SHREE VEERABHADRESHWAR CREDIT SOUHARDA SAHAKARI SANGH NIYAMIT,VIJAYAPUR V. INCOME TAX OFFICER WARD 1 BIJAPUR, VIJAYAPUR

ITA 448/BANG/2025

AI Insights

The case involves Shree Veerabhadreshwara Credit Souharda Sahakari Sangh Niyamit, a cooperative society engaged in banking and credit facilities, which appealed against the decision of the CIT(Appeals)-2, Pune. The CIT(A) had dismissed the assessee's appeal for non-prosecution and on merits, denying a deduction under section 80P of the Income Tax Act for the assessment year 2017-18. The primary legal issue was whether the assessee, registered under the Karnataka Souharda Sahakari Act, 1997, qualifies for deductions under section 80P(2)(a)(i) of the Act, which pertains to cooperative societies. The Tribunal, referencing decisions from the Karnataka High Court and the Supreme Court, concluded that the assessee is indeed a cooperative society and entitled to the deduction.

• Counselvise Citation: [2025] 140 COUNSELVISE.COM (IT) 717230 (ITAT-BANGALORE)
• Duration Of Justice: 5 month(s) 13 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 11-08-2025
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: SMC
• Assessment Year: 2017-2018
• Appeal Filed On: 28-02-2025
• Other Referred Cases: Government of India Ministry of Finance v. Karnataka State Souharda Federal Co-operative Ltd., Mavilayi Service Co-operative Bank Ltd. v. CIT
• Laws Referred To: Income Tax Act
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: REVENUE; GANESH R GHALE; STANDING COUNSEL REVENUE
• Assessee Lawyers: CHETAN CHOUGULE

Judgement Text

" IN THE INCOME TAX APPELLATE TRIBUNAL “SMC” BENCH : BANGALORE BEFORE SHRI PRASHANT MAHARISHI, VICE PRESIDENT ITA No.448/Bang/2025 Assessment year : 2017-18 Shree Veerabhadreshwara Credit Souharda Sahakari Sangh Niyamit, L.No.74, LBC Market, 1st Floor, Vijayapura – 586 101. PAN: AAGAS 7184J Vs. The Income Tax Officer, Ward 1, Bijapur. APPELLANT RESPONDENT Appellant by : Shri Chetan Chougule, CA Respondent by : Shri Ganesh R Ghale, Standing Counsel for Revenue Date of hearing : 12.06.2025 Date of Pronouncement : 11.08.2025 O R D E R 1. This appeal is filed by Shree Veerabhadreshwara Credit Souharda Sahakari Sangh Niyamit (the assessee/appellant) for the assessment year 2017-18 against the appellate order passed by the CIT(Appeals)-2, Pune [ld. CIT(A)] dated 18.12.2024 wherein the appeal filed by the assessee against the assessment order dated 02.11.2019 passed by the ITO, Ward 1, Bijapur, was dismissed. Printed from counselvise.com ITA No.448/Bang/2025 Page 2 of 4 2. The ld. CIT(A) has dismissed the appeal of the assessee primarily for non-prosecution and further decided on the merits of the case that assessee is not entitled to deduction u/s. 80P of the Act of Rs.12,56,381. Thus, assessee is aggrieved. In substance, the only ground raised is that assessee is entitled to deduction u/s. 80P of the Act. 3. Briefly stated the facts show that assessee is a co-operative society doing the business of banking and providing credit facilities to its members, filed its return of income on 31.10.2017 declaring total income at NIL after claiming deduction u/s. 80P of the Act at Rs.13,06,381. The case of assessee was selected for limited scrutiny to examine the deduction and necessary notices were issued and served upon the assessee. Assessee was specifically asked that it is not eligible for deduction u/s. 80P(2)(a)(i) of the Act because of the reason that assessee is registered under the Karnataka Souharda Sahakari Act, 1997, hence net profit of Rs.13,06,381 declared by the assessee is not eligible for deduction u/s. 80P(2)(a)(i) of the Act. Accordingly assessment order was passed assessing total income of assessee at Rs.12,56,381 by assessment order dated 12.11.2019. 4. The assessee challenged the same before the ld. CIT(A) who dismissed the appeal of assessee, as assessee was given 5 opportunities for hearing but did not avail any of them. Therefore on the merits also, the ld. CIT(A) confirmed the action of the ld. AO. The ld. CIT(A) also stated that assessee is not interested in prosecuting the appeal. Printed from counselvise.com ITA No.448/Bang/2025 Page 3 of 4 5. After hearing both the sides, I find that the solitary issue in this appeal is that when assessee registered under the Karnataka Souharda Sahakari Act, 1997 is not co-operative society and therefore it is not eligible for deduction u/s. 80P of the Act for the reason that the definition of Co-operative Society provided u/s. 2(19) of the I.T. Act does not cover it. 6. I find that this issue is covered in favour of the assessee by the decision of Hon’ble Karnataka High Court in the case of Government of India Ministry of Finance v. Karnataka State Souharda Federal Co-operative Ltd. 138 taxmann.com 170 wherein considering the provisions section 2(19) r.w.s. 80P of the Act, it was held that once the entities are once the entities are governed by the Co-operative Principles under the law in force and registered under the State enactment, which by implication or otherwise shall only have a same meaning of co-operative society, they are entitled to deduction u/s. 80P of the At. The Hon’ble High Court further held that The Souharda Act and the Co-operative Societies Act, 1959 are both in force in the State of Karnataka and are regulated by the State Registrar of Co-operatives Karnataka. Though the aforesaid two Acts are parallel but are in respect of co-operatives in the State as the name suggests. Therefore, assessee is entitled to deduction u/s. 80P of the Act. The Hon’ble High Court also considered the decision of Hon’ble Supreme Court in the case of Mavilayi Service Co-operative Bank Ltd. v. CIT [2021] 123 taxmann.com 161 and Printed from counselvise.com ITA No.448/Bang/2025 Page 4 of 4 followed it. In view of this, the order of the ld. lower authorities are not sustainable and assessee is eligible for deduction u/s. 80P of the Act. The ld. AO is directed to grant deduction u/s. 80P of the Act to the assessee. 7. The ld. CIT(A) has also decided the issue on the merits of the case, we also decide this issue on the merits and allow the appeal of the assessee. Accordingly all the grounds of appeal of the assessee are allowed. 8. In the result, the appeal of the assessee is allowed. Pronounced in the open court on this 11th day of August, 2025. Sd/- ( PRASHANT MAHARISHI ) VICE PRESIDENT Bangalore, Dated, the 11th August, 2025. /Desai S Murthy / Copy to: 1. Appellant 2. Respondent 3. Pr. CIT 4. CIT(A) 5. DR, ITAT, Bangalore. By order Assistant Registrar ITAT, Bangalore. Printed from counselvise.com "