The Supreme Court verdict on January 12 upholding income tax exemption under Section 80P for primary agricultural credit societies has widely been welcomed.
“The verdict has saved more than 90% of cooperatives from closure. These primary institutions will benefit from the verdict,” said Kince Varghese, secretary, Mavilayi Service Cooperative Bank, Kannur, on Wednesday.
The verdict, exempting credit societies and other primary societies from paying income tax, was delivered by a three-judge bench comprising justices R.F. Nariman, Naveen Sinha and K.M. Joseph. The SC ruling came on a Kerala High Court full bench verdict of March 2019, said Mr. Varghese.
He added that there were 1,638 primary agricultural credit societies in the State, which would benefit from the SC verdict. There are, among others, miscellaneous societies and women’s cooperatives that stand to benefit.
The Cochin Chamber of Commerce and Industry welcomed the verdict. P.M. Veeramani, vice president of the Chamber, said the verdict would save co-operatives from incurring huge liabilities of over ₹5,500 crore. He added that the ruling had given a new impetus to the economy of Kerala in the context of COVID-19. Disputes since 2007 have now been laid to rest.
According to the verdict, Mr. Varghese said, all cooperatives registered under the Kerala Cooperative Societies Act could be considered as cooperative societies, and that only those operating with Reserve Bank of India licence could be considered as cooperative banks.
