2020 (2) TMI 838 - HC - Income Tax

Benefit of Section 80P - petitioner is seeking for prayer to treat it as Co-operative on par with Co-operative registered under the Karnataka Cooperative Societies Act 1959 - HELD THAT - Identical issue had come-up in M/S. SWABHIMANI SOUHARDA CREDIT CO. OPERATIVE LTD 2020 (1) TMI 831 - KARNATAKA HIGH COURT - The respondents to pass fresh assessment order treating the petitioner as Co-operative Society and extending the benefit under Section 80P

Summary

Issues:
1. Interpretation of the term "Co-operative" in Section 2(19) of the Income Tax Act, 1961.
2. Applicability of Section 80P of the Income Tax Act, 1961 to entities registered under the Karnataka Souharda Sahakari Act, 1997.
3. Comparison between entities registered under the Karnataka Souharda Sahakari Act, 1997 and Co-operative Societies registered under the Karnataka Cooperative Societies Act, 1959.

Analysis:
1. The petitioner, a credit society registered under the Karnataka Souharda Sahakari Act, 1997, approached the High Court seeking a declaration that the term "Co-operative" in Section 2(19) of the Income Tax Act, 1961 applies to all co-operatives, including those defined under the 1997 Act. The petitioner sought to be treated as a Co-operative on par with societies registered under the 1959 Act and to avail the benefits of Section 80P of the 1961 Act. This issue was previously considered by the Principal Bench of the High Court in a related case.

2. The Principal Bench, after analyzing Section 80P of the 1961 Act, the provisions of the 1997 Act, and the 1959 Act, held that entities registered under the Karnataka Souharda Sahakari Act, 1997 fall within the definition of "co-operative society" under Section 2(19) of the Income Tax Act, 1961. Consequently, the petitioners were deemed entitled to claim the benefits under Section 80P of the Act. The court quashed the impugned notice and left other provisions of Section 80P to be addressed by the relevant authorities.

3. The question before the court was whether the petitioner society under the 1997 Act should be treated similarly to Co-operative Societies registered under the 1959 Act and be eligible for the benefits under Section 80P of the 1961 Act. Following the decision of the Principal Bench in the related case, the court disposed of the present writ petitions. The assessment order was quashed, and the respondents were directed to issue a fresh assessment treating the petitioner as a Co-operative Society and extending the benefits under Section 80P of the 1961 Act, subject to exceptions as observed in the previous order.

4. With the main petitions disposed of, any pending Interlocutory Applications (IAs) were also considered disposed of. The judgment clarified the applicability of Section 80P to entities registered under the Karnataka Souharda Sahakari Act, 1997, aligning them with the benefits accorded to Co-operative Societies under the Income Tax Act, 1961.