TaxTMI 
TaxTMI 
2019 (5) TMI 1654
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....no. (i) to (ix) of Ground No. 2 are either general or arguments. In course of hearing, it was submitted by the learned AR of the assessee that only Ground No. 2 is pressed and remaining grounds including sub grounds no. (i) to (ix) of Ground No. 2 are not pressed. Accordingly all grounds except Ground No. 2 are rejected as not pressed and I reproduce Ground No. 2 which is to be decided. This reads as under:- "2. The learned Commissioner of Income tax (Appeals) erred in law as well as on facts in applying the judgment of Hon. Supreme Court of India in the case of Citizen Co - Operative Society, Hyderabad. As the facts of Citizen Society & the assessee society is totally different. Difference in facts of the case are as under:"....
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....is judgment that even if a small portion of total income is earned from nominal members, deduction u/s 80P should not be allowed qua such income although deduction is to be allowed in respect of income from regular members as held by CIT (A) in the present case. He submitted that the order of CIT (A) is very cryptic without comparing the facts of the present case with the facts in the case of Citizen Co - Operative Society Limited vs. ACIT (Supra). He submitted that under these facts, the matter should be restored to CIT (A) for a fresh decision after comparing the facts of the present case with the facts in the case of Citizen Co - Operative Society Limited vs. ACIT (Supra). Learned DR of the revenue supported the order of AO & CIT (A). ....
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....d borrowers are quiet distinct. In reality, such activity of the appellant is that of finance business and cannot be termed as co-operative society. It is also found that the appellant is engaged in the activity of granting loans to general public as well. All this is done without any approval from the Registrar of the Societies. With indulgence in such kind of activity by the appellant, it is remarked by the Assessing Officer that the activity of the appellant is in violation of the Co-operative Societies Act. Moreover, it is a cooperative credit society which is not entitled to deduction under Section 80P(2)(a)(i) of the Act. 26. It is in this background, a specific finding is also rendered that the principle of mutuality is miss....
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....dings of fact which have remained unshaken till the stage of the High Court. Once we keep the aforesaid aspects in mind, the conclusion is obvious, namely, the appellant cannot be treated as a co-operative society meant only for its members and providing credit facilities to its members. We are afraid such a society cannot claim the benefit of Section 80P of the Act. 28. This appeal, therefore, fails and is hereby dismissed with costs." 6. I find that as per this judgment of Hon'ble Supreme Court rendered in the case of Citizen Co - Operative Society Limited vs. ACIT (Supra), this is not the ratio that that even if a small portion of total income is earned from nominal members, deduction u/s 80P should not be allowed qua such in....
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....g from regular member but to be disallowed in respect of income from nominal members. In fact, in the present case, apart from this objection that about 28% of interest income is from nominal members, there is no observation about any other aspect of various objection raised in the case of Citizen Co - Operative Society Limited vs. ACIT (Supra) and it is held by CIT (A) that deduction should be disallowed in respect of interest earned from nominal members by stating that this is the ratio of this judgment of Hon'ble Supreme Court rendered in the case of Citizen Co - Operative Society Limited vs. ACIT (Supra) but in my considered opinion as evident from relevant paras of this judgment reproduced above, this is not the ratio of this judgment.....