> v. K.4442 Pethampalayam Primary Agriculture Cooperative Credit Society Ltd

IN THE HIGH COURT OF JUDICATURE AT MADRASDATED : 10.03.2022CORAM THE HONOURABLE MR. JUSTICE R. MAHADEVANandTHE HONOURABLE MR. JUSTICE J.SATHYA NARAYANA PRASADWrit Appeal Nos.2395 of 2021 and 73 of 2022andCMP.Nos. 15275 of 2021 & 665 of 2022WA.No.2395 of 2021The Income Tax Officer,Ward-2(2), Erode,Income Office,No.15, Gandhiji Road,Erode, Erode District.. Appellant Versus K.4442 Pethampalayam PrimaryAgriculture Cooperative Credit Society Ltd.,represented by its PresidentR.Shanmugasundaram,S/o.Rasa Gounder,Elayampalayam,Kovilapalayam Post,Kanjikoil, Perundurai 638 116.Erode District. .. RespondentWA.No.73 of 2022The Income Tax Officer,Ward-2(1), Income Office,No.15, Gandhiji Road,Erode, Erode District.. AppellantAA 520, Veerappampalayam PrimaryAgricultural Cooperative SocietyLimited, represented by its Secretary,AA.520, VeerappampalayamArachalur (Via), Erode 638 101 .. Respondent W.A. No. 2395 of 2021:- Appeal filed under Clause 15 of theLetters Patent against the order dated 06.09.2019 passed in WritPetition No. 1608 of 2019 on the file of this Court https://hcservices.ecourts.gov.in/hcservices/ Prayer in WP.No.1608 of 2019:Writ Petition filed underArticle 226 of the Constitution of India to Writ of Certioraricalling for the entire records relating to the impugned orderpassed by the respondent in order No.ITBA/AST/S/143(3)/2018-19/1014552487(1), dated 24.12.2018 and quash the same. W.A. No. 73 of 2022:- Appeal filed under Clause 15 of theLetters Patent against the order dated 27.06.2019 passed in WritPetition No. 3389 of 2019 on the file of this Court Prayer in WP.No.3389 of 2019:Writ Petition filed underArticle 226 of the Constitution of India praying to issue a Writof Certiorari calling for the records of the respondent hereinin order No.ITBA/AST/S/143/(3)/2018-19/1014657509(1) passed bythe respondent for the Assessment Year 2016-2017 and quash theorder dated 29.12.2018. For Appellant : Mr. A.N.R. JayaprathapSenior Standing counselin both the Writ AppealsFor Respondent : Mr. C. Prakasamin both the Writ Appeals COMMON JUDGMENT (Judgment of the court was delivered by R.MAHADEVAN, J.) Both the writ appeals are filed by the Revenue, questioningthe validity of the orders dated 06.09.2019 and 27.06.2019passed by the learned Judge in the respective Writ PetitionNos.1608 and 3389 of 2019. 2. The writ petitions have been filed by the respondents/co-operative societies questioning the orders of assessmentpassed by the Assessing Officer and demanding payment of tax. 3. According to the respondents / writ petitioners, theyare the Cooperative Credit Societies registered under the TamilNadu Cooperative Societies Act, 1983. They filed their returnof income for the assessment year 2016-2017 declaring 'nil'income and claimed deduction under Section 80-P of Income TaxAct (in short, 'the Act'). Such returns filed by therespondents/writ petitioners were processed under Section 143(1) of the Act and the assessment was completed determining thetotal income and demanded payment of tax, while disallowingtheir claim made under Section 80P of the Act. Aggrieved by theorders of assessment, the respondents / writ petitioners have https://hcservices.ecourts.gov.in/hcservices/ filed the aforesaid two writ petitions. 3. According to the respondents / writ petitioners, theyare the Cooperative Credit Societies registered under the TamilNadu Cooperative Societies Act, 1983. They filed their returnof income for the assessment year 2016-2017 declaring 'nil'income and claimed deduction under Section 80-P of Income TaxAct (in short, 'the Act'). Such returns filed by therespondents/writ petitioners were processed under Section 143(1) of the Act and the assessment was completed determining thetotal income and demanded payment of tax, while disallowingtheir claim made under Section 80P of the Act. Aggrieved by theorders of assessment, the respondents / writ petitioners have https://hcservices.ecourts.gov.in/hcservices/ filed the aforesaid two writ petitions. 4. The learned Judge, on consideration of the submissionsmade by both sides, disposed of the said writ petitions, afterhaving found that the issue involved in the writ petitions iscovered by the judgment dated 02.08.2016 passed by the DivisionBench of this Court in Tax Case Appeal Numbers 484 to 487 and490 of 2016 wherein it was held that the exemption spelt out insection 80P(4) of the Income Tax Act, 1961, is applicable to thecredit society. However, it was brought to the notice of thelearned Judge by the counsel for the revenue that as against thesaid order passed by the Division Bench of this Court, an appealin SLP(C) No.11745 of 2019 has been filed before the HonourableSupreme Court and it is pending. Having regard to the same, thelearned Judge directed the appellant herein not to give effectto the orders of assessment, which are impugned in the writpetitions and to keep them in abeyance and further proceedingsshall be taken up subject to the outcome of the Special LeavePetition pending before the Honourable Supreme Court. 5.Challenging the orders so passed by the learned Judgein the writ petitions, the Revenue has come up with these twowrit appeals. 6. When these appeals are taken up for hearing today, thelearned Senior Standing Counsel appearing for the appellantcontended that once the orders of assessment are passed, theassessees ought to have filed statutory appeals before theappellate authority, whereas in this case, the respondents/ co-operative societies, instead of filing statutory appeals,preferred the writ petitions under Article 226 of theConstitution of India and hence, the learned Judge ought not tohave entertained the writ petitions. However, he fairlysubmitted that the Division Bench of this Court, in the Judgmentdated 02.08.2016 passed in Tax Case Appeal Numbers 484 to 487and 490 of 2016 has held that in terms of Section 80P of theAct, which was inserted under the Finance Act, 2006 with effectfrom 01.04.2007, the assessees, which are the cooperative creditsocieties, would be entitled to the benefit of Section 80P ofthe Act. It is further stated that assailing the said orderpassed by the Division Bench of this Court, the Revenue hascarried the matter on appeal before the Honourable Supreme Courtin Special Leave to Appeal (c) No(s).17745/2019 [Prl.Commissioner of Income Tax Vs. M/s.S.1308 Ammapet PrimaryAgricultural Cooperative Bank Ltd] and the Honourable SupremeCourt, by judgment dated 17.01.2020 permitted the Department towithdraw the appeal while keeping the question of law open forconsideration. The order dated 17.01.2020 passed by theHonourable Supreme Court reads as follows:“Permission granted, subject to just exceptions.”The special leave petition and pendingapplications are dismissed as withdrawn,leaving questions(s) of law open.” Stating so, the learned Senior Standing Counsel prayed forappropriate direction to the respondents / co-operative societiesin these writ appeals. exceptions.”The special leave petition and pendingapplications are dismissed as withdrawn,leaving questions(s) of law open.” Stating so, the learned Senior Standing Counsel prayed forappropriate direction to the respondents / co-operative societiesin these writ appeals. 7. In view of the aforesaid submissions made on the sideof the appellant, the learned counsel appearing for therespondents / co-operative societies sought leave of this courtto file statutory appeals before the appellate authority, asagainst the orders of assessment passed by the assessing officer.The learned counsel also brought to the notice of this Court thejudgment of the Honourable Supreme Court in the case of MavilayiService Co-operative Bank Ltd. v. Commissioner of Income Tax,Calicut (2021) 123 taxmann.com 161 (SC), wherein, in paragraph45, it was observed as follows: “ 45. To sum up, therefore, the ratio decidendiof Citizen Cooperative Society Ltd. (supra), must begiven effect to.Section 80P of the IT Act, being abenevolent provision enacted by Parliament toencourage and promote the credit of the co-operativesector in general must be read liberally andreasonably, and if there is ambiguity, in favour ofthe assessee. A deduction that is given without anyreference to any restriction or limitation cannot berestricted or limited by implication, as is sought tobe done by the Revenue in the present case by addingthe word “agriculture” into Section 80P(2)(a)(i)whenit is not there. Further, section 80P(4) is to beread as a proviso, which proviso now specificallyexcludes co-operative banks which are co-operativesocieties engaged in banking business i.e. engaged inlending money to members of the public, which have alicence in this behalf from the RBI. Judged by thistouchstone, it is clear that the impugned Full Benchjudgment is wholly incorrect in its reading ofCitizen Cooperative Society Ltd. (supra). Clearly,therefore, once Section 80P(4)is out of harm’s way,all the assessees in the present case are entitled tothe benefit of the deduction contained in Section 80P(2)(a)(i), notwithstanding that they may also begiving loans to their members which are not relatedto agriculture. Also, in case it is found that thereare instances of loans being given to non-members,profits attributable to such loans obviously cannotbe deducted.” Relying upon the above decision of the Honourable Supreme Court, the learned counsel for the respondents / co-operative societiessubmitted that appropriate direction may be issued to theAppellate Authority to take note of the aforesaid decision of theHonourable Supreme Court as well, at the time of disposal of thestatutory appeals to be filed by the respondents herein. 8. Having regard to the submissions made by the learnedcounsel on either side, this court grants four weeks time fromthe date of receipt of a copy of this judgment, to therespondents herein to file statutory appeals before the appellateauthority. On such filing, the appellate authority shallentertain the same, without raising any issue relating tolimitation aspect, consider the claims of the respondents/co-operative societies including their eligibility under section 80Pof the Act and pass orders, on merits and in accordance with lawand also in the light of the decision rendered by the HonourableSupreme Court, mentioned supra. Accordingly, the orders impugnedherein, shall stand modified. 9. Both the writ appeals stand disposed of in the aboveterms. No costs. Consequently, the connected miscellaneouspetitions are closed. Sd/-Assistant Registrar(CS-VII) //True Copy// msr/rsh Sub Assistant Registrar To 1. The Income Tax Officer, Ward-2(2), Erode, Income Office,No.15, Gandhiji Road, Erode, Erode District2. The Income Tax Officer, Ward-2(1), Income Office, No.15, Gandhiji Road, Erode, Erode District +1cc to Mr.C.Prakasam, Advocate, S.R.No.16639+2ccs to Mr.A.P.Srinivas, Advocate, S.R.No.16741 GMR(CO)SU(06/04/2022) 9. Both the writ appeals stand disposed of in the aboveterms. No costs. Consequently, the connected miscellaneouspetitions are closed. Sd/-Assistant Registrar(CS-VII) //True Copy// msr/rsh Sub Assistant Registrar To 1. The Income Tax Officer, Ward-2(2), Erode, Income Office,No.15, Gandhiji Road, Erode, Erode District2. The Income Tax Officer, Ward-2(1), Income Office, No.15, Gandhiji Road, Erode, Erode District +1cc to Mr.C.Prakasam, Advocate, S.R.No.16639+2ccs to Mr.A.P.Srinivas, Advocate, S.R.No.16741 GMR(CO)SU(06/04/2022) W.A.Nos. 2395 of 2021 and 73 of 2022