M/s. Udupi Taluk Protestant Christian Credit Co-operative Society Ltd. Vs. The Income Tax Officer, Ward – 1, Udupi

Parties Involved

Facts Summary

The assessee, M/s. Udupi Taluk Protestant Christian Credit Co-operative Society Ltd., is a co-operative credit society registered under the Karnataka Co-operative Societies Act. During the assessment year 2017-18, the assessee filed its return of income declaring a total income of Rs. 31,090 and claimed a deduction of Rs. 99,02,248 under section 80P(2)(a)(i) of the Act. The Assessing Officer (AO) disallowed the deduction on the ground that the assessee had transacted with nominal members who are part of the general public. The AO also added provisions for the Employees Gratuity Fund and disallowed a sum of Rs. 42,750 under section 40(a)(ia) of the Act. The assessee appealed to the Commissioner of Income Tax (Appeals) (CIT(A)), which dismissed the appeal. The assessee then filed an appeal before the Income Tax Appellate Tribunal (ITAT).…

Legal Issues

• 1. Whether the appellate authority was justified in denying the benefit of deduction u/s. 80P(2)(a)(i) of the Act to the appellant holding the 'concept of mutuality' was dislodged in appellant society.
• 2. Whether the appellant is entitled for deduction in respect of its Business profits of Rs. 64,36,986/- u/s. 80P(2)(a)(i) of the Act considering Sec. 2(f) and Sec. 60 of Karnataka Co-operative Societies Act, 1959 vis-à-vis the judgement of Hon'ble Apex Court in The Mavilayi Service Co-op. Bank Ltd. & Ors. vs. C.I.T. Calicut & anr.
• 3. Whether the appellant is entitled for deduction in respect of the income from Business that arose to it from its Associate Members to the extent of permissible cap specified under Sec. 18 of Karnataka Co-operative Societies Act, 1959.
• 4. Whether the appellate authority was justified in sustaining the addition made by the Respondent in the impugned order disallowing the Provision for Employees Gratuity Fund Rs. 8,22,430/- and Legal fees of Rs. 42,750/- aggregating to Rs. 8,65,180/-.
• 5. Whether both the authorities below passed the impugned Orders contrary to established principles laid down by the Hon'ble Supreme Court and jurisdictional High Court.

Judgment Outcome

Decided in favour of Assessee.

Precedents Relied Upon

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