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TMI Blog2021 (4) TMI 459X X X X Extracts X X X X X X X X Extracts X X X X ..... fferent orders of CIT(A) for the Assessment Year 2011-12 and 2013-14. The assessee has raised the following grounds: 1. The order of the Learned Commissioner of Income Tax (Appeals)-5 is not justified in law and on facts and circumstances of the case, in so far as it is against the Appellant. 2. The Ld. CIT(A)-5 is not justified in denying the deduction u/s 80P(2)(a)(i) for the Appellant. CIT(A) has erred in not considering the appellant as a Co-operative Society entitled for the deduction u/s 80P(2)(a)(i). 3. Without prejudice, the Ld. AO must record his reasons as per sub section (2) of section 148 before issuing any notice u/s 148. Despite formal written request by the Appellant vide letter dated 05.04.2018, the AO has not provided reasons in writing as to why the income chargeable to tax has escaped assessment for the year in question. As the AO has not adhered to strict procedure mandated by the law in this regard, the notice and the assessment order both have to be disregarded and set aside. 4. Without prejudice to the above, the Learned AO has wrongfully initiated action under section 147 beyond four years from the end of the relevant assessment year, with ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... favour of the assessee but in the case of PCIT and Another Vs. Totagars Cooperative Sale Society (supra), it was found that the amount deposited in bank was out of assessee's liability and not out of assessee's own funds and therefore, this issue was decided against the assessee. The bench observed that there is no finding of any of the authorities below on this factual aspect and therefore, it is proper to restore back the matter to the file of CIT(A) for fresh decision 'after examining the facts of present case in the light of these two judgements of Hon'ble Karnataka High Court. The Id. AR of assessee agreed to this proposition put forward by the bench. The Id. DR of revenue submitted that on this aspect, he is also in agreement with the proposition put forward by the bench but when the matter is restored back to the file of CIT(A), he Should be directed to examine the applicability of the judgement of Hon'ble Apex Court rendered in the case of The Citizen Co-operative Society Ltd. Vs. ACIT as reported in 397 ITR 1 also because as per page no. 15 of the paper book, it is shown in the Income and Expenditure Account of the assessee for the present year that as ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n appeal before us. 6. We have heard both the parties and perused the material on record. In our opinion the issue is squarely covered by the Tribunal order of SMC, Bangalore Bench in the case of Saptagiri Pattina Souharda Sahkari Niyamitha in ITA No.2319/Bang/2019 dated 31.01.2020 relating to Assessment Year 2016-17, wherein it was held as follows: 2. Briefly stated the facts of the case are that the assessee is a Souharda Co-operative registered under The Karnataka Souharda Sahakari Act, 1997 and provides credit facilities to its members. The assessment order u/s 143(3) of the I.T.Act for assessment year 2016-2017 was passed on 17.12.2018 raising a demand of ₹ 23,45,495 with total addition of ₹ 54,18,036. The assessee has claimed deduction u/s 80P of the I.T.Act, which was disallowed by the Assessing Officer by observing as under:- 4.1 The AO during the course of scrutiny proceedings has observed that he claimed a deduction of₹ 54,lB,036/- u/s 80P(2).According to the AO, the benefit of deduction u/s.80P(2)(a)(i) of the Act was available only to a co- operative society and since the Assessee is only a Souharda Sahaks registered under the Karnataka S ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... entity registered under the Karnataka Souharda Sahakari Act, 1997 fits into the definition of co-operative society as enacted by sec. 2(19) of the Income Tax Act, 1961 for the purpose of section 80P thereof? 4.1 The Hon'ble High Court answered the above question as follows:- 5. Having heard the learned counsel for the parties and having perused the petition papers, this Court is of a considered' opinion that the answer to the above question needs to be in the affirmative for the following reasons: (a) sec.80P of the I.T. Act provides for deduction in respect of income of Co-operative Societies is obvious going by its' very text; sub-section (1) of said section reads as under: 80P. (1) Where, in the case of an assessee being a 'co- operative society, the gross total income includes any income referred to in sub-section (2), there shall be deducted, in accordance with and subject to the provisions of this section, the sums specified in subsection (2) in computing the total income of the assessee. The other provisions of this section being not of much relevance to the question being treated, are not reproduced, although they too hav ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... INDIA, AIR 1989 SC 516; Chapter X of 1997 Act containing sec.67 enacts important cooperative principles that animate and brood through almost all the provisions of this Act; (d) the Karnataka Souharda Sahakari Bill, 1997 has the following as the Statement of Objects Reasons: 1. the recognition, encouragement and voluntary formation of cooperatives based on self help, mutual aid, wholly owned, manaqed and controlled by members as accountable, competitive, selfreliant and economic enterprises guided by co-operative principles specified therein; 2. removing all kinds of restrictions that have come to clog the free functioninq of the co-operatives and the controls and interference by the Government except registration and cancellation; 3. promotion of subsidiary orqanization, partnership between cooperatives and also collaboration between co-operatives and other institutions; 4. registration of' co-operatives, union co-operatives and Federal Co-operative in furtherance of the objectives specified above; 5. Conversion of co-operative societies registered under the Karnataka Co-operative Societies Act, 1959 as a cooperative under the proposed legislat ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the word (co-operative' is employed not as an adjective but as a noun; the definition of other relative concepts in. the dictionary clauses of these Acts strengthens this view: this apart, sec.7 of the 1997 Act provides that the entity registered as a 'co-operative' shall be a body corporate, notwithstanding the conspicuous absence of the word 'society' as a postfix; sec.9 of the 1959 Act makes the entity once registered u/s.8 thereof a body corporate; both the entities have perpetual succession by operation of law; thus on registration be it under the 1959 Act or the 1997 Act, a legal personality is donned by them, so that inter alia they can own and possess the property; (f) the employment of the word Sahakari in the very title of the 1997 Act is also not sans any significance; Kannada which means 'co-operation'; as already mentioned above both the 1959 Act and the 1997 Act employ this terminology; the 1997 Act is woven with the principles of co-operation; sec.4 of this Act bars registration of an entity unless its main objects are to serve the interest of the members in the area of co-operation and its bye-laws provide for economic and social. ..... 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