Karnataka State Co-Opeartive Federation Ltd. Vs Asst. Director of Income Tax (Exemptions) (Karnataka High Court)
The Karnataka High Court considered appeals arising from a common order of the Income Tax Appellate Tribunal (ITAT) dated 25.05.2016 for Assessment Years 2005-06, 2006-07, 2008-09, and 2009-10. The assessee, a co-operative society registered under the Karnataka Co-operative Societies Act, 1959 (KCS Act), had filed returns claiming exemption under Section 10(23C)(iiiab) of the Income Tax Act. While the Commissioner of Income Tax (Appeals) granted the exemption, the Tribunal later allowed the Revenue’s appeal on that issue. The assessee had also raised an additional ground regarding the non-taxability of contributions received from co-operative societies under Section 57(2A) of the KCS Act. The Tribunal remitted that issue to the CIT (Appeals) for adjudication.
Before the High Court, the assessee raised additional substantial questions of law concerning whether contributions made by co-operative societies to the co-operative education fund under Section 57(2A) of the KCS Act constituted income and whether such contributions stood diverted at source. The assessee argued that these contributions were made pursuant to a statutory mandate and were required to be utilized only for the purposes prescribed under the KCS Act. It was also pointed out that in the assessee’s own case for later assessment years, the Tribunal had held that such contributions were not taxable, though the matter had been remitted to the Assessing Officer for examination.
