ITAT ruling confirms cooperative society's tax exemption eligibility under Income Tax Act

The ITAT PANAJI allowed the appeal filed by the appellant, confirming its status as a cooperative society eligible for exemption under section 80P(2)(a)(i) of the Income Tax Act, 1961. The appellant, not holding a banking license and registered under the Cooperative Societies Act, was deemed a cooperative society, not a cooperative bank, entitling it to the claimed deduction. The decision, based on legal precedent, emphasized the importance of the registration certificate under the Cooperative Societies Act. The order was pronounced on November 18, 2021.

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Issues:
Identification of whether the appellant is a cooperative society or a cooperative bank for the purpose of claiming exemption u/s 80P(2)(a)(i) of the Income Tax Act, 1961.

Analysis:
The appellant, a cooperative society registered under the Karnataka State Co-operative Society Act, 1959, filed an appeal against the Assessing Officer's denial of exemption u/s 80P(2)(a)(i) of the Act for the assessment year 2012-13. The Assessing Officer treated the appellant as a cooperative bank, leading to a higher total income assessment. The ld. CIT(A) upheld this decision, prompting the appellant's appeal before the ITAT PANAJI.

During the appeal, the ld. AR argued that the appellant is a cooperative society, not a cooperative bank, making it eligible for the claimed deduction. Conversely, the ld. Sr. DR relied on the lower authorities' orders. The ITAT PANAJI considered the crucial issue of whether the appellant could be classified as a cooperative society or a cooperative bank. Notably, the appellant lacked a banking license from the Reserve Bank of India and was registered under the Cooperative Societies Act, 1959.

Referring to legal precedent, specifically the case of The Mavilayi Service Cooperative Bank Ltd. & ors. vs. CIT, the ITAT PANAJI emphasized that the assessing authority cannot disregard the registration certificate granted under the Cooperative Societies Act. As the appellant did not hold a banking license, it was determined that the appellant's status remained that of a cooperative society, entitling it to the exemption under section 80P(2)(a)(i) of the Act. Consequently, the ITAT PANAJI allowed the appellant's appeal, ruling in favor of the appellant's classification as a cooperative society and granting the exemption.

In conclusion, the ITAT PANAJI pronounced the order on November 18, 2021, allowing the appeal filed by the appellant and confirming its status as a cooperative society eligible for the exemption under section 80P(2)(a)(i) of the Income Tax Act, 1961.

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