TaxTMI 
TaxTMI 
2024 (1) TMI 844
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....18 of the Karnataka Co-operative Societies Act, 1959 by having more than 15% associate members (other than regular members). b) On the facts and in the circumstances of the case and in law the CIT(A)/NFAC erred in deleting the disallowance u/s 80P(2)(a)(i) of the Act of Rs. 45,52,542/- without appreciating the ratio of the decision in the case of Citizen Co-operative Society Limited, Hyderabad Vs. ACIT, Circle (1), Hyderabad in Civil Appeal Number 10245/2017. c) On the facts and in the circumstances of the case and in law the CIT(A)/NFAC erred in deleting the addition u/s 68 of Rs. 1,47,17,500/- without appreciating that the assessee society was not authorized to collect specified bank notes from its members. d) On the facts and in the circumstances of the case and in law the CIT(A)/NFAC erred in deleting the addition u/s 68 of Rs. 1,47,17,500/- without appreciating that the assessee society has brought into its books the moneys represented by specified bank notes which was not legal tender after 8.11.2016. 3.1 Ground Nos.(a) & (b) relates to the issue of deduction u/s 80P(2) of the Act. Ground Nos.(c) & (d) relates to the issue of addition u/s 68 of t....
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....tive Societies Act, 1959 on 10.2.1995. It was submitted that the amendment to Karnataka Co- operative Societies Act, 1959 in section 18 limiting the admission of associate members not in excess of 15% was effective only from 6.9.2014. It was thus contended that the amendment to section 18 of the Karnataka Co-operative Societies Act will not have application to the case in hand. 5. We have heard the rival submissions and perused the materials available on record. The Hon'ble Apex Court in the case of Mavilayi Service Co-operative Bank Ltd. & Ors. Vs. CIT cited (supra) had held that the expression "members", since it is not defined under the Income-Tax Act, the meaning/expression "members" must be considered n the context of the provision of the law enacted by the State legislature under which Co-operative Society claiming exemption has been formed. It is, therefore, necessary to consider the expression "member" in section 80P(2)(a)(i) of the Act in the light of definition as contained in section 18 of the Karnataka Co-operative Societies Act, 1959, which reads as follows: "Nominal or associate Members - (1) Notwithstanding anything contained in Section 16, a Co-....
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...., the ratio decidendi of Citizen Cooperative Society Ltd. (supra), must be given effect to. Section 80P of the IT Act, being a benevolent provision enacted by Parliament to encourage and promote the credit of the co-operative sector in general must be read liberally and reasonably, and if there is ambiguity, in favour of the assessee. A deduction that is given without any reference to any restriction or limitation cannot be restricted or limited by implication, as is sought to be done by the Revenue in the present case by adding the word "agriculture" into Section 80P(2)(a)(i) when it is not there. Further, section 80P(4) is to be read as a proviso, which proviso now specifically excludes co-operative banks which are co-operative societies engaged in banking business i.e. engaged in lending money to members of the public, which have a license in this behalf from the RBI. Judged by this touchstone, it is clear that the impugned Full Bench judgment is wholly incorrect in its reading of Citizen Cooperative Society Ltd. (supra). Clearly, therefore, once section 80P(4) is out of harm's way, all the assessees in the present case are entitled to the benefit of the deduction contained in s....
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....led the present appeal before the Tribunal. The solitary reason for the ld. AO to make the addition u/s 68 of the Act was that as per the Gazette Notification No.2652 dated 8.11.2016 of Government of India, assessee was not the authorized person to collect the SBNs by the RBI. On the facts of the instant case, it is noticed that assessee had stopped collecting the SBNs after the receipt of the Notification dated 14.11.2016 issued by the RBI, which has clearly clarified that assessee Co-operative Society cannot accept the demonetization notes. Section 68 of the Act warrants the assessee to satisfy three conditions namely (i) the identity of the creditor (ii) the creditworthiness of the creditor; and (iii) genuineness of the transaction. In the instant case, assessee had provided all the details of the above amounts detailing the party-wise details, the identity of the creditors, etc. at the time of hearing before AO and CIT(A). In other words, the assessee had furnished the details such as from whom the amounts are collected, where it is accounted and the details of the loans and deposits. Hence, the assessee cannot be made liable u/s 68 of the Act as unexplained credit. The evidenc....