TaxTMI 
TaxTMI 
TaxTMI 
2020 (3) TMI 46
X X X X Extracts X X X X
X X X X Extracts X X X X
....fined to its members only. 5. The Area of Operation of the Assessee is limited to Bangalore only, as restricted by bye law of the Society. 6. The Learned Assessing Officer has erred in disallowing the deduction claimed, to the conclusion that the society is not eligible for Deduction u/s 80P of Income Tax Act. While disallowing Sec.80P to the Appellant Society the Assessing Officer has stated that the provisions of Section 80P shall not apply in relation to any co-operative bank/institution treating the Assessee-society as co-operative bank. is a co-operative society. But Assessing Officer is referring modification brought about in the Banking Regulation Act of 1949, the modification which is related to Credit Co-Operative Banks. 7. The Learned Commissioner of Income-Tax (Appeals)-6 has erred in confirming the additions to the conclusion that the society is not eligible for Deduction u/s 80P of Income Tax Act. While disallowing 80P to the Appellant society, the CIT(A)- 6 has grossly erred in holding that the provisions of Section 80P shall not apply in relation to any cooperatives incorporated under Karnataka Souharda Sahakari Act, 1997 but only to Cooperative society regis....
X X X X Extracts X X X X
X X X X Extracts X X X X
....Karnataka Cooperative Societies Act, 1959 respectively are different or otherwise, and hence the matter is to be restored to the AO to ascertain the impact of registration under Souharda Act as "Co- Operative" and also to decide whether is eligible for deduction u/s 80P of the Act. Ultimately the Income Tax Appellate Tribunal "C" Bench has passed the order in favor of assessee for statistical reasons. 9. The Assessee also relies on the following judgment of the Hon'ble High Court to challenge the conjecture of the AO: A. In this connection, the Assessee relies on the latest decision of the Division Bench of the Madras High Court, in the case of NLC Employees Co-Operative Society Vs The Commissioner of Income Tax Officer, Puducherry (Appeal No 786 to 789 of 2015) dated 10th August, 2016. Here it has been held that Co-operative Credit Society which provides financial assistance to its members for the purposes other than agricultural activities is eligible for deduction u/s 80P. It further clarified that from the CPT Circular dated 12.03.2008, it is evident that a credit Co-Operative Society is not a co-operative Bank as defined in Part V of the banking Regulation Act, 1949.....
X X X X Extracts X X X X
X X X X Extracts X X X X
....duction under Sec.80(P)(2)(a)(i) of the Income Tax Act, 1961, and consequently delete the additions of Rs. 19,15,582/- made by AO in his order dated 28-12-2019." 3. Briefly stated the facts of the case are that the assessee is a Co-operative Society registered under the Karnataka Souharda Sahakari Act, 1997. The assessee e-filed its return of income for the assessment year 2016-2017 on 10.02.2018 declaring a total income of Rs.Nil after claiming deduction u/s 80P(2)(a)(i) of the I.T.Act, amounting to Rs. 19,15,582. The case was selected for scrutiny. The Assessing Officer noted that the activities of the assessee consisted of collecting deposits and providing credit facilities to its members and held that the assessee was engaged in the business of banking, and therefore, not eligible for deduction u/s 80P of the Act. He accordingly, disallowed the claim of the assessee. 4. Aggrieved by the order of the Assessing Officer denying the deduction u/s 80P(2)(d)(i) of the Act, the assessee carried the matter in appeal before the CIT(A), who confirmed the view taken by the Assessing Officer. Against the above orders of the authorities below, the assessee is in appeal before the Tribunal....
X X X X Extracts X X X X
X X X X Extracts X X X X
....ence, this argument has not merit that even now, the matter should be restored back to the AO for fresh decision although the SMC bench of the Tribunal has decided the issue. Regarding the judgment of Hon'ble Allahabad High Court rendered in the case of CIT Vs. Hari Nath and Co. (supra) on which reliance was placed by ld. DR of revenue, I find that in this case, it was held by Hon'ble Allahabad High Court that decision of Division Bench given in an earlier case is binding on its subsequent bench of the same High Court. There is no quarrel on this aspect but this is not the case of the SMC bench of the Tribunal as per the subsequent order that the decision of the Division Bench of the Tribunal in the case of M/s. Udaya Souharda Credit Co-operative Society Ltd. (supra) is not binding on the Tribunal whether SMC Bench or Division Bench. As per the subsequent decision of the SMC Bench of the Tribunal, it was held that as per the earlier decision of the Division Bench of the Tribunal, the matter was restored back to the AO for a fresh decision in the light of Karnataka Souharda Sahakari Act, 1997 and this was done by CIT (A) and AO as directed by the tribunal and because of this reason,....
X X X X Extracts X X X X
X X X X Extracts X X X X
....submissions. Sec.2(19) defines cooperative societies for the purpose of the Act and the same is as follows: "Definitions. 2. In this Act, unless the context otherwise requires,- (19) "cooperative society" means a co-operative society registered under the Co-operative Societies Act, 1912 (2 of 1912), or under any other law for the time being in force in any State for the registration of co-operative societies:" 7. As can be seen from the aforesaid definition of 'Cooperative society' under the Act, any co-operative society registered under any other law of any State for registration of co-operative society is also regarded as co-operative society under the Act. Souhardas' also operate on the principle of co-operation and adopt the principles of co-operation. Cooperative Societies and Co-operatives are all founded on the principle of cooperation. 8. Since the beginning of mankind the concept of 'cooperation' has been the foundation for harmonious existence In India, the Cooperative Societies Act 1912 regulated formation, management, winding up and other supervision by the Government etc. This Act became the model for the provincial governments to form their own Cooperative Acts. P....
X X X X Extracts X X X X
X X X X Extracts X X X X
....peratives based on self-help, mutual aid, wholly owned, managed and controlled by members as accountable, competitive, self-reliant and economic enterprises guided by cooperative principles and matters connected therewith; WHEREAS it is expedient to provide for recognition encouragement and voluntary formation of co-operatives based on self-help, mutual aid, wholly owned, managed and controlled by members as accountable, competitive self-reliant and economic enterprises guided by cooperative principles and for matters connected therewith; BE it enacted by the Karnataka State Legislature in the Forty-eighth Year of Republic of India as follows:- " 10. The Souharda Cooperatives enjoy functional autonomy in design and implementation of their Business plans, customer service activities, etc., based on the needs of their members. Unlike other forms of cooperatives in India, the interference of State / Central in day-to-day operations of Souharda Cooperatives is almost minimal. 11. The above discussion would show that souharda co-operatives are also one form of co-operative societies registered under a law in force in the State of Karnataka for registration of co-operative societies.....