Https://Hcservices.ecourts.gov.in/Hcservices v. The Income Tax Officer,Non Corp Ward-1(2), Cbe

IN THE HIGH COURT OF JUDICATURE AT MADRAS DATED :11.06.2019 CORAM THE HON'BLE MR.JUSTICE M.SUNDAR W.P.Nos.15651, 15660, 15671, 15672 & 15667 of 2019andW.M.P.Nos.15531, 15533, 15536, 15537, 15542, 15543, 15548,15549, 15539 & 15540 of 2019 K.343, Ondipudur PrimaryAgricultural Cooperative Credit Society Ltd.,Now name changed asK.343, Ondipur Urban CooperativeCredit Society Ltd.,Rep.by its Secretary,R.Indirani, F/56W/o.P.Palanisamy,No.18, Bharathiyar Street,Kuttinaicker Layout, Uppilipalayam,Coimbatore South, Coimbatore – 641 015. The Income Tax Officer,Non Corp Ward-1(2), CBE,No.63, Race Course Road,Coimbatore – 641 018. Prayer: Writ Petition filed under Article 226 of theConstitution of India praying to issue a Writ of Certiorari,calling for the entire records relating to the impugned orderpassed by the respondent in Notice No.ITBA/AST/S/148/2018-19/1015421531(1), dated 26.03.2019 and quash the same. https://hcservices.ecourts.gov.in/hcservices/ W.P.No.15660 of 2019K.2065 Kalikkanaickenpalayam PrimaryAgricultural Cooperative Credit Society Ltd.,Rep.by its Secretary,S.Sivaswamy, M/54S/o.S.Subramaniam,No.1/136, Vinayagar Nagar, Kasthurinaickenpalayam,Vadavalli Post, Coimbatore – 641041. ..PetitionervsThe Income Tax Officer,Non Corp Ward-4(2), CBE,No.63, Race Course Road,Coimbatore – 641 018...RespondentPrayer: Writ Petition filed under Article 226 of theConstitution of India praying to issue a Writ of Certiorari,calling for the entire records relating to the impugned orderpassed by the respondent in PAN , dated 28.03.2019 andconsequentialorderpassedbytherespondentinAAAAK5295J/148/AY:2012-13/NCW-4(2)/2019-20/CBE, dated 07.05.2019and quash the same. W.P.No.15671 of 2019K.1788 Naraseepuram PrimaryAgricultural Cooperative Credit Society Ltd.,Rep.by its Secretary,K.Nataraj, M/48S/o.Kalisamy,No.9/56, Nagar Koil Street,Pullagoundenpudur,Devarayapuram,Coimbatore – 641 109 ..Petitionervs..Respondent The Income Tax Officer,Non Corp Ward-4(2), CBE,No.63, Race Course Road,Coimbatore – 641 018. https://hcservices.ecourts.gov.in/hcservices/ Prayer: Writ Petition filed under Article 226 of theConstitution of India praying to issue a Writ of Certiorari,calling for the entire records relating to the impugned orderpassed by the respondent in PAN , dated 28.03.2019 andconsequentialorderpassedbytherespondentinAAAAN9388H/148/AY:2012-13/NCW-4(2)/2019-20/CBE, dated 07.05.2019and quash the same. W.P.No.15672 of 2019 K.758, Ikkarai Boluvampatti PrimaryAgricultural Cooperative Credit Society Ltd.,Rep.by its Secretary,A.Suseela, F/49W/o.Maruthachalam,No.4/4A, Boluvampatti Street,Ramanathapuram, PooluvapattiCoimbatore – 641 101 ..PetitionervsThe Income Tax Officer,Non Corp Ward-4(2), CBE,No.63, Race Course Road,Coimbatore – 641 018...RespondentPrayer: Writ Petition filed under Article 226 of theConstitution of India praying to issue a Writ of Certiorari,calling for the entire records relating to the impugned orderpassed by the respondent in PAN , dated 28.03.2019 andconsequentialorderpassedbytherespondentinAAAAI3699A/148/AY:2012-13/NCW-4(2)/2019-20/CBE, dated 07.05.2019and quash the same.W.P.No.15667 of 2019K.1006 Singanallur PrimaryAgricultural Cooperative Credit Society Ltd.,Now name changed asK.1006, Singanallur Urban CooperativeCredit Society Ltd.,Rep.by its Secretary,T.Kannan, M/52S/o.S.V.Thirupathi,No.199, Asthandra Naicker East Street,Singanallur,Coimbatore – 641 005. ..Petitioner vs The Income Tax Officer,Non Corp Ward-1(2), CBE,No.63, Race Course Road,Coimbatore – 641 018. ..Respondent Prayer: Writ Petition filed under Article 226 of theConstitution of India praying to issue a Writ of Certiorari,calling for the entire records relating to the impugned orderpassed by the respondent in Notice No.ITBA/AST/S/148/2018-19/1015421533(1), dated 26.03.2019 and quash the same. For Petitioners : Mr.C.Prakasam (in all W.Ps) vs The Income Tax Officer,Non Corp Ward-1(2), CBE,No.63, Race Course Road,Coimbatore – 641 018. ..Respondent Prayer: Writ Petition filed under Article 226 of theConstitution of India praying to issue a Writ of Certiorari,calling for the entire records relating to the impugned orderpassed by the respondent in Notice No.ITBA/AST/S/148/2018-19/1015421533(1), dated 26.03.2019 and quash the same. For Petitioners : Mr.C.Prakasam (in all W.Ps) For Respondent : Mr.A.N.R.Jayaprathap Junior Standing counsel(Income Tax)(in all W.Ps)C O M M O N O R D E R This common order will govern aforesaid five writ petitions.In other words, this common order will dispose of these fivewrit petitions. 2. Mr.C.Prakasam, learned counsel on record for writpetitioner in each of the five writ petitions andMr.A.N.R.Jayaprathap, Junior standing counsel (Income Tax), whoaccepted notice on behalf of the sole respondent in each of thefive writ petitions are before this Court. 3. All the five writ petitions are listed under the caption'FOR ADMISSION' in the motion list before this Court today. 4. However, with the consent of learned counsel on bothsides, main writ petitions are taken up, heard out and are beingdisposed of. 5. This Court is informed that facts are similar and thecore issue involved in these five writ petitions is one and thesame. 6. Short facts imperative for disposal of these five writpetitions by this common order are as follows:a) Writ petitioners in each of the five writpetitions are Cooperative Societies. https://hcservices.ecourts.gov.in/hcservices/ b) Writ petitioners claim that they are entitled tothe benefit of Section 80P of the 'Income Tax Act, 1961'['IT Act' for the sake of brevity] c) Respondent has issued notices under Section 148of IT Act. d) These notices under Section 148 of IT Act issuedto each of the writ petitioners have been assailed ineach writ petitions and these notices shall be referredto as 'impugned notice' in singular and 'impugnednotices' in plural. e) Impugned notices have been issued on the basisthat there has been income that has escaped assessmentwithin the meaning of Section 147 of IT Act for variousprevious Assessment years as set out in the respectivenotices. f) Predicated on Section 147, the impugned noticeswhich are under Section 148, call upon the writpetitioner assessees to file returns for the Assessmentyears mentioned therein. g) Contending that a Hon'ble Division Bench of thisCourt, has held that Cooperative Societies akin to thewrit petitioners are entitled to the benefit of Section80P, instant writ petitions have been filed, assailingthe impugned notices. 7. The sheetanchor submission of learned counsel for writpetitioner in each of these five writ petitions is that aDivision Bench of this Hon'ble Court, in an order dated02.08.2016 made in Tax Case Appeal Numbers.484 to 487 and 490 of2016, has held that Cooperative Societies akin to those of writpetitioners are entitled to the benefit of Section 80P of IT Act. 8. Adverting to the aforesaid order of Hon'ble DivisionBench, learned counsel submitted that questions of law, whichwere entertained by the Hon'ble Division Bench are adumbrated inparagraph 5 of the said order, which reads as follows: '5. Aggrieved by the order of the Income TaxAppellate Tribunal, the appellants have filing theseappeals, on raising the following substantial questionsof law:- 1. Whether on the facts and in the circumstancesof the case the Tribunal was right in holding that theassessee is to be treated as primary agriculturalsociety and is carrying on the business of banking orproviding credit facilities to its members and isentitled for deduction under Section 80P (2) (a) (i) ofthe Income Tax Act, 1961 with respect to the interestreceived from Class B members who were involved in non-agricultural activity. '5. Aggrieved by the order of the Income TaxAppellate Tribunal, the appellants have filing theseappeals, on raising the following substantial questionsof law:- 1. Whether on the facts and in the circumstancesof the case the Tribunal was right in holding that theassessee is to be treated as primary agriculturalsociety and is carrying on the business of banking orproviding credit facilities to its members and isentitled for deduction under Section 80P (2) (a) (i) ofthe Income Tax Act, 1961 with respect to the interestreceived from Class B members who were involved in non-agricultural activity. 2. Whether on the facts and in the circumstancesof the case the Tribunal was right in holding that theClass B members of the assessee society can be treatedas a member of the society for the purpose of Section80P (2) (a) (i) when Class B members do not have theright to participate in the voting and meetings of theboard of the society. 3. Whether on the facts and in the circumstancesof the case the Tribunal was right in not consideringthe fact that the assessee was lending monies for non-agricultural purpose and the provisions of Section 80P(4) and 2(24) (viia). The contention of the learned counsel for theappellant/ Revenue department, is that Class B membersof the respondent societies cannot be treated as membersof the assessee societies, as Class B members were notrecognised as per record and bye-laws of the assesseesociety, for the purpose of voting, attending the boardmeeting etc. Therefore, as per Section 80P (4), thebenefit under Section 80P cannot be extended to anycooperative Bank other than a primary agriculturalcredit society. The assessee cannot be treated as acredit society for the loan advanced to non-agriculturalpurposes and so the assessee societies are not entitledfor the benefit under Section 80P (2) (a) (i) read with80P (4).' 9. To be noted, all three aforesaid substantial questions oflaw pertain to Section 80P of IT Act qua Cooperative Societies.Also to be noted, the aforesaid judgment has been rendered byHon'ble Division Bench, in tax case appeals, which areessentially under Section 260A of IT Act. 10. The aforesaid three substantial questions of law onwhich the statutory appeals i.e., tax case appeals were heardout, were answered in favour of the assessee and the answer isarticulated by the Hon'ble Division Bench in Paragraph 8, whichreads as follows: '8. In the case of ITO Vs. M/s. VeerakeralamPrimary Agricultural Co-operative Credit Society in ITANo.197/Mds/2013 dated 11.02.2014, the Tribunaldismissed the appeal of the Revenue. Against the orderof the Income Tax Appellate Tribunal, the aforesaidVeerakeralam Primary Agricultural Co-operative CreditSociety filed an appeal under Section 260A of theIncome Tax Act, 1961, in T.C.A. Nos. 735, 755 of 2014and 460 of 2015 before this Court. By judgment dated05.07.2016, the appeals were dismissed, on the https://hcservices.ecourts.gov.in/hcservices/ following reasoning: “13. Sub-section (4) of Section 80P of the IncomeTax Act, 1961 is extracted below : “(4) The provisions of this section shall notapply in relation to any co-operative bank other than aprimary agricultural credit society or a primary co-operative agricultural and rural development bank.”Explanation – For the purposes of this subsection --- (a) “co-operative bank” and “primary agriculturalcredit society” shall have the meanings respectivelyassigned to them in Part V of the Banking RegulationAct, 1949 (10 of 1949); (b) “primary co-operative agricultural and ruraldevelopment bank” means a society having its area ofoperation confined to a taluk and the principal objectof which is to provide for long-term credit foragricultural and rural development activities.” “(4) The provisions of this section shall notapply in relation to any co-operative bank other than aprimary agricultural credit society or a primary co-operative agricultural and rural development bank.”Explanation – For the purposes of this subsection --- (a) “co-operative bank” and “primary agriculturalcredit society” shall have the meanings respectivelyassigned to them in Part V of the Banking RegulationAct, 1949 (10 of 1949); (b) “primary co-operative agricultural and ruraldevelopment bank” means a society having its area ofoperation confined to a taluk and the principal objectof which is to provide for long-term credit foragricultural and rural development activities.” It is seen that the primary object of the societyis to provide financial accommodation to its members tomeet all the agricultural requirements and to providecredit facilities to the members, as per the bye-lawsand as laid down in Section 5 (cciv) of the BankingRegulation Act, 1949. Further, from the CPT Circulardated 12.03.2008, it is evident that a credit co-operative society is not a co-operative bank, asdefined in Part V of the Banking Regulation Act, 1949.The object of a 'Co- operative bank' is to acceptdeposits from the public, for lending or investment ofmoney. On perusal of the findings of the AppellateAuthority as well as the Appellate Tribunal, it iscategorically made clear that the assessee society willnot come under the object of the principal business ofa co-operative bank, which is a banking business. Thebenefit of Section 80P is excluded for deductions byco-operative banks, whereas the primary agriculturalcredit societies are entitled for the said deduction. 14. .... 15. In the recent decision of the Kerala HighCourt, in the case of Chirakkal Service Co-operativeBank Ltd., Kannur vs. the Commissioner of Income Tax,reported in (2016) 68 taxmann.com.298 (Kerala), theHigh Court considered similar substantial questions oflaw (Issue No.A) raised by the assessee, regarding theentitlement for exemption under sub section (4) ofSection 80P. By considering the fact that the assesseeis a primary agricultural society, the Kerala HighCourt has answered the substantial question of law infavour of the assessee and held that the primary agricultural credit societies, registered as such underthe KCS Act and classified so under that Act, includingthe appellants, are entitled to such exemption.Therefore, the aforesaid decisions is applicable to theinstant case. 16. In the light of the aforesaid facts andcircumstances of the case, we are of the view, that thesubstantial question of law framed in the instantappeals, is answered against the Revenue. The exceptionbarred out in Section 80P (4) of the Income Tax Act,1961, is applicable to the assessee credit society.Hence, the appeals are accordingly dismissed.' 11. There is no disputation or disagreement before thisCourt that the aforesaid order of Hon'ble Division Bench and theratio therein would apply to the writ petitioner in each ofthese cases. 12. Therefore, it would follow as a natural sequitur that itwould serve no useful purpose in allowing the impugned noticesto proceed further as ultimately the authorities will standbound by the ratio / rationale laid by the Hon'ble DivisionBench. 13. However, learned counsel for Revenue, raises twosubmissions in this regard. 11. There is no disputation or disagreement before thisCourt that the aforesaid order of Hon'ble Division Bench and theratio therein would apply to the writ petitioner in each ofthese cases. 12. Therefore, it would follow as a natural sequitur that itwould serve no useful purpose in allowing the impugned noticesto proceed further as ultimately the authorities will standbound by the ratio / rationale laid by the Hon'ble DivisionBench. 13. However, learned counsel for Revenue, raises twosubmissions in this regard. 14. First submission is on limitation. This first submissionis that the aforesaid order of the Hon'ble Division Bench aswell as other orders passed by Hon'ble Division Benches of thisCourt on the same aspect i.e., benefit of Section 80P of IncomeTax Act to Cooperative Societies is being carried further toHon'ble Supreme Court by way of Special Leave Petitions. Inother words, it is the specific case and stated position of thelearned Revenue counsel that the IT department, has not givenlegal quietus to the order, but is agitating the matter furtherby filing Special Leave Petitions in Hon'ble Supreme Court. 15. Be that as it may, as of today, there is no disputationthat the aforesaid order of Hon'ble Division Bench has neitherbeen stayed nor reversed. Therefore, it holds the field. 16. Though this could be the end of the matter and thisCourt would have been inclined to set aside the impugnednotices, this Court takes a slightly different view owing to thesecond submission made by learned counsel, which is a crucialaspect of the trajectory of the hearing today. 17. The second submission made by learned Revenue counsel isthat with regard to notices under Section 148 of IT Act https://hcservices.ecourts.gov.in/hcservices/ particularly with regard to notices predicated on escapedassessment under 147 of IT Act, different periods of limitationhave been prescribed for different circumstances. It may not benecessary to advert to those aspects in a great detail. Sufficeto say that three different periods of limitation have beenprescribed for notices akin to the instant notices i.e., noticesunder Section 148 of IT Act and those three periods oflimitations are contained in first proviso to Section 147,Section 149(1)(b) and Section 149(1)(c) of IT Act. 18 Learned Revenue counsel adverting to the aforesaidprovisions submitted that it may be too late in the day for theRevenue to issue notices under Section 148 afresh, if they areset aside now and ultimately if the Revenue succeeds in theSpecial Leave Petitions, which are said to have been filed. 20. To be noted, learned counsel for writ petitionerresponding to the aforesaid submission submitted that some ofthe impugned notices in the instant writ petitions are in anyevent barred by limitation. This Court expresses no opinion onthis plea at this point of time in this order owing to thenature of the order that is being passed. 21. In the light of the narrative supra, the following orderis passed: a) All the five impugned notices will be kept inabeyance and there will be no further proceedingspursuant to the same until disposal of the SpecialLeave Petitions said to have been filed by respondent /Revenue in Hon'ble Supreme Court against the aforesaidorder of Hon'ble Division Bench of this Courtparticularly order dated 02.08.2016 in Tax Case AppealNos.484-487 and 490 of 2016. b) Subject to the outcome of the aforesaid SpecialLeave Petitions, i.e., if the Special Leave Petitionsare in favour of the Revenue, the impugned orders willstand revived and law will take its course. If theaforesaid scenario unfolds, it is open to the writpetitioner assessee to take all objections and defencesavailable to section 148 notice including calling forreasons and limitation. a) All the five impugned notices will be kept inabeyance and there will be no further proceedingspursuant to the same until disposal of the SpecialLeave Petitions said to have been filed by respondent /Revenue in Hon'ble Supreme Court against the aforesaidorder of Hon'ble Division Bench of this Courtparticularly order dated 02.08.2016 in Tax Case AppealNos.484-487 and 490 of 2016. b) Subject to the outcome of the aforesaid SpecialLeave Petitions, i.e., if the Special Leave Petitionsare in favour of the Revenue, the impugned orders willstand revived and law will take its course. If theaforesaid scenario unfolds, it is open to the writpetitioner assessee to take all objections and defencesavailable to section 148 notice including calling forreasons and limitation. c) Though obvious, it is made clear that if theSpecial Leave Petitions end in favour of assessees andif the aforesaid Hon'ble Division Bench orders areconfirmed or if the Hon'ble Supreme Court refuses tointerfere with the orders of the High Court, all thefive impugned notices will stand set aside withoutfurther reference to this Court. 22. With the aforesaid directions, all the five writpetitions are disposed of and there will be no order as tocosts. Consequently, connected miscellaneous petitions areclosed. Sd/- Assistant Registrar //True Copy// Sub Assistant Registrar To 1.The Income Tax Officer,Non Corp Ward-1(2), CBE,No.63, Race Course Road,Coimbatore – 641 018. 2.The Income Tax Officer,Non Corp Ward-4(2), CBE,No.63, Race Course Road,Coimbatore – 641 018. +5cc to Mr.C.Prakasam, Advocate Sr.47616, 47617, 47618, 47619 & 47621 +1cc to Mr.A.P.Srinivas, Senor Standing Counsel Income Tax,Sr.48164 andW.M.P.Nos.15531, 15533, 15536, 15537, 15542,15543, 15548, 15549, 15539 & 15540 of 2019 gj[co]srg 17/07/2019 https://hcservices.ecourts.gov.in/hcservices/