Case Law Details
Kuthannur Service Co-Operative Bank Limited Vs. ITO (Kerala High Court)
The grievance of the appellants is that, though the orders passed by the Tribunal are in their favour, the Tribunal has not considered the effect of Circular No. 133/6 of 2007 dated 09.05.2007 issued by the Central Board of Direct Taxes. In this circular, it was clarified by the department that, for the purpose of Section 80P(4) of the Act, a co-operative bank shall have the meaning assigned to it in Part V of the Banking Regulation Act, 1949. In other words, the contention of the appellants is that, in view of the aforesaid circular, in order to ascertain whether a cooperative society is conducting the business of banking, what shall be considered is whether it is a co-operative bank within the meaning of Part V of the Banking Regulation Act, 1949 and that the criteria shall not be as stated by the Full Bench of this Court in Mavilayi (supra).
The aforesaid contention is misconceived. Clarificatory circulars are issued by Government departments for the guidance of the officers. Such circulars or instructions do bind the department and its officers. But they do not bind the Court in interpretation of statutory provisions. Circulars issued by a Government department cannot have any primacy over the decision of the jurisdictional High Court. Circulars and instructions thus issued will not survive, if they are contrary to the decision of a Constitutional Court. If a circular provides an interpretation of law that runs contrary to the interpretation given by the jurisdictional High Court, it no longer survives. Circulars or instructions given by the department are no doubt binding on the authorities under the Act, but when the Supreme Court or the High Court has declared the law on the question arising for consideration, it will not be open to a party to contend that the circular should be given effect to and not the view expressed in the decision of the Supreme Court or the High Court.
FULL TEXT OF THE HIGH COURT ORDER / JUDGEMENT
The appellants/assessees are Co-operative Societies registered under the Kerala Co-operative Societies Act, 1969. The issue raised in these appeals relates to their claim for deduction under Section 80P(2) of the Income Tax Act, 1961 (hereinafter referred to as ‘the Act’).
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