The Tax Publishers2020 TaxPub(DT) 0241 (Ker-HC) : (2020) 420 ITR 0358 : (2020) 312 CTR 0465 : (2020) 271 TAXMAN 0118

INCOME TAX ACT, 1961

Section 80P(2)

Circulars or instructions given by the department are no doubt binding on the authorities under the Act, but when Supreme Court or High Court had declared the law on the question arising for consideration, it would not be open to a party to contend that the circular should be given effect to and not the view expressed in decision of the Supreme Court or the High Court. In view of decision in Chirakkal (2016 (2) KHC 726 : 2016 (2) KLT 535 : 2016 TaxPub(DT) 1770 (Ker-HC)), it was not necessary for Tribunal to consider the effect of the circular issued by department.

Deduction under section 80P(2) - Claim for deduction denied by AO by treating assessee as Co-operative Banks and not as Primary Agricultural Credit Societies - Allowability -

Assessee claimed deduction under section 80P(2) which was denied by AO by treating them as Co-operative Banks and not as Primary Agricultural Credit Societies. CIT(A) directed AO to grant deduction under section 80P (2) on the ground that assessees was classified as Primary Agricultural Credit Societies. Assessees filed cross objections supporting orders passed by first appellate authority, by making reference to a circular issued by department. Tribunal dismissed the appeals filed by revenue and cross objections filed by assessees were also dismissed on the ground that they only supported the view taken by first appellate authority. Held: Circulars issued by a Government department could not have any primacy over the decision of High Court. Circulars and instructions thus issued would not survive, if they were contrary to decision of a Constitutional Court. Circulars or instructions given by the department are no doubt binding on the authorities under the Act, but when Supreme Court or High Court had declared the law on the question arising for consideration, it would not be open to a party to contend that the circular should be given effect to and not the view expressed in the decision of the Supreme Court or the High Court. In view of decision in Chirakkal (2016 (2) KHC 726 : 2016 (2) KLT 535 : 2016 TaxPub(DT) 1770 (Ker-HC)), it was not necessary for Tribunal to consider the effect of the circular issued by department.

REFERRED : The Citizen Co-Operative Society Ltd. v. Asstt. CIT AIR 2017 SC 5147 : 2017 TaxPub(DT) 2053 (SC) CCE v. Gurukripa Resins Pvt. Ltd. (2011) 13 SCC 180 (SC) : 2011 TaxPub(EX) 1009 (SC) CCE, Bolpur v. Ratan Melting & Wire Industries (2008) 13 SCC 1 (SC) : 2008 TaxPub(EX) 2507 (SC) CIT v. Hero Cycles Pvt. Ltd. & Ors. AIR 1998 SC 1555 : 1997 TaxPub(DT) 1337 (SC) The Mavilayi Service Co-operative Bank Ltd. & Ors. v. CIT 2019 (2) KHC 287 : 2019 (2) KLT 597 : 2019 TaxPub(DT) 4909 (Ker-HC) The Chirakkal Service Co-Operative Bank Ltd. v. CIT 2016 (2) KHC 726 : 2016 (2) KLT 535 : 2016 TaxPub(DT) 1770 (Ker-HC)

FAVOUR : In assessee's favour

A.Y. :

IN THE KERALA HIGH COURT

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