Souharda Act registrants qualify as co-operative societies for income-tax deduction under Section 80P, subject to statutory conditions.

Entities registered under the Karnataka Souharda Sahakari Act, 1997 are treated as "co-operative society" within Section 2(19) of the Income-tax Act, 1961 because that definition covers societies registered under a State law for registration of co-operative societies. The Souharda Act is a State enactment governing co-operative institutions, and its scheme, objects and preamble support a broad construction aligned with the co-operative movement. The later amendment to Section 2(e) of the Souharda Act, expressly linking Souharda co-operatives to the Income-tax Act, further supports this interpretation. On that basis, such entities are entitled to claim deduction under Section 80P, subject to the statutory conditions.

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Issues: Whether entities registered under the Karnataka Souharda Sahakari Act, 1997 fall within the expression "co-operative society" in Section 2(19) of the Income-tax Act, 1961 so as to claim deduction under Section 80P of the Income-tax Act, 1961.

Analysis: The defining provision in Section 2(19) of the Income-tax Act, 1961 covers a co-operative society registered under the Co-operative Societies Act, 1912 or under any other law in force in a State for the registration of co-operative societies. The Souharda enactment is a State law governing co-operative institutions, and its scheme, objects and preamble are aligned with promotion of the co-operative movement. The later amendment to Section 2(e) of the Souharda Act, which expressly links Souharda co-operatives to the Income-tax Act, 1961, reinforces the view that such entities are to be treated as co-operative societies for income-tax purposes. The constitutional provisions on co-operative societies and the principle of harmonious construction also support a broad construction rather than a hyper-technical exclusion.

Conclusion: Entities registered under the Souharda Act are co-operative societies for the purpose of Section 2(19) of the Income-tax Act, 1961 and are entitled to claim the benefit of Section 80P, subject to the statutory conditions.

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