2021 (1) TMI 912

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....ounting to Rs. 10,67,783. 3. The brief facts of the case are as follow: The assessee is a co-operative society registered under the Karnataka Co-operative Societies Act, 1959. For the assessment year 2016-2017, the return of income was filed on 30.03.2017 declaring `Nil' income, after claiming deduction u/s 80P(2)(a)(i) of the I.T.Act amounting to Rs. 10,67,783. The assessment was taken up for scrutiny by issuance of notice u/s 143(2) of the I.T.Act. The assessment was passed u/s 143(3) of the I.T.Act vide order dated 23.10.2018. The Assessing Officer denied the claim of deduction u/s 80P(2)(a)(i) of the I.T.Act for the reason that assessee was providing credit facilities to Non-members, namely, associate / nominal members. The A.O. r....

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....he Bangalore Benches of the Tribunal in the case of M/s. Athmashakthi Multipurpose Co-operative Society Ltd. v. ITO [ITA Nos.1220 & 1221/Bang/2019 - order dated 18.10.2019] and in the case of M/s.Vikasha Vividhoddesha Sahakara Sangha Niyamitha v. ITO [ITA No.1424/Bang/2019 - order dated 08.11.2019]. 7. I have heard rival submissions and perused the material on record. In the instant case, admittedly, assessee has been accepting deposits and given loans primarily to associate / nominal members. Section 18 of the Karnataka Co-operative Societies Act, 1959, defines nominal or associate members as under:- "Nominal or Associate members : Not with standing anything contained in section 16, a co-operative society may admit, (a....

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.... the Karnataka Cooperative Societies Act, 1959 is allowed to do have nominal / associate members up to 15% for its total membership. In the instant case, the assessee-society is accepting deposits and also providing credit facilities to nominal / associate members far exceeding 15% of its total business. The A.O. has come to a categorical finding that regular members is less than 15%, whereas, non-members, i.e., nominal / associate members are exceeding 87% of the total members. This categorical finding of the A.O. has not been dispelled by the assessee before the Tribunal. Therefore, there is a clear violation of provisions dealing with non-members as per Karnataka Co-operative Societies Act, 1959. Therefore, the ratio of the judgment of t....