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TMI Blog2022 (12) TMI 332X X X X Extracts X X X X X X X X Extracts X X X X ..... redit facilities to its members. The return of income for the assessment year 2017-18 was filed on 01.11.2017 declaring Rs.Nil income after claiming exemption of Rs.15,12,507/- 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, Gokak ('the Assessing Officer') vide order dated 26.02.2019 passed u/s 143(3) of the Act at a total income of Rs.15,12,507/- 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, 1977, which is not a co ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 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. Thus, this ground of appeal stands allowed. As regards to the exemption of income earn ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 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 the case of Sant Motiram Maharaj Sahakari Pat Sanstha Ltd. vs. ITO, 120 taxmann.com 10 wherein the Tribunal after making reference to the decisions of the Hon'ble Supreme Court in the case of Totgars Co-operative Sales Society Ltd. (supra) and having noticed the divergent views of the Hon'ble Karnataka H ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 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 reliance of the ld. DR on the case of Pr. CIT and Another Vs. Totagars Cooperative Sales Society (2017) 395 ITR 611 (Kar.) is concerned, we find that the issue in that case was the eligibility of deduction u/s.80P(2)(d) of the Act on interest earned by the assessee co-operative society on investments made ..... X X X X Extracts X X X X X X X X Extracts X X X X
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