SRI MATHA VIVIDODDESHA PATHINA SOUHARDA SAHAKARI V. UNION OF INDIA

WP/35093/2019

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The case involves Sri Matha Vividoddesha Pathina Souharda Sahakari Niyamitha, a cooperative society registered under the Karnataka Souharda Sahakari Act, 1997, challenging the assessment order passed by the Income Tax Officer, Tumkur, which denied them the benefits under Section 80P of the Income Tax Act, 1961. The petitioner argued that they are a cooperative society as defined under the relevant laws and thus eligible for tax deductions. The court referenced a similar case, M/s. Swabhimani Souharda Credit Co-operative Ltd., where it was held that societies registered under the Karnataka Souharda Sahakari Act are to be considered as cooperative societies under the Income Tax Act for the purpose of Section 80P. The court's decision was influenced by this precedent, leading to the quashing of the impugned order and notice.

• Counselvise Citation: [2021] 140 COUNSELVISE.COM (IT) 722233 (HC-KARNATAKA)
• Appeal Type: Others
• Pronouncement Date: 18-10-2021
• Assessment Year: misc
• Other Referred Cases: M/s. Udaya Souharda Credit Co-operative Society Ltd. Vs. ITO, W-5(2)(3), M/s. Swabhimani Souharda Credit Co-operative Ltd. Vs. Government of India
• Laws Referred To: Income Tax Act, 1961, Karnataka Souharda Sahakari Act, 1997, 97th Constitutional Amendment Act, 2011
• Result in Favour of: Others
• Court: HIGH COURT
• Department Lawyers: E I SANMATHI; K R ROOPA
• Assessee Lawyers: ATHUL ALUR
• Keywords: Assessment Order; Co-operative Society; Karnataka Souharda Sahakari Act; Writ of Certiorari; Exemption under Section 80-P
• Section: 143(3); 80P; 2(19); 156

Judgement Text

" 1 IN THE HIGH COURT OF KARNATAKA, BENGALURU DATED THIS THE 18TH DAY OF OCTOBER, 2021 BEFORE THE HON'BLE MR.JUSTICE S.R.KRISHNA KUMAR WRIT PETITION No.35093 OF 2019 (T-IT) BETWEEN: SRI MATHA VIVIDODDESHA PATHINA SOUHARDA SAHAKARI NIYAMITHA KUVEMPU ROAD PAVAGADA-561 202 DIST: TUMKUR REPRESENTED BY ITS MANAGER SMT. SRI LAKSHMI) …PETITIONER (BY SRI.ATHUL K.ALUR, ADV.) AND: 1 . UNION OF INDIA MINISTRY OF FINANCE, DEPARTMENT OF REVENUE, THROUGH ITS SECRETARY (REVENUE) NORTH BLOCK NEW DELHI-110 001 2 . THE INCOME TAX OFFICER WARD-2, RAMAKRISHNA NAGAR, KUNIGAL ROAD, TUMKUR-572 105 3 . THE PRINCIPLE SECRETARY GOVERNMENT OF KARNATAKA CO OPERATION DEPARTMENT, ROOM NO.610, 3RD GATE, 6TH FLOOR, MULTI STORY BUILDING, DR AMBEDKAR VEEDHI BENGALURU-560 001 …RESPONDENTS (BY SRI E.I.SANMATHI, ADV. FOR R1 & R2 SMT K.R.ROOPA, HCGP FOR R3) 2 THIS W.P. IS FILED UNDER ARTICLES 226 AND 227 OF THE CONSTITUTION OF INDIA PRAYING TO QUASH THE ASSESSMENT ORDER PASSED U/S 143 (3) OF THE IT ACT, BY THE RESPONDENT-2 FOR THE ASSESSMENT PERIOD 2017-18 AT ANNEXURE-E DATED 28.06.2019 IN SO FAR AS THE PETITIONER IS CONCERNED AND ETC. THIS W.P. COMING ON FOR PRELIMINARY HEARING IN 'B' GROUP, THIS DAY, THE COURT MADE THE FOLLOWING:- ORDER In this petition, the petitioner has sought for the following reliefs: \"a) Issue Writ of certiorari or writ in the nature of certiorari quashing the assessment order passed u/s 143(3) of the IT Act, by the respondent-2 for the assessment period 2017-18 at ANNEXURE-E bearing Order No. ITBA/AST/S143(3) 2019- 20/1016586627(1) dated 28/06/2019 in so far as the petitioner is concerned. b) Issue Writ of certiorari or writ in the nature of certiorari quashing the demand issued u/s 156 of the IT Act, by the respondent-2 for the assessment period 2017-18 at Annexure-G bearing order No.ITBA/AST/S/156/2019-20/1016586677(1), dated 28/06/2019 in so far as the petitioner is concerned. c) Issue Writ of declaration or writ in the nature of declaration declaring that the petitioner is the co- operative society as per Clause 2(e) of the Karnataka Souharda Sahakari Act, 1997. 3 d) Issue Writ of declaration or writ in the nature of declaration declaring that, the petitioner is eligible for the deduction under 80P of the Income Tax Act. e) Issue writ of declaration or writ in the nature of declaration declaring that, the petitioner is a Co- operative Society in view of the 97th Constitutional Amendment Act, 2011 the petitioner is a co- operative society as per the definition 243 ZH (c). f) Issue writ of declaration or writ in the nature of declaration declaring that the judgment of the Income Tax Appellate Tribunal in case of M/s. Udaya Souharda Credit Co-operative Society Ltd., Vs. ITO, W-5(2)(3) in ITA No.2831/2017 dated 17/08/2018 is applicable to the petitioner's case – Annexure-J. g) Issue writ of declaration or writ in the nature of declaration declaring that the co-operation registered under the Karnataka Souharda Sahakari Act, 1997 are also co-operative societies under the Karnataka Co-operative Society Act, 1959. h) Issue any other Writ or directions deemed fit in the facts and circumstances of the case in the interest of justice and equity.\" 2. Heard learned counsel for the petitioner, learned HCGP for respondent No.3 and learned counsel for 4 respondent Nos.1 and 2 and perused the material on record. 3. In addition to reiterating the various contentions urged in the Memorandum of Petition and referring to the various documents produced by the petitioner, learned counsel for the petitioner submits that the main issue in controversy involved in the present petition is whether the petitioner, which is a Souharda Sahakari Niyamitha, a Society registered under the Karnataka Souharda Sahakari Act, 1997 (for short \"the said Act, 1997\") is a Co-operative Society within the meaning of the Section 2(19) of the Income Tax Act, 1961 (for short, \"the IT Act, 1961\"), so as to enable the petitioner to seek exemption under Section 80-P of the said Act. It is submitted that this issue is directly and squarely covered by the decision of a Co-ordinate Bench of this Court in the case of M/s. Swabhimani Souharda Credit Co-operative Ltd., Vs. Government of India (W.P.No.48414/2018 C/W W.P.No.14381/2019 dated 16.01.2020) and as such, the 5 present petition also deserves to be allowed in terms of the said decision of this Court. 4. Per contra, learned counsel for respondent Nos.1 and 2 in addition to reiterating the various contentions urged in the Statement Objections submits that aggrieved by the aforesaid order passed in M/s. Swabhimani Souharda Credit Co-operative Ltd.,(supra), the respondents have preferred W.A.No.378/2020 along with connected matters and the same are pending adjudication. It is however fairly submitted that there is no interim order of stay in the appeal. 5. As rightly contended by learned counsel for the petitioner, the material on record indicates that the petitioner herein is a Souharda Credit Co-operative Society, registered under the Karnataka Souharda Sahakari Act, 1997. In the case of M/s. Swabhimani Souharda Credit Co- operative Ltd.,(supra), this Court has come to the conclusion that even a Society registered under the said Act of 1997, is a Co-operative Society within the meaning of Sec.2(19) of the IT Act, 1961 for the purpose of Section 6 80-P and consequently, the petitioner-Society would be entitled to exemption under Section 80-P of the said Act, 1961 as held by this Court in the aforesaid decision. In the case of M/s. Swabhimani Souharda Credit Co-operative Ltd.,(supra), this Court has 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 sec. 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 sec. 80P of the said Act; a Writ of Certiorari issues quashing the impugned notice dated 30.03.2018 at Annexure-D in W.P.No.48414/2018; other legal consequences accordingly do follow.\" A perusal of the aforesaid decision of this Court clearly indicates that this Court has made it clear that all entities registered under the said Act of 1997 are Co- operative Societies within the meaning of Section 2(19) of the IT Act, 1961 and that they would be entitled to stake their claim for exemption under Section 80-P. 7 6. In the instant case, a perusal of the impugned order at Annexure-E dated 28.06.2019 passed by respondent No.2 will clearly indicate that respondent No.2 has rejected the claim of the petitioner for exemption under Section 80-P on the sole ground that the petitioner is not a Co-operative Society within the meaning of Section 2(19) of the I.T.Act. In view of the decision of a Co-ordinate Bench in the case of M/s. Swabhimani Souharda Credit Co- operative Ltd.,(supra), I am of the considered opinion that the impugned Assessment Order at Annexure-E is erroneous and illegal and therefore, deserves to be quashed and the matter be remitted back to respondent No.2 for re-consideration afresh in accordance with law, bearing in mind the observations and findings recorded in this order. 6. In the result, I pass the following: ORDER (i) The petition is allowed. (ii) The impugned order dated 28.06.2019 at Annexure-E and consequential notice at 8 Annexure-G dated 28.06.2019 are hereby quashed. (iii) The matter is remitted back to respondent No.2 for re-consideration afresh in accordance with law. (iv) All rival contentions between the parties on the merits/demerits of their respective claims are kept open and no opinion is expressed on the same. SD/- JUDGE Bmc "