RATNATRAYA URBAN CREDIT SOUHARD vs. THE INCOME TAX OFFICER

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WP/116056/2019HC KarnatakaKAHC02004221201906 February 2020Bench: S G PANDIT6 pages
AI SummaryAllowed

What did the High Court hold?

The High Court 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, they are entitled to claim the benefits of Section 80P, subject to other legal exceptions.

What were the facts?

The petitioner, a Credit Souharda Sahakari Niyamita registered under the Karnataka Souharda Sahakari Act, 1997, sought to be treated as a co-operative society under the Income Tax Act, 1961. They aimed to avail the benefits of Section 80P of the Act.

What were the issues?

Whether an entity registered under the Karnataka Souharda Sahakari Act, 1997, qualifies as a 'co-operative society' under the Income Tax Act, 1961, for the purpose of claiming deductions under Section 80P.

Which sections of the Income-tax Act were involved?

Section 2(19),Section 80P

AI-generated summary — verify with the full judgment below

IN THE HIGH COURT OF KARNATAKA, DHARWAD BENCH DATED THIS THE 06TH DAY OF FEBRUARY, 2020 BEFORE

THE HON’BLE MR.JUSTICE S.G. PANDIT

WRIT PETITION NO.116056/2019 (T-IT)

BETWEEN:

RATNATRAYA URBAN CREDIT SOUHARD SAHAKARI LIMITED, SHEDBAL, TQ: ATHANI-591315, DIST: BELAGAVI, REP. BY ITS SECRETARY, SRI.GURUPAD JIRAGALE S/O BHARMU ANAPPA, AGED ABOUT: 53 YEARS.

... PETITIONER

(BY SRI. H R KAMBIYAVAR & SMT. PATRI SHASHIKALA K AND SMT. ROOPA S CHINIWAR, ADVS.)

AND

1.

THE INCOME TAX OFFICER WARD-1, KIMJI BAI BUILDING, OPP-CIVIL HOSPITAL, BELAGAVI-590001.

2.

CENTRAL BOARD OF DIRECT TAXES, NORTH BLOCK, NEW DELHI-110001, REP. BY ITS CHAIRPERSON.

3.

MINISTRY OF FINANCE REVENUE DEPARTMENT, NORTH BLOCK, NEW DELHI-110001, REP. BY ITS UNDER SECRETARY.

4.

GOVERNMENT OF KARNATAKA CO-OPERATION DEPARTMENT, KARNATAKA GOVERNMENT SECRETARIAT,

2 ROOM NO.610, 3RD GATE, 6TH FLOOR, M.S. BUILDING, DR.AMBEDKAR VEEDHI, BENGALURU-560001, REP. BY ITS SECRETARY.

5.

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-R3) (SMT. VEENA HEGDE, AGA FOR R4 AND R5)

THIS WRIT PETITION IS FILED UNDER ARTICLES 226 AND 227 OF THE CONSTITUTION OF INDIA PRAYING TO (a) TO DECLARE THAT THE WOR “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 SAHAKARI ACT, 1997 BY HARMONIOUS CONSTRUCTION OF BOTH THE ENACTMENTS AND CONSEQUENTLY ISSUE A WRIT OF CERTIORARI TO QUASH THE IMPUGNED ORDER BEARING NO. ITBA/AST/S/143(3)/2019-20/1020415643(1) DATED 14.11.2019, ALONG WITH NOTICE OF PENALTY BEARING NO. ITBA/PNL/S/270A/2019-20/1020415756(1) DATED 14.11.2019, VIDE ANNEXURE-F, WAS 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 of demand issued under Section 156 of the 1961 Act as well as to quash Annexure-F, assessment order dated 14.11.2019. 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 WP No.48414/2018 and connected writ petition,

4 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 said Act; a Writ of Certiorari issues quashing the impugned notice dated 30.3.2018 at

5 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 Societies 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-F, assessment order dated 14.11.2019 is set-aside. The respondent No.1 to pass fresh assessment order treating the petitioner as Co-operative

6 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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