The main legal point established is that entities registered under the Karnataka Souharda Sahakari Act, 1997 fit into the definition of 'cooperative society' as per sec. 2(19) of the Income Tax Act, 1961, and are entitled to claim the benefit of sec. 80P.

ORDER :

1. Petitioner in W.P. No. 48414/2018 is a Credit Cooperative, registered under the Karnataka Souharda Sahakari Act, 1997 (hereafter “1997 Act”) petitioner in W.P. No. 14381/2019 is registered as the State Federal Cooperative, as provided under Section 33 of the said Act; they have knocked at the doors of writ court in substance for a prayer that they are entitled to seek deduction in respect of their income in terms of the scheme envisaged under section 80P of the Income Tax Act, 1961 (hereafter “1961 Act”) on the premises that they too are a Cooperative Society, on par with those registered under the provisions of Karnataka Co-operative Societies Act, 1959.

2. After service of notice, the Respondent Nos. 1 and 3 are represented by their Senior Panel Counsel and the State is represented by the learned AGA.

3. Regardless of unsatisfactory pleadings of the petitioners, their learned counsel submits that there have been two legislations relating to Cooperative Societies in the State of Karnataka viz. the Karnataka Co-operative Societies Act, 1959 the Karnataka Souharda Sahakari Act, 1997, the entities registered under the 1997 Act also answer the definition of “cooperative society” enacted in sec. 2(19) of the Income Tax Act 1961 and therefore, they are entitled to seek the benefit of sec. 80P thereof; the learned Panel Counsel for the Revenue per contra contends that the definition u/s 2(19) mentions of only a cooperative society and not a Souharda Co-operative; in the guise of judicial interpretation, the scope of the definition cannot be widened than what is prescribed by the Parliament; a stand in variance with this will have far reaching implications on the Exchequer.

4. In the light of the rival submissions half heartedly made at the Bar, the following question of law arises for consideration:

“Whether an entity registered under the Karnataka Souharda Sahakari Act, 1997 fits into the definition of “co-operative society” as enacted by sec. 2(19) of the Income Tax Act, 1961 for the purpose of Section 80P thereof?”

5. Having heard the learned counsel for the parties and having perused the petition papers, this Court is of a considered opinion that the answer to the above question needs to be in the affirmative for the following reasons:

(a) Sec. 80P of the 1961 Act provides for deduction in respect of income of Co-operative Societies is obvious going by its very text, sub-section (1) of said section reads as under:

“80P. (1) Where, in the case of an assessee being a co-operative society, the gross total income includes any income referred to in sub-section (2), there shall be deducted, in accordance with and subject to the provisions of this section, the sums specified in sub-section (2) in computing the total income of the assessee.”

The other provisions of this section being not of much relevance to the question being treated, are not reproduced, although they too have been looked into.

Sec. 2(19) which finds a place in the Dictionary Clause of the 1961 Act reads as under:

“co-operative 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.”

The provisions of sec.80P are enacted by the Parliament for promoting the co-operative movement in the Country in tune with what Father of the Nation Mahatma Gandhi preached to the countrymen; this Section needs to be liberally construed to effectuate the legislative object of encouraging & promoting the growth of co-operative movement vide Kanga and Palkhivala’s The Law and Practice of Income Tax, 10th Edition, Lexix Nexis at page 1656, it is more so because the right to form a co-operative society itself is made a Fundamental Right, now enshrining in Article 19(1)(i) by virtue of 97th Amendment to the Constitution of India w.e.f. 15.10.2013.

(b) the object of enacting sec. 80P of the 1961 Act may be defeated if a restrictive meaning