2019 (6) TMI 1098 - HC - Income Tax

Entitlement to the benefit of Section 80P - reopening of assessment u/s 147 - HELD THAT - 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:
- Interpretation of Section 80P of the Income Tax Act, 1961 regarding Cooperative Societies
- Validity of notices issued under Section 148 of the IT Act to Cooperative Societies
- Application of previous judgments by the Hon'ble Division Bench of the High Court

Analysis:
- The five writ petitions involved Cooperative Societies claiming benefits under Section 80P of the Income Tax Act, 1961. Respondent issued notices under Section 148 of the IT Act, challenging the claimed benefits. The core issue was the entitlement of Cooperative Societies to the benefits of Section 80P.
- The petitioners contended that a previous Division Bench judgment held that Cooperative Societies are entitled to the benefits of Section 80P. The judgment raised substantial questions of law related to the interpretation of Section 80P in the context of Cooperative Societies.
- The Division Bench answered the questions in favor of the assessee Cooperative Societies, emphasizing the distinction between cooperative banks and primary agricultural credit societies under Section 80P. The judgment established that primary agricultural credit societies are entitled to deductions under Section 80P.
- The Division Bench's judgment was considered applicable to the present cases, leading to the conclusion that the impugned notices should be set aside as the authorities would be bound by the Division Bench's ruling.
- The Revenue counsel raised concerns regarding the limitation for issuing fresh notices under Section 148 if the impugned notices were set aside. Different periods of limitation were highlighted under Section 147 and Sections 149(1)(b) and 149(1)(c) of the IT Act.
- The court decided to keep the impugned notices in abeyance pending the outcome of Special Leave Petitions filed by the Revenue in the Supreme Court against the Division Bench's order. The court clarified that if the Special Leave Petitions favored the Revenue, the impugned orders would stand revived, subject to objections and defenses by the assessees.
- If the Special Leave Petitions favored the assessees or if the Division Bench's orders were confirmed, the impugned notices would be set aside without further reference to the court. The writ petitions were disposed of accordingly, with no costs awarded.

This detailed analysis of the judgment highlights the interpretation of Section 80P, the validity of notices issued under Section 148, and the application of previous judgments by the Division Bench, providing a comprehensive overview of the legal issues addressed in the case.