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| The Tax Publishers2020 TaxPub(DT) 1392 (Bang-Trib) INCOME TAX ACT, 1961
Section 80P(2)(a)(i)
Where AO denied deduction under section 80P(2)(a)(i) on the ground that business of providing credit facilities to members carried on by assessee could not be regarded as a business carried on by a co-operative society complying with the principles of mutuality since assessee had admitted nominal members, who could neither vote nor were entitled to a share in profits as per the bye-laws of assessee, matter was remanded back to AO for fresh decision after examining other conditions for allowing such deduction because those conditions were not still examined by AO.
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Deduction under section 80P(2)(a)(i) - Co-operative society - Denial on the ground of alleged violation of principles of mutuality due to admission of nominal members -
Assessee, an agricultural Co-operative Society, registered under the Karnataka Co-operative Societies Act, 1959 claimed deduction under section 80P(2)(a)(i). AO denied assessee's claim on the ground that business of providing credit facilities to members carried on by assessee could not be regarded as a business carried on by a co-operative society complying with the principles of mutuality since assessee had admitted nominal members, who could neither vote nor were entitled to a share in profits as per the bye-laws of assessee. Assessee contended that admission of nominal members was permissible under Karnataka Co-operatives Societies Act, 1959 and there was no violation of any of the provisions of the said Act.Held: Matter was remanded back to AO for fresh decision regarding allowability of deduction under section 80P(2)(a)(i) after examining other conditions for allowing such deduction because those conditions were not still examined by AO.
Followed:/b>Sindhu Credit Souharda Sahakari Niyamita v. ITOn ITA No. 2144/Bang/2019-Order, dated 4-12-2019.
REFERRED :
FAVOUR : In assessee's favour.
A.Y. :
IN THE ITAT, BANGALORE BENCH
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