2018 (10) TMI 1028 - AT - Income Tax

Denial of deduction claimed u/s 80P(2) - appellant is a Co-Operative Bank or not? - assessee was registered under Souhardha Sahakari Act as co-operative but the assessee claimed it to be co-operative society registered under Karnataka Souhardha Sahakari Act 1977 for claiming deduction u/s 80P - Held that - Having carefully examined the orders of the authorities below in the light of the Tribunal order in the case of Udaya Souharda Credit Co-operative Society Limited 2018 (8) TMI 1063 - ITAT BANGALORE , we find that though argument was not raised earlier but it goes to the root of the case as it is to be ascertained whether the assessee is entitled for deduction u/s 80P and in the similar circumstance, the Tribunal has restored the matter back to the file of the AO in the case above. We set aside the order of the CIT(A) and restore the matter to the file of the AO to re-adjudicate the claim of the assessee in the light of aforesaid order of the Tribunal to ascertain as to whether the assessee is entitled for deduction u/s 80P or not before going on merit. - Decided in favour of assessee for statistical purposes.

Summary

Issues:
Denial of deduction claimed u/s 80P(2) of the Income Tax Act due to registration under Souhardha Sahakari Act as a cooperative society.

Analysis:
The appeal was filed against the order of the Commissioner of Income-tax (Appeals) for the assessment year 2012-13. The main issue revolved around the denial of deduction claimed under section 80P(2) of the Act. The assessee, registered under Souhardha Sahakari Act as a cooperative, claimed to be a cooperative society under the Karnataka Souhardha Sahakari Act 1977 for the purpose of deduction under section 80P. The Tribunal referred to a similar case involving the registration under the Karnataka Souhardha Sahakari Act and directed the matter to be sent back to the Assessing Officer (AO) to determine the impact of registration and the eligibility for deduction under section 80P.

The Counsel for the assessee argued that the Revenue had not previously examined the aspect of registration under the Karnataka Souhardha Sahakari Act and should not be allowed to raise new arguments at this stage. However, the Tribunal found that the issue was crucial to ascertain the eligibility for deduction under section 80P. The Tribunal highlighted the distinction between cooperatives and cooperative societies under the Karnataka Co-operative Societies Act and the Karnataka Souharda Sahakari Act. The Tribunal noted that the wordings in section 80P only referred to "co-operative societies" and not "co-operatives."

The Tribunal delved into the definitions of cooperatives and cooperative societies under the Acts, emphasizing that they were distinct entities. It noted the possibility of conversion between the two as per the provisions of the respective Acts. The Tribunal examined the certificate of registration granted to the assessee and found it registered as a cooperative under the Karnataka Souhardha Sahakari Act, not as a cooperative society under the Karnataka Co-operative Societies Act. The Tribunal concluded that without proper registration under the Co-operative Societies Act, the claim of being a cooperative society could not be allowed under section 80P.

Based on the findings and the legal interpretations, the Tribunal set aside the order of the Commissioner of Income-tax (Appeals) and directed the matter to be reconsidered by the Assessing Officer in light of the legal provisions and the Tribunal's decision. The appeal of the assessee was allowed for statistical purposes, and the order was pronounced in open court on 15th October 2018.