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2019 (7) TMI 801 - AT - Income TaxRectification of mistake u/s 154 - Tribunal had directed to grant deduction u/s 80P by merely perusing the certificate issued by the Registrar of Co-operative Societies characterizing the assessee s as co-operative societies as primary agricultural credit societies - HELD THAT - The Hon ble Kerala High Court in the case of Kil Kotagiri Tea Coffee Estates Co. Ltd. v. ITAT 1988 (7) TMI 54 - KERALA HIGH COURT had held that when an authority has decided on the basis of a decision of the High Court which is subsequently reversed there would be a rectifiable mistake coming within the section 154. The Larger Bench of the Hon ble Kerala High Court in THE MAVILAYI SERVICE CO-OPERATIVE BANK LTD 2019 (3) TMI 1580 - KERALA HIGH COURT has reversed the dictum laid down by the judgment in the case of Chirakkal Service Co-operative Bank Ltd. 2016 (4) TMI 826 - KERALA HIGH COURT by holding that the activities of the assessee has to be examined to determine whether the assessee s are Co-operative societies or cooperative banks. In the light of the Larger Bench judgment of the Hon ble Kerala High Court the Tribunal order dated 29.11.2018 suffers from a mistake apparent on record and the same needs to be recalled. The contentions of the assessees that these rectification applications have not been filed within a reasonable date and hence barred by limitation is legally untenable. The order of the Tribunal is dated 29.11.2018 and the miscellaneous applications have been filed within six months from the date of receipt of the Tribunal order by the Commissioner. Hon ble Supreme Court in the case of Sree Ayyanar Spinning and Weaving Mills Ltd. v. CIT 2008 (5) TMI 22 - SUPREME COURT had categorically held that it would be sufficient that a miscellaneous application is filed within the period mentioned u/s 254(2) and the same need not be disposed off within the time limit mentioned. The department cannot be faulted for the delay in disposal of the M.A. In the result the miscellaneous applications filed by the Revenue are allowed.
Issues:
1. Denial of deduction u/s 80P of the IT Act to primary agricultural credit societies. 2. Interpretation of the judgment of the Hon'ble Kerala High Court regarding classification of cooperative societies. 3. Rectification of Tribunal order based on subsequent reversal of High Court decision. 4. Timeliness of filing rectification applications under Section 254(2) of the IT Act. Issue 1: Denial of deduction u/s 80P of the IT Act to primary agricultural credit societies: The case involved primary agricultural credit societies registered under the Kerala Co-operative Societies Act, 1969, denied deduction u/s 80P by the Assessing Officer. The first appellate authority allowed the deduction based on the judgment of the Hon'ble Kerala High Court. The Tribunal also confirmed this decision in its consolidated order dated 29.11.2018. The Revenue filed miscellaneous applications seeking to recall this order. Issue 2: Interpretation of the judgment of the Hon'ble Kerala High Court regarding classification of cooperative societies: The Revenue argued that a Larger Bench of the Hon'ble Kerala High Court reversed the decision in a previous case, emphasizing that the activities of cooperative societies should be examined yearly to determine their classification. The Tribunal's order did not conduct such an examination but relied on the Registrar's certificate. The Tribunal acknowledged the reversal and the need for a factual inquiry into the nature of the societies. Issue 3: Rectification of Tribunal order based on subsequent reversal of High Court decision: The Tribunal recognized the mistake in its previous order due to the change in legal interpretation by the Larger Bench of the Hon'ble Kerala High Court. It held that the order needed to be recalled as the activities of the societies were not examined as required by the new interpretation. The rectification applications were deemed timely and legally valid, following the Supreme Court's precedent. Issue 4: Timeliness of filing rectification applications under Section 254(2) of the IT Act: The Tribunal rejected the contention that the rectification applications were untimely, stating they were filed within the six-month limitation period specified under Section 254(2) of the IT Act. Citing a Supreme Court ruling, it clarified that the filing deadline sufficed and did not require immediate disposal. The Tribunal allowed the Revenue's miscellaneous applications, recalling the previous order for further proceedings on the matter. In conclusion, the judgment addressed the denial of deduction under section 80P of the IT Act to primary agricultural credit societies, the need for a yearly examination of cooperative societies' activities for classification, the rectification of the Tribunal order following a High Court reversal, and the timeliness of filing rectification applications under the IT Act. The decision highlighted the importance of legal interpretation changes and the procedural aspects of rectification applications in tax matters.
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