2019 (7) TMI 389 - HC - Income Tax

Deduction u/s 80P (2) (a) (i) - reopening of assessment u/s 147 - Tribunal held that the assessee is to be treated as primary agricultural society and is carrying on the business of banking or providing credit facilities to its members and is entitled for deduction with respect to the interest received from Class B members who were involved in non-agricultural activity - HELD THAT - As decided in K. 343, ONDIPUDUR PRIMARY AGRICULTURAL COOPERATIVE CREDIT SOCIETY LTD., K. 2065 KALIKKANAICKENPALAYAM PRIMARY AGRICULTURAL COOPERATIVE CREDIT SOCIETY LTD., K. 1788 NARASEEPURAM PRIMARY AGRICULTURAL COOPERATIVE CREDIT SOCIETY LTD., K. 758, IKKARAI BOLUVAMPATTI PRIMARY AGRICULTURAL COOPERATIVE CREDIT SOCIETY LTD. AND K. 1006 SINGANALLUR PRIMARY AGRICULTURAL COOPERATIVE CREDIT SOCIETY LTD. VERSUS THE INCOME TAX OFFICER, COIMBATORE 2019 (6) TMI 1098 - MADRAS HIGH COURT benefit of Section 80P to Cooperative Societies is being carried further to Hon'ble Supreme Court by way of Special Leave Petitions. It is the specific case and stated position of the learned Revenue counsel that the IT department, has not given legal quietus to the order, but is agitating the matter further by filing Special Leave Petitions in Hon'ble Supreme Court. There is no disputation that the aforesaid order of Hon'ble Division Bench 2016 (8) TMI 560 - MADRAS HIGH COURT has neither been stayed nor reversed. Therefore, it holds the field. Though this could be the end of the matter and this Court would have been inclined to set aside the impugned notices, this Court takes a slightly different view owing to the second submission made by learned counsel, which is a crucial aspect of the trajectory of the hearing today. It may be too late in the day for the Revenue to issue notices under Section 148 afresh, if they are set aside now and ultimately if the Revenue succeeds in the Special Leave Petitions, which are said to have been filed. Impugned notices kept in abeyance subject to the outcome of the the Apex Court in the SLP as referred above

Summary

Issues involved:
- Interpretation of Section 80P of the Income Tax Act, 1961
- Validity of notices issued under Section 148 of the Income Tax Act
- Applicability of earlier judgments by the Hon'ble Division Bench
- Limitation periods for notices under Section 148 of the Income Tax Act

Detailed Analysis:
1. Interpretation of Section 80P of the Income Tax Act, 1961:
The judgment revolves around the interpretation of Section 80P of the Income Tax Act, 1961 concerning Cooperative Societies. The writ petitioners claimed entitlement to the benefits of this section, which led to the issuance of notices under Section 148 of the IT Act. The core argument was that Cooperative Societies, similar to the petitioners, should be granted the benefits outlined in Section 80P. The judgment extensively discusses the legal provisions and the implications of Section 80P on Cooperative Societies.

2. Validity of notices issued under Section 148 of the Income Tax Act:
The validity of notices issued under Section 148 of the Income Tax Act was challenged by the writ petitioners. These notices were issued based on the assertion that there was income that had escaped assessment. The petitioners contended that the notices were unjustified, especially in light of previous judgments by the Hon'ble Division Bench that Cooperative Societies are entitled to the benefits of Section 80P. The judgment critically evaluates the grounds on which the notices were issued and their compliance with the legal framework.

3. Applicability of earlier judgments by the Hon'ble Division Bench:
The judgment extensively refers to earlier judgments by the Hon'ble Division Bench, particularly an order dated 02.08.2016, which held that Cooperative Societies akin to the petitioners are entitled to the benefits of Section 80P of the IT Act. The legal arguments presented in these judgments, along with the questions of law raised, form a significant part of the analysis in the current judgment. The court emphasizes the relevance and applicability of these earlier decisions in determining the rights of the petitioners under Section 80P.

4. Limitation periods for notices under Section 148 of the Income Tax Act:
A crucial aspect of the judgment pertains to the limitation periods associated with notices issued under Section 148 of the IT Act. The Revenue department raised concerns about the timelines for issuing fresh notices if the current notices were set aside. The judgment delves into the provisions of the IT Act related to limitation periods, highlighting the complexities and implications of these timelines on the legal proceedings. The court carefully considers these arguments in the context of the case at hand to arrive at a reasoned decision.

In conclusion, the judgment provides a detailed analysis of the issues surrounding the interpretation of Section 80P, the validity of notices under Section 148, the significance of earlier judgments by the Hon'ble Division Bench, and the implications of limitation periods on the legal proceedings. The court's decision reflects a thorough examination of the legal framework and precedents to ensure a just and equitable resolution for the parties involved.