TMI Blog2014 (6) TMI 1057X X X X Extracts X X X X X X X X Extracts X X X X ..... a nominal and an associated member. In order to attract the benefit of deduction in respect of income of a co-operative society, what is required is that the assessee claiming benefit should be carrying on the business of banking or providing credit facilities to its members. As an individual could be a nominal member both of a federal society and a co-operative society and if a federal society extends credit facilities to such nominal members, the income derived from such business falls within Sub-Section (2)(a)(i) of Section 80P of the Act. Therefore, the assessee would be entitled to the benefit of deduction. Therefore, the finding recorded by the Tribunal that the assessee is entitled to the said benefit is strictly in accordance wi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... here another society is a member of the assessee-society, all members of the former do not ipsofacto become members of the assessee-society. Therefore, relying on the judgment of the Apex Court in the case of U.P. Co-operative Cane Unions Federation Limited .vs. CIT(1997) 11 SCC 287 disallowed the deduction and brought the said amount to tax. The assessee s appeal against the said order before the Commissioner of Income Tax(Appeals) came to be dismissed. In the appeal filed against the said orders before the Tribunal, the Tribunal held that in U.P. Co Operative Cane Unions Federation Limited s case, the Apex Court relied on the judgment of the Apex Court in Assam Co-Operative Apex Marketing Society Limited .vs. CIT (Addl.) [1993]201 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... o are not the direct members of the federation in violation of the bylaws which provide for extending facilities only to the member societies? 5. In order to appreciate the said contention, it is necessary to look into the relevant provisions. Section 80P(2)(a)(i) of the Income Tax Act reads as under:- carrying on the business of banking or providing credit facilities to its members, or Section 80P deals with deduction in respect of income of co-operative societies. Sub-section(2) deals with various types of income earned by a co-operative society. One such income is income derived by the Society which is engaged in carrying on the business of banking or providing credit facilities to its members. Such income is exempted from pa ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rative Housing Federation Limited is a co-operative society registered under the Act. It is a federal society, the membership of which is open to a co-operative society registered under the Act and not to individuals. However, the proviso makes it clear that if an individual is to be admitted as a member of a Federal Society it could be done as a nominal member. The definition of a Member contained under Section 2(f) includes a nominal and an associated member. Therefore, in order to attract the benefit of deduction in respect of income of a co-operative society, what is required is that the assessee claiming benefit should be carrying on the business of banking or providing credit facilities to its members. As an individual could be a nomi ..... X X X X Extracts X X X X X X X X Extracts X X X X
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