TaxTMI 
TaxTMI 
2019 (12) TMI 1180
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....lved, we are proceeding to dispose them off through a consolidated order for the sake of convenience. ITA No. 5285/MUM/2018 Assessment Year: 2012-13 2. The grounds of appeal filed by the assessee read as under: 1. The Ld. CIT(A) erred in law and on facts in confirming the action of the AO in denying that the appellant is a mutual concern and thereby denying exemption in respect of the income on the ground of mutuality. 2. The Ld. CIT(A) erred in law and on facts in not appreciating that the appellant has acted without any profit motive purely for the benefit of members. 3. Briefly stated, the facts of the case are that the assessee filed its return of income for the assessment year (AY) 2012-13 on 28.09.2012 di....
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....y. Making reference to clause 4(a) to (f) of its Bye-laws, it is stated that the appellant does not have any intention to earn profit. Further, making reference to clause 13 of Bye-laws, it is stated that only employees of Ordanance Factory can become its members. Thus it is argued that on the basis of the above facts, the income earned by trading with its members should not be treated as business income. Finally, the Ld. counsel submits that the proportionate/prorata deduction which has been given by the AO u/s 80P(2)(d) for interest received/accrued on investments made in Thane District Co-operative Bank for various funds is not based on any sound reasoning. 6. On the other hand, the Ld. Departmental Representative (DR) submits that....
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.... Stores effects purchases of various goods from the manufacturers/wholesellers at competitive price and sales are effected to members only, either on cash or on credit basis ; credit sales proceeds are recovered from members through their employer i.e. Ordnance Factory and its allied establishment, Ambarnath from salaries. Thus it is observed by us that the object is not to earn profit but to provide best possible consumer goods at best price to its members only. It is a case of mutual entity running on principles of mutuality. The essence of mutuality lies in the return for what one has contributed to a common fund. The fund should fulfill the essential requirements that all the contributors to the common fund must be entitled to partic....
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....1,80,580/- arising from trading between members of Co-operative Society as exempt on principles of mutuality and claiming deduction of interest earned from Co-operative Bank amounting to Rs. 7,70,784/- u/s 80P(2)(d) of the Act. The AO allowed deduction u/s 80P(2)(d) in respect of interest earned on fixed deposits amounting to Rs. 7,70,784/- with other Co-operative Society after deduction of expenses on percentage basis. The AO allowed net interest deduction of Rs. 96,040/- after deducting proportionate expenses for earning such interest income received from another Co-operative Bank. The AO calculated the proportionate expenses @ 87.54%. In appeal, the Ld. CIT(A) agreed with the action of the AO in respect of deduction of proportionate e....