Ugar Sugar Works Kamgar & Dr. Shirgaokar Shaikashanik Trust Nokar Co-op Credit Society Ltd. Vs ITO (ITAT Panaji)
The appeal arose from the order of the Commissioner of Income Tax (Appeals), Gulbarga, dated 29 December 2017 for Assessment Year 2012-13. The assessee was a cooperative society registered under the Karnataka State Co-operative Society Act, 1959 with the object of accepting deposits from and providing credit facilities to its members. It filed its return of income declaring total income of ₹4,03,384 after claiming deduction under Section 80P(2)(a)(i) of the Income-tax Act, 1961 amounting to ₹4,09,725. The Assessing Officer completed the assessment under Section 143(3) at a total income of ₹8,82,947 by denying the deduction under Section 80P(2)(a)(i), holding that the assessee was a cooperative bank and not a cooperative society. The CIT(A) affirmed the assessment, leading to the present appeal. Before the Tribunal, the assessee contended that it was a cooperative society and not a cooperative bank, while the Revenue relied on the orders of the lower authorities. The Tribunal noted that the assessee was registered under the Karnataka State Co-operative Society Act, 1959 and had not obtained any licence from the Reserve Bank of India to carry on banking business. Referring to the Supreme Court decision in The Mavilayi Service Cooperative Bank Ltd. & Ors. vs. CIT, the Tribunal observed that the assessing authority could not go behind the registration certificate granted under the Cooperative Societies Act. It held that, in the absence of an RBI banking licence, the assessee could not be treated as a cooperative bank and continued to be a cooperative society. Accordingly, it held that the assessee qualified for deduction under Section 80P(2)(a)(i), allowed the ground of appeal, and allowed the appeal.
