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Is a taxpayer eligible for deduction u/s 80P of the Income Tax Act if it is registered under the Karnataka Souhardha Sahakari Act, 1997?


Court :
ITAT Bangalore

Brief :
This appeal at the instance of the assessee is directed against the CIT(A)�s order dated 07.06.2021. The relevant assessment year is 2017-2018.

Citation :
ITA No.360/Bang/2021: Asst.Year 2017-2018

Before Shri George George K, Judicial Member
ITA No.360/Bang/2021: Asst.Year 2017-2018

Shri Mathaji Vividoddesha
Souharda Sahakari Niyamitha
No.126, I Main, Sheshadripuram
Bangalore – 560 020.


The Income Tax Officer
Ward 2(2)(1)

Appellant by : Sri.Prakash Hegde, CA
Respondent by : Sri.Ganesh R.Ghale, Standing Counsel

Date of Hearing : 14.09.2021
Date of Pronouncement : 20.09.2021


The brief facts of the case are as follows:-
The assessee is a society registered under the Karnataka Souhardha Sahakari Act, 1997. The main object of the assessee-society is to provide credit facilities to its members. For the assessment year 2017-2018, the assessee-society filed return of income on 31.10.2017 declaring total income at `Nil’. The assessment was taken up for scrutiny and the assessment was completed u/s 143(3) of the I.T.Act, vide order dated 19.12.2019. In the assessment order, the Assessing Officer assessed the income at Rs.45,24,811 after disallowing the deduction u/s 80P(2)(a)(i) of the I.T.Act. The solitary reason or the Assessing Officer to deny the benefit of deduction u/s 80P(2)(a)(i) of the I.T.Act was that the assesseesociety was not registered under the Co-operative Societies Act but only under the Karnataka Souhardha Sahakari Act, 1997.

2. I have heard rival submissions and perused the material on record. The sole reason for the Assessing Officer to hold that the assessee is not entitled to the benefit of deduction u/s 80P of the I.T.Act was that, the assessee was only registered under the Karnataka Souhardha Sahakari Act, 1997, and therefore, was not a co-operative society within the purview of section 2(19) of the I.T.Act. The Hon’ble Karnataka High Court in the case of M/s.Swabhimani Souharda Credit Co-operative Ltd. (supra) had decided an identical issue and held that the entities registered under the Karnataka Souharda Sahakari Act, 1997, fit into the definite term “Cooperative Society”.

3. In the instant case, since the A.O. has decided the issue against the assessee solely for the reason that the assessee is not a Co-operative Society because it is registered under the  Karnataka Souhardha Sahakari Act, 1997, I am of the view that the matter needs to be examined afresh by the A.O. The A.O. is directed to examine afresh the claim of deduction u/s 80P of the I.T.Act, in light of the judgment of the Hon’ble jurisdictional High Court in the case of Swabhimani Souharda Credit Co-operative Ltd. v. GOI (supra). It is ordered accordingly.

4. In the result, the appeal filed by the assessee is allowed for statistical purposes.
Order pronounced on this 20th day of September, 2021.

Please find attached the enclosed file for the full judgement


Poojitha Raam
on 02 October 2021
Published in Income Tax
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