Case Law Details
Charvaka Seva Sahakari Bank Ltd. Vs ITO (ITAT Bangalore)
Introduction: In a landmark ruling, the Income Tax Appellate Tribunal (ITAT) Bangalore has provided significant relief to Charvaka Seva Sahakari Bank Ltd., a co-operative society engaged in providing credit facilities to its members. The tribunal’s decision, dated January 2, 2024, revolves around the eligibility for exemption under Section 80P(2)(a)(i) of the Income Tax Act for income earned through providing credit facilities to nominal members.
Detailed Analysis: Charvaka Seva Sahakari Bank Ltd., a primary agriculture co-operative society, filed an appeal against the order of the National Faceless Appeal Centre (NFAC), Delhi for the assessment year 2016-17. The core issue was the disallowance of claims under Section 80P(2)(a)(i) by the CIT(A), Bangalore, which the NFAC upheld. The bank contended that as a co-operative society legislated under the Co-operative Society Act and engaged in providing credit facilities only to its members, it was entitled to the exemption.
The tribunal scrutinized the appellant’s operations, emphasizing its role in providing credit facilities not just to regular but also to nominal members. Citing the landmark judgment by the Supreme Court in Mavilayi Service Co-operative Bank Ltd. Vs Commissioner of Income Tax, Calcutta, the ITAT highlighted the inclusive definition of “members” within co-operative societies as per the Co-operative Society Act. This inclusivity extends the exemption under Section 80P(2)(a)(i) of the Income Tax Act to incomes derived from transactions with nominal members.
Conclusion: The ITAT Bangalore’s ruling is a pivotal development for co-operative societies, especially those functioning in rural and semi-urban areas, facilitating credit facilities to a broader member base. By recognizing nominal members within the ambit of “members” for Section 80P(2)(a)(i) exemptions, the tribunal has not only provided clarity but also supported the co-operative sector’s role in financial inclusion. This decision underscores the judiciary’s interpretative approach towards statutory provisions, ensuring that legislative intent to promote and sustain the co-operative movement is effectively upheld.
Please become a Premium member. If you are already a Premium member, login here to access the full content.
Author Bio
