The petitioner is a Co-operative Bank, and in the writ petition impugns Ext.P1 order passed by the Income Tax Department under Section 201 and 201(1A) of the Income Tax Act, 1961. The said order finds that, insofar as the petitioner Bank had considered contributions to unrecognised provident funds for deduction under Section 80C while computing the taxable salary and tax deductible at source of its employees, it had breached the provisions under the Act with regard to the tax deduction at source from payments made to employees. As already noted, it is challenging the said order that the petitioner has preferred this writ petition inter alia on the ground that the respondents were not justified in treating contributions to the provident fund Scheme, recognised under the Co-operative Societies Act, as an unrecognised provident fund for the purposes of the Income Tax Act.
2. I have heard Sri.Kaleeswaram Raj, the learned counsel for the petitioner and Sri.Jose Joseph the learned Standing counsel for the Income Tax Department.
3. On a consideration of the facts and circumstances of the case as also the submissions made across the Bar, I note that the challenge in the writ petition, against Ext.P1 order of the Income Tax authorities, is primarily on the ground that the provisions of the Income Tax Act, to the extent it does not recognise the contribution made by the employees of the petitioner Bank to the Provident Fund under the Kerala Co-operative Societies Act for the purposes of deduction under Section 80 C, is illegal and ultra vires. As per the provisions of Section 80 C, only contributions to such provident funds, as are recognised for the purposes of Income Tax Act, will qualify for deduction. It is not in dispute that the Provident Fund Scheme under the Kerala Co-operative Societies Act is not a recognised one for the purposes of the Income Tax Act. In that view of the matter, based on the provisions of the Income Tax Act, as they stood during the relevant period, the contributions by the employees of the petitioner Bank to the fund under the Co- operative Societies Act, did not qualify for exemption under Section 80 C of the Act. The contention of the petitioner as to the illegality, with regard to the exclusion of the said contribution from the purview of the Income Tax Act, cannot be accepted in view of the fact that, the issue of recognition of any particular fund, for the purposes of Section 80C of the Act, is a policy decision of the Central Government and a contribution to a fund that is not recognised for the purposes of the Income tax Act cannot be considered for the purposes of deduction under the said Act. That apart, Ext.P1 order passed against the petitioner is an appealable order under the Income Tax Act. Thus, leaving open the right of the petitioner to challenge Ext.P1 order in proceedings under the Income Tax Act, I dismiss the writ petition as devoid of merit. I make it clear that if the petitioner files an appeal against Ext.P1 order, within a period of one month from the date of receipt of a copy of this judgment, the same shall be considered by the appellate authority on merits. The stay against receovery proceedings granted in the writ petition, shall continue till such time as the appellate authority passes orders in the appeal and communicates the same to the petitioner. If the petitioner does not prefer any appeal within the time granted to him under this judgment, he will not get the benefit of this judgment.
A.K.JAYASANKARAN NAMBIAR JUDGE mns