Kerala HC Directs CBDT to Review Co-Operative Pension Board’s Tax Exemption Claim

Kerala State Co-Operative Employee Pension Board VS CIT (Kerala High Court)

The Kerala State Co-operative Employee Pension Board’s battle for tax exemption took center stage in a recent ruling by the Kerala High Court. In the case of Kerala State Co-Operative Employee Pension Board vs. CIT, the court addressed the denial of tax exemption based on technical grounds related to the filing of returns. The verdict underscores the importance of timely administrative processes and the obligations of tax authorities in considering exemption claims.

Detailed Analysis:

1. Background of the Case:

• The Kerala State Co-operative Employee Pension Board administers the ‘Kerala Co­operative Societies Employees Financing Pension Scheme 1994’.
• The petitioner’s income, primarily derived from interest on pension contributions, is exempted under Section 10(23AAA) of the Income Tax Act 1961.

2. Disputed Assessment Years:

• The assessment for the year 2012-13 resulted in a demand due to delayed filing, despite subsequent appeal success.
• Similar issues persisted in subsequent years (2013-14 to 2018-19), leading to denial of exemption and issuance of demands.

3. Legal Argument:

• The petitioner contends that denial of exemption is solely based on technical grounds of delayed filing.
• Appeals and applications for condonation of delay were made, awaiting decisions from tax authorities.

4. Court’s Verdict and Directives:

• The Kerala High Court directed the Central Board of Direct Taxes (CBDT) to expedite the decision on the petitioner’s application.
• Concurrently, the appellate authorities were instructed to promptly adjudicate on pending appeals.

Conclusion:

The Kerala High Court’s ruling in the Kerala State Co-Operative Employee Pension Board vs. CIT case emphasizes the need for procedural efficiency and fair consideration of exemption claims. Despite technicalities surrounding delayed filings, the court’s directives underscore the importance of timely administrative actions by tax authorities. This verdict serves as a reminder of the legal obligations inherent in tax assessment processes and the necessity for expeditious resolution of disputes to ensure fairness and compliance with the law.

FULL TEXT OF THE JUDGMENT/ORDER OF KERALA HIGH COURT

The petitioner is the Kerala State Co-operative Employee Pension Board constituted by the Government of Kerala for administration of the Pension Scheme namely ‘Kerala Co­operative Societies Employees Financing Pension Scheme 1994’. This Pension Scheme was framed by the Government issuing a notification dated 14.03.1995 in the exercise of its powers conferred under Section 80A of the Kerala State Co­operative Societies Act 1969.

The petitioner’s income is exempted under Section 10(23AAA) of the Income Tax Act 1961. The first exemption was issued for three years and it has been renewed thereafter as per the norms. The only income of the petitioner is the interest from the deposits of pension contributions of the Co­operative Employees.

2.1 The assessment for the Assessment Year 2012-13 was completed by the 4^th respondent with a demand disallowing the exemption as the petitioner did not file its return on time. The petitioner filed an appeal before the ₃rd respondent which was allowed by the Commissioner (Appeals). According to the petitioner, the petitioner is entitled to a refund of Rs.12,15,204/- which has not yet been issued. In respect of the Assessment Year 2013-14, the petitioner filed a return claiming exemption under Section 10(23AAA) online. The petitioner filed an application for condoning the delay in filing the return before the Chief Commissioner of Income Tax Thiruvananthapuram. However, the said application has not yet been decided. As the Assessing Officer did not consider the delayed return as a valid return, the Assessing Authority completed the assessment and a demand for Rs.56,04,860/- has been issued for the Assessment Year 2013-14 against which the petitioner has filed an appeal before the 1^st respondent.

2.2 In respect of the Assessment Years 2014-15 to 2018- 19 the petitioner did not file returns on time and therefore the petitioner’s claim for exemption under Section 10(23AAA) has been denied and demand has been issued. The petitioner has filed appeals in Exts.P7, P10 and P11.

3. Learned Counsel for the petitioner submits that the petitioner has been denied exemption from payment of the Income Tax on interest income on the technical ground of filing the return with delay to which he has filed an application before the Central Board of Direct Taxes (CBDT) under Section 119(2)(b). However, no decision has been taken and in the absence of a decision by the CBDT, the refund has not been processed.

4. Considering the said submissions the present writ petition is disposed of with a direction to the CBDT/2^nd respondent to consider and pass orders on the Ext.P9 application expeditiously, preferably within a period of two months from today, in accordance with the law. The ₃rd respondent is directed to consider and decide the appeals in Exts.P7, P10 and P11 expeditiously in accordance with the law, as early as possible.

With the aforesaid directions, the present writ petition stands finally disposed of.