Case Note & Summary
The appellant, Venugram Multipurpose Co-operative Credit Society Ltd., is a co-operative credit society registered under the Karnataka Co-operative Societies Act, 1959. It filed its return of income for the assessment year 2010-11 claiming deduction under Section 80P(2)(a)(i) of the Income Tax Act, 1961, which provides for deduction in respect of income of a co-operative society engaged in providing credit facilities to its members. The Assessing Officer, by order dated 31.10.2012, rejected the claim on the ground that the society was not registered under the Karnataka Souharda Co-operative Act, 1997, and therefore not entitled to the deduction. The First Appellate Authority, by order dated 07.10.2013, and the Income Tax Appellate Tribunal, Panaji Bench, by order dated 17.04.2014, upheld the Assessing Officer's order. The assessee then filed an appeal under Section 260A of the Income Tax Act, 1961 before the High Court of Karnataka. The High Court, after hearing the parties, framed the substantial question of law as to whether the appellant is entitled to deduction under Section 80P(2)(a)(i) of the Act. The court noted that the only reason for denial was the registration under the Karnataka Co-operative Societies Act, 1959 instead of the Karnataka Souharda Co-operative Act, 1997. The court held that the deduction under Section 80P(2)(a)(i) is available to all co-operative societies, regardless of the specific State Act under which they are registered, as long as they are engaged in providing credit facilities to their members. The court allowed the appeal, set aside the orders of the authorities below, and directed the Assessing Officer to grant the deduction under Section 80P(2)(a)(i) of the Act.
Headnote
A) Income Tax - Deduction under Section 80P(2)(a)(i) - Co-operative Society - Registration under State Act - The appellant, a co-operative credit society registered under the Karnataka Co-operative Societies Act, 1959, claimed deduction under Section 80P(2)(a)(i) of the Income Tax Act, 1961. The Assessing Officer, First Appellate Authority, and Tribunal denied the benefit on the ground that the society was not registered under the Karnataka Souharda Co-operative Act, 1997. The High Court held that registration under the Karnataka Co-operative Societies Act, 1959 does not disentitle the society from claiming deduction under Section 80P(2)(a)(i) of the Income Tax Act, 1961, as the deduction is available to all co-operative societies engaged in providing credit facilities to its members. The court allowed the appeal and directed the Assessing Officer to grant the deduction. (Paras 1-5)
Issue of Consideration
Whether the appellant, a co-operative credit society registered under the Karnataka Co-operative Societies Act, 1959, is entitled to deduction under Section 80P(2)(a)(i) of the Income Tax Act, 1961.
Final Decision
The High Court allowed the appeal, set aside the orders of the Assessing Officer, First Appellate Authority, and Tribunal, and directed the Assessing Officer to grant deduction under Section 80P(2)(a)(i) of the Income Tax Act, 1961 to the appellant.
Law Points
- Section 80P(2)(a)(i) of Income Tax Act
- 1961
- deduction for co-operative societies
- registration under State Co-operative Societies Act
- Karnataka Co-operative Societies Act
- 1959
