2023 (1) TMI 564

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....ness of providing credit facilities to its members. The Return of Income for the assessment year 2017-18 was filed on 24.10.2017 declaring Rs.Nil income after claiming exemption of Rs.28,80,791/- u/s 80P(2)(a)(i) of the Income Tax Act, 1961 ('the Act'). Against the said return of income the assessment was completed by the Income Tax Officer, Ward- 1, Nippani ('the Assessing Officer') vide order dated 10.12.2019 passed u/s 143(3) of the Act at a total income of Rs.28,80,791/- denying the claim for exemption u/s 80P(2)(a)(i) on the ground that the credit facilities were provided to the nominal members who had no right to vote and participate in the surplus and the appellant's society was registered under the Karnataka Souhard Sahakari Act, 19....

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....on record. The issue in the present appeal is with regard to the eligibility of an assessee registered under Karnataka Souharda Sahakari Act, 1997 for exemption u/s 80P(2)(a)(i) of the Act. The Hon'ble Karnataka High Court in the cases cited above (supra) held that a cooperative society registered under Karnataka Souharda Sahakari Act, 1997 also fall within the definition of cooperative society as defined u/s 2(19) of the Act. Therefore, the reasoning of the ld. CIT(A) that the appellant society is not a cooperative society, cannot be accepted. Therefore, the income earned by the appellant society from its members on the credit is exempt from tax u/s 80P(2)(a)(i) of the Act. As regards income earned on advance income with nominal members, n....

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....or denial of exemption u/s 80P(2)(d) of the Act is that interest was received from cooperative bank has no legs to stand as a cooperative bank is also a cooperative society. This issue was considered by the Hon'ble Karnataka High Court in the case of CIT vs. Totagars Cooperative Sale Society, 392 ITR 74 (Karn) wherein the Hon'ble High Court referring to the Hon'ble Supreme Court in the case of Totgars Co-operative Sales Society Ltd. (supra) held that the ratio of decision of the Hon'ble Supreme Court in the aforesaid case (supra) not to be applicable in respect of interest income on investment as same falls under the provisions of section 80P(2)(d) and not u/s 80P(2)(a)(i) of the Act. 9. Even the decision of Pune Bench of the Tribunal in ....

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....s. 80P on interest income and that of the Hon'ble Delhi High Court in Mantola Cooperative Thrift Credit Society Ltd. Vs. CIT (2014) 110 DTR 89 (Delhi) not allowing deduction u/s.80P on interest income earned from banks. Both the Hon'ble High Courts took into consideration the ratio laid down in the case of Totgar's Cooperative Sale Society Ltd. (2010) 322 ITR 283 (SC). There being no direct judgment from the Hon'ble jurisdictional High Court on the point, the Tribunal in Shri Laxmi Narayan Nagari Sahakari Pat Sanstha Maryadit (supra) preferred to go with the view in favour of the assessee by the Hon'ble Karnataka High Court in the case of Tumkur Merchants Souharda Credit Cooperative Ltd. (supra). 10. Insofar as the rel....