Case Note & Summary
The Revenue appealed against the order of the Income Tax Appellate Tribunal, Panaji Bench, which had allowed the assessee's claim for deduction under Section 80P(2)(d) of the Income Tax Act, 1961, for the assessment year 2007-08. The assessee, a co-operative society, had paid profits to its members and claimed exemption. The Revenue contended that the society, being a 'person' under Section 2(31), was not entitled to such exemption. The High Court, after hearing both sides, framed the substantial question of law regarding the entitlement of the society to claim exemption on profits paid to members. The court noted that Section 80P(2)(d) specifically allows a co-operative society to deduct from its gross total income the amount of profits paid to its members. The court held that the society's status as a 'person' does not preclude it from claiming the deduction, as the provision is clear and unambiguous. Consequently, the court dismissed the Revenue's appeal, affirming the Tribunal's order.
Headnote
A) Income Tax - Co-operative Society - Exemption under Section 80P(2)(d) - The issue was whether a co-operative society, assessed as a 'person' under Section 2(31) of the Income Tax Act, 1961, is entitled to claim deduction on profits paid to its members under Section 80P(2)(d). The court held that the society is entitled to the deduction, as the provision allows deduction of profits paid to members, and the society's status as a 'person' does not bar the claim. (Paras 1-3)
Issue of Consideration
Whether a co-operative society assessed as a 'person' under Section 2(31) of the Income Tax Act, 1961, is entitled to claim exemption on profits paid to its members under Section 80P(2)(d) of the Act.
Final Decision
The High Court dismissed the Revenue's appeal, holding that the respondent-society is entitled to claim exemption on profits paid to its members under Section 80P(2)(d) of the Income Tax Act, 1961.
Law Points
- Section 80P(2)(d) of Income Tax Act
- 1961
- exemption for co-operative societies
- profits paid to members
- deduction
- person under Section 2(31)
Case Details
2016 LawText (KAR) (11) 6
Justice Ashok B. Hinchigeri, Justice P.S. Dinesh Kumar
Sri Y V Raviraj (for appellant), Sri Ashok Kulkarni and Sri H R Kambiyavar (for respondent)
The Commissioner of Income Tax, Central Revenue Building, Attavar, Mangaluru and The Income Tax Officer, Ward-2, Santeri Krujapa Building, Habbuwada, Karwar
The Nagarbail Salt-Owners Co-operative Society Limited, Sanikatte, Gokarna, Kumta-581 326
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Nature of Litigation
Appeal by Revenue against order of Income Tax Appellate Tribunal allowing deduction under Section 80P(2)(d) of Income Tax Act, 1961.
Remedy Sought
Revenue sought to set aside the Tribunal's order and confirm the Income Tax Officer's order denying exemption.
Filing Reason
Revenue challenged the Tribunal's decision allowing the assessee's claim for deduction on profits paid to members.
Previous Decisions
Income Tax Appellate Tribunal, Panaji Bench, in ITA No.252/PNJ/2014 dated 23.01.2015, allowed the assessee's claim for deduction under Section 80P(2)(d) for assessment year 2007-08.
Issues
Whether a co-operative society assessed as a 'person' under Section 2(31) of the Income Tax Act, 1961, is entitled to claim exemption on profits paid to its members under Section 80P(2)(d) of the Act.
Submissions/Arguments
Revenue argued that the society, being a 'person' under Section 2(31), is not entitled to exemption under Section 80P(2)(d).
Assessee contended that Section 80P(2)(d) specifically allows deduction of profits paid to members, and the society's status as a 'person' does not bar the claim.
Ratio Decidendi
A co-operative society, even if assessed as a 'person' under Section 2(31) of the Income Tax Act, 1961, is entitled to claim deduction under Section 80P(2)(d) on profits paid to its members, as the provision is clear and unambiguous.
Judgment Excerpts
This appeal was presented by the Revenue challenging the common order dated 23.1.2015, in I.T.A.Nos.252 to 256 & 377/PNJ/2014 so far as it relates to ITA 252/PNJ/2014 for the assessment year 2007-08.
Whether the respondent – Society assessed to tax on its income as ‘person’ as defined under Section 2(31) of Income Tax Act, 1961, is entitled to claim exemption over its profits paid to its members and claim it as ...
Procedural History
The Revenue filed an appeal under Section 260A of the Income Tax Act, 1961, before the High Court of Karnataka against the order of the Income Tax Appellate Tribunal, Panaji Bench, dated 23.01.2015, which had allowed the assessee's claim for deduction under Section 80P(2)(d) for the assessment year 2007-08. The High Court heard the appeal and reserved judgment, ultimately dismissing the appeal.
Acts & Sections
- Income Tax Act, 1961: 2(31), 80P(2)(d), 260A
