Karavali Souharda Credit Cooperative Limited Vs ITO (ITAT Bangalore)
The Income Tax Appellate Tribunal (ITAT) in Bangalore has ruled that co-operative societies registered under the Karnataka Souharda Sahakari Act are eligible for deductions under Section 80P of the Income Tax Act. This ruling came during the appeal of Karavali Souharda Credit Cooperative Limited against an order from the Commissioner of Income Tax (Appeals) dated September 25, 2023.
Background of the Case
The appeal was filed for the assessment year 2016-17, with a significant delay of 209 days in submission. The appellant, Karavali Souharda, attributed this delay to not receiving the order from the CIT(Appeals) and technical glitches in the e-filing portal, which prevented timely access to the case details. The appellant filed a grievance on November 18, 2023, but the issue was not resolved until April 2024, leading to the late appeal submission. The ITAT found sufficient reasons for the delay and accepted the appeal.
Income and Deductions
Karavali Souharda had declared a total income of nil in their tax return filed on September 9, 2016. However, during scrutiny, the Assessing Officer (AO) identified an income of ₹52,51,302 and disallowed the deduction under Section 80P that the cooperative claimed. The AO’s rationale was that the society, having different classes of members, violated the principle of mutuality, referencing the Supreme Court’s ruling in the case of Citizen Co-operative Society Ltd. vs. ACIT.
