TaxTMI 
TaxTMI 
2021 (8) TMI 1042
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....ative Society, Hyderabad. As the facts of Citizen society & the assessee society is totally different. Difference in facts of the case are as under : i. Citizen Society is basically registered under Andra Pradesh Mutually Aided Co - Operative Societies Act, 1995 & subsequently registered under Multi State Co-Operative Societies Act, 2002. But the provisions of APMACS Act is applied, while passing an order. Where as our society is registered under Karnataka Souharda Sahakari Act, 1997. Therefore this judgment is not applicable to our society case. ii. Sec 2(r) of the KSS Act, 1997, 'member' means a person who has contributed towards the share capital of co - operative before its registration and includes a person admitted to membership after such registration in accordance with the Act, rules and the bye - laws (and includes a nominal member). Where as Sec 2(p) of APMACS Act, 1995 'member means a member of a co - operative society. This Act does not say member includes a nominal and associate member. Therefore any member other than regular member is a non member. But here in KSS Act, it includes nominal and associate members. iii. Para 15(iii) ....
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....rally, reasonably and in favour of the assessee (Bajaj Tempo Limited, Bombay Vs. CIT, Bombay City -III, Bombay) Supreme Court judgment. It is also treat that such a provision has to be construed as to effectuate the object of the Legislature and not to defeat it (CIT, Bombay & Ors Vs Mahindra and Mahindra Limited & Ors) Supreme Court judgment. Therefore the same may be applied in our case by considering the main objects & substance of the activities done by the society. ix. Para 27 of the judgment, the appellant cannot be treated as a co - operative society meant only for its members and providing credit facilities to its members. Where as our society has accepted the deposits from members & loans given to members only. Therefore in totality this judgment of Hon. Supreme Court of India is not applicable to our society as the facts & objectives of the society are completely different. On plain reading of the Citizen society judgment, the society is running to earn the profit & not to pay the income tax by taking the shelter under the Income Tax Act through Section 80P(2)(a)(i). Where as our society's main objective is to promote the savings among the members & uplift th....
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....appellant craves leave to add, delete, amend or otherwise modify or withdraw one or more of the above grounds either before or at the time of hearing of this appeal." 3. The issue that arises for consideration is, as to whether the revenue authorities were justified in denying the claim of the assessee for reduction u/s 80P(2)(a)(i) of the Act. Originally the issue had come up before the Tribunal in ITA No. 827/B/17 and by its order dated 31.10.2017 remanded the matter back to the AO with a direction to apply the principles laid down by the Hon'ble Supreme Court in the case of Citizens Cooperative Society Ltd in Civil appeal No. 10245/2017 dated 08.08.2017. 4. In the remand proceedings, the AO came to the conclusion that the assessee had admitted nominal members and provided credit facilities to nominal members and therefore the principle the of mutuality was not satisfied. He came to the conclusion that as per the decision of Hon'ble Supreme Court in the case of Citizens Co-op Society (Supra), if the principle of mutuality is not satisfied, then the assessee is not entitled to deduction u/s 80P(2)(a)(i) of the Act. Accordingly the AO confirmed the disallowance of deduction o....
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....ndustry, Tata Equity P/E fund, Reliance Growth Fund, Tata MIP Plus Fund which are non-members and thus against the bye-laws of the society. The assessee had earned income from e-stamping of Rs. 4,71,572 which is earned form General public. In view of the above, the AO disallowed the deduction of Rs. 87,10,540/- claimed u/s.80P(2)(a)(i) of the Act. 8. On appeal, the CIT(Appeals) noticed from the Bye laws of the society, that the assessee society also recognizes members as General members, Associate members and nominal members. The society is accepting deposits and also lending loans to nominal/associate members, the details of which are as follows:- No. of members Share capital Regular members 2980 Rs. 37,14,700 Nominal Members 29327 Rs. 3,54,44,035 Associate members 32307 Rs. 3,91,58,735 9. In respect of admitting members, the CIT(A) observed that the assessee society has admitted excess nominal/associate members which is more than 15% of the total members when compared to regular members which is in violation of Karnataka Co-operative Society Act, 1959. In view of the violation of the Karnataka Co-operative Society Act, CIT(A) obser....