COMMISSIONER OF INCOME TAX vs KERALA STATE CO-OPERATIVE MARKETING FEDERATION LTD.

SMT. K. K. USHA, J. :

Reference at the instance of the Revenue is from the order of the Tribunal, Cochin Bench in ITA No. 555/Coch/1985. Assessment year is 1981-82. Following are the questions referred for 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 s. 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 ?"

Assessee, a co-operative society, claimed exemption for the year ending 30th June, 1980 relevant to the asst. yr. 1981-82 on interest earned by it on the credit sales made to co-operative societies under s. 80P(2)(a)(i) of the IT Act. 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 is 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 under s. 80P(2)(a)(i) of the IT Act.

Assessee had objected to levy of interest under ss. 139 and 217 of the IT Act. First appellate authority directed the ITO to treat the payment made by the assessee on 15th December, 1980 as advance tax or as tax otherwise paid which is to be taken into account while calculating interest. Even though 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 CIT(A).

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

"211. Instalments of advance tax -

(1) xx xx

(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 illustration that it is cl. (i) that is applicable in the case of the assessee. If that be so, the due dates for payment of advance tax are 15th June, 1980, 15th September, 1980 and 15th December, 1980. Rs. 9,00,000 had been paid on 15th December, 1980 (the date is shown by mistake as 16th June, 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 15th December, 1980 and that the date shown in the proceedings is a mistake. When payment is made on 15th December, 1980, by applying the provisions contained under cl. (i) of s. 211(1), it has to be taken that the payment is that of advance tax. Tribunal was, therefore, fully justified in taking the view that payment made on 15th December, 1980 was that of advance tax and assessee will be 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 2nd question in the affirmative against the Revenue and in favour of the assessee.