TaxTMI 
TaxTMI 
2024 (9) TMI 582
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....Credit Co-operative Limited being a credit cooperative society registered under Karnataka Souhardha Sahakari Act, 1997 had e-filed the return of income for the AY 2018-19 on 1.10.2018 declaring Nil income after claiming deduction u/s 80P of the Act amounting to Rs. 36,02,052/-. The said return was then processed u/s 143(1) of the Act. Thereafter, the notice u/s 143(2) of the Act was issued to the assessee on 22.9.2019 and subsequently notices u/s 142(1) were issued time to time for further verification and enquiry. In response to the notice issued u/s 142(1) of the Act, the assessee uploaded details/information on the e-portal. After perusing and considering the details/information submitted during the course of assessment proceedings, the ....
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....articipators in the surpluses and hence the concept of mutuality in the said entity ceases to exist. The denial of voting rights is patently discriminatory and does not enable the member to have a say in the way the affairs of the society ought to be carried on and thereby violate the cooperative principles which forms the foundation of the mutual concern. It is immaterial to go into the argument of the extent of the association of such member in the concerns i.e. whether the share of such members in the whole mutual concern is miniscule or of great numbers as the concept of mutuality is based on equality among the members. 2.2 In view of the above, the AO held that the society cannot be termed as a mutual concern and the principles of mut....
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.... resultant interest is nothing but income in the hands of the society. The assessee has invested the idle funds which were not required for lending to its members with Co-op Banks or scheduled banks and earned interest on such funds. The assessee has invested the excess funds which were not required by the assessee for its immediate operations. In view of the above discussion, the AO held that the interest income of Rs. 2,92,14,754/- derived by the assessee society from loans/advances/investment in share/schedule bank/district Cooperative bank is not eligible for deduction u/s 80P(2)(a)(i) of the Act and requires to be added to income of the assessee as "income from other sources" u/s 56 of the Act. Hence, the same was added to the income o....
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....or deduction under section 80P(2)(a)(i) of the Act and requires to be added to the income of the assessee as "Income from Other Sources" under section 56 of the Income tax Act, 1961. Hence, the same is added to the income of the assessee and the assessment of interest income of Rs. 2,92,14,754/- as income from other sources was confirmed by the ld. CIT(A). 4. 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. v. CIT & Anr. (123 taxman.com 161) had held that the co-operative societies providing credit facilities to its members is entitled to deduction u/s 80P(2)(a)(i) of the Act. The Hon'ble Apex Court after considering the j....
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.... & Ors. v. CIT & Anr. (supra). The relevant finding of the Co-ordinate Bench of the Tribunal in the case of M/s. Ravindra Multipurpose Cooperative Society Ltd. v. ITO (supra), reads as follows:- "6. Grounds 2-4 & additional Ground No.1: In respect of associate / nominal members, Hon'ble Supreme Court in the case of Mavilayi Service Co-operative Bank Ltd. v. CIT (2021) 123 taxmann.com 161 (SC) has held that the expression "Members" is not defined in the Income-tax Act. Hence, it is necessary to construe the expression "Members" in section 80P(2)(a)(i) of the Act in the light of definition of that expression as contained in the concerned co-operative societies Act. In view of this, the facts are to be examined in the light of principles l....