The Haryana State Coop.Supply And ... vs Chief Commissioner Of Income Tax Pkl
2024 Latest Caselaw 19491 P&H

Punjab-Haryana High Court

The Haryana State Coop.Supply And ... vs Chief Commissioner Of Income Tax Pkl on 6 November, 2024

Author: Sanjeev Prakash Sharma

Bench: Sanjeev Prakash Sharma

                           Neutral Citation No:=2024:PHHC:026339-DB
               CWP No. 14292 of 2002              -1-

     IN THE HIGH COURT OF PUNJAB AND HARYANA
                  AT CHANDIGARH

                                            CWP No. 14292 of 2002 (O&M)

                                             Reserved on :       21.09.2024
                                 Date of Pronouncement :         06.11.2024
The Haryana State Co-operative
                  Co           Supply &
Marketing Federation Limited (HAFED)                         ...Petitioner
                                   Versus
Chief Commissioner of Income Tax and another                 ...Respondents

CORAM: HON'BLE MR. JUSTICE SANJEEV PRAKASH SHARMA
       HON'BLE MR. JUSTICE SANJAY VASHISTH

Present:     Mr. Rajesh Garg, Senior Advocate assisted by
             Ms. Neha Matharoo, Mr. Mandeep Singh and
             Ms. Latika Garg, Advocates, for the petitioner.

             Mr. Saurabh Kapoor, Senior Standing Counsel and
             Ms. Pridhi Sandhu, Junior Standing Counsel,
             for the respondents.
                                    ***
SANJEEV PRAKASH SHARMA, J.

The present petition has been filed seeking direction to th thee

respondents to allow the waiver petition of the petitioner and quashing/

setting aside the order dated 15.07.2002, whereby the petition filed for

waiver of interest under Sections 234-B 234 B and 234 234-C C of the Income Tax Act,

1961 (for short, 'the Act') for assessment assessment years 1996 1996-97, 1997-98 and 1998--

99 was rejected.

2. Petitioner is a cooperative society registered under the Haryana

Cooperative Societies Act, 1984. Purpose for formation of this society is for

making arrangements for procuring, marketing/ tradi trading, ng, processing/

manufacturing of agricultural products as well as by by-products products of its affiliated

members within and outside the country and to find out and adopt latest

technology and supply of goods on cooperative basis and to act as agent to

its constituents nts and other persons and institutions approved by the Registrar,

Cooperative Societies, Punjab and also to make arrangements for

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Neutral Citation No:=2024:PHHC:026339-DB

distribution of agricultural inputs in retail to members and non-members and

to run warehouses and to arrange for construction of buildings necessary for

business of the Federation. It had been availing exemption under Section

80(P)(2)(a)(iii) of the Act since its inception.

3. It is stated that exemption was being allowed in terms of

Division Bench judgment of this Court in C.I.T. vs Punjab State Co-

operative Supply & Marketing Federation Limited 182 ITR 53. The

judgment of this Court was approved by the Supreme Court in Kerala State

Cooperative Marketing Federation Limited vs Commissioner of Income

Tax 231 ITR 814.

4. Unamended provision of Section 80(P)(2)(a)(iii) of the Act

reads as under:-

"80(P) (1) Where, in the case of an assessee being a co- operative society, the gross total income includes any income referred to in sub-section (2), there shall be deducted, in accordance with and subject to the provisions of this section, the sums specified in sub- section (2), in computing the total income of the assesse. (2) The sums referred to in sub section (1) shall be the following, namely:

(a) in the case of a co-operative society engaged in

(iii) the marketing of agricultural produce of its members"

The Amended Section 80(P)(2)(a)(iii) of the Act after the 2nd Amendment

in 1998, which was brought into force with effect from 01.04.1968 reads as

under:-

"80(P) (1) Where, in the case of an assessee being a co- operative society, the gross total income includes any income referred to in sub-section (2), there shall be deducted, in accordance with and subject to provisions of

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this section. the sums specified in sub-section (2), in computing the total income of the assessee, (2) The sums referred to in sub section (1) shall be the following, namely:-

(a) in the case of a co-operative society engaged in--

(iii) the marketing of the agricultural produce grown by its members."

Accordingly for the AY 1998-99, the Assessing Officer disallowed the

deduction claimed by the petitioner in terms of the aforesaid amended

Section 80(P)(2)(a)(iii) of the Act and further charged interest on the

disallowed amount, in terms of Sections 234(B) and 234(C) of the Act for

the assessment years 1996-97, 1997-98 and 1998-99 as the amendment had

been made applicable retrospectively.

5. Learned senior counsel for the petitioner submitted that the

petitioner was wrongfully charged interest merely because the law was

amended with retrospective effect and reliance was placed on the circular

issued by the Central Board of Direct Taxes dated 23.05.1996 under Section

119 of the Act which provides that if any income which was not chargeable

to the income tax on the basis of any order passed in the case of assessee by

the jurisdictional High Court subsequently, in consequence of any

retrospective amendment of law or decision of the Hon'ble Supreme Court,

the assessee becomes liable to pay advance tax or advance tax paid is less

and the assessee becomes liable to pay interest u/s 234-B and 234-C, then it

would be a fit case for waiver of such interest.

6. Learned senior counsel for the petitioner further submitted that

earlier the petitioner had preferred CWP No.10547 of 1997 - The Haryana

State Co-operative Supply & Marketing Federation Limited (Hafed),

Chandigarh vs Chief Commissioner of Income Tax (North West Zone),

Central Revenue Building, Sector-17, Chandigarh and another for waiver

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of interest charged for the assessment years 1991-92, 1992-93 and 1993-94

under Section 234-B of the Act. This Court disposed of the writ petition on

09.09.1997 with direction to the respondents to pass a fresh reasoned order

and the Chief Commissioner of Income Tax vide its order dated 31.03.1998

allowed the waiver of interest for the three years, as above. Therefore, there

was no occasion to reject the waiver petitions for the previous three

assessment years and submitted that the order dated 15.07.2002 deserves to

be quashed and the interest ought not be imposed merely because of change

of law with retrospective effect. It is submitted that it is on account of the

High Court's order as approved by the Supreme Court that the exemption

was claimed by the petitioner for payment of advance tax for the years

accrued on 15.03.1996, 15.03.1997 and 15.03.1998.

7. Per contra, it is submitted by learned counsel for the

respondents that exemption under Section 80(P)(2)(a)(iii) of the Act was

disallowed to the petitioner on the basis of judgment of Hon'ble the Supreme

Court in Assam Cooperative Apex Marketing Society Limited vs

Commissioner of Income-Tax (Addl.) 201 ITR 338 which impliedly

overruled the judgment passed by this Court wherein it was held that the

exemption under Section 80(P)(2)(a)(iii) of the Act is not available to the

Apex Society but only to primary society, whose members are agriculturists.

Later on in Kerala State Cooperative Marketing Federation Limited's case

(supra), the judgment passed in Assam Cooperative Apex Marketing Society

Limited's case (supra) was overruled. It was held that the exemption was

also available as per the aforesaid section to Apex Cooperative Societies.

Since the amendment has been made retrospectively with effect from

01.04.1968 in Section 80(P)(2)(a)(iii) of the Act, the apex society like the

petitioner, would not be entitled to exemption for the assessment years 1996-

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97 and 1997-98. The benefit was given till the judgment was in force. The

benefit cannot be granted for the year 1996-97 onwards.

8. The Apex Court in Mavilayi Service Cooperative Bank

Limited and others vs Commissioner of Income Tax, Calicut and another

(2021) 7 SCC 90 after considering the law laid down in the case of Citizen

Cooperative Society Limited vs CIT (2017) 9 SCC 364 culled out following

principles:-

"24.1. That Section 80-P of the IT Act is a benevolent provision, which was enacted by Parliament in order to encourage and promote the growth of the cooperative sector generally in the economic life of the country and must, therefore, be read liberally and in favour of the assessee;

24.2. That once the assessee is entitled to avail of deduction, the entire amount of profits and gains of business that are attributable to any one or more activities mentioned in sub-section (2) of Section 80-P must be given by way of deduction;

24.3. That this Court in Kerala State Coop. Mktg. Federation Ltd. has a construed Section 80-P widely and liberally, holding that if a society were to avail of several heads of deduction, and if it fell within any one head of deduction, it would be free from tax notwithstanding that the conditions of another head of deduction are not satisfied;

24.4. This is for the reason that when the legislature wanted to restrict the deduction to a particular type of cooperative society, such as is evident from b Section 80- P(2)(b) qua milk cooperative societies, the legislature expressly says so which is not the case with Section 80- P(2)(a)(i);

24.5. That Section 80-P(4) is in the nature of a proviso to the main provision contained in Sections 80-P(1) and (2).

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This proviso specifically excludes only cooperative banks, which are cooperative societies who must possess a licence from RBI to do banking business. Given the fact that the assessee in that case was not so licensed, the assessee would not fall within the mischief of Section 80- P(4)."

9. We find that the impugned order has been passed rejecting

petitions for waiver of interest on the ground that the petitioner should have

paid advance tax for three assessment years on the basis of Supreme Court

Judgment in Assam Cooperative Apex Marketing Society Limited's case

(supra). Since the same stands overruled, the order dated 15.07.2002 passed

by the respondents is not sustainable.

10. As on today, it is settled that the Cooperative Society like the

petitioner would be exempted from payment of tax, and therefore, there was

no occasion for depositing advance tax. Hence, the waiver of interest under

Section 234-B and 234-C of the Act for the assessment years 1996-97, 1997-

98 and 1998-99 was wrongly rejected. Accordingly, the order dated

15.07.2002 is quashed and set aside. The petitioner society is entitled to

claim the waiver of interest for the aforesaid period.

11. The writ petition is accordingly allowed.

12. All pending applications stand disposed of.

13. No costs.

                                            (SANJEEV PRAKASH SHARMA)
                                                     JUDGE



06.11.2024                                       (SANJAY VASHISTH)
vs                                                    JUDGE

Whether speaking/reasoned                   Yes/No

Whether reportable                          Yes/No

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