TMI Blog2019 (12) TMI 1X X X X Extracts X X X X X X X X Extracts X X X X ..... se of The Citizen Co-operative Society Ltd. Vs. ACIT (supra) is squarely applicable in this year and respectfully following the same, I hold that the present assessee is not eligible for deduction u/s. 80P in Assessment Year 2016-17. In the result, the appeal filed by the assessee for Assessment Year 2016-17 is dismissed. Number of associated members is well within the prescribed percentage of 15% of regular members and hence, on this aspect, there is no violation of the provisions of the Karnataka Cooperative Societies Act, 1959 in Assessment Year 2015-16. In Assessment Year 2015-16 also, the AO and ld. CIT(A) has followed the same judgment of the Hon ble Apex Court rendered in the case of The Citizen Co-operative Society Ltd. Vs. ACIT (supra) without any specific finding as to which provisions of the Karnataka Cooperative Societies Act, 1959 is being violated by assessee society in Assessment Year 2015-16. Hence, I feel it proper to restore the matter back to the file of ld. CIT(A) for fresh decision in Assessment Year 2015-16. Hence set aside the order of ld. CIT(A) in Assessment Year 2015-16 and restore the matter back to his file for fresh decision. - ITA Nos. 1220 & 1221 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ss of finance and have to be termed as Co-operative Society, thereby entitling them under Section 80P(2)(a)(i) of the Act, under the facts and in the circumstances of the Appellant's case. 7. Without prejudice to seek waiver with the Hon'ble CCIT/DG, the appellant denies itself liable to be charged to interest u/s 234B of the Act, which under the facts and in the circumstances of the Appellant's case deserves to be cancelled. 8. For the above and other grounds that may be urged at the time of hearing of the appeal, your Appellant humbly prays that the appeal may be allowed and Justice rendered and the Appellant may be awarded costs in prosecuting the appeal and also order for the refund of institution fees as part of the costs. 3. The grounds raised by the assessee for Assessment Year 2016-17 in ITA No. 1221/Bang/2019 are as under. 1. The order of the learned Commissioner of Income Tax (Appeals) Mangalore in so far as it is prejudicial to the appellant are opposed in law, equity, weight of evidence, probabilities, facts and circumstances of the case. 2. The learned Commissioner of income Tax (Appeals), Mangalore has er ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... y registered u/s.7 of Karnataka State Co-op Society Act, 1959 (hereinafter referred to as KCS Act. 1959) and engaged in business of banking and providing credit facilities to its members. The Appellant filed its return of income for the AYs 2015-16 and 2016-17 declaring NIL total income after claiming deduction u/s. 80P of ₹ 25,74,304/- and ₹ 41.37,472/- respectively. Both returns of income were selected for scrutiny through CASS. The assessing officer noticed that the principles of mutuality were violated by the Appellant society and therefore denied the deduction in view of the Hon'ble Supreme Court decision in case of Citizen Co-op Society Ltd. The assessing officer disallowed the entire deduction claimed on the following grounds. a) Interest income was held to be income from other sources and excluded from the deduction u/s 80P(2)(a)(i). Further deduction under Section 80P(2)(d) was also denied relying on the Karnataka High Court decision in the case of Totgar's Cooperative Sale Society Ltd dated 16th June 2017. b) The principles of mutuality were violated relying upon the decision of Hon'ble Apex Court in the case of M/s C ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ill be within 15% limit. At this juncture, the bench pointed out that as per the figures noted by ld. CIT(A) on page no. 12 of his order, there was only 307 associated members in Assessment Year 2015-16 and this number of associated members was within the 15% limit prescribed as per the provisions of section 18 of the Karnataka Cooperative Societies Act, 1959 w.e.f. 06.09.2014. The bench pointed out that in Assessment Year 2016-17, the number of associated members has gone up to 540 which means 233 new associated members were made after 06.09.2014 i.e. after the limit was prescribed in Karnataka Cooperative Societies Act, 1959 that the number of associated members should not exceed 15% of regular members. The bench observed that under these facts, there is gross violation of the Karnataka Cooperative Societies Act, 1959 by the assessee after the amendment as on 06.09.2014 and because of this reason, the judgment of the Hon ble Apex Court rendered in the case of The Citizen Co-operative Society Ltd. Vs. ACIT as reported in 397 ITR 1 is squarely applicable and therefore, in Assessment Year 2016-17, the assessee s claim for deduction u/s. 80P of the IT Act is not allowable because it ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... f the provisions of the Karnataka Cooperative Societies Act, 1959 in Assessment Year 2015-16. In Assessment Year 2015-16 also, the AO and ld. CIT(A) has followed the same judgment of the Hon ble Apex Court rendered in the case of The Citizen Co-operative Society Ltd. Vs. ACIT (supra) without any specific finding as to which provisions of the Karnataka Cooperative Societies Act, 1959 is being violated by assessee society in Assessment Year 2015-16. Hence, I feel it proper to restore the matter back to the file of ld. CIT(A) for fresh decision in Assessment Year 2015-16. Hence I set aside the order of ld. CIT(A) in Assessment Year 2015-16 and restore the matter back to his file for fresh decision by way of a speaking and reasoned order as to how the judgment of Hon ble Apex Court rendered in the case of The Citizen Co-operative Society Ltd. Vs. ACIT (supra) is applicable in this year by giving a categorical finding as to which provision of the Karnataka Cooperative Societies Act, 1959 has been violated by assessee in Assessment Year 2015-16. If it is found that the assessee has violated some provisions of the Karnataka Cooperative Societies Act, 1959, obviously the assessee will not ..... X X X X Extracts X X X X X X X X Extracts X X X X
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