ALNAVAR CREDIT SOUHARDA V. THE UNION OF INDIA

WP/116022/2019

AI Insights

The case revolves around the classification of Alnavar Credit Souharda Co-operative Limited under the Income Tax Act, 1961, specifically concerning its eligibility for tax exemptions under Section 80P. The petitioner argued that it should be recognized as a cooperative society as defined under the Karnataka Souharda Sahakari Act, 1997, and thus entitled to the same benefits as those granted to societies under the Karnataka Cooperative Societies Act, 1959. The High Court referenced a similar case (WP No.48414/2018) where it was previously determined that entities registered under the Karnataka Souharda Sahakari Act, 1997 do fit into the definition of 'co-operative society' under Section 2(19) of the Income Tax Act, 1961.

• Counselvise Citation: [2020] 140 COUNSELVISE.COM (IT) 739137 (HC-KARNATAKA)
• Appeal Type: Others
• Pronouncement Date: 05-02-2020
• Assessment Year: misc
• Other Referred Cases: WP No.48414/2018
• Laws Referred To: Constitution of India, Income Tax Act, 1961, Karnataka Souharda Sahakari Act, 1997, Karnataka Co-operative Societies Act, 1959
• Result in Favour of: Others
• Court: HIGH COURT
• Department Lawyers: M B KANAVI; Y V RAVIRAJ; VEENA HEGDE
• Assessee Lawyers: F V PATIL; NANDISH PATIL
• Keywords: Assessment Order; Co-operative Society; Income tax exemption; Legal interpretation
• Section: 80P(2)(a)(i); 226; 227; 1(19)

Judgement Text

"IN THE HIGH COURT OF KARNATAKA, DHARWAD BENCH Dated this the 5th day of February 2020 Before THE HON’BLE MR.JUSTICE S.G. PANDIT Writ Petition No.116022 of 2019 (T-IT) BETWEEN ALNAVAR CREDIT SOUHARDA CO-OPERATIVE LIMITED, INDIRA NAGAR, ALNAVAR, TQ: ALNAVAR, DIST: DHARWAD, REP. BY ITS CHIEF EXECUTIVE, SHRI.ASHOK GURSHIDAPPA BYAHATTI, AGE: 68 YEARS, OCC: CEO, R/O :RAJATGIRI, DHARWAD-580001. ...PETITIONER (BY SRI. F.V. PATIL & SRI NANDISH PATIL, ADVOCATES) A N D 1. THE UNION OF INDIA REP. BY ITS SECRETARY, MINISTRY OF FINANCE, RAJPATH MARG, E BLOCK, CENTRAL SECRETARIAT, NEW DELHI, DELHI-110011. 2. THE GOVERNMENT OF INDIA MINISTRY OF FINANCE, INCIOME TAX DEPARTMENT, MAYUR BHAWAN, CONNAUGHT LANE, 2 CONNAUGHT PLACE, NEW DELHI, DELHI-110001. 3. THE INCOME TAX OFFICER WARD NO.1 (7 HUBLI), HUBBALLI, TQ: HUBBALLI, DIST: DHARWAD-580001. 4. THE STATE OF KARNATAKA REP. BY ITS PRINCIPAL SECRETARY, DEPARTMENT OF CO-OPERATION, M.S. BUILDING, AMBEDKAR VEEDHI, BENGALURU-560001. ...RESPONDENTS (BY SRI. M.B. KANAVI, ADVOCATE FOR R1 SRI. Y.V. RAVIRAJ, ADVOCATE FOR R2 & R3 SMT. VEENA HEGDE, AGA FOR R4) THIS WRIT PETITION IS FILED UNDER ARTICLES 226 AND 227 OF THE CONSTITUTION OF INDIA PRAYING TO DECLARE THAT THE INTERPRETATION ADOPTED BY THE 3RD RESPONDENT STATING THAT THE CO-OPERATIVE REGISTERED UNDER THE KARNATAKA SOUHARDA SAHAKARI ACT, 1997 IS NOT A CO-OPERATIVE SOCIETY WITHIN THE DEFINITION OF SECTION 1(19) OF THE INCOME TAX ACT, 1961 AND NOT ENTITLED FOR EXEMPTIONS IN TERMS OF SECTION 80P(2)(a)(i) OF THE INCOME TAX ACT, 1961 IS ARBITRARY, ILLEGAL AND UNSUSTAINABLE UNDER LAW IN TERMS OF ARTICLES 19(1)(c) AND THE CONSTITUTIONAL 97TH AMENDMENT ACT OF 2011 AND THE RELEVANT PROVISIONS CONTAINED UNDER THE KARNATAKA SOUHARDA SAHAKARI ACT, 1997; AND ISSUE WRIT IN THE NATURE OF CERTIORARI TO QUASH THE ASSESSMENT ORDER DATED 14.11.2019 NO.ITBA/AST/5/ 156/2019 20/102039911(1) THE 2ND RESPONDENT VIDE ANNEXUE-A. THIS WRIT PETITION COMING ON FOR PRELIMINARY HEARING IN ‘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 of India 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 praying to quash the Assessment Order bearing No.ITBA/AST/S/143(3)/2019- 20/1020393835(1), dated 14.11.2019 passed by the 3rd respondent vide Annexure-A. In other words, the petitioner is seeking for prayer to treat it as Co-operative on par with Co-operative 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, wherein 4 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, ‘1959 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 5 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.” 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-A, Assessment Order dated 14.11.2019 passed by the 3rd 6 respondent is set-aside. The respondent No.3 to pass fresh assessment order treating 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 Kms "