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TMI Blog2021 (1) TMI 912X X X X Extracts X X X X X X X X Extracts X X X X ..... ing deposits and given loans primarily to associate / nominal members. the assessee-society is accepting deposits and also providing credit facilities to nominal / associate members far exceeding 15% of its total business. The A.O. has come to a categorical finding that regular members is less than 15%, whereas, non-members, i.e., nominal / associate members are exceeding 87% of the total members. This categorical finding of the A.O. has not been dispelled by the assessee before the Tribunal. Therefore, there is a clear violation of provisions dealing with non-members as per Karnataka Co-operative Societies Act, 1959. Therefore, the ratio of the judgment of the Hon ble Supreme Court in the case of Citizen Co-operative Society [ 2017 (8) TMI ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d the claim of deduction u/s 80P(2)(a)(i) of the I.T.Act for the reason that assessee was providing credit facilities to Non-members, namely, associate / nominal members. The A.O. relied on the judgment of the Hon ble Apex Court in the case of Citizen Co-operative Society Ltd. v. ACIT reported in 397 ITR 1 (SC) for denying the claim of deduction u/s 80P(2) of the I.T.Act. 4. Aggrieved by the order of the Assessing Officer in denying the claim of deduction u/s 80P(2)(a)(i) of the I.T.Act, assessee preferred an appeal to the first appellate authority. The CIT(A) held that since nominal and associate members of assessee is more than 15% of the total membership, there has been a violation of provisions of Karnataka Co-operative Societies Act ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... es nominal or associate members as under:- Nominal or Associate members : Not with standing anything contained in section 16, a co-operative society may admit, (a) Any individual as a nominal or associate member; (b) Any banking company as a nominal member; (c) Any firm, company, co operative society or any body or corporation constituted by or under any law for the time being in force, as a nominal or associate member. A nominal member shall not be entitled to any share in any form whatsoever in the assets or profits of the society and a nominal member who is an individual shall not also be entitled to become an office bearer of the society. An associate member may hold shares but shall not be entitled to b ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ear violation of provisions dealing with non-members as per Karnataka Co-operative Societies Act, 1959. Therefore, the ratio of the judgment of the Hon ble Supreme Court in the case of Citizen Co-operative Society (supra) is clearly applicable to the facts of the instant case. The Hon ble Apex Court in the case of The Mavilayi Service Co-operative Bank Ltd. Ors. v. CIT (supra) had clearly stated that when assessee is accepting deposits and providing credit facilities to non-members, the respective State Cooperative Societies Act will have application. As mentioned earlier, the Karnataka Co-operative Societies Act, 1959 prohibits non-members, i.e., nominal / associate members in excess of 15% of the total membership. Therefore, the judgmen ..... X X X X Extracts X X X X X X X X Extracts X X X X
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