Top Stories Denial of Exemption Claim from Payment of Income Tax on Interest Income Based on Technical Ground: Kerala HC directs to Consider Application Filed before CBDT [Read Order] The respondent department denied the exemption claim from payment of income tax on interest income based on technical grounds By Yogitha S. Yogesh – On April 4, 2024 3:01 pm – 2 mins read In a recent case, the Kerala High Court directed to consider the application filed before the Central Board of Direct Taxes ( CBDT ) under Section 119(2)(b) of the Income Tax Act, 1961. The respondent department denied the exemption claim from payment of income tax on interest income based on technical grounds. C A Jojo, Swathy S appeared for the petitioner and Sri Jose Joseph appeared for the respondent.

The petitioner is the Kerala State Co-operative Employee Pension Board constituted by the Government of Kerala for administration of the Pension Scheme namely ‘Kerala Cooperative Societies Employees Financing Pension Scheme 1994’.  This Pension Scheme was framed by the Government issuing a notification dated 14.03.1995 in the exercise of its powers conferred under Section 80A of the Kerala State Cooperative Societies Act 1969. The petitioner’s income is exempted under Section 10(23AAA) of the Income Tax Act 1961.

The first exemption was issued for three years and it has been renewed thereafter as per the norms.  The only income of the petitioner is the interest from the deposits of pension contributions of the Cooperative Employees. The assessment for the Assessment Year 2012-13 was completed by the 4th respondent with a demand disallowing the exemption as the petitioner did not file its return on time.  The petitioner filed an appeal before the 3rd respondent which was allowed by the Commissioner (Appeals).  According to the petitioner, the petitioner is entitled to a refund of Rs.12,15,204/- which has not yet been issued.  The petitioner filed a return claiming exemption under Section 10(23AAA) online.

The petitioner applied condoning the delay in filing the return before the Chief Commissioner of Income Tax Thiruvananthapuram.  However, the said application has not yet been decided.  As the Assessing Officer did not consider the delayed return as a valid return, the Assessing Authority completed the assessment and a demand for Rs.56,04,860/- has been issued for the Assessment Year 2013-14 against which the petitioner has filed an appeal before the 1st respondent. In respect of the Assessment Years 2014-15 to 201819 the petitioner did not file returns on time and therefore the petitioner’s claim for exemption under Section 10(23AAA) has been denied and demand has been issued.  The petitioner has filed appeals.

Counsel for the petitioner submitted that the petitioner has been denied exemption from payment of the Income Tax on interest income on the technical ground of filing the return with delay to which he has applied to the Central Board of Direct Taxes ( CBDT ) under Section 119(2)(b).  However, no decision has been taken and in the absence of a decision by the CBDT, the refund has not been processed. Justice Dinesh Kumar Singh disposed of the writ petition with a direction to the CBDT/2nd respondent to consider and pass orders on the application expeditiously, preferably within a period of two months.  The 3rd respondent is directed to consider and decide the appeals expeditiously under the law, as early as possible.