High Court of KeralaDivision BenchAppeals allowed; Single Judge judgments set asi...
W.A. Nos.1639/2019 & Connected Cases (In the High Court of Kerala at Ernakulam)
Case / Petition Number:WA.No.1639 of 2019; connected WA Nos.1640-1652 of 2019
Neutral Citation:/
Case Details & Bench
- Court
- High Court of Kerala
- Hon'ble Judges
- C. K. Abdul Rehim
- R. Narayana Pisharadi
- Judgment Date
- 2019-07-19
- Court Decision / Holding
- The appeals are allowed. The Single Judge’s judgments are set aside. Ext-P4 interim orders are modified to grant absolute stay on realisation of the disputed tax pending disposal of the appeals. The Commissioner of Income Tax (Appeals) is directed to dispose of the appeals at the earliest opportunity, with opportunity to the appellants. No payment of any portion of the disputed amount is required for the stay.
- Final Disposition
- Appeals allowed; Single Judge judgments set aside; Ext-P4 interim orders modified to grant absolute stay; ITA (Appeals) directed to dispose of appeals at the earliest; no 20% payment required for stay.
Parties to the Case
Appellants / Petitioners
- Pulpatta Co-operative Urban Credit Society Ltd. (WA.1639/2019)
- Karakurissi Service Co-operative Bank Ltd. (WA.1640/2019)
- Thachampara Service Co-operative Bank Ltd. (WA.1641/2019)
- Pattambi Service Co-operative Bank Ltd. (WA.1642/2019)
- Pottassery Service Co-operative Bank Ltd. (WA.1643/2019)
- Mundur Service Co-operative Bank Ltd. (WA.1644/2019)
- Kumaramputhur Service Co-operative Bank Ltd. (WA.1646/2019)
- Kongad Service Co-operative Bank Ltd. (WA.1647/2019)
- Thathamangalam Service Co-operative Bank Ltd. (WA.1649/2019)
- Peringode Service Co-operative Bank Ltd. (WA.1651/2019)
- Mannarkkad Govt Employees Co-operative Credit Society Ltd. (WA.1652/2019)
Respondents
- The Income Tax Officer, Ward 3 / Ward 2 / Ward 4, Ayakar Bhavan, Palakkad (as applicable to each connected case)
- The Commissioner of Income Tax (Appeals), Sakthan Nagar, Thrissur
Legal Representation & Advocates
Counsels for Petitioners
- • Sri Harisankar V. Menon
- • Smt. K. Krishna
- • Smt. Meera V. Menon
Counsels for Respondents
- • Sri Jose Joseph (Standing Counsel)
Case Synopsis & Summary
This batch of writ appeals challenges orders passed under Section 80P of the Income Tax Act, 1961, by the Commissioner of Income Tax (Appeals) and related interim orders. The petitioners are co-operative banks and societies registered under the Kerala Co-operative Societies Act, 1969, seeking deductions under Section 80P and challenging assessments finalized prior to some controlling jurisprudence. The core dispute centers on the validity of interim stay conditions imposed by the First Appellate Authority, which required payment of 20% of the disputed tax amount as a condition for stay, and whether such a provision can be maintained in light of subsequent Full Bench and Supreme Court authority. The court notes that a CBDT-driven practice of insisting on part payment for stay should reflect prima facie merits and proper consideration of facts, and that the evolving law post-Citizen Co-operative Society Ltd v. ASCI requires a factual enquiry under 80P(4) before determining eligibility for benefits. Relying on the Full Bench decision in Mavilayi Service Co-operative Bank and the Constitutionally anchored principle of Article 226 powers, the Kerala High Court holds that the 20% payment is unjustified and grants absolute stay, directing the Appellate Authority to dispose of appeals expeditiously. The judgment also overrules the older Chirakkal decision as inconsistent with SC guidance, while affirming Perinthalmanna’s approach in this context.
Provisions of Law Cited
Section 80P of the Income Tax Act, 1961 (and Sub-section 80P(4))Article 226 of the Constitution of IndiaKerala Co-operative Societies Act, 1969
Legal Doctrines & Maxims
- Interim stay should reflect prima facie merit and proper application of mind in the appellate process
- Absolute stay vs conditional stay (payment of 20%) as a principle guiding stay orders
- Assessing Officers must conduct a factual enquiry under Section 80P(4) before allowing 80P benefits
Submissions & Arguments
Contentions of Appellants / Petitioners
The appellants contend that post the Mavilayi Full Bench, Chirakkal’s view is no longer good law in light of Citizen Co-operative Society Ltd. v. A.C.I.T. and that the Assessing Officer must engage in a factual enquiry under Section 80P(4) to determine eligibility for 80P benefits. They challenge the continued insistence on 20% payment as a condition for stay, arguing it lacks prima facie merit and proper application of mind, and seek absolute stay pending disposal of appeals, with expedited disposition by the Appellate Authority.
Contentions of Respondents
The respondents defend the interim orders, noting the Assessing Authority’s findings that co-operatives engage in banking activities outside the scope of their primary objectives and that stay orders were rightly conditioned by 20% payments. They rely on CBDT guidance and emphasize the discretionary nature of stay, arguing that interference under Article 226 would be unjustified given the prima facie merits and the potential risk in realisation if judgments go against the taxpayers.
Cited Precedents (4)
| Case Name | Citation | Treatment | Explanation |
|---|---|---|---|
| Mavilayi Service Co-operative Bank v. Commissioner of Income Tax | 2019 (2) KLT 597 (FB) | Positive | Full Bench decision relied upon to guide the interpretation of 80P and stay provisions; forms the core precedent in resolving the issue. |
| Chirakkal Service Co-operative Bank Ltd. v. Commissioner of Income Tax | 2016 (2) KLT 535 | Overruled | Held no longer good law in view of Supreme Court guidance in Citizen Co-operative Society Ltd; hence explicitly overruled. |
| Citizen Co-operative Society Ltd. v. Assistant Commissioner of Income Tax | 2017 (4) KLT Online 2013 (SC) | Positive | SC decision establishing that Sub-section 80P(4) requires enquiry into factual situations, guiding the present judgment. |
| Perinthalmanna Co-operative Bank Ltd. v. Income Tax Officer and Another | 2014 (1) KLT Online 1117 | Positive | Full Bench decision affirmed by later judgments; supports the need for proper enquiry into 80P deductions. |
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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 C.K.ABDUL REHIM**
## **&**
**THE HONOURABLE MR. JUSTICE R. NARAYANA PISHARADI**
**FRIDAY, THE 19TH DAY OF JULY 2019 / 28TH ASHADHA, 1941**
**WA.No.1639 of 2019**
**AGAINST THE JUDGMENT DATED 01.07.2019 IN WP(C) 17748/2019 of HIGH COURT**
## **APPELLANT/PETITIONER:**
**THE PULPATTA CO-OPERATIVE URBAN CREDIT SOCIETY LTD. NO.7445, PULAPATTA P.O., UMMANEZHI, PALAKKAD-678 632, REPRESENTED BY ITS SECRETARY, JAYASANKARAN.K., AGED 40, S/O.KUTTYRAMAN.**
**BY ADVS.SRI.HARISANKAR V. MENON SMT.K.KRISHNA SMT.MEERA V.MENON**
## **RESPONDENTS/RESPONDENTS:**
**1 THE INCOME TAX OFFICER, WARD 3, AYAKAR BHAVAN, PALAKAKD-678 014.**
- **2 THE COMMISSIONER OF INCOME TAX (APPEALS), SAKTHAN NAGAR, THRISSUR-680 001.**
**THIS WRIT APPEAL HAVING BEEN FINALLY HEARD ON 19.07.2019, ALONG WITH WA.1644/2019, WA.1642/2019, WA.1651/2019, WA.1641/2019, WA.1652/2019, WA.1649/2019, WA.1647/2019, WA.1646/2019, WA.1643/2019, WA.1640/2019, THE COURT ON THE SAME DAY DELIVERED THE FOLLOWING:**
**W.A. Nos.1639/2019 & Connected cases**
**-:2:-**
## **IN THE HIGH COURT OF KERALA AT ERNAKULAM**
## **PRESENT**
**THE HONOURABLE MR.JUSTICE C.K.ABDUL REHIM**
## **&**
**THE HONOURABLE MR. JUSTICE R. NARAYANA PISHARADI**
**FRIDAY, THE 19TH DAY OF JULY 2019 / 28TH ASHADHA, 1941**
## **WA.No.1640 of 2019**
**AGAINST THE JUDGMENT DATED 01.07.2019 IN WP(C) NO.17738/2019 of HIGH COURT**
## **APPELLANT/PETITIONER:**
**THE KARAKURISSI SERVICE CO-OPERATIVE BANK LTD NO. P 1025, KARAKURISSI, PALAKKAD 678 595, REPRESENTED BY ITS SECRETARY, A. JAYASREE, AGED 48, D/O. A. ANIYAN MENON.**
**BY ADVS.SRI.HARISANKAR V. MENON SMT.K.KRISHNA SMT.MEERA V.MENON**
## **RESPONDENTS/RESPONDENTS:**
**1 THE INCOME TAX OFFICER WARD 2, AYAKAR BHAVAN, PALAKKAD 678 014**
**2 THE COMMISSIONER OF INCOME TAX (APPEALS), SAKTHAN NAGAR, THRISSUR 680 001**
## **OTHER PRESENT:**
**SRI. JOSE JOSEPH**
**THIS WRIT APPEAL HAVING COME UP FOR ADMISSION ON 19.07.2019, ALONG WITH WA.1639/2016, WA.1641/2019, WA.1642/2019, WA.1643/2019, WA.1644/2019, WA.1646/2019, WA.1647/2019, WA.1649/2019, WA.1651/2019, WA.1652/2019, THE COURT ON THE SAME DAY DELIVERED THE FOLLOWING:**
**W.A. Nos.1639/2019 & Connected cases**
**-:3:-**
## **IN THE HIGH COURT OF KERALA AT ERNAKULAM**
## **PRESENT**
**THE HONOURABLE MR.JUSTICE C.K.ABDUL REHIM**
## **&**
**THE HONOURABLE MR. JUSTICE R. NARAYANA PISHARADI**
**FRIDAY, THE 19TH DAY OF JULY 2019 / 28TH ASHADHA, 1941**
## **WA.No.1641 of 2019**
**AGAINST THE JUDGMENT DATED 01.07.2019 IN WP(C)NO.17751/2019 of HIGH COURT**
## **APPELLANT/PETITIONER:**
**THE THACHAMPARA SERVICE CO-OPERATIVE BANK LTD. NO. 3150, MAIN ROAD, THACHAMPARA, PALAKKAD - 678 593, REPRESENTED BY ITS SECRETARY, JAYAKUMAR.M, AGED 52, S/O. PADMANABHAN NAIR**
**BY ADVS.SRI.HARISANKAR V. MENON SMT.K.KRISHNA SMT.MEERA V.MENON**
## **RESPONDENTS/RESPONDENTS:**
**1 THE INCOME TAX OFFICER, WARD 4, AYAKAR BHAVAN, PALAKKAD - 678 014**
**2 THE COMMISSIONER OF INCOME TAX (APPEALS) SAKTHAN NAGAR, THRISSUR - 680 001**
## **OTHER PRESENT:**
## **SRI JOSE JOSEPH STANDING COUNSEL**
**THIS WRIT APPEAL HAVING COME UP FOR ADMISSION ON 19.07.2019, ALONG WITH WA.1644/2019, WA.1642/2019, WA.1651/2019, WA.1652/2019, WA.1649/2019, WA.1647/2019, WA.1646/2019, WA.1643/2019, WA.1640/2019, THE COURT ON THE SAME DAY DELIVERED THE FOLLOWING:**
**W.A. Nos.1639/2019 & Connected cases**
**-:4:-**
## **IN THE HIGH COURT OF KERALA AT ERNAKULAM**
## **PRESENT**
**THE HONOURABLE MR.JUSTICE C.K.ABDUL REHIM**
## **&**
**THE HONOURABLE MR. JUSTICE R. NARAYANA PISHARADI**
**FRIDAY, THE 19TH DAY OF JULY 2019 / 28TH ASHADHA, 1941**
## **WA.No.1642 of 2019**
**AGAINST THE JUDGMENT DATED 01.07.2019 IN WP(C)NO.17742/2019 of HIGH COURT**
## **APPELLANT/PETITIONER:**
**THE PATTAMBI SERVICE CO-OPERATIVE BANK LTD NO. P 585, RAZMALL COMPLEX, PALLIPURAM ROAD, PATTAMBI, PALAKKAD - 679 303, REPRESENTED BY ITS SECRETARY, C. GIRIJA, AGED 57, D/O.E.P. NARAYANAN NAIR**
**BY ADVS.SRI.HARISANKAR V. MENON SMT.MEERA V.MENON**
## **RESPONDENTS/RESPONDENTS:**
**1 THE INCOME TAX OFFICER WARD 3, AYAKAR BHAVAN, PALAKKAD - 678 014 2 THE COMMISSIONER OF INCOME TAX (APPEALS) SAKTHAN NAGAR, THRISSUR - 680 001**
## **OTHER PRESENT:**
## **SRI JOSE JOSEPH STANDING COUNSEL**
**THIS WRIT APPEAL HAVING COME UP FOR ADMISSION ON 19.07.2019, ALONG WITH WA.1644/2019, WA.1651/2019, WA.1641/2019, WA.1652/2019, WA.1649/2019, WA.1647/2019, WA.1646/2019, WA.1643/2019, WA.1640/2019, THE COURT ON THE SAME DAY DELIVERED THE FOLLOWING:**
**W.A. Nos.1639/2019 & Connected cases**
**-:5:-**
## **IN THE HIGH COURT OF KERALA AT ERNAKULAM**
## **PRESENT**
**THE HONOURABLE MR.JUSTICE C.K.ABDUL REHIM**
**&**
**THE HONOURABLE MR. JUSTICE R. NARAYANA PISHARADI**
**FRIDAY, THE 19TH DAY OF JULY 2019 / 28TH ASHADHA, 1941**
**WA.No.1643 of 2019**
**AGAINST THE JUDGMENT DATED 01.07.2019 IN WP(C)NO.17746/2019 of HIGH COURT**
## **APPELLANT/PETITIONER:**
**THE POTTASSERY SERVICE CO-OPERATIVE BANK LTD NO. P543, POTTASSERY P.O., MANNARKKAD, PALAKKAD-678 598, REPRESENTED BY ITS SECRETARY, JOLLY SEBASTIAN, AGED 54, S/O DEVASIA**
**BY ADVS.SRI.HARISANKAR V. MENON SMT.K.KRISHNA SMT.MEERA V.MENON**
## **RESPONDENTS/RESPONDENTS:**
**1 THE INCOME TAX OFFICER WARD 4, AYAKAR BHAVAN, PALAKKAD - 678 014**
**2 THE COMMISSIONER OF INCOME TAX (APPEALS) SAKTHAN NAGAR, THRISSUR - 680 001**
## **OTHER PRESENT:**
## **SRI JOSE JOSEPH STSNDING COUNSEL**
**THIS WRIT APPEAL HAVING COME UP FOR ADMISSION ON 19.07.2019, ALONG WITH WA.1644/2019, WA.1642/2019, WA.1651/2019, WA.1641/2019, WA.1652/2019, WA.1649/2019, WA.1647/2019, WA.1646/2019, WA.1640/2019, THE COURT ON THE SAME DAY DELIVERED THE FOLLOWING:**
**W.A. Nos.1639/2019 & Connected cases**
**-:6:-**
## **IN THE HIGH COURT OF KERALA AT ERNAKULAM**
## **PRESENT**
**THE HONOURABLE MR.JUSTICE C.K.ABDUL REHIM**
**&**
**THE HONOURABLE MR. JUSTICE R. NARAYANA PISHARADI**
**FRIDAY, THE 19TH DAY OF JULY 2019 / 28TH ASHADHA, 1941**
## **WA.No.1644 of 2019**
**AGAINST THE JUDGMENT DATED 01.07.2019 IN WP(C)NO.17735/2019 of HIGH COURT**
## **APPELLANT/PETITIONER:**
**THE MUNDUR SERVICE CO-OPERATIVE BANK LTD. NO. F 1650, MUNDUR, PALAKKAD - 678 592, REPRESENTED BY ITS SECRETARY, JIJUMON.A.J., AGED 45, S/O.JAYAPRAKASH.A.L.**
**BY ADVS.SRI.HARISANKAR V. MENON SMT.MEERA V.MENON**
## **RESPONDENTS/RESPONDENTS:**
**1 THE INCOME TAX OFFICER WARD 2, AYAKAR BHAVAN, PALAKKAD - 678 014**
**2 THE COMMISSIONER OF INCOME TAX (APPEALS) SAKTHAN NAGAR, THRISSUR - 680 001**
## **OTHER PRESENT:**
## **SRI JOSE JOSEPH STANDING COUNSEL**
**THIS WRIT APPEAL HAVING COME UP FOR ADMISSION ON 19.07.2019, ALONG WITH WA.1642/2019, WA.1651/2019, WA.1641/2019, WA.1652/2019, WA.1649/2019, WA.1647/2019, WA.1646/2019, WA.1643/2019, WA.1640/2019, THE COURT ON THE SAME DAY DELIVERED THE FOLLOWING:**
**W.A. Nos.1639/2019 & Connected cases**
**-:7:-**
## **IN THE HIGH COURT OF KERALA AT ERNAKULAM**
## **PRESENT**
**THE HONOURABLE MR.JUSTICE C.K.ABDUL REHIM**
**&**
**THE HONOURABLE MR. JUSTICE R. NARAYANA PISHARADI**
**FRIDAY, THE 19TH DAY OF JULY 2019 / 28TH ASHADHA, 1941**
## **WA.No.1646 of 2019**
**AGAINST THE JUDGMENT DATED 01.07.2019 IN WP(C)NO.17789/2019 of HIGH COURT**
## **APPELLANT/PETITIONER:**
**THE KUMARAMPUTHUR SERVICE CO-OPERATIVE BANK LTD., NO.P 373, MANNARKKAD COLLEGE P.O., KUMARAMPUTHUR, MANNARKKAD, PALAKKAD - 678 583, REPRESENTED BY ITS SECRETARY-IN-CHARGE, N.KRISHNADAS, AGED 56, S/O.RAGHAVAN NAIR.**
**BY ADVS.SRI.HARISANKAR V. MENON SMT.MEERA V.MENON**
## **RESPONDENTS/RESPONDENTS:**
**1 THE INCOME TAX OFFICER, WARD 4, AYAKAR BHAVAN, PALAKKAD - 678 014.**
**2 THE COMMISSIONER OF INCOME TAX (APPEALS), SAKTHAN NAGAR, THRISSUR - 680 001.**
## **OTHER PRESENT:**
## **SRI JOSE JOSEPH STANDING COUNSEL**
**THIS WRIT APPEAL HAVING COME UP FOR ADMISSION ON 19.07.2019, ALONG WITH WA.1644/2019, WA.1642/2019, WA.1651/2019, WA.1641/2019, WA.1652/2019, WA.1649/2019, WA.1647/2019, WA.1643/2019, WA.1640/2019, THE COURT ON THE SAME DAY DELIVERED THE FOLLOWING:**
**W.A. Nos.1639/2019 & Connected cases**
**-:8:-**
## **IN THE HIGH COURT OF KERALA AT ERNAKULAM**
## **PRESENT**
**THE HONOURABLE MR.JUSTICE C.K.ABDUL REHIM**
**&**
**THE HONOURABLE MR. JUSTICE R. NARAYANA PISHARADI**
**FRIDAY, THE 19TH DAY OF JULY 2019 / 28TH ASHADHA, 1941**
## **WA.No.1647 of 2019**
**AGAINST THE JUDGMENT DATED 01.07.2019 IN WP(C)NO.17731/2019 of HIGH COURT**
## **APPELLANT/PETITIONER:**
**M/S.KONGAD SERVICE CO-OPERATIVE BANK LTD., NO.P-538, KONGAD POST, PALAKKAD -678 631, REPRESENTED BY ITS SECRETARY, SHYLA K., AGED 55, D/O.C.GANGADHARAN NAIR.**
**BY ADVS.SRI.HARISANKAR V. MENON SMT.MEERA V.MENON**
## **RESPONDENTS/RESPONDENTS:**
**1 THE INCOME TAX OFFICER, WARD-2, AYAKAR BHAVAN, PALAKKAD - 678 014.**
**2 THE COMMISSIONER OF INCOME TAX (APPEALS), SAKTHAN NAGAR, THRISSUR-680 001.**
## **OTHER PRESENT:**
## **SRI JOSE JOSEPH STANDING COUNSEL**
**THIS WRIT APPEAL HAVING COME UP FOR ADMISSION ON 19.07.2019, ALONG WITH WA.1644/2019, WA.1642/2019, WA.1651/2019, WA.1641/2019, WA.1652/2019, WA.1649/2019, WA.1646/2019, WA.1643/2019, WA.1640/2019, THE COURT ON THE SAME DAY DELIVERED THE FOLLOWING:**
**W.A. Nos.1639/2019 & Connected cases**
**-:9:-**
## **IN THE HIGH COURT OF KERALA AT ERNAKULAM**
## **PRESENT**
**THE HONOURABLE MR.JUSTICE C.K.ABDUL REHIM**
**&**
**THE HONOURABLE MR. JUSTICE R. NARAYANA PISHARADI**
**FRIDAY, THE 19TH DAY OF JULY 2019 / 28TH ASHADHA, 1941**
## **WA.No.1649 of 2019**
**AGAINST THE JUDGMENT DATED 01.07.2019 IN WP(C)NO.17740/2019 of HIGH COURT**
## **APPELLANT/PETITIONER:**
**THE THATHAMANGALAM SERVICE CO-OPERATIVE BANK LTD NO. P 502, THATHAMANGALAM, PALAKKAD 678 012, REPRESENTED BY ITS SECRETARY K. JYOTHI, AGED 42, W/O. DIVYA PRASAD.**
**BY ADVS.SRI.HARISANKAR V. MENON SMT.MEERA V.MENON**
## **RESPONDENTS/RESPONDENTS:**
**1 THE INCOME TAX OFFICER, WARD 5, AYAKAR BHAVAN, PALAKKAD 678 014**
**2 THE COMMISSIONER OF INCOME TAX (APPEALS), SAKTHAN NAGAR, THRISSUR 680 001**
## **OTHER PRESENT:**
## **SRI JOSE JOSEPH STANDING COUNSEL**
**THIS WRIT APPEAL HAVING COME UP FOR ADMISSION ON 19.07.2019, ALONG WITH WA.1644/2019, WA.1642/2019, WA.1651/2019, WA.1641/2019, WA.1652/2019, WA.1647/2019, WA.1646/2019, WA.1643/2019, WA.1640/2019, THE COURT ON THE SAME DAY DELIVERED THE FOLLOWING:**
**W.A. Nos.1639/2019 & Connected cases**
**-:10:-**
## **IN THE HIGH COURT OF KERALA AT ERNAKULAM**
## **PRESENT**
**THE HONOURABLE MR.JUSTICE C.K.ABDUL REHIM**
## **&**
**THE HONOURABLE MR. JUSTICE R. NARAYANA PISHARADI**
**FRIDAY, THE 19TH DAY OF JULY 2019 / 28TH ASHADHA, 1941**
## **WA.No.1651 of 2019**
**AGAINST THE JUDGMENT DATED 01.07.2019 IN WP(C)NO.17783/2019 of HIGH COURT**
## **APPELLANT/PETITIONER:**
**THE PERINGODE SERVICE CO-OPERATIVE BANK LTD NO F.552, 13/325, PARASSERY POST, KONGAD, PALAKKAD-678 582, REPRESENTED BY ITS SECRETARY IN CHARGE, M.P.SASIKALA, AGED 57, D/O M.P.VASUDEVAN.**
**BY ADVS.SRI.HARISANKAR V. MENON SMT.MEERA V.MENON**
## **RESPONDENTS/RESPONDENTS:**
**1 THE INCOME TAX OFFICER WARD 2, AYAKAR BHAVAN, PALAKKAD-678 014.**
**2 THE COMMISSIONER OF INCOME TAX (APPEALS), SAKTHAN NAGAR, THRISSUR-680 001.**
## **OTHER PRESENT:**
## **SRI JOSE JOSEPH STANDING COUNSEL**
**THIS WRIT APPEAL HAVING COME UP FOR ADMISSION ON 19.07.2019, ALONG WITH WA.1644/2019, WA.1642/2019, WA.1641/2019, WA.1652/2019, WA.1649/2019, WA.1647/2019, WA.1646/2019, WA.1643/2019, WA.1640/2019, THE COURT ON THE SAME DAY DELIVERED THE FOLLOWING:**
**W.A. Nos.1639/2019 & Connected cases**
**-:11:-**
## **IN THE HIGH COURT OF KERALA AT ERNAKULAM**
## **PRESENT**
**THE HONOURABLE MR.JUSTICE C.K.ABDUL REHIM**
**&**
**THE HONOURABLE MR. JUSTICE R. NARAYANA PISHARADI**
**FRIDAY, THE 19TH DAY OF JULY 2019 / 28TH ASHADHA, 1941**
## **WA.No.1652 of 2019**
**AGAINST THE JUDGMENT DATED 01.07.2019 IN WP(C)NO.17729/2019 of HIGH COURT**
## **APPELLANT/PETITIONER:**
**THE MANNARKKAD GOVT EMPLOYEES CO-OPERATIVE CREDIT SOCIETY LTD, P-630, MANNARKKAD P.O, PALAKKAD-678 582, REPRESENTED BY ITS SECRETARY, ZAIBUNEESA C.P, AGED 57, D/O. MOIDEENKUTTY.**
**BY ADVS.SRI.HARISANKAR V. MENON SMT.MEERA V.MENON**
## **RESPONDENTS/RESPONDENTS:**
**1 THE INCOME TAX OFFICER WARD 4, AYAKAR BHAVAN, PALAKKAD-678 014**
**2 THE COMMISSIONER OF INCOME TAX (APPEALS) SAKTHAN NAGAR, THRISSUR-680 001**
## **OTHER PRESENT:**
## **SRI JOSE JOSEPH STANDING COUNSEL**
**THIS WRIT APPEAL HAVING COME UP FOR ADMISSION ON 19.07.2019, ALONG WITH WA.1644/2019, WA.1642/2019, WA.1651/2019, WA.1641/2019, WA.1649/2019, WA.1647/2019, WA.1646/2019, WA.1643/2019, WA.1640/2019, THE COURT ON THE SAME DAY DELIVERED THE FOLLOWING:**
**W.A. Nos.1639/2019 & Connected cases**
**-:12:-**
## **C.K.ABDUL REHIM**
## **&**
## **R.NARAYANA PISHARADI,JJ.**
= = = = = = = = = = = = = = = = = =
**W.A. No.1639, 1640,1641,1642, 1643, 1644, 1646, 1647, 1649, 1651 & 1652 of 2019** - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - Dated this the 19[th] day of July,2019
## **J U D G M E N T**
## **C.K.ABDUL REHIM, J.**
Since identical judgments of the Single Judge are under challenge in these writ appeals, all the cases were considered together and disposed of through this common judgment.
2. Ext.P4 orders of the Commissioner of Income Tax (Appeals) were challenged in the writ petitions. The appellants are Co-operative Societies registered under the Kerala Co-operative Societies Act, 1969. Assessments of income tax made against the societies were challenged claiming deductions allowable under Section 80P of the Income Tax Act, 1961(hereinafter referred to as 'the IT Act'). The interim applications filed seeking stay against realisation of the tax assessed was considered by the Appellate Authority and interim stay were granted in all the cases by insisting
**W.A. Nos.1639/2019 & Connected cases**
## **-:13:-**
upon payment of 20% of the disputed amount, pending disposal of the appeals. When those orders were challenged in the writ petitions, the learned Single Judge found that the insistence for payment of 20% was made based on the directions issued by the Central Board of Direct Taxes(CBDT). It was found that there is sufficient consideration of merits and there is application of mind from the side of the Appellate Authority. Hence, by observing that no interference is warranted against the interim order in exercise of the power vested under Article 226 of the Constitution of India, the challenges were repelled. However, on the request of the appellants, instalment facility was granted by allowing payment of the amount insisted upon, in five equal monthly instalments.
3. In the writ appeals it is contended that, after finalisation of the assessments in all these cases, there occurred a change in the principle of law involved, with respect to the deductions permissible under Section 80P of the IT Act. It is pointed out that a Full Bench of this Court in **The Mavilayi Service Co operative Bank v. Commissioner of Income Tax (2019(2) KLT 597(FB))** held that the
**W.A. Nos.1639/2019 & Connected cases**
**-:14:-**
Division Bench judgment in **Chirakkal Service Co operative Bank Ltd. v. Commissioner of Income Tax (2016(2) KLT 535)** is no more good law, in view of the ruling of the Apex Court in **Citizen Co-operative Society Ltd. v. Assistant Commissioner of Income Tax (2017(4)KLT Online 2013(SC))** . It was held therein that, by the reason of sub-section (4) of Section 80P, the Assessing Officer has to conduct an enquiry into the factual situations as to the activities of the Assessee society and to arrive at a conclusion whether the benefits can be extended or not, in the light of the said provision. Therefore the Full Bench found that the law laid down by a Division Bench of this Court in **Perinthalmanna Co operative Bank Ltd. v. Income Tax Officer and Another (2014(1) KLT Online 1117)** has to be affirmed.
4. Contention raised is to the effect that, in view of reversal of the principle settled in **Chirakkal Society's** case (supra) the assessments completed against the appellants requires a re-look. Therefore it was contended that the insistence for payment of 20% of the disputed amount of tax, for granting stay pending disposal of the appeal, was
**W.A. Nos.1639/2019 & Connected cases**
**-:15:-**
## improper and becomes unreasonable.
5. On the contrary, learned standing counsel for Government of India (Taxes) contended that, in all these cases there are specific findings entered by the Assessing Authority that the major activities conducted by the Co-operative societies are in the nature of banking business and they have given majority of the loans which are not coming within the ambit and scope of the objective of the societies and such activities cannot be taken as one falling within the scope of a Primary Agricultural Credit Societies(PACS). Further, it is contended that there exists no legal grounds for this court to interfere with the interim orders passed by the Appellate Authority, which falls within the discretionary jurisdiction of such authorities.
6. As contended on behalf of the revenue, under normal circumstances, interference with respect to interim orders passed by statutory Appellate Authorities has to be restrained. Law remaining settled in this field is primarily that, the Appellate Authorities while considering the question of granting interim stay shall take into consideration of the prima facie merit in the appeals. This court as well as the
**W.A. Nos.1639/2019 & Connected cases**
## **-:16:-**
Apex Court has deprecated the practice of insisting upon part payments without prima facie consideration of the merits and without proper application of mind. Decisions are mainly to the extent that, those aspects should also reflect in such interim orders. However, an analysis on the basis of these settled principle need not to be ventured in the cases at hand, because the grounds of challenge is mainly on the basis of the subsequent Full Bench ruling.
7. We take note of the fact that this Division Bench had already remanded certain Income Tax Appeals, which were filed challenging the orders of the Income Tax Appellate Tribunal, on the very same subject, in view of the Full Bench decision in **Mavilayi Society** 's case (supra). We had also occasion to consider a batch of writ appeals which were filed challenging identical judgments of the Single Bench in the matter of conditional orders passed by the first Appellate Authorities, in W.A. No.1529 of 2019 and connected cases, dated 1[st] July, 2019. In all these matters we have taken the view that, in view of the law remaining settled through the Full Bench decision, the factual aspects needs a re-look, based on the nature of activities of the appellant Co-operative
**W.A. Nos.1639/2019 & Connected cases**
## **-:17:-**
societies. However, contention of the learned standing counsel that the assessment orders, even though were finalised prior to the Full Bench decision, are in strict consonance with the principle contained therein assumes importance. This is a question which is for consideration of the Appellate Authority, probably upon calling for a report of the Assessing Authority, because there exists no power of remand vested with the Commissioner of Income Tax (Appeals). Taking note of such a situation, we are of the opinion that the ultimate finding with respect to the question of allowability of deductions under Section 80P is yet to be rendered by the Appellate Authority. Therefore a uniform insistence for payment of 20% of the amount, pending disposal of the appeals, cannot be held as justified. Further, we take note of the fact that all the appellants are registered Co-operative societies functioning with remarkable capital assets. Therefore it cannot be said that there will be any difficulty for realising the liabilities, if the ultimate decision goes against the appellants. Hence we are inclined to direct the Appellate Authority for an early disposal of the appeals and till then to grant an absolute stay without insisting upon
**W.A. Nos.1639/2019 & Connected cases**
**-:18:-**
payment of any portion of any disputed amounts.
Under the above mentioned circumstances, all the above appeals are hereby allowed. The impugned judgments of the Single Judge are hereby set aside. Ext-P4 interim order impugned in all these cases are modified to the extent of granting absolute stay with respect to realisation of the disputed amount of tax in the respective appeals, pending disposal of such appeals. The Commissioner of Income Tax (Appeals) is hereby directed to dispose of the appeals itself, at the earliest possible, after affording opportunity to the appellants.
## **Sd/-**
## **C.K.ABDUL REHIM JUDGE**
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## **R. NARAYANA PISHARADI**
## **JUDGE**
DST
//True copy// PA.To Judge