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TMI Blog1998 (2) TMI 145X X X X Extracts X X X X X X X X Extracts X X X X ..... ment order. In the assessment order in para 2, the Assessing Officer has observed that the assessee received gross payments to the tune of Rs. 28,49,937. Out of gross payments and bills the Executive Engineer of PWD deducted Rs. 56,439 as TDS and Rs. 1,32,406 on account of security. The appellant reflected only net payments amounting to Rs. 26,60,948. The Assessing Officer took note of other payments regarding TDS and after working out the total payments in accordance with the TDS certificate, he came to the conclusion that the payment to the extent of Rs. 1,90,524 was not shown as receipts of the year under consideration and made an addition to the tune of Rs. 1,90,524. Aggrieved against the order passed by the Assessing Officer the appellant filed appeal before the CIT(A). 4. The learned CIT(A) accepted the plea of the ld. counsel that security deducted is not shown as part of the gross receipts because according to the method of accounting adopted regularly, the security is shown in the year when same is received back. The ld. CIT(A) has worked out difference to Rs. 57,974 which is mainly on account of not including the TDS with the payments received during the year under cons ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... pellant society particularly when the above mentioned amendment was found correct and approved by the Asstt. Registrar of the Co-op. Societies of the Co-op. Deptt. Who is the competent authority in the matter of working of the Co-op. Society in the District. Still further the appellant society has passed the necessary resolution again in the General Body meeting to remove this lacuna if any, recently." 8. During the assessment proceedings the Assessing Officer gave finding that the appellant is not fulfilling all the conditions laid under section 80P(2)(a)(vi) of the IT Act and as such the income is not fully exempt but is entitled to a statutory deduction of Rs. 20,000 provided under section 80P(2)(c)(ii) of the IT Act. Aggrieved against the finding of the Assessing Officer the appellant filed appeal before the CIT(A). The CIT(A) has observed that the Assistant Registrar vide report dated 11-7-1991 has stated that as per resolution, the voting rights were restricted to the members who contribute their labour but the Assistant Registrar did not offer any comment on bye-laws No. 53 under which only General Body of Co-operative Society could carry out amendment. The Assessing Offic ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... a simple majority at a general meeting with an ordinary quorum." In view of the foregoing discussion, it is apparent that Resolution No. 3 dated 7-1-1986 passed by the Managing Committee was beyond its purview since it has introduced a substantive amendment in the Bye-Law the voting rights could be restricted only by the General Body, (ii) Since the Managing Committee Resolution is not valid, as such, the voting rights were available to all members whether they contributed labour or not and deduction under section 80P(2)(a)(vi) cannot be allowed to the assessee in view of the proviso which was introduced w.e.f. 1-4-1972 [Gora Vibhag Jungle Karndar Mandali -161 1TR 658 (Guj.).] The ground of appeal is rejected." 9. The learned Counsel of the appellant made almost similar plea as was taken before the authorities below. 10. Apart from the discussions made above, the appellant has made claim that the case of the appellant is covered under section 80P(2)(a)(vi) of the IT Act. The sub-clause deals with the collective disposal of labour and its employees. The ld. Counsel has drawn our attention to the case of M/s. Guru Nanak Co-op (L C) Society Ltd., decided by the ITAT. There is ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the total membership of the society whichever is less. 6. No individual shall be eligible for admission as member of the society if: - (i) he has applied for bankruptcy. or (ii) he has been declared as an insolvent, or (iii) he has been sentenced for any offence involving dishonesty of moral turpituted within 5 years preceding the date of his admission as a member; or (iv) he is an approved contractor." It is also relevant to reproduce the Resolution 3 as follows: "Resolution No. 3: The meeting of the Ganesh Co-op. L C Society Ltd, Bhatinda held today i.e. on 7-1-1986 under the Presidentship of Sh. Boota Singh, President of the Society: - 1. That Sh. Suraj Bhan being Secretary is hereby authorised to write the proceedings of today. 2. It is hereby resolved that only those members would be entitled to voting right, who would work personally in the works allotted to the society." Not only that the said resolution is not passed in accordance with the Bye-Laws of the Society but also same is not passed by the competent authority. It is very much clear that even resolution does not delete the Bye-Laws 5 and 6 as reproduced above. This clearly shows that the issue ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ive Societies Act, that no nominal or sympathiser member shall have the right to vote and no such member shall be eligible to be a member of a Committee or for appointment as a representative of the society or any other society. It is, therefore, clear that the Gujarat State, after experience, has also, by amending the provisions of the Act, taken away the right to vote by nominal or sympathiser member even if provided by the rules or bye-laws. From the above discussion, it is clear that if the co-operative society as specified in sub-clause (vi) of section 80P(2) of the Income-tax Act wants to earn full exemption on the profits made by its, persons other than those three categories specified in the proviso to section 80P(2) of the Income-tax Act, can members of the society, but they should not be given the right to vote only to members specified in the proviso. The laudable object behind this enactment is to see that the working of such societies is not in any way interferred with or controlled by such outsiders. We have carefully considered the provisions of section 80P of the Act alongwith its object and we are of the view that the language of the proviso has clearly expressed t ..... X X X X Extracts X X X X X X X X Extracts X X X X
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