KODACHADRI PATINA SOUHARDA SAHAKARI NIYAMITHA,SHIMOGGA vs. INCOME TAX OFFICER, WARD-3, SHIMOGA

This is an appeal filed by the assessee against the order passed by the Ld. CIT(A)-11, Bengaluru dated 25/02/2025 in DIN No. ITBA/APL/ M/250/2024-25/1073686051(1) for the assessment year 2016-17.

The only issue raised by the assessee is that the ld. CIT(A) erred in denying the benefit of deduction u/s 80P of the Act.

On appeal, the ld. CIT(A) allowed the appeal of the assessee in part by observing as under: “4.9 The Hon'ble Court had held that the entities registered under the Karnataka Souharda Sahakari Act, would fit into the definition of a "co-operative society" as defined in section 2(19) of the Income Act Tax and are entitled to stake their claim for the benefit in section 80P of the Act. The decision is rendered in the context of whether the entities registered under the Souharda Act fit into the definition of the co operative societies u/s 2(19) of the Income Tax Act, 4.10 To further interpret the decision, it only makes the entities stake their claim but does not automatically make them eligible to get the benefit of the deduction provided in the Act which can be granted only if all the conditions mentioned therein are met. Hence the decision rendered in the case cited is distinguishable on facts. As already discussed, the deduction U/s 80P(2)(d) is granted only on the interest income earned from other co-operative societies but not co-operative banks.”

Being aggrieved by the order of ld. CIT(A), the assessee is in appeal before us.

The ld. AR before us submitted that the issue on hand is covered in favour of the assessee by the order of this Tribunal in the case of Mysore Credit Souharda Co-operative Society Ltd. Vs. ITO in dated 25-10-2024. Accordingly, the ld. AR submitted that similar direction can be given in the case on hand.

On the other hand, the ld. DR vehemently supported the order of the authorities below:

We have heard the rival contentions of both the parties and perused the materials available on record. At the outset, we note that this Tribunal in the case cited above involving identical facts and circumstances has decided the issue by setting aside matter to the file of the AO. The relevant extract is reproduced as under: “8. We have heard the rival contentions of both the parties and perused the materials available on record. The facts of the case have been elaborated in the preceding paragraph which are not in dispute, therefore we are not inclined to repeat the same for the sake of brevity and convenience. The limited question before us whether the assessee being registered under The Karnataka Souhardra Sahakari Act 1997 is eligible for deduction under section 80P of the Act in the given facts and circumstances. This issue has been resolved by the judgment of Hon'ble Karnataka High Court in the case of M/s Swabhimani Souharda Credit Co-operative Ltd. Vs. ITO reported in 421 ITR 670 wherein it was held as under:

In the result, the appeal of the assessee is allowed for statistical purposes.