TaxTMI 
TaxTMI 
TaxTMI 
2019 (12) TMI 1
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....g the disallowance of Rs. 25,74,304 under section 80P(2)(a)(i) on the ground that the Associate Members of the Appellant exceeds 15% of the Regular Members and therefore, it is a violation of Karnataka State Co-operative Societies Act, 1959. 3. The findings of the learned Commissioner of Income Tax (Appeals), Mangalore that the Appellant has violated the provisions of Karnataka State Co-operative Societies Act, 1959 is perverse and contrary to the materials available on record. 4. The learned Commissioner of Income Tax (Appeals), Mangalore has erred in considering the Appellant Society's 'Nominal Members' as 'General Public' when the legislature has permitted this membership with restricted rights and obligations under the facts and in the circumstances of the appellant's case. 5. The learned Commissioner of Income Tax (Appeals), Mangalore has erred in citing the case of Citizen Co-operative Society Civil Appeal No. 10245 of 2017 while dismissing the first appeal of the Appellant as the facts, circumstances and law in the case are different from that of the Appellant Society. 6. The learned Commissioner of Income Tax (Appeals) should have conside....
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....e different from that of the Appellant Society. 6. The learned Commissioner of Income Tax (Appeals) should have considered that the principles of mutuality is not applicable to the Appellant Co-operative Society as they are not in the business of finance and have to be termed as Co-operative Society, thereby entitling them under Section 80P(2)(a)(i) of the Act, under the facts and in the circumstances of the Appellant's case. 7. Without prejudice to seek waiver with the Hon'ble CCIT/DG, the appellant denies itself liable to be charged to interest u/s 234B of the Act, which under the facts and in the circumstances of the Appellant's case deserves to be cancelled. 8. For the above and other grounds that may be urged at the time of hearing of the appeal, your Appellant humbly prays that the appeal may be allowed and Justice rendered and the Appellant may be awarded costs in prosecuting the appeal and also order for the refund of institution fees as part of the costs." 4. The relevant facts till the assessment stage are noted by ld. CIT(A) in para 3 of his order which is reproduced hereinbelow for ready reference. "3. Facts of the case: The Appellant is a C....
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....erative society shall not exceed 15% of the total regular members. He further submitted that this restriction was also as per proviso to section 18 of the Karnataka Cooperative Societies Act 1959 w.e.f. 06.09.2014. He submitted that as per this amendment, restriction has been prescribed but no procedure has been framed for removing the existing Associated members and hence, the violation of this condition in Assessment Year 2016-17 is not because of any fault of the assessee and therefore this should not be considered as a violation of the provisions of the Karnataka Cooperative Societies Act 1959 by the assessee. He also submitted that as per the details available on page no. 2 of his written submissions, out of total 546 associated members, there was Nil transaction with 129 members and the account of six associated members were closed and in respect of 235 associated members, there was transaction of an amount below Rs. 10/- per member and hence, these members i.e. 129 + 235 + 6 total 370 should not be considered as associate members and if these members are reduced from total number of associated members i.e. 546, the remaining associated members will be within 15% limit. At th....
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....the number of associated members was well within the limit prescribed as per the provisions of section 18 of the Karnataka Cooperative Societies Act, 1959 amended w.e.f. 06.09.2014 and thereafter, the assessee has admitted 233 new associated members in violation of the provisions of the Karnataka Cooperative Societies Act, 1959 and hence, it is seen that in the present case in Assessment Year 2016-17, the assessee society has intentionally violated the provisions of the Karnataka Cooperative Societies Act, 1959 and hence, this judgment of the Hon'ble Apex Court rendered in the case of The Citizen Co-operative Society Ltd. Vs. ACIT (supra) is squarely applicable in this year and respectfully following the same, I hold that the present assessee is not eligible for deduction u/s. 80P in Assessment Year 2016-17. 6. In the result, the appeal filed by the assessee for Assessment Year 2016-17 is dismissed. 7. Now I take up the appeal of the assessee for Assessment Year 2015-16. In this year, the number of associated members is well within the prescribed percentage of 15% of regular members and hence, on this aspect, there is no violation of the provisions of the Karnataka Cooperative ....