The Revenue Tax Division, which had been protecting the co-operatives in Kerala at bay for a very long time on Thursday, was stopped by the Supreme Court docket for its intervention. The vital ruling is that revenue tax shouldn’t be paid on the revenue of co-operative banks. The decision is a reduction to all of the co-operatives which aren’t sanctioned by the Reserve Financial institution, together with the first agricultural credit score societies.
The Supreme Court docket clarified that every one the societies registered below the Kerala Co-operative Act ought to be handled as co-operative societies. Solely teams accepted by the Reserve Financial institution ought to be thought of as co-operative banks.
Within the state, Kerala Financial institution, Malappuram District Financial institution and licensed city banks are on this class. Solely these should not eligible for exemption below Section 80P of the Revenue Tax Act.
The intervention of the Revenue Tax Division in co-operatives got here in 2007 when the Central Authorities amended the Finance Act. Appeals in opposition to this had been rejected by the Revenue Tax Commissioner. Regardless of approaching the tribunal, there was no escape. The teams then approached the Excessive Court docket. Perinthalmanna Service Co-operative Financial institution and Chirakkal and Mavilai Service Banks have filed separate petitions in two separate benches of the Excessive Court docket. Following this, 13 teams filed an enchantment earlier than the Excessive Court docket Full Bench.
The total bench verdict dated March 19, 2019 was that the Revenue Tax Division can determine whether or not to grant exemptions or not by analyzing the enterprise yearly. That is what the Supreme Court docket overturned.
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