Statutory validity of bye-laws governs exemption under section 80P(2)(a)(vi); inconsistent voting rights cannot sustain the claim.

Eligibility for exemption under section 80P(2)(a)(vi) depends on whether the society's bye-laws and voting-right structure conform to the Kerala Co-operative Societies Act and Rules. The Court noted that voting rights in such a society are confined by the statutory scheme, and a bye-law granting voting rights to sympathiser members without labour rights would be void if inconsistent with the parent Act and Rule 5. Because the Tribunal had not properly examined these statutory provisions and had relied on another decision without establishing its relevance under the Kerala enactment, its order could not stand. The matter was remitted for fresh consideration in accordance with law.

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Issues: Whether the assessee was entitled to exemption under section 80P(2)(a)(vi) of the Income-tax Act, 1961 in the light of the voting-rights provisions in its bye-laws and the Kerala Co-operative Societies Act and Rules, and whether the Tribunal could sustain the exemption without examining that statutory validity.

Analysis: The income of the society arose from collective disposal of the labour of its members, bringing the claim within section 80P(2)(a)(vi), but the proviso to section 80P(2)(a) restricts voting rights in such a society to specified classes. The bye-laws conferred voting rights on sympathiser members who had no right to labour. The Court held that the effect of section 20 of the Kerala Co-operative Societies Act and section 2(m) was that voting rights were confined to members having the status contemplated by the Act, while Rule 5 required bye-laws to conform to the Act. If the bye-laws were inconsistent with the Act and Rules, the voting-right provision would be void. The Tribunal had not properly examined these provisions and had merely followed another Tribunal decision without establishing its applicability under the Kerala enactment.

Conclusion: The Tribunal's order could not stand and was set aside. The matter was remitted to the Tribunal for fresh consideration in accordance with law, and the referred question was not answered.

Final Conclusion: The exemption claim was left for reconsideration after proper examination of the statutory validity of the bye-laws governing voting rights, and the case was sent back for a fresh decision on that basis.

Ratio Decidendi: In determining eligibility for exemption under section 80P(2)(a)(vi), the adjudicating authority must first examine whether the society's bye-laws comply with the governing co-operative statute and rules, because a bye-law inconsistent with the parent Act is ultra vires and cannot control the statutory exemption.

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