M/s. Athmashakthi Multipurpose Co-operative Society Limited, Mangaluru V. The Income tax Officer, Ward - 1(4), Mangaluru

ITA 1221/BANG/2019

• Counselvise Citation: [2019] 115 COUNSELVISE.COM (IT) 6505 (ITAT-BANGALORE)
• Duration Of Justice: 4 month(s) 20 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 18-10-2019
• Appeal Filed By: Assessee
• Order Result: Dismissed
• Bench Allotted: A
• Next Hearing Date: 25-09-2019
• Assessment Year: 2016-2017
• Appeal Filed On: 28-05-2019
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Assessee Lawyers: PRASANNA SHENOY
• Keywords: Opportunity of being heard; Co-operative Credit Society; Set aside
• Section: 234B; 80P; 20

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL SMC-A BENCH : BANGALORE BEFORE SHRI ARUN KUMAR GARODIA, ACCOUNTANT MEMBER I TA NO S . 1220 & 1221 /BANG/201 9 ASSESSMENT YEAR S : 20 1 5 - 16 & 2016 - 17 M/S. ATHMASHAKTHI MULTIPURPOSE CO-OPERATIVE SOCIETY LTD., I FLOOR, SHREE ARCADE, BALMATTA ROAD, BENDOREWELL, MANGALORE. PAN: AACAA3741R VS. THE INCOME-TAX OFFICER, WARD 1 (4), MANGALORE. APPELLANT RESPONDENT ASSESSEE BY : SHRI PRASANNA SHENOY, CA REVENUE BY : SHRI GANESH R. GHALE, STANDING COUNSEL FOR DEPT DATE OF HEARING : 2 5 .0 9 .2019 DATE OF PRONOUNCEMENT : 18 . 10 .2019 O R D E R PER SHRI A.K. GARODIA, ACCOUNTANT MEMBER BOTH THESE APPEALS ARE FILED BY THE ASSESSEE WHICH ARE DIRECTED AGAINST A COMBINED ORDER OF LD. CIT(A), MANGALURU DATED 28.03.2019 FOR ASSESSMENT YEARS 2015-16 AND 2016-17. BOTH THESE APPEALS WERE HEARD TOGETHER AND ARE BEING DISPOSED OF BY WAY OF THIS COMMON ORDER FOR THE SAKE OF CONVENIENCE. 2. THE GROUNDS RAISED BY THE ASSESSEE FOR ASSESSMENT YEAR 2015-16 IN ITA NO. 1220/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 ERRED IN LAW AND ON FACTS IN CONFIRMING THE DISALLOWANCE OF RS. 25,74,304 UNDER SECTION 80P(2)(A)(I) ON THE GROUND THAT THE ASSOCIATE MEMBERS OF THE APPELLANT EXCEEDS 15% OF THE REGULAR MEMBERS AND THEREFORE, IT IS A VIOLATION OF KARNATAKA STATE CO-OPERATIVE SOCIETIES ACT, 1959. 3. THE FINDINGS OF THE LEARNED COMMISSIONER OF INCOME TAX (APPEALS), MANGALORE THAT THE APPELLANT HAS VIOLATED THE PROVISIONS OF KARNATAKA ITA NOS. 1220 & 1221/BANG/2019 PAGE 2 OF 7 STATE CO-OPERATIVE SOCIETIES ACT, 1959 IS PERVERSE AND CONTRARY TO THE MATERIALS AVAILABLE ON RECORD. 4. THE LEARNED COMMISSIONER OF INCOME TAX (APPEALS), MANGALORE HAS ERRED IN CONSIDERING THE APPELLANT SOCIETY'S 'NOMINAL MEMBERS' AS 'GENERAL PUBLIC' WHEN THE LEGISLATURE HAS PERMITTED THIS MEMBERSHIP WITH RESTRICTED RIGHTS AND OBLIGATIONS UNDER THE FACTS AND IN THE CIRCUMSTANCES OF THE APPELLANT'S CASE. 5. THE LEARNED COMMISSIONER OF INCOME TAX (APPEALS), MANGALORE HAS ERRED IN CITING THE CASE OF CITIZEN CO-OPERATIVE SOCIETY CIVIL APPEAL NO. 10245 OF 2017 WHILE DISMISSING THE FIRST APPEAL OF THE APPELLANT AS THE FACTS, CIRCUMSTANCES AND LAW IN THE CASE ARE DIFFERENT FROM THAT OF THE APPELLANT SOCIETY. 6. THE LEARNED COMMISSIONER OF INCOME TAX (APPEALS) SHOULD HAVE CONSIDERED THAT THE PRINCIPLES OF MUTUALITY IS NOT APPLICABLE TO THE APPELLANT CO-OPERATIVE SOCIETY AS THEY ARE NOT IN THE BUSINESS 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 ERRED IN LAW AND ON FACTS IN CONFIRMING THE DISALLOWANCE OF RS. 41,37,470 UNDER SECTION 80P(2)(A)(I) ON THE GROUND THAT THE ASSOCIATE MEMBERS OF THE APPELLANT EXCEEDS 15% OF THE REGULAR MEMBERS AND THEREFORE, IT IS A VIOLATION OF KARNATAKA STATE CO-OPERATIVE SOCIETIES ACT, 1959. 3. THE FINDINGS OF THE LEARNED COMMISSIONER OF INCOME TAX (APPEALS), MANGALORE THAT THE APPELLANT HAS VIOLATED THE PROVISIONS OF KARNATAKA STATE CO-OPERATIVE SOCIETIES ACT, 1959 IS PERVERSE AND CONTRARY TO THE ITA NOS. 1220 & 1221/BANG/2019 PAGE 3 OF 7 MATERIALS AVAILABLE ON RECORD. 4. THE LEARNED COMMISSIONER OF INCOME TAX (APPEALS), MANGALORE HAS ERRED IN CONSIDERING THE APPELLANT SOCIETY'S 'NOMINAL MEMBERS' AS 'GENERAL PUBLIC' WHEN THE LEGISLATURE HAS PERMITTED THIS MEMBERSHIP WITH RESTRICTED RIGHTS AND OBLIGATIONS UNDER THE FACTS AND IN THE CIRCUMSTANCES OF THE APPELLANT'S CASE. 5. THE LEARNED COMMISSIONER OF INCOME TAX (APPEALS), MANGALORE HAS ERRED IN CITING THE CASE OF CITIZEN CO-OPERATIVE SOCIETY CIVIL APPEAL NO. 10245 OF 2017 WHILE DISMISSING THE FIRST APPEAL OF THE APPELLANT AS THE FACTS, CIRCUMSTANCES AND LAW IN THE CASE ARE DIFFERENT FROM THAT OF THE APPELLANT SOCIETY. 6. THE LEARNED COMMISSIONER OF INCOME TAX (APPEALS) SHOULD HAVE CONSIDERED THAT THE PRINCIPLES OF MUTUALITY IS NOT APPLICABLE TO THE APPELLANT CO-OPERATIVE SOCIETY AS THEY ARE NOT IN THE BUSINESS 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. 4. THE RELEVANT FACTS TILL THE ASSESSMENT STAGE ARE NOTED BY LD. CIT(A) IN PARA 3 OF HIS ORDER WHICH IS REPRODUCED HEREINBELOW FOR READY REFERENCE. 3. FACTS OF THE CASE: THE APPELLANT IS A CO-OPERATIVE SOCIETY 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 RS.25,74,304/- AND RS 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 ITA NOS. 1220 & 1221/BANG/2019 PAGE 4 OF 7 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 CITIZEN CO-OPERATIVE SOCIETY LTD, HYDERABAD DATED 8TH SEPTEMBER 2017. AGGRIEVED BY THE ASSESSMENT ORDER, THE APPEAL FOR AY 2015-16 IS FILED WITHIN THE STATUTORY TIME LIMIT. HOWEVER, THE APPEAL FOR AY 2016-17 WAS FILED 2 DAYS LATE ALONG WITH REQUEST FOR CONDONATION OF DELAY. TAKING INTO CONSIDERATION THE REQUEST OF THE APPELLANT, THE DELAY IS CONDONED AND APPEAL IS ADMITTED. THE APPELLANT RAISED THE FOLLOWING GROUNDS OF APPEAL. 5. BEING AGGRIEVED OF THE ASSESSMENT ORDER IN BOTH YEARS, THE ASSESSEE CARRIED THE MATTER IN BOTH YEARS BEFORE LD. CIT(A) WITHOUT SUCCESS. NOW THE ASSESSEE IS IN FURTHER APPEAL BEFORE THE TRIBUNAL. IT WAS SUBMITTED BY LD. AR OF ASSESSEE THAT ON PAGE NO. 12 OF HIS ORDER, THE LD. CIT(A) HAS NOTED ABOUT NUMBERS OF VARIOUS MEMBERS OF THE ASSESSEE IN BOTH THE YEARS FOR VARIOUS CATEGORIES I.E. ORDINARY MEMBERS, ASSOCIATED MEMBERS AND NOMINAL MEMBERS. HE SUBMITTED THAT IN ASSESSMENT YEAR 2015-16, THE ASSOCIATED MEMBERS WERE 307 AS AGAINST ORDINARY MEMBERS 2437 AND HENCE, IN THIS YEAR, THERE IS NO VIOLATION OF PROVISIONS OF SECTION 18 OF KARNATAKA COOPERATIVE SOCIETIES ACT 1959 AS PER WHICH THE NUMBER OF ASSOCIATED MEMBERS IN ANY CO-OPERATIVE SOCIETY EXCEPT EMPLOYEES CO-OPERATIVE SOCIETY SHALL NOT EXCEED 15% OF THE TOTAL REGULAR MEMBERS. HE FURTHER SUBMITTED THAT THIS RESTRICTION WAS ALSO AS PER PROVISO TO SECTION 18 OF THE KARNATAKA COOPERATIVE SOCIETIES ACT 1959 W.E.F. 06.09.2014. HE SUBMITTED THAT AS PER THIS AMENDMENT, RESTRICTION HAS BEEN PRESCRIBED BUT NO PROCEDURE HAS BEEN FRAMED FOR REMOVING THE EXISTING ASSOCIATED MEMBERS AND HENCE, THE VIOLATION OF THIS CONDITION IN ASSESSMENT YEAR 2016-17 IS NOT BECAUSE OF ANY FAULT OF THE ASSESSEE AND THEREFORE THIS SHOULD NOT BE CONSIDERED AS A VIOLATION OF THE PROVISIONS OF THE KARNATAKA COOPERATIVE SOCIETIES ACT 1959 BY THE ASSESSEE. HE ALSO SUBMITTED THAT AS PER THE DETAILS AVAILABLE ON PAGE NO. 2 OF HIS WRITTEN SUBMISSIONS, OUT OF TOTAL 546 ASSOCIATED MEMBERS, THERE WAS NIL TRANSACTION WITH 129 MEMBERS AND THE ACCOUNT OF SIX ASSOCIATED MEMBERS WERE CLOSED AND IN RESPECT OF 235 ASSOCIATED MEMBERS, THERE WAS TRANSACTION OF AN AMOUNT BELOW RS. 10/- PER ITA NOS. 1220 & 1221/BANG/2019 PAGE 5 OF 7 MEMBER AND HENCE, THESE MEMBERS I.E. 129 + 235 + 6 TOTAL 370 SHOULD NOT BE CONSIDERED AS ASSOCIATE MEMBERS AND IF THESE MEMBERS ARE REDUCED FROM TOTAL NUMBER OF ASSOCIATED MEMBERS I.E. 546, THE REMAINING ASSOCIATED MEMBERS WILL 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 CO- OPERATIVE SOCIETIES ACT, 1959 BY THE ASSESSEE AFTER THE AMENDMENT AS ON 06.09.2014 AND BECAUSE OF THIS REASON, THE JUDGMENT OF THE HONBLE 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 ASSESSEES CLAIM FOR DEDUCTION U/S. 80P OF THE IT ACT IS NOT ALLOWABLE BECAUSE IT WAS HELD BY HONBLE APEX COURT IN THE CASE OF THE CITIZEN CO-OPERATIVE SOCIETY LTD. VS. ACIT (SUPRA), AS PER PARA 25 OF THIS JUDGMENT THAT BECAUSE OF THE VIOLATION OF THE PROVISIONS OF MACSA I.E. MUTUALLY AIDED CO-OPERATIVE CREDIT SOCIETY ACT FOR A SOCIETY HAVING BEEN REGISTERED, UNDER SECTION 5 OF ANDHRA PRADESH MUTUALLY AIDED CO-OPERATIVE SOCIETIES ACT, 1995, SOCIETY CANNOT BE TERMED AS A COOPERATIVE SOCIETY AND FINALLY, IT WAS CONCLUDED BY HONBLE APEX COURT IN PARA NO. 27 OF THIS JUDGMENT THAT THE ASSESSEE CANNOT BE TREATED AS CO-OPERATIVE SOCIETY MEANT ONLY FOR ITS MEMBERS AND PROVIDING CREDIT FACILITIES TO ITS MEMBERS AND THEN SUCH A SOCIETY CANNOT CLAIM THE BENEFIT U/S. 80P OF THE IT ACT. THE BENCH ASKED THE LD. AR OF ASSESSEE TO MAKE ARGUMENTS AS TO HOW THIS JUDGMENT OF THE HONBLE APEX COURT RENDERED IN THE CASE OF THE CITIZEN CO-OPERATIVE SOCIETY LTD. VS. ACIT (SUPRA) IS NOT APPLICABLE IN ASSESSMENT YEAR 2016-17 IN THE PRESENT CASE. IN REPLY, THE LD. AR OF ASSESSEE MADE VARIOUS SUBMISSIONS SUCH AS NO ITA NOS. 1220 & 1221/BANG/2019 PAGE 6 OF 7 POWER TO REMOVE ANY EXISTING ASSOCIATED MEMBER AND NO/NEGLIGIBLE TRANSACTION WITH GOOD NO. OF ASSOCIATED MEMBERS BUT I FIND NO MERIT IN THESE CONTENTIONS BECAUSE I FIND THAT TILL ASSESSMENT YEAR 2015-16, THE NUMBER OF ASSOCIATED MEMBERS WAS WELL WITHIN THE LIMIT PRESCRIBED AS PER THE PROVISIONS OF SECTION 18 OF THE KARNATAKA COOPERATIVE SOCIETIES ACT, 1959 AMENDED W.E.F. 06.09.2014 AND THEREAFTER, THE ASSESSEE HAS ADMITTED 233 NEW ASSOCIATED MEMBERS IN VIOLATION OF THE PROVISIONS OF THE KARNATAKA CO- OPERATIVE SOCIETIES ACT, 1959 AND HENCE, IT IS SEEN THAT IN THE PRESENT CASE IN ASSESSMENT YEAR 2016-17, THE ASSESSEE SOCIETY HAS INTENTIONALLY VIOLATED THE PROVISIONS OF THE KARNATAKA COOPERATIVE SOCIETIES ACT, 1959 AND HENCE, THIS JUDGMENT OF THE HONBLE APEX COURT RENDERED IN THE CASE 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. 6. IN THE RESULT, THE APPEAL FILED BY THE ASSESSEE FOR ASSESSMENT YEAR 2016-17 IS DISMISSED. 7. NOW I TAKE UP THE APPEAL OF THE ASSESSEE FOR ASSESSMENT YEAR 2015-16. IN THIS YEAR, THE 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 HONBLE 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 HONBLE 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 ITA NOS. 1220 & 1221/BANG/2019 PAGE 7 OF 7 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 BE ELIGIBLE FOR DEDUCTION U/S. 80P OF THE IT ACT. BUT IF IT IS FOUND THAT THERE IS NO SUCH VIOLATION COMMITTED BY ASSESSEE OF ANY PROVISION OF THE KARNATAKA COOPERATIVE SOCIETIES ACT, 1959 IN ASSESSMENT YEAR 2015-16, THEN THE ISSUE REGARDING ELIGIBILITY OF DEDUCTION U/S. 80P SHOULD BE DECIDED ON MERIT AS PER LAW AFTER PROVIDING ADEQUATE OPPORTUNITY OF BEING HEARD TO BOTH SIDES. 8. IN THE RESULT, THE APPEAL FILED BY THE ASSESSEE FOR ASSESSMENT YEAR 2015-16 IS ALLOWED FOR STATISTICAL PURPOSES. 9. IN THE COMBINED RESULT, THE APPEAL OF THE ASSESSEE FOR ASSESSMENT YEAR 2015-16 IS ALLOWED FOR STATISTICAL PURPOSES AND APPEAL FOR ASSESSMENT YEAR 2016-17 IS DISMISSED. ORDER PRONOUNCED IN THE OPEN COURT ON THE DATE MENTIONED ON THE CAPTION PAGE . SD/- (ARUN KUMAR GARODIA) ACCOUNTANT MEMBER BANGALORE, DATED, THE 18 TH OCTOBER, 2019. /MS/ COPY TO: 1. APPELLANT 4. CIT(A) 2. RESPONDENT 5. DR, ITAT, BANGALORE 3. CIT 6. GUARD FILE BY ORDER ASSISTANT REGISTRAR, INCOME TAX APPELLATE TRIBUNAL, BANGALORE.