2014 (6) TMI 1057

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....ederation Limited, which is a Cooperative Society had filed its return of income for the assessment year 2009-10 on 29.9.2011 admitting total income of Rs. 18,91,300/-. The case was selected for scrutiny. During the course of assessment proceedings, the assessing Officer noticed that the assessee had claimed an amount of Rs. 2,30,47,717/- as deduction under Section 80P(2)(a)(i) of the Act. The assessee was asked to explain. The assessee furnished its reply. After considering the reply, the assessing authority held that the said deduction is permissible only if the Cooperative Society is engaged in the business of banking or providing credit facility to its members. The word "member" used in the Co-Operative Societies Act only refers to a....

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....al Society and therefore, Section 80P(2)(a)(i) of the Act is not attracted and the Tribunal was in error in granting the relief. 4. Per contra, the learned counsel for the assessee submits that the proviso to the definition of a Federal Society makes it clear that the Federal Society carves out an exception to the general rules and persons and individuals who were admitted as nominal members are treated as members of the Federal Society also and therefore, the Tribunal was justified in granting the relief. Therefore, the substantial question that arises for our consideration in this appeal is as under:- "Whether the Tribunal was correct in allowing deduction under Section 80P(2)(a)(i) to assessee federation on interest inco....

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....s. It is open only to a co-operative society. However, the proviso carves out an exception and provides for admission of individuals as nominal members. In other words, they are not full fledged members. Similarly, the definition of member sets out the types of persons who could be the members of a cooperative society. They are (1) a person joining in the application for the registration of a co-operative society; (2) a person admitted to membership after such registration in accordance with the Act, Rules and the bye-laws; (3) a nominal member and (4) an associate member. A co-operative society is defined under the Act at Section 2(c) as under:- 'Co-operative Society' means a society registered or deemed to be registere....