TaxTMI 
TaxTMI 
2013 (4) TMI 574
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....the assessee is entitled for deduction u/s. 80P(2)(a)(vi) of the Act and is also assailing his decision in granting partial relief u/s 40(a)(ia) of the Act. In the Cross Objection the assessee is assailing the decision of the Ld. CIT(A) in partially confirming the disallowance made u/s. 40(a)(ia) of the Act. 3. The facts relating to the case are stated in brief. The assessee is a co-operative society and is engaged mainly in running restaurants, under the name and style of "Indian coffee House". It filed its return of income for the year under consideration declaring a loss of Rs. 2,97,446/-. During the assessment proceedings, the Assessing Officer noticed that the assessee did not deduct tax at source on rent payments. Accordingly, he disallowed the sum of Rs. 12,19,536/- by invoking sec. 40(a)(ia) of the Act. The Assessing Officer also noticed that the assessee did not offer interest received from its members amounting to Rs. 16,93,334/- as its income. When this was pointed out to the Authorised Representative of the assessee, he admitted that he had nothing to explain in this regard. Accordingly, the Assessing Officer added the above said sum also. The Assessing Officer compu....
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....ial assistance to the society. (3) the State Government. The Ld D.R submitted that the bye-laws of the society did not mention anything about the voting rights and further the bye laws give the impression that the persons who are not the workers can also become members of the society. By placing reliance on the decision of the Hon'ble Gujarat High Court in the case of Gora Vibhaj Jungle Kamdar Mandali vs. CIT reported in 161 ITR 658, the Ld. DR submitted that the assessee- society shall not be entitled for exemption u/s. 80P(2)(a)(vi) of the Act if the voting right is extended to individuals who do not contribute their labour. The Ld. DR further submitted that the exemption u/s. 80P(a)(vi) is available only when the earning of the assessee-society was through utilisation of the actual labour of its members. For this proposition, the Ld. DR placed reliance on the decision of the Hon'ble High Court of Orissa, Nilagiri Engineering Co-operative Society Ltd. vs. CIT, (1994) 208 ITR 326. 6. On the contrary, the Ld. Counsel for the assessee submitted that the assessee society was formed to give employment to the workers who have retired from the Coffee Board and they themselves c....
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.... in sub-section (1) shall be the following , namely- (a) In the case of a co-operative society engaged in- (i).....(v) (vi) the collective disposal of the labour of its members, or the whole of the amount of profits and gains of business attributable to any one or more of such activities. Provided that in the case of a co-operative society falling under sub- clause (vi), or sub-clause (vii), the rules and bye-laws of the society restrict the voting rights to the following classes of its members, namely- (1) the individuals who contribute their labour or, as the case may be, carry on the fishing or allied activities; (2) the co-operative credit societies which provide financial assistance to the society. (3) the State Government. (b) ...... (c) in the case of a co-operative society engaged in activities other than those specified in clause (a) or clause (b) (either independently of, or in addition to, all or any of the activities so specified), so much of its profits and gains attributable to such activities as does not exceed,- (i) Where such co-operative society is a consumers'co-operative society, one hundred thousand rupees; and (ii) In any other ca....
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....ely satisfy both the conditions viz., that it is a society engaged in the collected disposal of labour of its members and further the voting rights are restricted by the bye-laws and rules of the society to the three classes of the members specified in the proviso to sec. 80P(2) of the Act. As already stated, the assessing officer did not examine both the issues during the course of assessment proceedings. 12. The Ld D.R also furnished a copy of Profit and Loss account before us. On a perusal of the same, we notice that the assessee is deriving income from Sales, Commission on sale of Lottery, Lucky Vat Commission, dividend income, interest income and rental income. However, the Ld CIT(A) has held that the members of the society themselves do the work and run coffee house. The other types of income earned by the assessee society has escaped the attention of Ld CIT(A). Further the Ld CIT(A), without examining the Bye-laws of the society, has given a finding that the voting rights are confined to the individuals who contribute their labour, where as the fact remains that the Bye-laws is silent about the voting rights. 13. According to Ld D.R, the bye-laws permits membership to ....