Home Case Index All Cases Income Tax Income Tax + AT Income Tax - 2018 (3) TMI AT This
Forgot password New User/ Regiser ⇒ Register to get Live Demo
2018 (3) TMI 1807 - AT - Income TaxEligibility for deduction u/s. 80P(2)(a)(i) - principles of mutuality - DR submitted that an assessee would be eligible for relief only if it falls within two categories of co-operative banks i.e., 'primary agricultural cooperative society' and 'primary co- operative agricultural and rural development bank' - HELD THAT:- AO examined the books of accounts and found that the society had advanced loans to non-voting/non-profit sharing members and earned profit from them. However, the profit was shared only with the voting members/shareholding members and hence, principles of mutuality did not exist among all the classes of members and accordingly held that the assessee is not eligible for deduction u/s. 80P(2)(a)(i) and completed the assessment. These findings have not been disputed. Thus, when the profits of the assessee are not shared with Associate Members as is done with the Members, it is clear that these assessee’s case fail on the principles of mutuality. Referring to case of THE CITIZEN CO-OPERATIVE SOCIETY LIMITED, THROUGH ITS MANAGING DIRECTOR, HYDERABAD VERSUS ASSISTANT COMMISSIONER OF INCOME TAX [2017 (8) TMI 536 - SUPREME COURT] it is clear that the Hon’ble Supreme Court rejected the above assessee’s claim holding that the principles of mutuality was missing in that case. Although, both the Members to the transactions of this assessee are the contributors towards surplus, however, the Associate Members are not entitled to the benefits of surplus of the assessee and hence, the principles of mutuality is missing in this case. The assessee cannot be treated as a Co-operative Society meant only for its Members and providing credit facility to its Members and hence they are not entitled to the benefit of section 80P(2)(a)(i) of the Act. The Revenue’s above appeal is allowed.
|