VKJ Latest News Update

VKJ Law Offices of Vinay K. Jain Advocates & Solicitors

Writ court’s intervention is unwarranted where assessee has alternate remedy of statutory appeal available to it: HC

2019-TIOL-1776-HC-MAD-IT

IN THE HIGH COURT OF MADRAS

WP No.4448 of 2019
WMP Nos.5014 & 5016 of 2019

M/s K274 UTHUKULI PRIMARY AGRICULTURAL COOPERATIVE CREDIT SOCIETY LTD
REPRESENTED BY ITS SECRETARY 1, UTTUKULI POST
UTTUKULI, THIRUPUR-638751
PAN NO: AABAK4347E

Vs

INCOME TAX OFFICER
WARD 1(3), INCOME TAX OFFICER, NO.121
ADAM BUILDING, SIXTY FEET ROAD
TIRUPUR – 641602

M Sundar, J

Dated: July 18, 2019

Appellant Rep by: Mr B Raveendran
Respondent Rep by: 
Mr A N R Jayaprathap, Jr. Standing Counsel

Income Tax – Section 80P

Keywords – Co-operative society

THE assessee is a Primary Agricultural Cooperative Credit Society, registered under ‘Tamil Nadu Cooperative Societies Act, 1983’ (TNCS Act). During the assessment proceedings, the assessee had claimed deduction u/s 80P. However, the AO while rejecting the explanations disallowed the claim of the assessee. On appeal, the CIT(A) as well as the Tribunal also did not granted the relief to the assessee. Hence, the assessee preferred this appeal raising an issue that the Cooperative Societies akin to the assesse, which are registered under TNCS Act are entitled to claim deductions under various heads adumbrated u/s 80P as it has been laid down by this Court in CIT, Salem Vs. Tiruchengode Agricultural Producers Cooperative Marketing Society Ltd. and this case was rendered by the Division Bench of this Court based on CIT Vs. M/s. Veerakeralam Primary Agricultural Co-operative Credit Society. Further the assessee has submitted that he will opt for the alternate remedy of a statutory appeal with regard to those aspects of the order excluding the concerned issue, which is covered byVeerakeralam Primary Agricultural Co-operative Credit Society and Tiruchengode Agricultural Producers Cooperative Marketing Society principles.

On appeal, the High Court held that,

Whether writ court needs to interfere in the matter where alternate remedy is available to the assessee u/s 246A – NO: HC

++ alternate remedy rule qua exercise of writ jurisdiction is a self imposed restraint. It is a rule of discretion and it is not a rule of compulsion. Though it is not an absolute rule, Supreme Court in United Bank of India Vs. Satyawati Tondon and others held that “…it should be exercised with greater rigour in fiscal law statutes…” More importantly, the Supreme Court held that “….such a rule has to be applied with utmost rigour when it comes to cases involving taxes, cess, fees….” Satyawati Tondon principle was reiterated by Supreme Court in State Bank of Travancore Vs. Mathew K.C.”…It is a matter of serious concern that despite repeated pronouncement of this Court, the High Courts continue to ignore the availability of statutory remedies under the DRT Act and the SARFAESI Act and exercise jurisdiction under Article 226 for passing orders which have serious adverse impact on the right of banks and other financial institutions to recover their dues.” Thus, this writ petition is disposed of, leaving it open to the assessee to avail alternate remedy of statutory appeal to CIT (A) u/s 246A.

Disposed of

Case followed:

United Bank of India Vs. Satyawati Tondon and others (2010) 8 SCC 110

State Bank of Travancore Vs. Mathew K.C. (2018) 3 SCC 85

JUDGEMENT

Per: M Sundar:

Mr.B.Raveendran, learned counsel on record for writ petitioner and Mr.A.N.R.Jayaprathap, learned Junior Standing counsel (Income Tax) on behalf of lone official respondent are before this Court.

2. With consent of learned counsel on both sides, main writ petition is taken up and is being disposed of.

3. Owing to the nature of the trajectory which the hearing has taken today, the entire writ petition now turns on a very narrow compass. Therefore, it may not be necessary to set out facts in great detail.

4. Suffice to say that the writ petitioner is a Primary Agricultural Cooperative Credit Society, registered under ‘Tamil Nadu Cooperative Societies Act, 1983’ [‘TNCS Act’ for brevity]

5. The instant writ petition has been filed, assailing an order dated 28.12.2018 made by the lone official respondent and this order bears reference Order No:ITBA/AST/S/143(3)/2018- 19/1014632062(1). This order ‘dated 28.12.2018 bearing reference Order No: ITBA/AST/S/143(3)/2018-19/1014632062(1)’, shall hereinafter be referred to as ‘impugned order’. To be noted, impugned order is an assessment order, pertaining to Assessment Year 2016-17 qua writ petitioner and the impugned order has been made by the lone official respondent under Section 143(3) of ‘Income Tax Act, 1961’ [‘IT Act’ for brevity]

6. The pivotal submission is that the writ petitioner being a Cooperative Society, is entitled to various deductions enlisted / adumbrated under Section 80P of IT Act. That Cooperative Societies akin to the writ petitioner, which are registered under TNCS Act are entitled to claim deductions under various heads adumbrated under Section 80P of IT Act has been laid down by this Court in Commissioner of Income Tax, Salem Vs. Tiruchengode Agricultural Producers Cooperative Marketing Society Ltd., [hereinafter ‘Tiruchengode Agricultural Producers Cooperative Marketing Society case’ for brevity] vide order dated 02.08.2016 made in Tax Case Appeal Numbers.484 to 487 and 490 of 2016 = 2016-TIOL-2014-HC-MAD-IT. ‘Tax Case Appeals’ shall be referred to as ‘TCAs’ in plural and ‘TCA’ in singular for the sake of brevity.

7. The aforesaid Tiruchengode Agricultural Producers Cooperative Marketing Society case was rendered by a Hon’ble Division Bench of this Court based on Veerakeralam Primary Agricultural Co-operative Credit Society principle being principle laid down by another Hon’ble Division Bench vide judgment in Commissioner of Income Tax Vs. M/s. Veerakeralam Primary Agricultural Co-operative Credit Society dated 05.07.2016 made in TCA Nos.735, 755 of 2014 and 460 of 2015 = 2016-TIOL-2132-HC-MAD-IT [hereinafter ‘Veerakeralam Primary Agricultural Co-operative Credit Society principle’ for brevity].

8. In the aforesaid cases, Hon’ble Division Bench addressed itself to the question as to whether Primary Agricultural Societies carrying on the business of providing credit facilities to its members are entitled to claim deductions under Section 80P of IT Act and the same was answered in the affirmative.

9. Reverting to the case on hand, a perusal of the impugned order reveals that it turns on two heads which as set out in the impugned order reads as follows:

‘(i) Large deduction under chapter VI-A from Total Income.

(ii) Low income in comparison to high loans/advances/Investment in shares appearing in balance sheet.’

10. With regard to (i) supra, as the Hon’ble Division Bench of this Hon’ble Court has already held that Cooperative Societies akin to the writ petitioner are entitled to claim deductions under various heads adumbrated under Section 80P of IT Act, the same does not survive. However, this Court is informed that Income Tax Department is carrying both Tiruchengode Agricultural Producers Cooperative Marketing Society case and Veerakeralam Primary Agricultural Cooperative Credit Society orders in TCAs to Hon’ble Supreme Court. On this basis, this Court has passed an order dated 27.06.2019 in W.P.No.2552 of 2019 & etc., batch interalia to the effect that this question is subject to outcome of the Special Leave Petitions said to have been filed by the department. To be noted, this aforesaid order dated 27.06.2019 in W.P.No.2552 of 2019 & etc., batch came to be passed by this Court as that was the lone issue therein, but in the instant case, that issue is dovetailed with another issue namely (ii) supra.

11. In the aforesaid backdrop, learned counsel for writ petitioner submitted that the writ petitioner will opt for the alternate remedy of a statutory appeal with regard to those aspects of the impugned order excluding the aforesaid issue, which is covered by Veerakeralam Primary Agricultural Co-operative Credit Society and Tiruchengode Agricultural Producers Cooperative Marketing Society principles.

12. This takes us to the alternate remedy aspect. Alternate remedy is available to the writ petitioner by way of an appeal under Section 246A of IT Act.

13. There is a time limit of 30 days prescribed for preferring an appeal under Section 246A of IT Act, which lies to Commissioner (Appeals).

14. At the request of writ petitioner, time that has been spent in the instant writ petition i.e., time from the date of filing of instant writ petition to the date on which this order is made available shall stand excluded for computing limitation for filing an appeal under Section 246A of IT Act. Even after such exclusion, if there is a delay, it is open to the writ petitioner to seek condonation of the same under Section 249(3) of IT Act and such a prayer for condonation of delay shall be dealt with by the Appellate Authority on its own merits.

15. Before parting with this case, it is necessary to mention that alternate remedy rule qua exercise of writ jurisdiction is a self imposed restraint. It is a rule of discretion and it is not a rule of compulsion. Though it is not an absolute rule, Hon’ble Supreme Court in Satyawati Tandon Case

] held that it should be exercised with greater rigour in fiscal law statutes. More importantly, in Satyawati Tondon case, Hon’ble Supreme Court held that such a rule has to be applied with utmost rigour when it comes to cases involving taxes, cess, fees etc., In other words, when it comes to fiscal statutes, these rules have to be applied with greater rigour and it is to be applied very strictly with regard to recovery of taxes, CESS, fess etc., Satyawati Tondon principle was reiterated by Hon’ble Supreme Court in K.C.Mathew case [Authorized Officer, State Bank of Travancore Vs. Mathew K.C. reported in (2018) 3 SCC 85]. Relevant paragraph in K.C.Mathew case is paragraph 10 and the same reads as follows:

’10. In Satyawati Tondon the High Court had restrained further proceedings under Section 13(4) of the Act. Upon a detailed consideration of the statutory scheme under the SARFAESI Act, the availability of remedy to the aggrieved under Section 17 before the Tribunal and the appellate remedy under Section 18 before the Appellate Tribunal, the object and purpose of the legislation, it was observed that a writ petition ought not to be entertained in view of the alternate statutory remedy available holding:

(SCC pp.123 & 128, Paras 43 & 55)

“43. Unfortunately, the High Court overlooked the settled law that the High Court will ordinarily not entertain a petition under Article 226 of the Constitution if an effective remedy is available to the aggrieved person and that this Rule applies with greater rigour in matters involving recovery of taxes, cess, fees, other types of public money and the dues of banks and other financial institutions. In our view, while dealing with the petitions involving challenge to the action taken for recovery of the public dues, etc., the High Court must keep in mind that the legislations enacted by Parliament and State Legislatures for recovery of such dues are a code unto themselves inasmuch as they not only contain comprehensive procedure for recovery of the dues but also envisage constitution of quasijudicial bodies for redressal of the grievance of any aggrieved person. Therefore, in all such cases, the High Court must insist that before availing remedy under Article 226 of the Constitution, a person must exhaust the remedies available under the relevant statute.

55.It is a matter of serious concern that despite repeated pronouncement of this Court, the High Courts continue to ignore the availability of statutory remedies under the DRT Act and the SARFAESI Act and exercise jurisdiction under Article 226 for passing orders which have serious adverse impact on the right of banks and other financial institutions to recover their dues. We hope and trust that in future the High Courts will exercise their discretion in such matters with greater caution, care and circumspection.’

16. This writ petition is disposed of, leaving it open to the writ petitioner to avail alternate remedy of statutory appeal to Commissioner (Appeals) under Section 246A of IT Act, in the manner set out supra in this order.

2019-TIOL-1776-HC-MAD-IT

IN THE HIGH COURT OF MADRAS

WP No.4448 of 2019
WMP Nos.5014 & 5016 of 2019

M/s K274 UTHUKULI PRIMARY AGRICULTURAL COOPERATIVE CREDIT SOCIETY LTD
REPRESENTED BY ITS SECRETARY 1, UTTUKULI POST
UTTUKULI, THIRUPUR-638751
PAN NO: AABAK4347E

Vs

INCOME TAX OFFICER
WARD 1(3), INCOME TAX OFFICER, NO.121
ADAM BUILDING, SIXTY FEET ROAD
TIRUPUR – 641602

M Sundar, J

Dated: July 18, 2019

Appellant Rep by: Mr B Raveendran
Respondent Rep by: 
Mr A N R Jayaprathap, Jr. Standing Counsel

Income Tax – Section 80P

Keywords – Co-operative society

THE assessee is a Primary Agricultural Cooperative Credit Society, registered under ‘Tamil Nadu Cooperative Societies Act, 1983’ (TNCS Act). During the assessment proceedings, the assessee had claimed deduction u/s 80P. However, the AO while rejecting the explanations disallowed the claim of the assessee. On appeal, the CIT(A) as well as the Tribunal also did not granted the relief to the assessee. Hence, the assessee preferred this appeal raising an issue that the Cooperative Societies akin to the assesse, which are registered under TNCS Act are entitled to claim deductions under various heads adumbrated u/s 80P as it has been laid down by this Court in CIT, Salem Vs. Tiruchengode Agricultural Producers Cooperative Marketing Society Ltd. and this case was rendered by the Division Bench of this Court based on CIT Vs. M/s. Veerakeralam Primary Agricultural Co-operative Credit Society. Further the assessee has submitted that he will opt for the alternate remedy of a statutory appeal with regard to those aspects of the order excluding the concerned issue, which is covered byVeerakeralam Primary Agricultural Co-operative Credit Society and Tiruchengode Agricultural Producers Cooperative Marketing Society principles.

On appeal, the High Court held that,

Whether writ court needs to interfere in the matter where alternate remedy is available to the assessee u/s 246A – NO: HC

++ alternate remedy rule qua exercise of writ jurisdiction is a self imposed restraint. It is a rule of discretion and it is not a rule of compulsion. Though it is not an absolute rule, Supreme Court in United Bank of India Vs. Satyawati Tondon and others held that “…it should be exercised with greater rigour in fiscal law statutes…” More importantly, the Supreme Court held that “….such a rule has to be applied with utmost rigour when it comes to cases involving taxes, cess, fees….” Satyawati Tondon principle was reiterated by Supreme Court in State Bank of Travancore Vs. Mathew K.C.”…It is a matter of serious concern that despite repeated pronouncement of this Court, the High Courts continue to ignore the availability of statutory remedies under the DRT Act and the SARFAESI Act and exercise jurisdiction under Article 226 for passing orders which have serious adverse impact on the right of banks and other financial institutions to recover their dues.” Thus, this writ petition is disposed of, leaving it open to the assessee to avail alternate remedy of statutory appeal to CIT (A) u/s 246A.

Disposed of

Case followed:

United Bank of India Vs. Satyawati Tondon and others (2010) 8 SCC 110

State Bank of Travancore Vs. Mathew K.C. (2018) 3 SCC 85

JUDGEMENT

Per: M Sundar:

Mr.B.Raveendran, learned counsel on record for writ petitioner and Mr.A.N.R.Jayaprathap, learned Junior Standing counsel (Income Tax) on behalf of lone official respondent are before this Court.

2. With consent of learned counsel on both sides, main writ petition is taken up and is being disposed of.

3. Owing to the nature of the trajectory which the hearing has taken today, the entire writ petition now turns on a very narrow compass. Therefore, it may not be necessary to set out facts in great detail.

4. Suffice to say that the writ petitioner is a Primary Agricultural Cooperative Credit Society, registered under ‘Tamil Nadu Cooperative Societies Act, 1983’ [‘TNCS Act’ for brevity]

5. The instant writ petition has been filed, assailing an order dated 28.12.2018 made by the lone official respondent and this order bears reference Order No:ITBA/AST/S/143(3)/2018- 19/1014632062(1). This order ‘dated 28.12.2018 bearing reference Order No: ITBA/AST/S/143(3)/2018-19/1014632062(1)’, shall hereinafter be referred to as ‘impugned order’. To be noted, impugned order is an assessment order, pertaining to Assessment Year 2016-17 qua writ petitioner and the impugned order has been made by the lone official respondent under Section 143(3) of ‘Income Tax Act, 1961’ [‘IT Act’ for brevity]

6. The pivotal submission is that the writ petitioner being a Cooperative Society, is entitled to various deductions enlisted / adumbrated under Section 80P of IT Act. That Cooperative Societies akin to the writ petitioner, which are registered under TNCS Act are entitled to claim deductions under various heads adumbrated under Section 80P of IT Act has been laid down by this Court in Commissioner of Income Tax, Salem Vs. Tiruchengode Agricultural Producers Cooperative Marketing Society Ltd., [hereinafter ‘Tiruchengode Agricultural Producers Cooperative Marketing Society case’ for brevity] vide order dated 02.08.2016 made in Tax Case Appeal Numbers.484 to 487 and 490 of 2016 = 2016-TIOL-2014-HC-MAD-IT. ‘Tax Case Appeals’ shall be referred to as ‘TCAs’ in plural and ‘TCA’ in singular for the sake of brevity.

7. The aforesaid Tiruchengode Agricultural Producers Cooperative Marketing Society case was rendered by a Hon’ble Division Bench of this Court based on Veerakeralam Primary Agricultural Co-operative Credit Society principle being principle laid down by another Hon’ble Division Bench vide judgment in Commissioner of Income Tax Vs. M/s. Veerakeralam Primary Agricultural Co-operative Credit Society dated 05.07.2016 made in TCA Nos.735, 755 of 2014 and 460 of 2015 = 2016-TIOL-2132-HC-MAD-IT [hereinafter ‘Veerakeralam Primary Agricultural Co-operative Credit Society principle’ for brevity].

8. In the aforesaid cases, Hon’ble Division Bench addressed itself to the question as to whether Primary Agricultural Societies carrying on the business of providing credit facilities to its members are entitled to claim deductions under Section 80P of IT Act and the same was answered in the affirmative.

9. Reverting to the case on hand, a perusal of the impugned order reveals that it turns on two heads which as set out in the impugned order reads as follows:

‘(i) Large deduction under chapter VI-A from Total Income.

(ii) Low income in comparison to high loans/advances/Investment in shares appearing in balance sheet.’

10. With regard to (i) supra, as the Hon’ble Division Bench of this Hon’ble Court has already held that Cooperative Societies akin to the writ petitioner are entitled to claim deductions under various heads adumbrated under Section 80P of IT Act, the same does not survive. However, this Court is informed that Income Tax Department is carrying both Tiruchengode Agricultural Producers Cooperative Marketing Society case and Veerakeralam Primary Agricultural Cooperative Credit Society orders in TCAs to Hon’ble Supreme Court. On this basis, this Court has passed an order dated 27.06.2019 in W.P.No.2552 of 2019 & etc., batch interalia to the effect that this question is subject to outcome of the Special Leave Petitions said to have been filed by the department. To be noted, this aforesaid order dated 27.06.2019 in W.P.No.2552 of 2019 & etc., batch came to be passed by this Court as that was the lone issue therein, but in the instant case, that issue is dovetailed with another issue namely (ii) supra.

11. In the aforesaid backdrop, learned counsel for writ petitioner submitted that the writ petitioner will opt for the alternate remedy of a statutory appeal with regard to those aspects of the impugned order excluding the aforesaid issue, which is covered by Veerakeralam Primary Agricultural Co-operative Credit Society and Tiruchengode Agricultural Producers Cooperative Marketing Society principles.

12. This takes us to the alternate remedy aspect. Alternate remedy is available to the writ petitioner by way of an appeal under Section 246A of IT Act.

13. There is a time limit of 30 days prescribed for preferring an appeal under Section 246A of IT Act, which lies to Commissioner (Appeals).

14. At the request of writ petitioner, time that has been spent in the instant writ petition i.e., time from the date of filing of instant writ petition to the date on which this order is made available shall stand excluded for computing limitation for filing an appeal under Section 246A of IT Act. Even after such exclusion, if there is a delay, it is open to the writ petitioner to seek condonation of the same under Section 249(3) of IT Act and such a prayer for condonation of delay shall be dealt with by the Appellate Authority on its own merits.

15. Before parting with this case, it is necessary to mention that alternate remedy rule qua exercise of writ jurisdiction is a self imposed restraint. It is a rule of discretion and it is not a rule of compulsion. Though it is not an absolute rule, Hon’ble Supreme Court in Satyawati Tandon Case

] held that it should be exercised with greater rigour in fiscal law statutes. More importantly, in Satyawati Tondon case, Hon’ble Supreme Court held that such a rule has to be applied with utmost rigour when it comes to cases involving taxes, cess, fees etc., In other words, when it comes to fiscal statutes, these rules have to be applied with greater rigour and it is to be applied very strictly with regard to recovery of taxes, CESS, fess etc., Satyawati Tondon principle was reiterated by Hon’ble Supreme Court in K.C.Mathew case [Authorized Officer, State Bank of Travancore Vs. Mathew K.C. reported in (2018) 3 SCC 85]. Relevant paragraph in K.C.Mathew case is paragraph 10 and the same reads as follows:

’10. In Satyawati Tondon the High Court had restrained further proceedings under Section 13(4) of the Act. Upon a detailed consideration of the statutory scheme under the SARFAESI Act, the availability of remedy to the aggrieved under Section 17 before the Tribunal and the appellate remedy under Section 18 before the Appellate Tribunal, the object and purpose of the legislation, it was observed that a writ petition ought not to be entertained in view of the alternate statutory remedy available holding:

(SCC pp.123 & 128, Paras 43 & 55)

“43. Unfortunately, the High Court overlooked the settled law that the High Court will ordinarily not entertain a petition under Article 226 of the Constitution if an effective remedy is available to the aggrieved person and that this Rule applies with greater rigour in matters involving recovery of taxes, cess, fees, other types of public money and the dues of banks and other financial institutions. In our view, while dealing with the petitions involving challenge to the action taken for recovery of the public dues, etc., the High Court must keep in mind that the legislations enacted by Parliament and State Legislatures for recovery of such dues are a code unto themselves inasmuch as they not only contain comprehensive procedure for recovery of the dues but also envisage constitution of quasijudicial bodies for redressal of the grievance of any aggrieved person. Therefore, in all such cases, the High Court must insist that before availing remedy under Article 226 of the Constitution, a person must exhaust the remedies available under the relevant statute.

55.It is a matter of serious concern that despite repeated pronouncement of this Court, the High Courts continue to ignore the availability of statutory remedies under the DRT Act and the SARFAESI Act and exercise jurisdiction under Article 226 for passing orders which have serious adverse impact on the right of banks and other financial institutions to recover their dues. We hope and trust that in future the High Courts will exercise their discretion in such matters with greater caution, care and circumspection.’

16. This writ petition is disposed of, leaving it open to the writ petitioner to avail alternate remedy of statutory appeal to Commissioner (Appeals) under Section 246A of IT Act, in the manner set out supra in this order.

17. This writ petition is disposed of with the above observations. No costs. Consequently, connected miscellaneous petitions are closed.

17. This writ petition is disposed of with the above observations. No costs. Consequently, connected miscellaneous petitions are closed.

Leave a Reply

Close Menu
%d bloggers like this: