High Court of KeralaSingle JudgeWrit petitions allowed; recoveries stayed; pend...
Poothrikka Service Co-Operative Bank Ltd.; Mamala Service Co-Operative Bank Ltd.; Vadavucode Farmers Service Co-Operative Bank Ltd. v. Income Tax Officer (WP(C).Nos. 8610/2021, 8642/2021, 8652/2021), High Court of Kerala
Case / Petition Number:WP(C).No.8610/2021(A); WP(C).No.8642/2021(E); WP(C).No.8652/2021(F)
Case Details & Bench
- Court
- High Court of Kerala
- Hon'ble Judges
- A.M. Badar
- Judgment Date
- 2021-03-31
- Court Decision / Holding
- Writ petitions allowed. The 2nd respondent is directed to decide the pending appeals expeditiously and, until then, to keep the recovery proceedings pursuant to the assessment orders in abeyance.
- Final Disposition
- Writ petitions allowed; recoveries stayed; pending appeals to be decided expeditiously.
Parties to the Case
Appellants / Petitioners
- Poothrikka Service Co-Operative Bank Ltd., No.E 344, Kolenchery P.O., Ernakulam, Pin-682 311
- Mamala Service Co-Operative Bank Ltd., No.2799, Mamala P.O., Ernakulam, Pin-682 035
- Vadavucode Farmers Service Co-Operative Bank Ltd., No.651, Vadavukode P.O., Ernakulam, Pin-682 310
Respondents
- Income Tax Officer, Ward-2, Income Tax Office, RS Road, Aluva, Ernakulam-683 101
- Commissioner of Income Tax (Appeals)-2, Office of the Commissioner of Income Tax, Central Revenue Tower, Kochi-682 018
- Additional Commissioner, National E-ASSESSMENT Centre, New Delhi – 110 005
Legal Representation & Advocates
Counsels for Petitioners
- • Sri C.A. Jojo
Counsels for Respondents
- • Sri Christopher Abraham, SC
Case Synopsis & Summary
Three writ petitions (WP(C).Nos. 8610/2021, 8642/2021, 8652/2021) filed by cooperative banks challenged denial of deduction under Section 80P of the Income Tax Act. The petitioners contended that their assessment orders denying 80P benefits were improper and that pending appeals before the Commissioner of Income Tax (Appeals) should not be conditioned on payment of 20% of the tax demand, a practice they argued was contrary to precedent. The petitions rely on Kerala High Court decisions including Mavilayi Service Co-operative Bank Ltd. v. Commissioner of Income Tax (Calicut) and subsequent cases such as Angadipuram Service Co-operative Bank Ltd. and Electricity Board Employees Co-operative Society Ltd., which have stayed tax recovery and directed expeditious disposal of appeals. The respondents argued that at most the petitioners could file stay petitions and seek relief in pending orders, without arrogating a right to automatic 80P deduction. The Court ultimately allows the petitions, citing the ratio of the cited authorities, and directs the Tax Department to decide pending appeals expeditiously while keeping recovery in abeyance until then, thereby aligning with the established precedent that relief be granted pending appellate consideration.
Provisions of Law Cited
Section 80P of the Income Tax ActSection 156 of the Income Tax Act
Submissions & Arguments
Contentions of Appellants / Petitioners
The petitioners submit that cooperative societies are entitled to deduction under Section 80P of the Income Tax Act. They challenge the assessment orders denying 80P, and contend that pending statutory appeals before the Commissioner of Income Tax (Appeals) cannot be conditioned on payment of 20% of the demand for stay. They rely on this Court’s decisions in Mavilayi Service Co-operative Bank Ltd. and subsequent rulings (e.g., Angadipuram and Electricity Board Employees Co-operative Society Ltd.) to urge that recovery be kept in abeyance and appeals decided expeditiously.
Contentions of Respondents
The respondents contend that petitioners may pursue stay petitions and that recovery actions may proceed unless stayed by the appellate authority. They submit that there is no automatic entitlement to 80P until the appeals are disposed of, and that the 20% demand rule was not challenged in every instance; the authorities are bound by law and should follow established procedures.
Cited Precedents (5)
| Case Name | Citation | Treatment | Explanation |
|---|---|---|---|
| Mavilayi Service Co-operative Bank Ltd. v. Commissioner of Income Tax, Calicut | 2019(2) KHC 287 | Positive | Cited as controlling authority; relied upon for staying recovery and expeditious disposition of appeals in line with the Full Bench/precedent. |
| W.A. No. 1536 of 2019 | 01-07-2019 | Positive | Division Bench relied on this judgment to quash recovery and direct early disposal of appeals. |
| WP(C) 5234 of 2020 (Electricity Board Employees Co-operative Society Ltd. v. Income Tax Officer) | 26-02-2020 | Positive | Similar decision cited, supporting stay and expeditious disposal of appeals. |
| The Angadipuram Service Co-operative Bank Ltd. v. The Commissioner of Income Tax (Appeals) | n/a | Positive | Ratio cited to allow writ petitions and direct timely disposal of appeals with stay of recovery. |
| Electricity Board Employees Co-operative Society Ltd. v. Income Tax Officer | WP(C) 5234 of 2020 | Positive | Referenced as a similar supportive decision. |
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Extracted Judgment Text
Exact text extracted from official judgment records.
## **IN THE HIGH COURT OF KERALA AT ERNAKULAM**
## **PRESENT**
**THE HONOURABLE MR. JUSTICE A.M.BADAR**
**WEDNESDAY, THE 31ST DAY OF MARCH 2021 / 10TH CHAITHRA, 1943**
## **WP(C).No.8610 OF 2021(A)**
## **PETITIONER:**
**POOTHRIKKA SERVICE CO-OPERATIVE BANK LTD. NO.E 344, KOLENCHERY P.O., ERNAKULAM, PIN-682 311, REPRESENTED BY ITS SECRETARY.**
**BY ADV. SRI.C.A.JOJO**
## **RESPONDENTS:**
**INCOME TAX OFFICER, WARD-2, INCOME TAX OFFICE, R S ROAD, 1 ALUVA, ERNAKULAM-683 101.**
- **COMMISSIONER OF INCOME TAX (APPEALS)-2, OFFICE OF THE COMMISSIONER OF INCOME TAX,**
- **2 CENTRAL REVENUE TOWER, KOCHI-682 018.**
## **ADDITIONAL COMMISSIONER,**
- **3 NATIONAL E-ASSESSMENT CENTRE, NEW DELHI – 110 005.**
**R1-3 BY SRI.CHRISTOPHER ABRAHAM, SC**
**THIS WRIT PETITION (CIVIL) HAVING COME UP FOR ADMISSION ON 31.03.2021, ALONG WITH WP(C).8642/2021(E), WP(C).8652/2021(F), THE COURT ON THE SAME DAY DELIVERED THE FOLLOWING:**
WP(C).Nos.8610 OF 2021 AND CONNECTED CASES
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# **IN THE HIGH COURT OF KERALA AT ERNAKULAM**
# **PRESENT**
**THE HONOURABLE MR. JUSTICE A.M.BADAR**
**WEDNESDAY, THE 31ST DAY OF MARCH 2021 / 10TH CHAITHRA, 1943**
**WP(C).No.8642 OF 2021(E)**
## **PETITIONER:**
**MAMALA SERVICE CO-OPERATIVE BANK LTD. NO.2799, MAMALA P.O., ERNAKULAM,PIN-682 035, REPRESENTED BY ITS SECRETARY.**
**BY ADV. SRI.C.A.JOJO**
## **RESPONDENTS:**
**INCOME TAX OFFICER, WARD-2,INCOME TAX OFFICE,**
- **1 R.S.ROAD, ALUVA, ERNAKUAM-683 101.**
- **COMMISSIONER OF INCOME TAX (APPEALS)-2,**
- **2 OFFICE OF THE COMMISSIONER OF INCOME TAX, CENTRAL REVENUE TOWER, KOCHI-682 018.**
**R1-2 BY SRI. CHRISTOPHER ABRAHAM, STANDING COUNSEL**
**THIS WRIT PETITION (CIVIL) HAVING COME UP FOR ADMISSION ON 31.03.2021, ALONG WITH WP(C).8610/2021(A), WP(C).8652/2021(F), THE COURT ON THE SAME DAY DELIVERED THE FOLLOWING:**
WP(C).Nos.8610 OF 2021 AND CONNECTED CASES
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# **IN THE HIGH COURT OF KERALA AT ERNAKULAM**
# **PRESENT**
**THE HONOURABLE MR. JUSTICE A.M.BADAR**
**WEDNESDAY, THE 31ST DAY OF MARCH 2021 / 10TH CHAITHRA, 1943**
## **WP(C).No.8652 OF 2021(F)**
## **PETITIONER:**
**VADAVUCODE FARMERS SERVICE CO-OPERATIVE BANK LTD. NO.651,**
**VADAVUKODE P.O., ERNAKULAM, PIN-682 310, REPRESENTED BY ITS MANAGING DIRECTOR.**
**BY ADV. SRI.C.A.JOJO**
## **RESPONDENTS:**
**INCOME TAX OFFICER, WARD-3, INCOME TAX OFFICE, 1 R.S.ROAD, ALUVA, ERNAKULAM-683 101.**
**COMMISSIONER OF INCOME TAX (APPEALS)-2, OFFICE OF THE COMMISSIONER OF INCOME TAX, 2 CENTRAL REVENUE TOWER, KOCHI-682 018. ADDITIONAL COMMISSIONER, 3 NATIONAL E-ASSESSMENT CENTRE, NEW DELHI-110 005.**
**R1-3 BY SRI. CHRISTOPHER ABRAHAM, STANDING COUNSEL.**
**THIS WRIT PETITION (CIVIL) HAVING COME UP FOR ADMISSION ON 31.03.2021, ALONG WITH WP(C).8610/2021(A), WP(C).8642/2021(E), THE COURT ON THE SAME DAY DELIVERED THE FOLLOWING:**
WP(C).Nos.8610 OF 2021 AND CONNECTED CASES
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## **JUDGMENT**
**(W.P.(C) Nos.8610 of 2021,8642 of 2021 and**
**8652 of 2021)**
## **Dated this the 31st day of March 2021**
Heard the learned counsel appearing for the
petitioners in these writ petitions.
2. It is argued by the learned counsel
appearing for the petitioners that petitioners are the co-operative banks and they are entitled for the benefits of Section 80(P)of the Income Tax Act. The
learned counsel for petitioners submit that the assessment order denying the benefit of Section 80(P)of the Income Tax Act has been challenged by the petitioners by filing statutory appeals before the 2[nd] respondent, the Commissioner of the Income Tax (Appeals). However, during pendency of those appeals, the Assessing Officer has communicated to the petitioners that the petitioners should pay 20% of the demand and then apply for stay of demand. This course of action adopted by the respondents, in
submission of the learned counsel for the petitioners is contrary to the judgment by the
WP(C).Nos.8610 OF 2021 AND CONNECTED CASES
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Hon'ble Supreme COurt in the matter of **Mavilayi**
**Service Co-operative Bank Ltd. v. Commissioner of Income Tax, Calicut** , reported in **[2019(2) KHC 287].**
It is further argued that this Court in a series of judgments has quashed such action on the part of the respondents.
3. The learned Standing Counsel takes notice
for respondents and argues that the petitioners can
at the most prefer stay petitions and can seek stay in the impugned orders.
4. I have considered the submissions in
advance.
5. The question which is pending for adjudication before the appellate authority is whether the petitioners who are co-operative Societies are entitled for deduction under Section
80 (P) of the Income Tax Act. The Assessing Officer has denied the benefit of Section 80 (P) of the Income Tax Act to the petitioner societies. In the matter of Mavilayi Service Co-operative Bank Ltd.
WP(C).Nos.8610 OF 2021 AND CONNECTED CASES
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the question regarding liability of the co-operative societies to pay the income tax assess was decided. The Division Bench of this Court relying on the said judgment in W.A.No. 1536/2019 dated 01-07-2019, has quashed the action on the part of respondents with the direction that the Commissioner of the Income Tax should consider and dispose of the statutory appeals filed by the appellant co-operative societies at the earliest taking note of Full Bench decision in the matter of Mavilayi Service Co-operative Bank Ltd. and till then the recovery and collection of taxes should be kept in abeyance. Similar is the judgment of the learned Single Judge in W.P.(C) No. 5234/2020, the Electricity Board Employees Co-operative Society Ltd. v. Income Tax Officer decided on 26-02-2020.
In this view of the matter, in the light of ratio of judgment of this Court, in the matter of **The Angadipuram Service Co-operative Bank Ltd. v. The Commissioner of Income Tax (Appeals)** , the writ petitions are allowed. The 2[nd] respondent is directed
WP(C).Nos.8610 OF 2021 AND CONNECTED CASES
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to decide the pending appeals expeditiously and till then the respondents are directed to keep the recovery proceedings pursuant to the assessment order in abeyance.
## **Sd/-**
**A.M.BADAR JUDGE**
SSK/31/03
WP(C).Nos.8610 OF 2021 AND CONNECTED CASES
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## **APPENDIX OF WP(C) No.8610/2021**
## **PETITIONER'S EXHIBITS:**
**EXHIBIT P1 A TRUE COPY OF THE CERTIFICATE IN THIS REGARD ISSUED BY THE ASSISTANT REGISTRAR(GENERAL) KUNNATHUNADU DATED 23.05.2017. EXHIBIT P2 A TRUE COPY OF THE ASSESSMENT ORDER FOR AY 2018-19 DATED 09.02.2021 ISSUED BY THE 3RD RESPONDENT. EXHIBIT P3 A TRUE COPY OF THE DEMAND NOTICE FOR AN AMOUNT OF RS. 70,79,119/- U/S. 156 DATED 09.02.2021 ISSUED BY THE 3RD RESPONDENT. EXHIBIT P4 A TRUE COPY OF THE APPEAL FOR AY 2018-19 BEFORE THE 2ND RESPONDENT DATED 18.12.2019. EXHIBIT P5 A TRUE COPY OF THE STAY PETITION FOR AY 2018-19 BEFORE THE 2ND RESPONDENT DATED 24.03.2021. EXHIBIT P6 A TRUE COPY OF THE NOTICE OF DEMAND DEMANDING 20% OF TAX DATED 24.03.2021 FOR AYS 2018-19 ISSUED BY THE 1ST RESPONDENT. EXHIBIT P7 A TRUE COPY OF THE JUDGMENT IN WA 1536 OF 2019 DATED 01.07.2019. EXHIBIT P8 A TRUE COPY OF THE JUDGMENT IN WP(C) 5234 OF 2020 DATED 26.02.2020. RESPONDENT'S EXHIBITS:NIL**
SSK //TRUE COPY// PA TO JUDGE
WP(C).Nos.8610 OF 2021 AND CONNECTED CASES
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## **APPENDIX OF WP(C) No.8642/2021**
## **PETITIONER'S EXHIBITS:**
**EXHIBIT P1 A TRUE COPY OF THE CERTIFICATE IN THIS REGARD ISSUED BY THE ASSISTANT REGISTRAR (GENERAL) KUNNATHUNADU DATED 14.12.2016. EXHIBIT P2 A TRUE COPY OF THE ASSESSMENT ORDER FOR AY2017-18 DATED 29.12.2019 ISSUED BY THE 1ST RESPONDENT.**
**EXHIBIT P3 A TRUE COPY OF THE DEMAND NOTICE FOR AN AMOUNT OF RS.1,45,27,306/- U/S. 156 DATED 30.12.2019 ISSUED BY THE 1ST RESPONDENT. EXHIBIT P4 A TRUE COPY OF THE APPEAL FOR AY 2017-18 BEFORE THE 2ND RESPONDENT DATED 22.01.2020. EXHIBIT P5 A TRUE COPY OF THE STAY PETITIONER FOR AY 2017-18 BEFORE THE 2ND RESPONDENT DATED 24.03.2021. EXHIBIT P6 A TRUE COPY OF THE NOTICE OF DEMAND DEMANDING 20 % OF TAX DATED 24.03.2021 FOR AYS 2017-18 ISSUED BY THE 1ST RESPONDENT. EXHIBIT P7 A TRUE COPY OF THE JUDGMENT IN WA 1536 OF 2019 DATED 01.07.2019. EXHIBIT P8 A TRUE COPY OF THE JUDGMENT IN WP(C) 5234 OF 2020 DATED 26.02.2020.**
## **RESPONDENT'S EXHIBITS:NIL**
SSK //TRUE COPY// PA TO JUDGE
WP(C).Nos.8610 OF 2021 AND CONNECTED CASES
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## **APPENDIX OF WP(C) No.8652/2021**
## **PETITIONER'S EXHIBITS:**
**EXHIBIT P1 A TRUE COPY OF THE CERTIFICATE OF REGISTRATION ISSUED BY THE ASSISTANT REGISTRAR PERUMBAVOOR DATED 4.10.2018.**
**EXHIBIT P2 A TRUE COPY OF THE ASSESSMENT ORDER FOR AY 2017-18 DATED 31.12.2019 ISSUED BY THE 1ST RESPONDENT.**
- **EXHIBIT P3 A TRUE COPY OF THE DEMAND NOTICE FOR AN AMOUNT OF RS.8,36,62,521/- U/S 156 DATED 31.12.2019 ISSUED BY THE 1ST RESPONDENT.**
- **EXHIBIT P4 A TRUE COPY OF THE APPEAL FOR AY 2017-18 BEFORE THE 2ND RESPONDENT DATED 13.1.2020.**
- **EXHIBIT P5 A TRUE COPY OF THE STAY PETITION FOR AY 2017-18 BEFORE THE 2ND RESPONDENT DATED 24.3.2021.**
- **EXHIBIT P6 A TRUE COPY OF THE ASSESSMENT ORDER FOR AY 2018-19 DATED 17.2.2021 ISSUED BY THE 3RD RESPONDENT.**
- **EXHIBIT P7 A TRUE COPY OF THE DEMAND NOTICE FOR AN AMOUNT OF RS.1,90,97,273/- U/S 156 DATED 17.2.2021 ISSUED BY THE 3RD RESPONDENT.**
- **EXHIBIT P8 A TRUE COPY OF THE APPEAL FOR AY 2018-19 BEFORE THE 2ND RESPONDENT DATED 8.3.2021.**
- **EXHIBIT P9 A TRUE COPY OF THE STAY PETITION FOR AY 2018-19 BEFORE THE 2ND RESPONDENT DATED 24.3.2021.**
- **EXHIBIT P10 A TRUE COPY OF THE NOTICE OF DEMAND DEMANDING 20% OF TAX DATED 24.3.2021 FOR AYS 2017-18 AND 2018-19 ISSUED BY THE 1ST RESPONDENT.**
- **EXHIBIT P11 A TRUE COPY OF THE JUDGMENT IN W.A.1536 OF 2019 DATED 1.7.2019.**
**RESPONDENT'S EXHIBITS:NIL**
SSK //TRUE COPY// PA TO JUDGE