2023 (7) TMI 902 - AT - Income Tax

Tax Tribunal: 'Souharda' Cooperative Society Qualifies under Income Tax Act sec.2(19)

The Tribunal ruled in favor of the assessee, holding that a 'Souharda' cooperative society registered under state laws qualifies as a cooperative society ... Revision u/s 263 - AO treated assessee taxpayer as a “cooperative society” registered u/sec.2(19) - PCIT’s revision directions is that the assessee is not a “cooperative society” within the meaning of sec.2(19) of the Act being only a “Souharda” society registered under the state law(s) - HELD THAT:- All these Revenue’s arguments fail to evoke our concurrence as the instant issue of assessee; a “Souharda” cooperative society being covered u/sec.2(19) of the Act, is no more res integra in light of the valuable guidance coming from recent decision in Sri Matha Vivododdesha Pathina Souharda Sahakari Niyamitha vs. Union of India [2021 (10) TMI 1413 - KARNATAKA HIGH COURT] Their lordships’ have settled the law therein that a “Souharda” cooperative society registered under the state cooperative law(s) very well forms “a cooperative society” u/sec.2(19) of the Act. That being the case, we accept the assessee’s contentions challenging correctness of the learned PCIT’s revision directions in all these assessment years. AO’s corresponding regular assessments stand restored as a necessary corollary. Decided in favour of assessee. Issues:The judgment involves the eligibility of the assessee to claim sec.80P deductions and the correctness of the PCIT's revision directions regarding the assessee being a 'cooperative society' under sec.2(19) of the Income Tax Act.Eligibility of Sec.80P Deductions:The batch of seven appeals pertains to a single assessee challenging the PCIT's revision directions regarding the eligibility of the assessee to claim sec.80P deductions for the assessment years 2009-2010 to 2015-2016. The primary dispute between the parties revolves around the assessee's classification as a 'cooperative society' under sec.2(19) of the Act. The Revenue argued that the assessee, registered as a 'Souharda' society under state laws, does not qualify as a cooperative society. However, the Tribunal referred to a recent decision by the jurisdictional high court which clarified that a 'Souharda' cooperative society registered under state laws falls within the definition of a cooperative society under sec.2(19) of the Act. Consequently, the Tribunal accepted the assessee's contentions and upheld the Assessing Officer's regular assessments, thereby allowing the appeals in favor of the assessee.Conclusion:The Tribunal ruled in favor of the assessee, holding that a 'Souharda' cooperative society registered under state laws qualifies as a cooperative society under sec.2(19) of the Income Tax Act. As a result, the PCIT's revision directions were deemed incorrect, and the Assessing Officer's regular assessments were restored. The appeals of the assessee were allowed, and the order was pronounced in open court on 18.07.2023.