Wp(C)/38566/2017 Of The Ottoor Service Co-Operative Bank Ltd v. Commissioner Of Income Tax [2016 (2) Klt 535], They

IN THE HIGH COURT OF KERALA AT ERNAKULAM PRESENT: THE HONOURABLE MR. JUSTICE P.B.SURESH KUMAR THURSDAY, THE 21ST DAY OF DECEMBER 2017/30TH AGRAHAYANA, 1939 WP(C).No. 38566 of 2017 (U) ---------------------------- PETITIONER(S):---------------------- THE OTTOOR SERVICE CO-OPERATIVE BANK LTD NO. 976, REPRESENTED BY ITS SECRETARY, CHENNANKODE, VADASSERIKONAM P.O, VARKALA, THIRUVANANTHAPURAM DISTRICT. BY ADV. SRI.V.G.ARUN RESPONDENT(S): ------------------------ 1. THE INCOME TAX OFFICER, WARD -2(3), OFFICE OF THE JOINT COMMISSIONER OF INCOME TAX, RANGE-2,AAYAKAR BHAVAN, KOWDIAR P.O, THIRUVANANTHAPURAM DISTRICT 695 003. 2. THE COMMISSIONER OF INCOME TAX (APPEALS), AAYAYAKAR BHAVAN, KOWDIAR, THIRUVANANTHAPURAM 695 003. AAYAYAKAR BHAVAN, KOWDIAR, THIRUVANANTHAPURAM 695 003. BY ADVS.SRI.K.M.V.PANDALAI SRI.CHRISTOPHER ABRAHAM, THIS WRIT PETITION (CIVIL) HAVING BEEN FINALLY HEARD ON 06.12.2017, THE COURT ON 21.12.2017, DELIVERED THE FOLLOWING: TS WP(C).No. 38566 of 2017 (U) ---------------------------------------- APPENDIX PETITIONER(S)' EXHIBITS ------------------------------------- EXHIBIT P1 A TRUE COPY OF THE CERTIFICATE DATED 26-09-2014,ISSUED BY THE ASSISTANT REGISTRAR OF CO-OPERATIVE SOCIETIES(GENERAL), CHIRAYINKEEZHU THE ASSISTANT REGISTRAR OF CO-OPERATIVE SOCIETIES(GENERAL), CHIRAYINKEEZHU EXHIBIT P2 A TRUE COPY OF THE ASSESSMENT ORDER FORTHE YEAR 2013-2014 DATED 25-01-2016THE YEAR 2013-2014 DATED 25-01-2016 EXHIBIT P3 A TRUE COPY OF THE NOTICE ISSUED BY THE 1ST RESPONDENTDATED 25-01-2016DATED 25-01-2016 EXHIBIT P4 A TRUE COPY OF THE NOTICE NO.AAA00619E/ITO,W-2(5)/TVM/2017-18 DATED 25-08-2017 ISSUED BY THE 1ST RESPONDENT NO.AAA00619E/ITO,W-2(5)/TVM/2017-18 DATED 25-08-2017 ISSUED BY THE 1ST RESPONDENT EXHIBIT P5 A TRUE COPY OF THE JUDGMENTDATED 25-09-2017 IN WP(C) NO 30493 OF 2017DATED 25-09-2017 IN WP(C) NO 30493 OF 2017 EXHIBIT P6 A TRUE COPY OF THE ORDER DATED 13-11-2017 IN ITA NO.145/TVM/CIT(/(A),TVM/2015-16 ISSUED BY THE 2ND RESPONDENTNO.145/TVM/CIT(/(A),TVM/2015-16 ISSUED BY THE 2ND RESPONDENT RESPONDENT(S)' EXHIBITS - NIL ------------------------------------------------ /TRUE COPY/ PS TO JUDGE P.B.SURESH KUMAR, J. -------------------------------------------- W.P.(C).No.38566 of 2017 --------------------------------------------------------------- Dated this the 21[st] day of December, 2017 JUDGMENT Petitioner is a Primary Agricultural Credit Societyregistered under the Kerala Co-operative Societies Act.The petitioner is an assessee under the Income Tax Act(the Act) on the rolls of the first respondent. Theassessment of the petitioner for the year 2013-2014 hasbeen completed by the first respondent under Section 143of the Act, in terms of Ext.P2 order determining theincome of the petitioner at Rs.1,22,36,746/- against the nilincome returned by the petitioner and raising a demandfor tax to the tune of Rs.51,00,400/-. Aggrieved by Ext.P2 W.P.(c).No.38566 of 2017 : 2 : order, the petitioner preferred ITA No.145/TVM/CIT/(A),TVM/2015-16 before the second respondent along with anapplication for stay. The application for stay preferred by thepetitioner in the appeal has now been disposed of by thesecond respondent as per Ext.P6 order, staying realisation of50% of the tax demand, pending disposal of the appeal.Ext.P6 order is under challenge in the writ petition. 2.Heard the learned counsel for the petitioneras also the learned Standing Counsel for the respondents. W.P.(c).No.38566 of 2017 : 2 : order, the petitioner preferred ITA No.145/TVM/CIT/(A),TVM/2015-16 before the second respondent along with anapplication for stay. The application for stay preferred by thepetitioner in the appeal has now been disposed of by thesecond respondent as per Ext.P6 order, staying realisation of50% of the tax demand, pending disposal of the appeal.Ext.P6 order is under challenge in the writ petition. 2.Heard the learned counsel for the petitioneras also the learned Standing Counsel for the respondents. 3.In the assessment order, the AssessingOfficer has rejected the claim of the petitioner for deductionmade under Section 80P(2)(a)(i) of the Act, apart fromtreating a portion of the interest income earned by thepetitioner from their surplus fund deposited by the DistrictCo-operative Banks, Treasuries etc. as income from othersources. According to the petitioner, in the light of decisionof this Court in Chirakkal Service Co-operative Bank Ltdv. Commissioner of Income Tax [2016 (2) KLT 535], they W.P.(c).No.38566 of 2017 were entitled to deduction under Section 80P(2)(a)(i) of theAct. As regards the interest income earned from the surplusfunds deposited by the District Co-operative Banks,Treasuries etc, the case of the petitioner is that the saidincome was also eligible for deduction under Section 80P(2)(d) of the Act. The second respondent accepted the case ofthe petitioner that they are entitled to deduction underSection 80 P (2) (a) (i) of the Act and rejected the case setup by them as regards the interest income. It is on thatbasis, the demand was stayed to the extent of 50%. 4.It appears prima facie to this Court, in thelight of the provision contained in Section 80 P (2) (d) of theAct that the interest income of the petitioner is not liable totax. In the said view of the matter, according to me, thepetitioner is entitled to an absolute stay in the matter. In the result, the writ petition is allowed. Theimpugned order is modified granting the petitioner absolutestay for realisation of the amount covered by Ext.P2 order, W.P.(c).No.38566 of 2017 : 4 : pending disposal of the appeal in which Ext.P6 order ispassed. rsr Sd/-P.B.SURESH KUMAR JUDGE