primary agricultural credit society, which contested an income tax assessment for the year 2013-2014. The Income Tax Officer assessed the bank's income significantly higher than reported, leading to a substantial tax demand. The bank appealed this assessment and sought a stay on the tax demand, which was partially granted by the Commissioner of Income Tax (Appeals). Dissatisfied with the partial stay, the bank filed a writ petition challenging the stay order. The High Court, referencing a prior decision and the specific provisions of the Income Tax Act, found in favor of the bank, granting an absolute stay on the tax demand pending the appeal's outcome.

• Counselvise Citation: [2017] 140 COUNSELVISE.COM (IT) 755373 (HC-KERALA)
• Appeal Type: Others
• Pronouncement Date: 21-12-2017
• Assessment Year: misc
• Other Referred Cases: Chirakkal Service Co-operative Bank Ltd v. Commissioner of Income Tax [2016 (2) KLT 535]
• Laws Referred To: Income Tax Act, Kerala Co-operative Societies Act
• Result in Favour of: Others
• Court: HIGH COURT
• Department Lawyers: K M V PANDALAI; CHRISTOPHER ABRAHAM
• Assessee Lawyers: V G ARUN
• Keywords: Assessment; Deduction; Income Tax; Interest income; Primary Agricultural Credit Society; Tax demand
• Section: 143; 80P(2)(d); 80P(2)(a)(i)

Judgement Text

"IN THE HIGH COURT OF KERALA AT ERNAKULAM PRESENT: THE HONOURABLE MR. JUSTICE P.B.SURESH KUMAR THURSDAY, THE 21ST DAY OF DECEMBER 2017/30TH AGRAHAYANA, 1939 WP(C).No. 38566 of 2017 (U) ---------------------------- PETITIONER(S): ---------------------- THE OTTOOR SERVICE CO-OPERATIVE BANK LTD NO. 976, REPRESENTED BY ITS SECRETARY , CHENNANKODE, VADASSERIKONAM P.O, VARKALA, THIRUVANANTHAPURAM DISTRICT. BY ADV. SRI.V.G.ARUN RESPONDENT(S): ------------------------ 1. THE INCOME TAX OFFICER, WARD -2(3), OFFICE OF THE JOINT COMMISSIONER OF INCOME TAX, RANGE-2,AAYAKAR BHAVAN, KOWDIAR P.O, THIRUVANANTHAPURAM DISTRICT 695 003. 2. THE COMMISSIONER OF INCOME TAX (APPEALS), AAYAYAKAR BHAVAN, KOWDIAR, THIRUVANANTHAPURAM 695 003. BY ADVS.SRI.K.M.V.P ANDALAI SRI.CHRISTOPHER ABRAHAM, THIS WRIT PETITION (CIVIL) HAVING BEEN FINALLY HEARD ON 06.12.2017, THE COURT ON 21.12.2017, DELIVERED THE FOLLOWING: TS WP(C).No. 38566 of 2017 (U) ---------------------------------------- APPENDIX PETITIONER(S)' EXHIBITS ------------------------------------- EXHIBIT P1 A TRUE COPY OF THE CERTIFICATE DATED 26-09-2014,ISSUED BY THE ASSISTANT REGISTRAR OF CO-OPERATIVE SOCIETIES(GENERAL), CHIRAYINKEEZHU EXHIBIT P2 A TRUE COPY OF THE ASSESSMENT ORDER FOR THE YEAR 2013-2014 DATED 25-01-2016 EXHIBIT P3 A TRUE COPY OF THE NOTICE ISSUED BY THE 1ST RESPONDENT DATED 25-01-2016 EXHIBIT P4 A TRUE COPY OF THE NOTICE NO.AAA00619E/ITO,W-2(5)/TVM/2017-18 DATED 25-08-2017 ISSUED BY THE 1ST RESPONDENT EXHIBIT P5 A TRUE COPY OF THE JUDGMENT DATED 25-09-2017 IN WP(C) NO 30493 OF 2017 EXHIBIT P6 A TRUE COPY OF THE ORDER DATED 13-11-2017 IN ITA NO.145/TVM/CIT(/(A),TVM/2015-16 ISSUED BY THE 2ND RESPONDENT RESPONDENT(S)' EXHIBITS - NIL ------------------------------------------------ /TRUE COPY/ PS TO JUDGE TS P.B.SURESH KUMAR, J. -------------------------------------------- W.P.(C).No.38566 of 2017 --------------------------------------------------------------- Dated this the 21st day of December, 2017 JUDGMENT Petitioner is a Primary Agricultural Credit Society registered under the Kerala Co-operative Societies Act. The petitioner is an assessee under the Income Tax Act (the Act) on the rolls of the first respondent. The assessment of the petitioner for the year 2013-2014 has been completed by the first respondent under Section 143 of the Act, in terms of Ext.P2 order determining the income of the petitioner at Rs.1,22,36,746/- against the nil income returned by the petitioner and raising a demand for tax to the tune of Rs.51,00,400/-. Aggrieved by Ext.P2 W.P.(c).No.38566 of 2017 : 2 : order, the petitioner preferred ITA No.145/TVM/CIT/(A), TVM/2015-16 before the second respondent along with an application for stay. The application for stay preferred by the petitioner in the appeal has now been disposed of by the second respondent as per Ext.P6 order, staying realisation of 50% of the tax demand, pending disposal of the appeal. Ext.P6 order is under challenge in the writ petition. 2. Heard the learned counsel for the petitioner as also the learned Standing Counsel for the respondents. 3. In the assessment order, the Assessing Officer has rejected the claim of the petitioner for deduction made under Section 80P(2)(a)(i) of the Act, apart from treating a portion of the interest income earned by the petitioner from their surplus fund deposited by the District Co-operative Banks, Treasuries etc. as income from other sources. According to the petitioner, in the light of decision of this Court in Chirakkal Service Co-operative Bank Ltd v. Commissioner of Income Tax [2016 (2) KLT 535], they W.P.(c).No.38566 of 2017 : 3 : were entitled to deduction under Section 80P(2)(a)(i) of the Act. As regards the interest income earned from the surplus funds deposited by the District Co-operative Banks, Treasuries etc, the case of the petitioner is that the said income was also eligible for deduction under Section 80P(2) (d) of the Act. The second respondent accepted the case of the petitioner that they are entitled to deduction under Section 80 P (2) (a) (i) of the Act and rejected the case set up by them as regards the interest income. It is on that basis, the demand was stayed to the extent of 50%. 4. It appears prima facie to this Court, in the light of the provision contained in Section 80 P (2) (d) of the Act that the interest income of the petitioner is not liable to tax. In the said view of the matter, according to me, the petitioner is entitled to an absolute stay in the matter. In the result, the writ petition is allowed. The impugned order is modified granting the petitioner absolute stay for realisation of the amount covered by Ext.P2 order, W.P.(c).No.38566 of 2017 : 4 : pending disposal of the appeal in which Ext.P6 order is passed. Sd/- P.B.SURESH KUMAR JUDGE rsr "