TaxTMI 
TaxTMI 
2025 (3) TMI 2215
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....f the Act to the tune of Rs. 15,06,464/-. The AO issued statutory notices to the assessee. The assessee furnished detailed reply, from which the AO noticed that the assessee had earned interest incomes from investments, FD with Bank, Saving Deposit and Flexi Deposit, totaling to Rs. 4,70,899/-. The AO also noticed from the profit and loss account produced by the assessee that the above interest incomes earned by the assessee during the year under consideration had been reflected in the credit side of the profit and loss account. The AO, on the basis of interest incomes earned by the assessee, issued notice to the assessee proposing variation of Rs. 4,70,899/-. The assessee uploaded its reply on 09.08.2022 accepting the proposed variation of Rs. 4,70,899/-. The AO accordingly made a disallowance of Rs. 4,70,899/- under section 80P of the Act and assessed the total income of the assessee at Rs. 4,70,899/-. 3. Aggrieved, the assessee preferred an appeal before the NFAC. However, the appeal before the NFAC came to be dismissed after considering the submissions of the assessee agitating the denial of exemption under section 80P of the Act. 4. Now, the assessee has approached this ....
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.... assessee (Ld. A.R.) submitted that there is a delay of 12 days in filing the appeal before the Tribunal. The Ld. A.R. further submitted that the Honorary Secretary of the assessee-society had filed an application dated 07.09.2024 for condonation of delay, duly supported by an Affidavit, stating therein that during the relevant period, when the order of the NFAC was uploaded on the e-profile/email, wife of the Honorary Secretary was admitted in the Hospital for childbirth and owing to this pre-occupation and post-delivery care of the wife and child, he could not devote time for filing the appeal before the Tribunal within the stipulated period. He prayed that the delay be kindly condoned. 6. The Ld. Sr. D.R. had no objection to the delay being condoned. 7. In view of the prayer made by the Ld. A.R. and no objection by the Ld. Sr. D.R., I condone the delay in filing of the appeal and admit the appeal for hearing. 8. The Ld. A.R. submitted that the allegation of the AO that non-Members of the assessee-Society have been granted credit facilities is factually incorrect. He reiterated that only bonafide staff of Union Bank of India can become members of the assessee-Society and....
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....sal of the Annual Report submitted, it is observed that the Society has Regular Members as also Nominal Members. Such Nominal Membership is offered to members on payment of Rs. 100/-. As per the above provisions, governing the conduct of the Assessee, the Assessee cannot admit Nominal Members and deal with them". The AO has further stated in the Show Cause Notice at Point No. (iii) and (iv) that "The second category is that of nominal members, who make deposits with the assessee for the purpose of obtaining loans etc. As per the return of income, the assessee has received Rs. 401/- towards Membership fee. (iv) This category of persons is neither members nor nominal/associate members. " Thus, the main allegation of the AO was that the assessee-society had nominal members, which the AO had identified from the Annual Report filed by the assessee. The AO had further observed that the assessee had two categories of members viz. (1) Resident Members or Ordinary Members and (2) Nominal Members. The AO had also observed that the assessee had received Rs. 401/- as Membership from such Nominal members and that the assessee was granting loans to Nominal members which was not permissible. It i....
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....r was there any discussion regarding category of members in the Annual Report dated 21.10.2018. Further, nothing has been stated in the Annual Report to suggest that the assessee had advanced loans to Nominal members or accepted deposits from Nominal members. It is further noticed that in the reply dated 02.01.2021, the assessee-society had very clearly stated that all the members of the society were bonafide employees of the Union Bank of India only and no outsider was admitted as member and neither any deposit was accepted nor any loan was advanced to such members. In my opinion, the AO had failed to pinpoint the name of any such member, who was not the employee of Union Bank of India or establish with evidence that the assessee had advanced loan or accepted deposits to/from any such persons, who were not the employees of the Union Bank of India. Thus, the AO had placed reliance on the judgment of the Hon'ble Supreme Court in the case of Citizen Co-operative (supra) without even establishing with any evidence as to how the facts in that case were applicable to the case at hand. The facts emanating from the judgment of the Hon'ble Supreme Court in the case of Citizens Coop....
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....nt members are the same. There are no outside members in the society except the employees of Union Bank. The assessee society is thus a mutual concern. Income derived by it from its operations is distributed amongst members. All the members are entitled to participate in the surplus, thereby creating an identity. In order to apply principle of mutuality, there must be complete identity between contributors and participators and requirement of law bring that contributors of the common fund and participators in the surplus must be an identical body. What is essential is that members of the assessee as a class must be able to participate in the surplus. It is immaterial whether surplus is paid back to the members or is put to reserve with the society for development and for providing better amenities to the members. There is complete identity between the contributors and the participators of the assessee. (v) It is not the case of the AO that substantial deposits are received from Nominal members as was in the case of Citizens Cooperative, on the contrary there are no nominal members and whereas in the case of assessee, all the deposits have been received and loans have been ....