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

ITA 572/BANG/2025

AI Insights

The case involves an appeal by Kodachadri Patina, Souharda Sanhakari Niyamitha against the order of the CIT(A)-11, Bengaluru, which denied the benefit of deduction under section 80P of the Income Tax Act for the assessment year 2016-17. The primary contention was whether the assessee, registered under the Karnataka Souharda Society Act 1997, qualifies as a 'co-operative society' under section 2(19) of the Income Tax Act, thereby eligible for deductions under section 80P. The CIT(A) had partially allowed the appeal but distinguished the case based on specific facts, leading to the current appeal. The Tribunal referenced a similar case and decision by the Karnataka High Court, which supported the assessee's position, and remanded the matter back to the AO for re-evaluation in light of these precedents.

• Counselvise Citation: [2025] 140 COUNSELVISE.COM (IT) 705521 (ITAT-BANGALORE)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 02-07-2025
• Appeal Filed By: Assessee
• Order Result: Allowed
• Assessment Year: 2016-2017
• Other Referred Cases: Mysore Credit Souharda Co-operative Society Ltd. Vs. ITO, Swabhimani Souharda Credit Co-operative Ltd. Vs. ITO
• Laws Referred To: Karnataka Souharda Society Act 1997, Income Tax Act
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: GANESH R GHALE; STANDING
• Assessee Lawyers: THARUN KOTHARI
• Keywords: Set aside

Judgement Text

" IN THE INCOME TAX APPELLATE TRIBUNAL ‘SMC’ BENCH, BANGALORE BEFORE SHRI WASEEM AHMED, ACCOUNTANT MEMBER AND SHRI KESHAV DUBEY, JUDICIAL MEMBER ITA No. 572/Bang/2025 Assessment Year: 2016-17 Kodachadri Patina, Souharda Sanhakari Niyamitha, Ground Floor, Rathna Arcade, Kuvempu Road, Shimogga – 577 201. PAN – AABAK 5339 C Vs. The Income Tax Officer, Ward - 3, Shimoga. . APPELLANT RESPONDENT Assessee by : Shri Tharun Kothari, Advocate Revenue by : Shri Ganesh R Ghale, Advocate for Standing Counsel Date of hearing : 18.06.2025 Date of Pronouncement : 02.07.2025 O R D E R PER WASEEM AHMED, ACCOUNTANT MEMBER: 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. 2. 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. ITA No.572/Bang/2025 Page 2 of 4 . 2.1 The assessee in the present case is a society registered under Karnataka Souharda Society Act 1997. As per the AO, the assessee is not eligible for deduction u/s 80P of the Act as it is registered under Souharda Society Act 1997. Therefore, the AO disallowed the deduction claimed by the assessee amounting to Rs. 47,04,774/- and added to the total income of the assessee. 3. 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.” 4. Being aggrieved by the order of ld. CIT(A), the assessee is in appeal before us. 5. 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 ITA No. 1437/Bang/2024 dated 25-10-2024. Accordingly, the ld. AR submitted that similar direction can be given in the case on hand. ITA No.572/Bang/2025 Page 3 of 4 . 6. On the other hand, the ld. DR vehemently supported the order of the authorities below: 7. 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: “23. A comprehensive reading of the Preambles of the aforesaid Acts vis-a-vis objects and reasons would indicate that both the Statutes support and promote Co-operative movement. No hyper technical view can be taken to exclude the entities registered under the Souharda Act as not falling under the definition of 'Co-operative Society' as defined in Section 2[19] of the Act. Now, it is further clarified by the Amendment Act No.35/2021 brought out to Section 2[eJ of the Souharda Act by substitution whereby 'Co-operative' means a Souharda Cooperative Society including a Co-operative bank during the business of banking registered or deemed to be registered under Section 5 and which has the words 'Souharda Co- operative Society' in its name and for the purposes of the income Tax Act, 1961 also amongst other enactment specified therein. By substituting all wigs the others \"The income lax Act, 1961 \" it has been clarified that for the purpose of the Income Tax Act, Cooperative under Souharda Act is a Co- operative Society as such, the assesses are entitled for the benefit of Section 80P of the Income Tax Act, 1961. In the absence of any specified date mentioned, the Amended Act certainly relates back to the date of enactment.\" 8.1 In view of the above, we hold that the assessee cannot be denied the benefit of the deduction under section 80P of the Act merely on the ground that it is registered under The Karnataka Souhardra Sahakari Act 1997. Accordingly, we hold that the assessee is entitled for deduction under ITA No.572/Bang/2025 Page 4 of 4 . section 80P of the Act. Hence, ground of appeal of the assessee is allowed.” 7.1 The facts of the case on hand are identical to the facts of the case discussed above, therefore, respectfully following the same, we set aside the issue to the file of the AO to decide the dispute after considering the finding in the case cited above. Hence, the ground of appeal of the assessee is allowed for statistical purposes. 8. In the result, the appeal of the assessee is allowed for statistical purposes. Order pronounced in court on 2nd day of July, 2025 Sd/- Sd/- (KESHAV DUBEY) (WASEEM AHMED) Judicial Member Accountant Member Bangalore Dated, 2nd July, 2025 / vms / Copy to: 1. The Applicant 2. The Respondent 3. The CIT 4. The CIT(A) 5. The DR, ITAT, Bangalore. 6. Guard file By order Asst. Registrar, ITAT, Bangalore "