Punjab State Co-Operative Supply Marketing Federation Ltd. Vs Chief Commissioner of Income Tax And Anr. (Punjab And Haryana High Court)
The Punjab and Haryana High Court disposed of a batch of petitions through a common order as they involved identical issues. The petitioner, a cooperative society owned and controlled by the State of Punjab, filed the petitions under Articles 226/227 of the Constitution seeking to set aside an order dated 20.02.2006. The impugned order rejected its application for waiver of interest levied under Section 234B of the Income Tax Act, 1961.
The petitioner was engaged in the purchase and marketing of agricultural produce such as wheat and paddy. For Assessment Year 1998–99, it earned income of Rs. 35.67 crores and claimed exemption under Section 80P(2). The Assessing Officer, through order dated 24.10.2000, denied the exemption and levied interest under Section 234B. While the petitioner accepted the tax liability, it sought waiver of interest under Section 119. The Chief Commissioner rejected this request.
The petitioner relied on a 1989 judgment of the High Court, which had held that marketing cooperative societies were entitled to exemption under Section 80P(2). Although a similar judgment relating to a Haryana society was appealed by the revenue, the decision in favour of the petitioner was not challenged and was accepted. Subsequently, the Supreme Court, by judgment dated 25.02.1993, held that such societies were not entitled to exemption. However, on 31.01.1994, the Supreme Court expressed doubt over its 1993 decision and referred the issue to a larger bench. Ultimately, by judgment dated 13.05.1998, the Supreme Court overruled its earlier decision and held that marketing societies were entitled to exemption.
