Case Law Details
Peroorkada Service Co-Operative Bank Ltd Vs ITO (Kerala High Court)
In a recent development, the Kerala High Court issued a directive to the Income Tax Commissioner regarding recovery proceedings initiated against Peroorkada Service Co-Operative Bank Ltd. The bank, engaged in providing banking services and agricultural credit to its members, had claimed income tax exemption under Section 80P of the Income Tax Act, 1961. The court’s order revolves around the speedy resolution of an appeal filed by the bank and the implications of the demand notice issued.
1. Background: Peroorkada Service Co-Operative Bank Ltd, a primary Credit Co-operative Society, had its income tax assessment completed for the assessment year 2012-2013. The assessing authority determined the total income at Rs. 71,98,44,040, contrasting with the bank’s declared income of ‘nil.’ Subsequently, a demand notice under Section 156 of the Income Tax Act, 1961, was issued, demanding Rs. 54,49,31,750.
2. Appeal and Stay Application: The bank promptly filed an appeal challenging the assessment and also sought a stay on the recovery proceedings. The appeal and stay application were initially filed before one authority and later transferred to another.
3. Legal Precedent: The bank’s counsel cited a precedent, Principal Commissioner v. Peroorkaa Service Co-operative Bank Ltd., [2022 442 ITR 141 (Ker.)], which they claimed supported their case. Additionally, it was argued that the bank’s income primarily comprised interest earned from deposits made by its members.
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