2021 (11) TMI 1117 - AT - Income Tax

Exemption u/s 80P(2)(a)(i) - whether the appellant can be termed as a cooperative society or cooperative bank? - HELD THAT - The undisputed position is that the appellant is registered a cooperative society under the Karnataka State Co-operative Society Act 1959 and does not enjoy any licence from Reserve Bank of India to carry on the business of banking. It is a trite law that the assessing authority cannot go behind the registration certificate granted under the Cooperative Societies Act as held in the case of The Mavilayi Service Cooperative Bank Ltd. ors. 2021 (1) TMI 488 - SUPREME COURT So long as the appellant society had not obtained any licence from Reserve Bank of India for the purpose of banking business it cannot be termed as cooperative bank. We hold that the appellant status continued to be a cooperative society though interest income as received from its members. Thus appellant society qualifies for exemption u/s 80P(2)(a)(i) of the Act. Thus this issue raised by the assessee in grounds of appeal stands allowed.

Summary

Issues:
Identification of whether the appellant is a cooperative society or a cooperative bank for the purpose of claiming exemption u/s 80P(2)(a)(i) of the Income Tax Act, 1961.

Analysis:
The appellant, a cooperative society registered under the Karnataka State Co-operative Society Act, 1959, filed an appeal against the Assessing Officer's denial of exemption u/s 80P(2)(a)(i) of the Act for the assessment year 2012-13. The Assessing Officer treated the appellant as a cooperative bank, leading to a higher total income assessment. The ld. CIT(A) upheld this decision, prompting the appellant's appeal before the ITAT PANAJI.

During the appeal, the ld. AR argued that the appellant is a cooperative society, not a cooperative bank, making it eligible for the claimed deduction. Conversely, the ld. Sr. DR relied on the lower authorities' orders. The ITAT PANAJI considered the crucial issue of whether the appellant could be classified as a cooperative society or a cooperative bank. Notably, the appellant lacked a banking license from the Reserve Bank of India and was registered under the Cooperative Societies Act, 1959.

Referring to legal precedent, specifically the case of The Mavilayi Service Cooperative Bank Ltd. & ors. vs. CIT, the ITAT PANAJI emphasized that the assessing authority cannot disregard the registration certificate granted under the Cooperative Societies Act. As the appellant did not hold a banking license, it was determined that the appellant's status remained that of a cooperative society, entitling it to the exemption under section 80P(2)(a)(i) of the Act. Consequently, the ITAT PANAJI allowed the appellant's appeal, ruling in favor of the appellant's classification as a cooperative society and granting the exemption.

In conclusion, the ITAT PANAJI pronounced the order on November 18, 2021, allowing the appeal filed by the appellant and confirming its status as a cooperative society eligible for the exemption under section 80P(2)(a)(i) of the Income Tax Act, 1961.