TMI Blog1990 (11) TMI 132X X X X Extracts X X X X X X X X Extracts X X X X ..... ng been registered some time in 1957 under the Tamil Nadu Co-operative Societies Act an later under the provisions of the Pondicherry Co-operative Societies Act, 1965. The objects of the assessee-society, as could be gathered from the bye-laws in Annexure-D to the stated case are eleven, out of which, what is relevant for purposes of these references is its object set out in clause 2(j) to the effect that the object of the society shall be to lend money to the members of the society for the purposes of building houses. The other objects deal with acquisition of land, laying-out the land as house-sites to suit the requirements of the society in the shape of roads, parks,playgrounds, schools, hospitals, water works, etc., to construct or cause to be constructed building or other works of common utility, to build or cause to be built residential houses or other buildings for the members, to dispose of land, houses, etc., to establish and maintain social, recreative, educational, public health or medical institutions for the benefit of the members, to raise funds required for the business of the society, to repair, alter or otherwise deal with the buildings of the society and to do all ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ed to the benefit of deduction under section 80P(1) and (2)(a)(i) of the Act for all the assessment years in question. That is how the two common questions of law set out earlier have been referred to this court for its opinion. We may take up for consideration the second question first. There is no dispute that the assessee-society is a co-operative housing society and it had been providing credit facilities to its members. Learned counsel for the Revenue, however, contended that the predominant object of the society was house building and the extension of credit facilities to its members for that purpose was only in the nature of a means to achieve that end. On the other hand, learned counsel for the assessee submitted that even if the society is registered for purposes of house building, it need not necessarily be engaged in an activity of providing credit facilities to its members and in this case one of the objects of the society itself, besides house building, is to lend money to the members of the society, though for purposes of house building, and that would be sufficient to make it an independent and organised business activity of the assessee-society carried on systemat ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... is not one intended to serve as a means to secure a principal object, viz., house building. We hold that the object set out in clause 2(j) of the byelaws of the society is a separate, distinct and independent activity of the assessee-society. We may now make a brief reference to two decisions strongly relied on by learned counsel for the Revenue in Rodier Mill Employees' Co-operative Stores Ltd. v. CIT [1982] 135 ITR 355 (Mad) and CIT v. Madras Autorickshaw Drivers' Co-operative Society Ltd. [1983] 143 ITR 981 (Mad). In the first case, a co-operative society sold consumer goods on credit to its members and claimed that its entire profits were exempt under section 80P(2)(a)(i) of the Act. That claim was negatived by the Incometax Officer, but accepted on appeal by the Appellate Assistant Commissioner, whose conclusion was reversed by the Tribunal. On further reference to this court, it was pointed out that there is a well-merited distinction between credit societies and consumer societies and the reference section 80P(2)(a)(i) of the Act is to a co-operative society whose primary object is the provision of loans or other credit facilities to its members and not to a society whose ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Kerala Co-operative Consumers' Federation Ltd. v. CIT [1988] 170 ITR 455 (Ker), also does not help the Revenue in any manner. We have, therefore, no hesitation in answering the second question referred to us in the affirmative and against the Revenue. We now proceed to a consideration of the first question. Under section 80P(2)(a)(i) of the Act, in order to claim the benefit of deduction under section 80P(1) of the Act, the co-operative society should be engaged in carrying on the business of banking or providing credit facilities to its members. The nature of the credit facilities provided by the assessee-society to its members in furtherance of its object clause 2(j) has already been referred to. We have earlier pointed out that that activity is a distinct and separate activity of the assessee-society and that activity carried on by the assessee-society would make it a society engaged, among others, in carrying on the business of providing credit facilities to its members, attracting section 80P(2)(a)(i) of the Act. We may, in this connection, refer to the nature of construction to be put upon section 80P(2)(a)(i) of the Act. The corresponding provision in the Indian Income-ta ..... X X X X Extracts X X X X X X X X Extracts X X X X
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