Commissioner of Income Tax vs Kerala State Co-operative Marketing Federation Ltd.

K.K. Usha, J.—This reference at the instance of the Revenue is from the order of the Income Tax Appellate Tribunal, Cochin Bench, in I.T. A. No. 555 (Coch.) of 1985. The assessment year is 1981-82. Following are the questions referred for the opinion of this court ;

"1. Whether, on the facts and in the circumstances of the case, the interest received from other co-operative societies on the credit sales to those societies is covered by Section 80P(2)(a)(i) and is entitled to be deducted ?

Whether, on the facts and in the circumstances of the case, the tax paid after the close of the accounting period of the assessee should be regarded as in the nature of advance tax paid ?"

The assessee, a co-operative society, claimed exemption for the year ending June 30, 1980, relevant to the assessment year 1981-82 on interest earned by it on the credit sales made to co-operative societies u/s 80P(2)(a)(i) of the Income Tax Act. The exemption was denied by the assessing authority on the ground that such exemption would be available only in the case of co-operative societies engaged in the business of banking and providing credit facilities to its members. Credit sales to the members are not the same as giving credit facilities. On appeal by the assessee, the benefit was allowed by the first appellate authority as well as the Tribunal. In the light of the decision of this court in Kerala Co-operative Consumers'' Federation Ltd. Vs. Commissioner of Income Tax, , it has to be held that the assessee is not entitled to exemption on the interest earned by it on credit sales made to co-operative societies u/s 80P(2)(a)(i) of the Income Tax Act.

The assessee had objected to levy of interest under Sections 139 and 217 of the Income Tax Act. The first appellate authority directed the Income Tax Officer to treat the payment made by the assessee on December 15, 1980, as advance tax or as tax otherwise paid which is to be taken into account while calculating interest. Even though the correctness of this finding was canvassed by the Revenue before the Tribunal, it took the view that tax paid during the financial year, even though, after the close of the accounting period of the assessee, will have to be regarded as in the nature of advance tax paid and thus affirmed the finding of the Commissioner of Income Tax (Appeals).

The previous year of the assessee for the assessment year 1981-82 was from July 1, 1979, to June 30, 1980. The relevant provisions applicable are contained in Section 211(1)(i), which read as follows :

"211. Instalments of advance tax.--. . . (i) the 15th day of June, the 15th day of September and the 15th day of December, in the case of an assessee whose total income to the extent of 75 per cent. thereof or more is derived from a source or sources for which the previous year (relevant to the assessment year next following the financial year, aforesaid) ends on or before the 31st day of December ;"

Both sides submitted before us with reference to illustrations that it is Clause (i) that is applicable in the case of the assessee. If that be so, the due dates for payment of advance tax are June 15, 1980, September 15, 1980, and December 15, 1980. Rs. 9,00,000 had been paid on December 15, 1980 (the date is shown by mistake as June 16, 1980, in all the proceedings including the statement of case). Both sides admitted before us that the payment of Rs. 9,00,000 was made on December 15, 1980, and that the date shown in the proceedings is a mistake. When the payment is made on December 15, 1980, by applying the provisions contained under Clause (i) of Section 211(1), it has to be taken that the payment is that of advance tax. The Tribunal was, therefore, fully justified in taking the view that payment made on December 15, 1980, was that of advance tax and the assessee will he entitled to all consequential reliefs.

In the light of the above discussion, we answer question No. 1 in the negative, against the assessee and in favour of the Revenue. We answer the second question in the affirmative, against the Revenue and in favour of the assessee.

A copy of this judgment under the seal of this court and the signature of the Registrar shall be forwarded to the Income Tax Appellate Tribunal, Cochin Bench.