Law:

Section:

Section 80P(2)(a)(vi) of the Income-tax Act, 1961 - Deductions - Income o! cooperative societies - Whether where rules and bye-laws of assessee, a co-operative society, extended right of voting to persons other than those specified in proviso to section 80P(2)(a), assessee could claim benefit of exemption provided in section 80P(2)(a)(vi) - Held, no Facts For the relevant assessment year, the assessee, a co-operative society, claimed that its income was exempt under the provisions of section 80P(2)(a)(vi ). The ITO, however, rejected the assessee's claim. On appeal before the AAC, the assessee claimed that the aim of the society was to develop financial and social interests of the persons residing and working in the forest and to help them to avoid unemployment. The society was a labour society and only those persons who were members of the society were allowed to work as labourers in the forest. The membership was restricted to the specified villages and on the condition of fulfilment of various requirements of the rules and regulations of the society. It was, therefore, claimed that the assessee's claim for exemption was fully covered by the aforesaid provisions and the disallowance of the exemption was not justified. The AAC accepted the assessee's claim. On appeal before the Tribunal, the revenue contended that according to clause 7A of the bye-laws of the assessee-society, apart from the labourers residing in the villages, the membership was open to social workers and individuals interested in the upliftment of adivasi labourers and such persons could be enrolled as members with the approval of the managing committee. Under clause 22 of the bye-laws, every member was vested with the right to vote and every member present in the general meeting was entitled to exercise single voting. On the basis of the aforesaid two bye-laws, it was contended that the voting rights were not confined to the labour members of the society only but they were also extended to social workers and individuals who could be enrolled as members of the society and, therefore, the conditions laid down in the proviso to the section were not fulfilled and, hence, exemption was not…

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