SHRI. VITTHALRAY SOUHARDA PATTIN V. UNION OF INDIA

WP/146141/2020

AI Insights

The case involves Shri Vitthalray Souharda Pattin Sahakari Niyamit, a society registered under the Karnataka Souharda Sahakari Act, 1997, which engaged in banking and credit facilities. The petitioner challenged the assessment order by the Income Tax Officer, which denied them the status of a cooperative society under the Income Tax Act, 1961, affecting their eligibility for tax benefits under Section 80P. The High Court referenced a similar case, Writ Petition No. 48414 of 2018, and found that the petitioner should be considered a cooperative society, thus entitled to the benefits under Section 80P.

• Counselvise Citation: [2020] 140 COUNSELVISE.COM (IT) 722262 (HC-KARNATAKA)
• Appeal Type: Others
• Pronouncement Date: 10-06-2020
• Assessment Year: misc
• Other Referred Cases: M/s Swabhimani Souharda Credit Cooperative Ltd vs. Government of India, Writ Petition No. 48414 of 2018(T-TI), Writ Petition No. 108723/2018(T-IT), Writ Petition No. 118238/2020(T-IT), Writ Petition No. 2738 of 2020 (T-IT), Writ Petition No. 14381 of 2019 (T-IT)
• Laws Referred To: Karnataka Souharda Sahakari Act, 1997, Karnataka Cooperative Societies Act, 1959, Income Tax Act, 1961
• Result in Favour of: Others
• Court: HIGH COURT
• Department Lawyers: M B KANAVI; Y V RAVIRAJ; PRAVEEN UPPAR
• Assessee Lawyers: SHIVRAJ BALLOLLI; POOJA BALLOLLI
• Keywords: Assessment Order; Bank account freeze; Cooperative Society; Income Tax; Writ petition
• Section: 80P; 2(19); 226; 227

Judgement Text

"IN THE HIGH COURT OF KARNATAKA DHARWAD BENCH DATED THIS THE 10TH DAY OF JUNE, 2020 BEFORE THE HON’BLE MR. JUSTICE ASHOK G NIJAGANNAVAR WRIT PETITION NO.146141 OF 2020 (T-RES) BETWEEN: SHRI VITTHALRAY SOUHARDA PATTIN SAHAKARI NIYAMIT, HARUGERI, AT POST : HARUGERI, TQ : RAIBAG, DIST : BELAGAVI-591 220, EARLIER HAVING OFFICE AT POST KONNUR, TQ : JAMKANDI, TQ : BAGALKOT, REPRESENTED BY ITS PRESIDENT, SHRI VITHAL S/O. LAXMAN HALLUR, AGE : 53 YEARS, OCC : PRESIDENT, R/O. AT POST : HARUGERI, TQ : RAIBAG, DIST : BELAGAVI-591 220. …..PETITIONER (BY SRI SHIVARAJ S. BALLOLI, SMT.POOJA S. BALLOLI, ADVOCATES) AND: 1. UNION OF INDIA, MINISTRY OF FINANCE, RAJPATH MARG. CENTRAL SECRETARIAT, NEW DELHI-110 011, REPRESENTED BY ITS SECRETARY. 2 2. THE CENTRAL BOARD OF DIRECT TAXES, GOVERNMENT OF INDIA, DEPARTMENT OF REVENUE, MINISTRY OF FINANCE, REPRESENTED BY ITS CHAIRMAN. 3. THE INCOME TAX OFFICER, WARD NO.2, BAGALKOT, SECTOR 24, SECTOR 63A, NAVANAGAR, BAGALKOT-587103. 4. THE STATE OF KARNATAKA, DEPARTMENT OF COOPERATION, MS BUILDING, AMBEDKAR VEEDHI, BENGALURU-560 001. …RESPONDENTS (BY SRI M.B. KANAVI, ADVOCATE FOR R-1) (BY SRI.Y.V.RAVIRAJ, ADVOCATE FOR R-2 AND 3) (BY SRI PRAVEEN K.UPPAR, HCGP FOR R-4) THIS PETITION IS FILED UNDER ARTICLE 226 AND 227 OF THE CONSTITUTION OF INDIA AND PRAYED TO DECLARE THAT THE INTERPRETATION ADOPTED BY THE 3RD HOLDING THAT THE PETITIONER SOUHARDA REGISTERED UNDER THE KARNATAKA SOUHARDA SAHAKARI ACT, 1997 IS NOT A COOPERATIVE SOCIETY WITHIN THE DEFINITION OF COOPERATIVE SOCIETY UNDER SECTION 2(19) OF THE INCOME TAX ACT, 1961 IS ARBITRARY, ILLEGAL AND ULTRA VIRES THE CONSTITUTION AND VIOLATIVE OF ARTICLES 14 AND 19(1)(C) OF THE CONSTITUTION OF INDIA ; 3 ALTERNATIVELY DELCARE THAT THE DEFINITION OF COOPERATIVE SOCIETY IN SECTION 2(19) OF THE INCOME TAX ACT, 1961 IS ULTRA VIRES THE CONSTITUTION OF INDIA BEING VIOLATIVE OF ARTICLE 14 IN AS MUCH AS THE SAME DOES NOT INCLUDE COOPERATIVES REGISTERED UNDER THE KARNATAKA SOUHARDA SAHAKARI ACT, 1997 ; CONSEQUENTLY QUASH THE IMPUGNED ASSESSMENT ORDER PASSED BY THE 3RD RESPONDENT DATED 05.12.2019 BEARING ORDER NO. ITBA /AST /S /144 / 2019-20 /1021747062 (1) VIDE ANNEXURE-A ; CONSEQUENTLY ISSUE A WRIT OF MANDAMUS DIRECTING THE 3RD RESPONDENT TO DE- FREEZE THE BANK ACCOUNTS OF THE PETITIONER BEARING ACCOUNT NO.0560/303/148 AND 560/214/27 WITH THE SYNDICATE BANK, HARUGERI BRANCH, ATHANI-GOKAK ROAD, RAIBAG TALUK, BELAGAVI DISTRICT AS PER ANNEXURE-C; PASS ANY SUCH OTHER WRIT OR ORDER AS THIS HON’BLE COURT MAY DEEM FIT ON THE FACTS AND CIRCUMSTANCES OF THE CASE AND TO MEET THE ENDS OF JUSTICE AND EQUITY. THIS PETITION COMING ON FOR PRELIMINARY HEARING IN B-GROUP THIS DAY, THE COURT MADE THE FOLLOWING: 4 ORDER The petitioner Shri Vitthalray Souharda Pattin Sahakari Niyamit, is a society registered under the Karnataka Souharda Sahakari Act, 19978 (hereinafter referred to as the ‘Souharda Act’) engaged in the business of banking and providing credit facilities to its members has filed this Writ Petition under Article 226 and 227 of the Constitution of India to quash the impugned assessment order No.ITBA/AST/S/144/ 2019-20/1021747062(1) dated 05.12.2019 vide annexure-A and to declare that the petitioner-Society registered under the Souhardha Act, 1997 being par with the cooperative society registered under Karnataka Cooperative Societies Act, 1959 is entitled to claim the benefit in terms of the scheme under Section 80P of the Income Tax Act, 1961. Consequently, to issue a writ of mandamus directing the 3rd respondent to de-freeze the bank accounts of the petitioner with the Syndicate 5 Bank, Harugeri Branch, Raibag Taluka, Belagavi District. 2. The learned AGA has accepted notice for respondent No.4. Learned counsel Sri.Y.V.Raviraj has accepted the notice for respondent Nos.2 and 3 and learned counsel Sri.M.B.Kanavi has accepted the notice for respondent No.1. 3. The subject matter of this writ petition is substantially identical to the one stated in Writ Petition No.48414 of 2018(T-TI) between M/s Swabhimani Souharda Credit Cooperative Ltd vs. Government of Indian and others disposed of vide order dated 16.01.2020. 4. The learned counsel for the petitioner submits that the writ petition namely No.108723/2018(T-IT) and No. 118238/2020(T-IT) have been disposed of by the Dharwad Bench by following the decision in aforesaid 6 Writ Petition No. 48414 of 2018(T-TI). Hence, the same relief needs to be extended on the principle of parity as the facts and circumstances are similar in nature. 5. In Writ petition No.2738 of 2020 (T-IT) the learned Senior counsel representing the respondent has submitted that the Judgment/order passed in Writ Petition Nos.48414 of 2018 clubbed with Writ Petition No.14381 of 2019 (T-IT) has not been challenged and no review is sought. 6. In Writ Petition Nos.48414 of 2018 and connected writ petition the principal bench of High Court of Karnataka, Bengaluru had framed the 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”. 7 7. On referring to the relevant provisions of Karnataka Souharda Sahakari Act, 1997, Karnataka Cooperative Societies Act, 1959 and Section 80(P)(2)(a)(i) of the Income Tax Act, 1961 it is held as under : “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 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.” 8. The substantial question of law being the same in the present writ petition. The decisions rendered by 8 the Principal Bench in the aforesaid writ petitions are aptly applicable and holds good. Hence, the present writ petition deserves to be disposed of in terms of the order dated 16.01.2020 in Writ Petition No.48414 of 2018 and connected writ petition. 9. It is hereby declared that the interpretation adopted by the 3rd respondent that the petitioner- Shri Vittalray Souharda Pattin Sahakari Niyamit registered under the Karnataka Souharda Sahakari Act, 1997 is not a cooperative society within a definition of Cooperative Society under Section 2(19) of Income Tax Act is arbitrary, illegal and ultra vires the constitution and violative of Article 14 and 19(1)(c) of the constitution of India. Consequently, the order of assessment No. ITBA / AST / S / 144 / 2019-20 / 1021747062 (1) dated 05.12.2019 is quashed. 9 10. The respondent No.3 is directed to pass fresh order treating the petitioner as a cooperative society extending the benefit under Section 80P of Income Tax Act, 1961 with all other exceptions as observed in the order dated 16.01.2020 in Writ Petition No.48414 of 2018 (T-IT) and connection writ petition. 11. The order issued by the 3rd respondent to freeze the Bank Account No.0560/303/148 and 560/ 214/27 of the petitioner in Syndicate Bank, Harugeri Branch is also quashed. SD/- JUDGE CKK "