2019 (9) TMI 815 - HC - Income Tax

Entitlement to deduction u/s 80P - whether the petitioners' Society is entitled to deduction under Section 80(P)? - HELD THAT - There is no dispute to the fact that the Division Bench of this Court in NO. 3324, NERINJIPETTAI PRIMARY AGRICULTURAL COOPERATIVE CREDIT SOCIETY LTD. VERSUS THE INCOME TAX OFFICER, WARD-2 (1) , ERODE DISTRICT 2019 (7) TMI 389 - MADRAS HIGH COURT has answered on such question in favour of the Society. However, it is stated that the said order of the Division Bench is put to challenge before the Apex Court where the matter is pending in SLP The respondents shall keep the impugned assessment orders in abeyance till the disposal of the above S.L.P. by the Apex Court. It is open to either party to work out their remedy/action, subject to the outcome of the aforesaid S.L.P.

Summary

Issues involved:
Challenge to order of assessment by Primary Agricultural Co-operative Societies under Section 80(P) of the Income Tax Act.

Analysis:
1. Assessment Order Challenge: The writ petitioners, Primary Agricultural Co-operative Societies, challenged the order of assessment for the assessment year 2016-17, which assessed the tax payable by the societies and issued demand notices. The main contention was the entitlement to deduction under Section 80(P) of the Income Tax Act.

2. Legal Contention: The petitioners relied on a Division Bench judgment stating that the exemption under Section 80P(4) of the Income Tax Act applies to Credit Societies. However, the Standing Counsel for the respondents highlighted that the Division Bench's order was challenged before the Apex Court through a Special Leave Petition (SLP) which was pending consideration.

3. Court's Direction: In a similar case, the Court had directed to keep the proceedings in abeyance until the disposal of the SLP filed by the Revenue against the Division Bench's order. The respondents did not object to passing a similar order in the present case, considering the previous judgments.

4. Decision: The Court acknowledged the issue of whether the petitioners' Society is entitled to deduction under Section 80(P) of the Income Tax Act. While the Division Bench had ruled in favor of the Society, the matter was pending before the Apex Court through an SLP. Hence, the Court directed to keep the impugned assessment orders in abeyance until the Apex Court's decision and allowed both parties to take action based on the SLP outcome.

5. Final Disposition: The Court disposed of the writ petitions by directing the respondents to keep the assessment orders in abeyance until the Apex Court's decision. It allowed both parties to act based on the SLP outcome and closed the case without costs, in line with the previous judgments and the pending SLP challenging the Division Bench's order.

By maintaining the status quo and awaiting the Apex Court's decision on the challenged Division Bench judgment, the Court ensured fair treatment and legal clarity for the Primary Agricultural Co-operative Societies involved in the assessment dispute under Section 80(P) of the Income Tax Act.