Wp(C)/22434/2014 Of The Njeezhoor Service Co-Operative Bank Ltd v. The Income Tax Officer

IN THE HIGH COURT OF KERALA AT ERNAKULAM PRESENT: THE HONOURABLE MR.JUSTICE K.VINOD CHANDRAN WEDNESDAY, THE 27TH DAY OF AUGUST 2014/5TH BHADRA, 1936 WP(C).No. 22434 of 2014 (D) ---------------------------- PETITIONER : -------------------- THE NJEEZHOOR SERVICE CO-OPERATIVE BANK LTD. NO. 136, THIRUVAMPADY P.O., NEEZHOOR, KOTTAYAM REPRESENTED BY ITS SECRETARY MRS. AMBIKA DEVI BY ADV. SRI.RAMESH CHERIAN JOHN RESPONDENTS : ------------------------- 1. THE INCOME TAX OFFICER, WARD IV, OFFICE OF THE ADDITIONAL COMMISSIONER OF INCOME TAX KOTTAYAM RANGE, KOTTAYAM - 686 001. KOTTAYAM RANGE, KOTTAYAM - 686 001. 2. THE COMMISSIONER OF INCOME TAX (APPEALS) V., VITH FLOOR, KERA BHAVAN, SRVHS ROAD COCHIN - 11. COCHIN - 11. R1 & R2 BY STANDING COUNSEL FOR GOVT. OF INDIA (TAXES) SRI.JOSE JOSEPH THIS WRIT PETITION (CIVIL) HAVING COME UP FOR ADMISSION ON 27-08-2014, THE COURT ON THE SAME DAY DELIVERED THE FOLLOWING: Mn WP(C).No. 22434 of 2014 (D) --------------------------------------- APPENDIX PETITIONERS' EXHIBITS : ------------------------------------- EXHIBIT P1 : TRUE COPY OF THE CERTIFICATE ISSUED BY THE ASSISTANT REGISTRAR OF CO-OPERATIVE SOCIETY DATED 13.12.2013. REGISTRAR OF CO-OPERATIVE SOCIETY DATED 13.12.2013. EXHIBIT P2 : TRUE COPY OF THE ORDER OF ASSESSMENT DATED 16.01.2014 COMPLETED BY THE 1ST RESPONDENT UNDER SECTION 143(3) OF THE ACT.16.01.2014 COMPLETED BY THE 1ST RESPONDENT UNDER SECTION 143(3) OF THE ACT. EXHIBIT P3 : TRUE COPY OF THE FORM OF APPEAL AND GROUNDS OF APPEAL.APPEAL. EXHIBIT P4 : TRUE COPY OF THE PETITION FOR STAY OF COLLECTION OF TAX DATED 26.05.2014. (*SUBSTITUTED)TAX DATED 26.05.2014. (*SUBSTITUTED) *EXHIBIT P4 IN : THE COPY OF THE STAY PETITION FILED BEFORE THE 2ND IA.NO.11816/14 RESPONDENT. IA.NO.11816/14 RESPONDENT. *THE EXHIBIT P4 IN THE WPC IS SUBSTITUTED WITH THE EXHIBIT PRODUCED IN THE IA 11816/14 AS PER THE ORDER DATED 27/8/14 IN IA NO. 11816/14. EXHIBIT PRODUCED IN THE IA 11816/14 AS PER THE ORDER DATED 27/8/14 IN IA NO. 11816/14. EXHIBIT P5 : TRUE COPY OF THE JUDGMENT IN WP(C) NO.14290 OF 2014. EXHIBIT P6 : TRUE COPY OF THE NOTICE DATED 01.07.2014 POSTING THE APPEAL BY THE 2ND RESPONDENT. BY THE 2ND RESPONDENT. EXHIBIT P7 : TRUE COPY OF THE LETTER DATED 15.07.2014. EXHIBIT P8 : TRUE COPY OF THE LETTER DATED 28.07.2014 WITH SUMMARY OF ARGUMENTS FILED BEFORE THE 2ND RESPONDENT. ARGUMENTS FILED BEFORE THE 2ND RESPONDENT. EXHIBIT P9 : TRUE COPY OF THE ORDER DATED 29.07.2014 PASSED BY THE 2ND RESPONDENT. RESPONDENT. RESPONDENT(S)' EXHIBITS : NIL ------------------------------------------------------- //TRUE COPY// P.S. TO JUDGE Mn K.Vinod Chandran, J. -------------------------------------- W.P.(C).No.22434 of 2014-D -------------------------------------- Dated this the 27th day of August, 2014 JUDGMENT The petitioner is aggrieved by the conditional orderpassed, at Exhibit P9, wherein the petitioner was directed tosatisfy 25% of the total demand for keeping in abeyance therecovery proceedings. 2. The petitioner contends that, the petitioner is aPrimary Agricultural Credit Society, as is evidenced by Exhibit P1,and the disallowance made by the 1st respondent is not proper.The learned counsel points out that, on a bare reading of ExhibitP2, it is very evident that the disallowance was made primarily on the ground that, out of the total loans granted by the society, tothe tune of Rs.26,85,15,486/-; only Rs.9,77,56,511/- was grantedfor agricultural purposes and the balance was for business,education, housing, and so on and so forth. In such circumstance,the petitioner prays for stay of further proceedings pursuant toExhibit P2 till the disposal of Exhibit P3 appeal. 2. The petitioner contends that, the petitioner is aPrimary Agricultural Credit Society, as is evidenced by Exhibit P1,and the disallowance made by the 1st respondent is not proper.The learned counsel points out that, on a bare reading of ExhibitP2, it is very evident that the disallowance was made primarily on the ground that, out of the total loans granted by the society, tothe tune of Rs.26,85,15,486/-; only Rs.9,77,56,511/- was grantedfor agricultural purposes and the balance was for business,education, housing, and so on and so forth. In such circumstance,the petitioner prays for stay of further proceedings pursuant toExhibit P2 till the disposal of Exhibit P3 appeal. 3. The learned Standing Counsel for Government ofIndia (Taxes), however, contends that, the petitioner is ineligiblefor any exemption, since the petitioner does not come under thedefinition of Primary Agricultural Credit Society, as defined underthe Income Tax Act, 1961, which definition is adopted from theBanking Regulation Act, 1949. It is also pointed out that there issubstantial difference in that definition from that of the KeralaCo-operative Societies Act, 1969. It is further submitted that,several assessments were made, disallowing exemption to thosesocieties which were classified as “Primary Agricultural CreditSociety” by the State Co-operative Department, which wereupheld by the Tribunal. 4. Taking into consideration the totality of circumstances, this Court is not inclined to interfere with thediscretion exercised by the first appellate authority in Exhibit P9. Itis to be noticed that the first appellate authority has directedpayment of only 1/4th of the total tax demanded and also directedpayment in four equal monthly instalments, starting from August,2014. There is no compelling reason why this Court should invokethe extra-ordinary jurisdiction under Article 226 of the Constitution to interfere with the discretion exercised by the first appellateauthority. In any event, considering the hardship pleaded by thepetitioner, the instalments directed in Exhibit P9 shall start from26.09.2014 and followed up on or before the 26th of eachsucceeding month. The appeal shall be considered on merits,untrammelled by the observations made herein, which are only inthe nature of recording the submission of either parties. The writ petition is dismissed, however, with the above observation. Sd/-K.Vinod Chandran, Judge vku. ( true copy )