Just a moment...

Report
FeedbackReport
Bars
×

By creating an account you can:

Logo TaxTMI
>
Feedback/Report an Error
Email :
Please provide your email address so we can follow up on your feedback.
Category :
Description :
Min 15 characters0/2000
TMI Blog
Home / RSS

2003 (3) TMI 19

X X   X X   Extracts   X X   X X

Full Text of the Document

X X   X X   Extracts   X X   X X

....ion under section 80P(2)(a)(vi) of the Income-tax Act, 1961?" The brief facts necessary for the purpose of this case are as follows: The respondent-assessee is a co-operative society, the members of which are engaged in labour work on contract with the Food Corporation of India, Palakkad. For the assessment year 1992-93, the assessee filed nil return, contending that its entire income is exempted under section 80P(2)(a)(vi) of the Income-tax Act, 1961 (for short "the Act"). The Assessing Officer completed the assessment on a total income of Rs. 6,25,893. The exemption claimed was denied on the ground that the voting right was not restricted by the bye-laws of the society to the members doing labour. The Assessing Officer noted that certain....

X X   X X   Extracts   X X   X X

Full Text of the Document

X X   X X   Extracts   X X   X X

....rala Co-operative Societies Act, particularly, section 20 thereof, and the Tribunal, without even considering the scope and ambit of the provisions of section 20 of the Co-operative Societies Act, had held that the assessee is entitled to exemption under section 80P(2)(a)(vi). Shri P. Balachandran, learned counsel appearing for the respondent, on the other hand, submits that though sympathisers, few in number (five members), were also admitted as members of the society, without any right to work, and were given the right to vote, the right to vote conferred to those members was contrary to the provisions of section 20 of the Co-operative Societies Act, and, by virtue of the provisions of Rule 5 of the Co-operative Societies Rules, the prov....

X X   X X   Extracts   X X   X X

Full Text of the Document

X X   X X   Extracts   X X   X X

....ection (2)(a) says that in the case of a co-operative society falling under sub-clause (vi) or sub-clause (vii), the rules and bye-laws of the society should restrict the voting right to the following classes of its members, viz., (1) the individuals who contribute their labour or, as the case may be, carry on fishing or allied activities; (2) the co-operative credit societies which provide financial assistance to the society; and (3) the State Government. As we have already noted, under the bye-laws of the society voting power is given to its members, who are sympathisers, who have no right to work, also (clause 5 of the bye-laws dealt with by the Assessing Officer in paragraphs 2 and 3 of the assessment order). Thus, going by the proviso ....

X X   X X   Extracts   X X   X X

Full Text of the Document

X X   X X   Extracts   X X   X X

.... section 20, voting right is conferred only to an active member of a society. It is also specified that a nominal or associate member shall not have the right to vote. Thus, the question that arises for consideration is as to whether sympathisers, who have no right to labour can be treated as active members of a society, or only nominal or associate member falling under clause (a) of the proviso to section 20 read with section 2(m). Rule 5 of the Co-operative Societies Rules clearly provides that the byelaws of a co-operative society shall not be contrary to the provisions of the Act. If the voting power conferred to members, who are sympathisers, without the right to labour under clause (5) of the bye-laws is contrary to the provisions of ....