SHRI.MAHAVEER VIVIDDHODDESHAGAL vs. THE INCOME TAX OFFICER

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WP/109398/2019HC KarnatakaKAHC02000886201927 January 2020Bench: S G PANDIT6 pages
AI SummaryRemanded

What did the High Court hold?

The High Court of Karnataka, Dharwad Bench, disposed of the writ petition in terms of a prior order by the Principal Bench of the High Court of Karnataka in an identical case (WP No.48414/2018). The Principal Bench had declared that entities registered under the Karnataka Souharda Sahakari Act, 1997, fit the definition of "co-operative society" under Section 2(19) of the Income Tax Act, 1961. Consequently, such entities are entitled to claim the benefit of Section 80P of the IT Act, subject to all just exceptions. The High Court quashed the impugned notice and assessment proceedings. The operative direction was for the respondent No.1 (Income Tax Officer) to pass a fresh assessment order treating the petitioner as a Co-operative Society and extending the benefit under Section 80P, with other exceptions as observed in the earlier order. The judgment noted that other provisions of Section 80P and their effect were left to be addressed by the concerned authorities.

What were the facts?

The petitioner, Shri. Mahaveer Vividdhoddeshagal Souharda Sahakari Limited, registered under the Karnataka Souharda Sahakari Act, 1997, filed a writ petition before the High Court of Karnataka. The petitioner sought a declaration that the term "Co-operative" in Section 2(19) of the Income Tax Act, 1961, applies to entities registered under state law, including those defined under Section 2(e) of the Karnataka Souharda Sahakari Act, 1997. Consequently, the petitioner sought to quash a notice issued under Section 142(1) and 143(2) of the IT Act, and an assessment order passed under Section 143(3) for Assessment Year 2017-18 by the Income Tax Officer. The petitioner aimed to be treated as a co-operative society on par with those registered under the Karnataka Co-operative Societies Act, 1959, to avail the benefit of Section 80P of the IT Act.

What were the issues?

1. Whether an entity registered under the Karnataka Souharda Sahakari Act, 1997, fits into the definition of "co-operative society" as enacted by Section 2(19) of the Income Tax Act, 1961, for the purpose of Section 80P thereof. Assessee's Contention: The petitioner argued that the term "Co-operative" in Section 2(19) of the IT Act should be interpreted harmoniously to include co-operatives registered under the Karnataka Souharda Sahakari Act, 1997, thereby entitling them to the benefits of Section 80P. They relied on the principle of harmonious construction of statutes. Revenue's Contention: The judgment does not explicitly record arguments made by the revenue. However, the issuance of the notice and assessment proceedings under challenge implies a contention that the petitioner did not qualify as a co-operative society for the purpose of Section 80P.

Which sections of the Income-tax Act were involved?

Section 2(19),Section 80P,Section 142(1),Section 143(3)

AI-generated summary — verify with the full judgment below

IN THE HIGH COURT OF KARNATAKA, DHARWAD BENCH DATED THIS THE 27th DAY OF JANUARY, 2020 BEFORE

THE HON’BLE MR.JUSTICE S.G. PANDIT

WRIT PETITION NO.109398/2019 (T-IT)

BETWEEN:

SHRI. MAHAVEER VIVIDDHODDESHAGAL SOUHARDA SAHAKARI LIMITED, HUKKERI, TQ:HUKKERI, DIST:BELAGAVI, REP. BY ITS CHIEF EXECUTIVE OFFICER (CEO), SRI. RAJENDRA S/O TAVANAPPA PATIL, AGED ABOUT 53 YEARS.

... PETITIONER (BY SRI.H.R. KAMBIYAVAR, ADV. FOR SMT. PATRI SHASHIKALA KALLAYYA, ADVOCATE)

AND

1.

THE INCOME TAX OFFICER WARD 1, DR.BHODAGERIS HOSPITAL BUILDING, BELAGAVI ROAD, GOKAK, DIST: BELAGAVI.

2.

COMMISSIONER OF INCOME TAX GOKAK, DR. GHODIGERI’S HOSPITAL BUILIDING, BELAGAVI ROAD, GOKAK-591307.

3.

CENTRAL BOARD OF DIRECT TAXES

NORTH BLOCK, NEW DELHI-110001.

4.

MINISTRY OF FINANCE

GOVERNMENT OF INDIA,

REVENUE DEPARTMENT,

NORTH BLOCK, NEW DELHI-110001.

REP. BY ITS UNDER SECRETARY.

5.

GOVERNMENT OF KARNATAKA

CO-OPERATION DEPARTMENT,

KARNATAKA GOVERNMENT SECRETARIAT,

ROOM NO.610, 3RD GATE, 6TH FLOOR,

M.S. BUILDING, DR. AMBEDKAR VEEDHI,

BANGALORE-560001. REP. BY ITS SECRETARY.

6.

REGISTRAR OF CO-OPERATIVE SOCIETIES,

NO.1, ALI ASKER ROAD,

NEAR RAJ BHAVAN, VASANTH NAGAR,

BENGALURU-560052.

REP. BY ITS REGISTRAR.

... RESPONDENTS (BY SRI Y V RAVIRAJ, ADV. FOR R1-R4) (SMT. VEENA HEGDE, AGA FOR R5 AND R6)

THIS WRIT PETITION IS FILED UNDER ARTICLES 226 AND 227 OF THE CONSTITUTION OF INDIA PRAYING TO (A) TO DECLARE THAT THE WORD "CO-OPERATIVE" IN SECTION 2(19) OF THE IT ACT APPLIES TO ALL IDENTITIES REGISTERED UNDER THE STATE LAW INCLUDING A CO-OPERATIVE AS DEFINED UNDER SECTION 2(E) OF THE KARNATAKA SOUHARDA SAHAKAR ACT, 1997 BYN HARMONIOUS CONSTRUCTION OF BOTH THE ENACTMENTS (B) CONSEQUENTLY ISSUE A WRIT OF CERTIORARI TO QUASH THE IMPUGNED NOTICE BEARING NO.ITO/W-1/142(1)/GKK/AADAS3569C/2018-19/62, DATED 07.12.2018 ANNEXURE-"E" FURTHER ASSESSMENT PROCEEDINGS U/S 143(3) FOR THE A.Y.2017-18, BEARING NO.F.NO.SRI. MAHAVEER VIVIDDHODDESHAGAL SOUHARDA/ITO/GKK/2018-19 DATED 17.1.2019 ANNEXURE-J WERE ISSUED BY THE 1ST RESPONDENT.

THIS WRIT PETITION COMING ON FOR PRELIMINARY HEARING B GROUP THIS DAY, THE COURT MADE THE FOLLOWING:

3 ORDER

The petitioner-Credit Souharda Sahakari Niyamita registered under the Karnataka Souharda Sahakari Act, 1997 (for short, ‘1997, Act’) is before this Court under Article 226 of the Constitution praying to declare that the word “Co-operative” in Section 2(19) of the Income Tax Act, 1961 (for short, ‘1961, Act’) applies to all co- operatives including the word “co-operative” defined under Section 2(e) of the 1997 Act and consequently prayer to quash the notice issued under Section 142(1), 143(2) of the 1961 Act as well as to quash Annexure-J, assessment proceedings under Section 143(3) dated 17.1.2019. In other words, the petitioner is seeking for prayer to treat it as Co-operative on par with Co- operative registered under the Karnataka Co-operative Societies Act, 1959 and to extend the benefit of Section 80P of the 1961 Act.

2.

Identical issue had come-up before the Principal Bench, High Court of Karnataka, Bengaluru in

4 WP No.48414/2018 and connected writ petition, wherein the Court had framed following issue for its consideration: “Whether an entity registered under the Karnataka Souharda Sahakari Act, 1997 fits into the definition of “co-operative society” as enacted by Section 2(19) of the Income Tax Act, 1961 for the purpose of Section 80P thereof.

3.

After referring to Section 80P of the 1961 Act, the provisions of 1997 Act and Karnataka Co- operative Societies Act, 1959 (for short, ‘the Act’) the Principal Bench in the above said writ petitions has held as follows: “In the above circumstances, these writ petitions succeed; a declaration is made to the effect that the entities registered under the Karnataka Souharda Sahakari Act, 1997 fit into the definition of “co-operative society” as enacted in Section 2(19) of the Income Tax Act, 1961 and therefore subject to all just exceptions, petitioners are entitled to stake their claim for the benefit of Section 80P of the

5 said Act; a Writ of Certiorari issues quashing the impugned notice dated 30.3.2018 at Annexure-D in WP No.48414/2018; other legal consequences accordingly do follow. It is needless to mention that the other provisions of Section 80P of 1961 Act and their effect on the claim of the petitioner-like- societies have been left to be addressed by the concerned authorities.”

4.

The question involved in the present writ petition is also to the effect that whether the petitioner- Society registered under the 1997 Act is to be treated on par with Co-operative Society registered under the 1959 Act and whether the petitioner would be entitled for the benefit of Section 80P of the 1961 Act. The question is answered by the Principal Bench in the above writ petitions. Hence, in terms of the order dated 16.1.2020 in WP No.48414/2018 and connected writ petition, the present writ petition is disposed of. Annexure-L, assessment order dated 5.12.2019 is set-aside. The respondent No.1 to pass fresh assessment order treating

6 the petitioner as Co-operative Society extending the benefit under Section 80P of the 1961 Act, with all other exceptions as observed in order dated 16.1.2020 in WP No.48414/2018.

SD/- JUDGE JTR

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