Case Law Details
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.
FULL TEXT OF THE ORDER OF ITAT PANAJI
This is an appeal filed by the assessee directed against the order of ld. Commissioner of Income Tax (Appeals), Gulbarga (‘CIT(A)’ for short) dated 29.12.2017 for the assessment year 2012-13.
2. Briefly, the facts of the case are that the appellant is a cooperative society registered under the Karnataka State Co-operative Society Act, 1959 with the object of accepting deposits from its members and providing credit facilities to its members. The return of income for the assessment year 201213 was filed on 25.09.2012 declaring total income of Rs.4,03,384/- after claiming exemption u/s 80P(2)(a)(i) of the Income Tax Act, 1961 (‘the Act’) of Rs.4,09,725/-. Against the said return of income, the assessment was completed by the Income Tax Officer, Ward-1(3), Belgaum (‘the Assessing Officer’) vide order dated 27.08.2014 passed u/s 143(3) of the Act at a total income of Rs.8,82,947/-. While doing so, the Assessing Officer denied the claim of exemption u/s 80P(2)(a)(i) of the Act holding it to be cooperative bank not cooperative society.
3. Being aggrieved by the above action of the Assessing Officer, an appeal was preferred before the ld. CIT(A), who vide impugned order confirmed the action of the Assessing Officer.
4. Being aggrieved by the above decision of the ld. CIT(A), the assessee is in appeal before us in the present appeal.
5. The ld. AR submits that the appellant is not a cooperative bank but a cooperative society and eligible for deduction u/s 80P(2)(a)(i) of the Act.
6. On the other hand, ld. Sr. DR placed reliance on the orders of the lower authorities.
7. heard the rival submissions and perused the material on record. The only issue raised by the assessee in the grounds of appeal relates to whether the appellant can be termed as a cooperative society or cooperative bank. The undisputed position is that the appellant is registered a cooperative society under the Karnataka State Co-operative Society Act, 1959 and does not enjoy any licence from Reserve Bank of India to carry on the business of banking. It is a trite law that the assessing authority cannot go behind the registration certificate granted under the Cooperative Societies Act as held by the Hon’ble Supreme Court in the case of The Mavilayi Service Cooperative Bank Ltd. & ors. vs. CIT, 431 ITR 01 (SC).
8. So long as the appellant society had not obtained any licence from Reserve Bank of India for the purpose of banking business, it cannot be termed as cooperative bank. In the circumstances, we hold that the appellant status continued to be a cooperative society though interest income as received from its members. Thus, appellant society qualifies for exemption u/s 80P(2)(a)(i) of the Act. Thus, this issue raised by the assessee in grounds of appeal stands allowed.
9. In the result, the appeal filed by the assessee stands allowed.
pronounced on this 18th day of November, 2021.
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