2022 (3) TMI 1080 - HC - Income Tax

Deduction u/s 80P - HELD THAT - Admittedly, in all these cases, the Assessing Officer has passed orders of assessment determining the income of the respective respondent/ Cooperative Society and demanded tax. Challenging the said orders of assessment, the respondents have already filed appeals before the appellate authority and they are pending. Therefore, it would be appropriate to direct the respondents herein to raise all the contentions including the eligibility of their claim under section 80P of the Act, in the appeals pending before the appellate authority. The appellate authority is also directed to consider the claim of the respondents/co-operative societies and pass orders, on merits and in accordance with law and also in the light of the decision rendered MAVILAYI SERVICE COOPERATIVE BANK LTD. ORS. VERSUS COMMISSIONER OF INCOME TAX, CALICUT ANR. 2021 (1) TMI 488 - SUPREME COURT Accordingly, the orders impugned herein, shall stand modified.

Issues:
1. Validity of orders passed by the learned Judge in the writ petitions filed by the respondents / co-operative societies.
2. Entitlement of cooperative credit societies to the benefit of Section 80P of the Income Tax Act.
3. Jurisdiction of the High Court to entertain writ petitions along with statutory appeals before the appellate authority.
4. Impact of relevant legal precedents on the decision-making process.

Issue 1: The High Court addressed the validity of the orders passed by the learned Judge in the writ petitions filed by the respondents / co-operative societies. The respondents challenged the assessment orders passed by the Assessing Officer, disputing tax demands. The High Court considered the lead case of WP No. 769 of 2019, where the respondent agricultural cooperative credit society claimed a deduction under Section 80-P of the Income-tax Act. The learned Judge found the issue to be covered by a previous Division Bench judgment. Pending a related appeal before the Supreme Court, the High Court directed the assessment orders to be kept in abeyance until the outcome of the Supreme Court appeal.

Issue 2: The controversy revolved around the entitlement of cooperative credit societies to the benefit of Section 80P of the Income Tax Act. The Revenue challenged the orders passed by the learned Judge, arguing that the respondents should have pursued statutory appeals before the appellate authority instead of filing writ petitions. However, legal precedents, including a Division Bench judgment and a Supreme Court decision, supported the cooperative credit societies' eligibility for the benefit under Section 80P. The High Court directed the appellate authority to consider the claims of the respondents in light of the legal precedents and pass orders accordingly.

Issue 3: The High Court examined the jurisdictional aspect of entertaining writ petitions alongside statutory appeals before the appellate authority. The Revenue contended that the writ petitions should not have been entertained simultaneously with the statutory appeals. However, the Court found that since the respondents had already filed appeals before the appellate authority, it was appropriate for them to raise all contentions, including the eligibility under Section 80P, during the appellate proceedings. The Court directed the appellate authority to consider the claims and modify the impugned orders accordingly.

Issue 4: The High Court's decision was influenced by relevant legal precedents, including a Division Bench judgment and a Supreme Court ruling. The judgment emphasized the need to interpret Section 80P liberally and reasonably in favor of the assessee, as highlighted in the Supreme Court's decision in a similar case. The Court directed the appellate authority to consider the legal principles laid down by the Supreme Court while deciding the pending appeals of the respondents. Ultimately, the writ appeals were disposed of with modifications to the impugned orders, without any costs incurred.

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