THE YAMAKANMARDI LAXMI V. THE INCOME TAX OFFICER

WP/112378/2019

AI Insights

The case revolves around the petitioner, a credit cooperative society registered under the Karnataka Souharda Sahakari Act, 1997, challenging the notices and assessment orders issued by the Income Tax Department. The core issue was whether the petitioner qualifies as a 'co-operative society' under the Income Tax Act, 1961, specifically for the benefits under Section 80P, which pertains to deductions for income of co-operative societies. The High Court referenced a similar case (WP No.48414/2018) where it was previously determined that such entities do qualify as 'co-operative societies'. Based on this precedent, the court ruled in favor of the petitioner, quashing the notices and directing a fresh assessment.

• Counselvise Citation: [2020] 140 COUNSELVISE.COM (IT) 754902 (HC-KARNATAKA)
• Appeal Type: Others
• Pronouncement Date: 27-01-2020
• Assessment Year: misc
• Other Referred Cases: WP No.48414/2018
• Laws Referred To: 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: Y V RAVIRAJ; VEENA HEGDE
• Assessee Lawyers: H R KAMBIYAVAR; PATRI SHASHIKALA
• Keywords: Co-operative; Income Tax; Karnataka Souharda Sahakari Act; Quash notice; Section 80P
• Section: 142(1); 143(2); 80P; 2(19); 156; 226; 227

Judgement Text

"IN THE HIGH COURT OF KARNATAKA, DHARWAD BENCH DATED THIS THE 27TH DAY OF JANUARY, 2020 BEFORE THE HON’BLE MR.JUSTICE S.G. PANDIT WRIT PETITION NO.112378/2019 (T-IT) & WRIT PETITION Nos.113220-222/2019 BETWEEN: THE YAMAKANMARDI LAXMI URBAN CREDIT SOUHARDA SAHAKARI NIYAMIT, YAMAKANMARDI TQ:HUKKERI, DIST:BELAGAVI, REP.BY ITS, GENERAL MANAGER, SRI SHIVALINGAPPA S/O VIRUPAXI KANCHAGARATTI, AGED ABOUT 51 YEARS ... PETITIONER (BY SRI. H R KAMBIYAVAR & SMT. PATRI SHASHIKALA, ADVS.) AND 1. THE INCOME TAX OFFICER WARD-1, GOKAK DR.GHODIGERIS HOSPITAL BUILDING BELAGAVI ROAD, GOKAK 591307 2. COMMISSIONER OF INCOME TAX GOKAK, DR.GHODIGERIS HOSPITAL BUILDING BELAGAVI ROAD, GOKAK 591307 3. CENTRAL BOARD OF DIRECT TAXES NORTH BLOCK, NEW DELHI 110001 REP BY ITS CHAIRPERSON 4. MINISTRY OF FINANCE REVENUE DEPARTMENT NORTH BLOCK, NEW DELHI 110001 REP BY ITS UNDER SECRETARY 2 5. GOVERNMENT OF KARNATAKA CO-OPERATION DEPARTMENT KARNATAKA GOVERNMENT SECRETARIAT ROOM NO.610, 3RD GATE, 6TH FLOOR, M.S.BUILDING, DR.AMBEDKAR VEEDHI BANGALORE 560001, REP BY ITS SECRETARY 6. REGISTRAR OF CO-OPERATIVE SOCIETIES, NO.1, ALI ASKER ROAD, NEAR RAJ BHAVAN, VASANTH NAGAR, BENGALURU 560052 REP BY ITS REGISTRAR ... RESPONDENTS (BY SRI. Y V RAVIRAJ, ADV. FOR R1-R3) (SMT. VEENA HEGDE, AGA FOR R4 AND R5) THESE WRIT PETITIONS ARE FILED UNDER ARTICLES 226 AND 227 OF THE CONSTITUTION OF INDIA PRAYING TO (A) DECLARE THAT THE WORD \"CO-OPERATIVE” IN SECTION 2(19) OF THE IT ACT APPLIES TO ALL IDENTITIES REGISTERED UNDER THE STATE LAW INCLUDING A CO-OPERATIVE AS DEFINED UNDER SECTION 2(e) OF THE KARNATAKA SOUHARDA SAHAKARI ACT, 1997 BY HARMONIOUS CONSTRUCTION OF BOTH THE ENACTMENTS (B) CONSEQUENTLY ISSUE A WRIT OF CERTIORARI TO QUASH THE IMPUGNED NOTICE BEARING NO.ITBA/AST/S/143(2)/2018-19/ 1011379528(1) DATED 14.08.2018, VIDE ANNEXURE-E WAS ISSUED BY THE 1ST RESPONDENT AND CONSEQUENTLY ISSUE A WRIT OF CERTIORARI TO QUASH THE IMPUGNED NOTICE BEARING F.NO.ITO/W-1/142(1)/GKK/ AABTT558OF/2018- 19/51 DATED 07.12.2018 VIDE ANNEXURE-G WAS ISSUED BY THE 1ST RESPONDENT. THESE WRIT PETITIONS COMING ON FOR PRELIMINARY HEARING 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 prayer to quash the notice issued under Section 142(1), 143(2) of the 1961 Act as well as to quash Annexure-P, demand notice issued under Section 156 of the 1961 Act. In other words, petitioner is seeking for prayer to treat it as Co-operative on par with Co-operative registered 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 4 WP No.48414/2018 and connected writ petition, wherein 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 5 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.” 4. The question involved in the present writ petitions 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 petitions are disposed of. Annexure-P, assessment order bearing No. ITBA/AST/S/143(3)/2019-20/1021733884(1) dated 6 5.12.2019 is quashed. The respondents to pass fresh assessment order treating the petitioner as Co-operative Society and 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. 5. In view of disposal of the main petitions, pending IAs if any, do not survive for consideration, hence, same are disposed of. SD/- JUDGE JTR "