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2022 (1) TMI 540 - HC - Income TaxDeduction u/s 80P - entities registered under the Souharda Act - Appellant Cooperative registered under the Karnataka Souharda Sahakari Act 1997 enacted by the Government of Karnataka falling under the definition of Section 2[19] for the purpose of Section 80P - whether the appellate cooperative is not a cooperative society since it is registered under the Karnataka Souharda Sahakari Act, 1997 and not under the Karnataka Co-operative Societies Act? - Whether the definition of ‘cooperative’ in Section-2[e] of the Karnataka Souharda Sahakari Act, 1997, enacted by the Government of Karnataka, deeming to be “Cooperative Society” for the purpose of the enactments mentioned in the said society is only illustrative or exhaustive and not restricted to the enactments mentioned in the said Section? - HELD THAT:- The fallout of the object and reasons and the subsequent amendment which takes the forefront by this 97th Constitution Amendment is appreciating “Cooperative movement.” By incorporating part IX-B in the Constitution under the head “The Co-operative Society” and making it part of directive principles of the state policy, it becomes explicit that the co-operative movement is top priority of the Central Government’s Policy and its implementation. Merely, because separate definitions are provided for the words “Co-operative” and “Co-operative Society” under Section 2[e] and [g] respectively of Sec.2 of Souharda Act, it cannot be construed as their characteristic is different, since their nomenclature is different. Importance has to be given to the word “Cooperative” which is found in both the enactments i.e., Act No.11 of 1959 and Act No.17 of 1997, as adjective pre-fixed to the noun that means the characteristic of the organization/institution while applying the principle of hormonial construction and interpretation of the laws, especially the laws which are intended to promote the organization of that character. The Souharda Act and the Karnataka Cooperative Societies Act, 1959 are both in force in the State of Karnataka and are regulated by the State Registrar of Co-operatives Karnataka. Registrar of Cooperative Societies governs all Co-operatives while being formed, alteration of bylaws and closure of the Co-operative Societies. Though the aforesaid two Acts are parallel but are in respect of Co-operatives in the State as the name suggests. Once the entities are governed by the Co-operative Principles under the law in force and registered under the State enactment, which by implication or otherwise shall only have a same meaning of Co-operative Society. Both these Acts [Souharda Act and Cooperative Societies Act, 1959] would come within the ambit of Article 246[3] read with Entry 32 of the List-II of Schedule – VII of the Constitution of India. The judgments cited by the learned counsel for the Revenue inasmuch as Articles 246 and 254 would be of no assistance in adjudicating the dispute in the case on hand. If a strict literal interpretation is given to the word ‘Co-operative’ as canvassed by the learned counsel for the Revenue, in the absence of rate of tax fixed for such ‘Co-operative’, no tax liability would arise in the light of the judgment of the Hon’ble Apex Court in the case of Govind Saran Ganga Saran supra. Hence, the said arguments are negated. The provisions of Section 80P offers tax deduction in respect of income of Co-operative Societies which is enacted with a laudable object of promoting Co-operating moment. Such benefit cannot be denied to the so called Co-operatives under the Souharda Act merely on hyper technicalities. The interpretation given by the Revenue to Section 2[19] of the Act is untenable. A harmonious reading of the said provisions would indicate that Co-operative Society registered under the Co-operative Societies Act, 1959 alone is not the Cooperative Society for the purposes of the Income Tax Act, as the phrase ‘or’ employed with the following words ‘under any other law for the time being in force in any State for the registration of Co-operative Society’ if read, Co-operative Societies registered under the Souharda Act which is a State enactment would certainly be construed as Co-operative Society coming within the ambit of Section 2[19]. We find no jurisdictional error in the order passed by the learned Single Judge in extending the benefit of Section 80P to the entities registered under the Souharda Act.Writ appeals stand dismissed.
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