Mookambika Vividoddesha Vs ITO (ITAT Bangalore)
Summary: In Shree Mookambika Vividoddesha Souharda Sahakari Ltd. v. ITO, the Bangalore ITAT considered deduction u/s 80P(2)(a)(i) for AY 2017–18. The assessee was registered u/s 6 of the Karnataka Souharda Sahakari Act, 1997 & provided credit facilities to members.
The assessee filed its return declaring Nil income after claiming deduction of ₹15,64,262 u/s 80P(2)(a)(i). During scrutiny, the AO rejected the claim on two principal grounds. First, the assessee was described as a “co-operative” registered under the Souharda Act rather than a “co-operative society” registered under the Karnataka Co-operative Societies Act, 1959. Secondly, the AO considered the principle of mutuality to have been violated because regular members were not completely identical with associate or nominal members.
Relying on the Supreme Court decision reported in 397 ITR 1, the AO disallowed the deduction. The CIT(A) affirmed the denial, determining income at ₹15.64 lakh. Despite hearing notice, nobody appeared for the assessee; hence, the ITAT adjudicated from the record after hearing Revenue.
Issue Before the Tribunal
The issue was whether an entity registered under the Karnataka Souharda Sahakari Act qualifies as a “co-operative society” u/s 2(19) & can claim deduction u/s 80P. Did associate or nominal members destroy mutuality?
