Chidambara Souharada Pattina Sahakari Niyamita Vs ITO (ITAT Bangalore)
Call It “Souharda” or “Society”—Co-operation by Any Name Qualifies u/s 80P: Bangalore ITAT
The controversy
The assessee, Shri Chidambara Souharada Pattina Sahakari Niyamita, was registered under the Karnataka Souharda Sahakari Act, 1997. It provided credit facilities exclusively to its members.
For AY 2017-18, the assessee filed its return declaring nil income after claiming a deduction of ₹31,69,257 u/s 80P.
The return was selected for limited scrutiny under CASS to examine low income in comparison with high loans, advances or investments appearing in the balance sheet & the substantial Chapter VI-A deduction.
During assessment, the assessee furnished its audit report, financial statements, investment details, ITR-V, statement of income, registration certificate & bye-laws.
The AO nevertheless denied the deduction solely because the assessee was registered under the Karnataka Souharda Sahakari Act, 1997, and not under the Karnataka Co-operative Societies Act, 1959.
“Co-operative” distinguished from “co-operative society”
According to the AO, the Karnataka Legislature had deliberately distinguished between entities registered under the two State enactments.
An entity registered under the Karnataka Co-operative Societies Act, 1959 was described as a “co-operative society,” whereas an entity registered under the Karnataka Souharda Sahakari Act, 1997 was merely called a “co-operative.”
