Section 2(19)

Section 2(19) — the law in short

What the courts have decided on section 2(19), in one screen. Read this first; open an entry when you need the facts, the reasoning and the source.

• Mavilayi Service Co-operative Bank Ltd v CIT Supreme CourtHelps taxpayer
  My society lends to non-members too. Does that wipe out its 80P(2)(a)(i) deduction?
  No. The deduction stands: the society need not lend only for agricultural purposes, and lending to non-members does not disentitle it — only the profits from non-member loans fall outside the deduction. Section 80P(4) shuts out only co-operative banks licensed to carry on banking business.
• Citizen Credit Co-operative Bank Ltd v ITO (TDS Ward), Mumbai High CourtHelps taxpayerValidity unconfirmed
  We are a co-operative bank. The TDS officer says we should have deducted tax under s.194A on fixed deposit interest paid to co-operative housing societies that are not our members, and has treated us as an assessee in default. Is he right?
  No, on the Bombay High Court's reading. Clause (v) of s.194A(3) has two limbs, and the words 'other than a co-operative bank' appear only in the first limb, which deals with interest paid by a society to its members; the second limb — interest 'credited or paid by a co-operative society to any other co-operative society' — carries no such exclusion, so a co-operative bank, which remains a co-operative society, is not obliged to deduct tax on interest paid to non-member co-operative societies. Paragraph 42.7 of CBDT Circular No. 19 of 2015 says the same thing in terms.
• Thiruvananthapuram District Electricity Board Employees Co-operative Society Ltd v ITO High CourtCuts both waysHigh Courts differ
  Our employees' credit society earns interest from the District Co-operative Bank and also from the treasury. The Commissioner (Appeals) refused s.80P(2)(d) on both. Where does the Kerala High Court stand?
  The Kerala High Court quashed the appellate orders so far as they refused the deduction, holding that the entitlement to deduct interest received by a co-operative society from its investments with other co-operative societies is settled in the assessee's favour by its own Division Bench decision in Pr. CIT v Peroorkada Service Co-operative Bank Ltd. (2022) 442 ITR 141 (Ker). Interest from a District Co-operative Bank was therefore deductible; interest from the treasury was not, and the year in which treasury interest was received was sent back for re-examination.
• Thorapadi Urban Co-op Credit Society Ltd v ITO High CourtHelps taxpayerHigh Courts differ
  I have received a s.148A(b) notice and a s.148A(d) order saying my society's s.80P(2)(d) deduction on interest from a co-operative bank has escaped assessment. Can I challenge the notice itself rather than fight through the reassessment?
  In this case yes. The Madras High Court, in writ petitions against s.148A(b) notices, s.148A(d) orders and s.148 notices, held that a co-operative society registered under the State Co-operative Societies Act remains a co-operative society within s.2(19) whether or not it carries on banking, so interest from a co-operative bank qualifies under s.80P(2)(d); because the impugned orders were passed without considering that, they were set aside and the notices quashed.
• M/s Swabhimani Souharda Credit Co-operative Ltd v Government of India High CourtHelps taxpayerValidity unconfirmed
  We are registered under the Karnataka Souharda Sahakari Act 1997, not the Karnataka Co-operative Societies Act 1959. The Assessing Officer says we are not a 'co-operative society' under s.2(19) and so cannot claim s.80P at all. Is that right?
  No. The Karnataka High Court declared that entities registered under the Karnataka Souharda Sahakari Act, 1997 fit the definition of 'co-operative society' in s.2(19) of the Income-tax Act, 1961 and are therefore entitled to stake their claim to the benefit of s.80P. The definition covers a society registered under the Co-operative Societies Act 1912 or under any other law for the time being in force in a State for the registration of co-operative societies, and the 1997 Act is such a law.
• Coimbatore District Central Co-operative Bank Ltd v ITO (TDS) High CourtHelps taxpayer
  The department has raised s.201 demands on our co-operative bank for not deducting tax on time deposit interest paid to members in years before June 2015. Does the Finance Act 2015 amendment to s.194A(3)(v) apply to those years?
  No. The Madras High Court held that the words 'other than a co-operative bank' were inserted in s.194A(3)(v) by the Finance Act 2015 with prospective effect from 1 June 2015, and that an amendment is prospective unless made retrospective by express language or necessary implication. For interest paid or credited to members before that date the exemption in s.194A(3)(v) was available, and the Court also held that no State or central enactment draws a distinction between a co-operative bank and a co-operative society carrying on banking business.
• Technopolis Premises Co-operative Society Ltd v Pr. CIT — s.80P is expressly carved out of the AMT add-back ITATHelps taxpayerValidity unconfirmed
  The Commissioner has revised my co-operative society's assessment under s.263 because AMT on adjusted total income came out higher than the normal tax. The department's working grossed up my total income by the s.80P deduction. Is that right?
  It is not. Clause (i) of s.115JC(2) requires total income to be increased by deductions claimed under any section "other than section 80P" included in Chapter VI-A under heading C. The Assessing Officer's internal working had added back the s.80P deduction of Rs.56,16,242, producing an adjusted total income of Rs.1,13,55,916 instead of the correct Rs.57,39,674; on the correct figure the AMT was lower than the normal tax, so there was no prejudice to the Revenue and no ground for revision.
• Statutory position — s.194A(3)(v) and (viia): when a co-operative society or a co-operative bank must deduct tax on interest CBDT Circulars & InstructionsCuts both waysValidity unconfirmed
  Our co-operative society pays interest to members, to other co-operative societies and to outsiders. Which of these payments carry a TDS obligation under s.194A?
  Clause (v) of s.194A(3) exempts two things and must be read as two limbs: income credited or paid by a co-operative society, other than a co-operative bank, to a member thereof; and income credited or paid by a co-operative society to any other co-operative society. The words 'other than a co-operative bank' were inserted in the first limb by the Finance Act 2015 with effect from 1 June 2015, so from that date a co-operative bank must deduct tax on interest on time deposits of its members; the second limb was not amended and carries no exclusion of a co-operative bank, so interest paid by any co-operative society, including a co-operative bank, to another co-operative society remains outside sub-section (1).
• Statutory position — s.80P(4): which bodies are shut out, and what the Banking Regulation Act 1949 actually defines CBDT Circulars & InstructionsCuts both ways
  The Assessing Officer says my society is a co-operative bank and so s.80P(4) denies the whole deduction. What does he have to establish before he can say that?
  Section 80P(4) provides that the provisions of s.80P shall not apply in relation to any co-operative bank other than a primary agricultural credit society or a primary co-operative agricultural and rural development bank, and its Explanation borrows the meanings of 'co-operative bank' and 'primary agricultural credit society' from Part V of the Banking Regulation Act, 1949. Under Part V a co-operative bank is only one of three things — a State co-operative bank, a central co-operative bank or a primary co-operative bank — so unless the society answers one of those three descriptions it is not hit by sub-section (4), whatever its name or its bye-laws call it.

Listed strongest first: Supreme Court, then High Court, then Tribunal, then CBDT. Nothing here has yet been read in full by a chartered accountant — open an entry to see where it came from.