TMI Blog2021 (1) TMI 488X X X X Extracts X X X X X X X X Extracts X X X X ..... ue in the present case by adding the word agriculture into Section 80P(2)(a)(i) when it is not there. Section 80P(4) is to be read as a proviso, which proviso now specifically excludes co-operative banks which are cooperative societies engaged in banking business i.e. engaged in lending money to members of the public, which have a licence in this behalf from the RBI. Judged by this touchstone, it is clear that the impugned Full Bench judgment is wholly incorrect in its reading of Citizen Cooperative Society Ltd. (supra). Clearly, therefore, once section 80P(4) is out of harm s way, all the assessees in the present case are entitled to the benefit of the deduction contained in section 80P(2)(a)(i), notwithstanding that they may also be giving loans to their members which are not related to agriculture. Also, in case it is found that there are instances of loans being given to non-members, profits attributable to such loans obviously cannot be deducted. Thus, the giving of loans by a primary agricultural credit society to nonmembers is not illegal, unlike the facts in Citizen Cooperative Society Ltd. (supra). Resultantly, the impugned Full Bench judgment is set aside. The ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ding that as per the Audited Receipt Disbursal Statement furnished by the assessees in these cases, agricultural credits that were given by the assessee-societies to its members were found to be negligible the credits given to such members being for purposes other than agricultural credit. The decisions of the assessing officers were challenged up to the Kerala High Court. Before the High Court, the assessees relied upon a decision of a Division Bench of the Kerala High Court in Chirakkal Service Co-operative Bank Ltd. v. CIT (2016) 384 ITR 490 (Ker.), where in a batch of appeals challenging assessments completed under section 147 read with 143(3)/144 of the IT Act, the High Court, after considering section 80P(4) of the IT Act, various provisions of the Kerala Act, the Banking Regulation Act, 1949, the bye-laws of the Societies, etc., held that once a Co-operative Society is classified by the Registrar of Co-operative Societies under the Kerala Act as being a primary agricultural credit society, the authorities under the IT Act cannot probe into whether agricultural credits were in fact being given by such societies to its members, thereby going behind the certificate so g ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Act must be refused. This conclusion was reached after referring to several judgments, but relying heavily upon the judgment of this Court in Citizen Cooperative Society Ltd. v. Asst. CIT, Hyderabad (2017) 9 SCC 364. Thus, the conclusion of the Full Bench was as follows: 33. In view of the law laid down by the Apex Court in Citizen Co-operative Society [397 ITR 1] it cannot be contended that, while considering the claim made by an assessee society for deduction under section 80P of the IT Act, after the introduction of sub-section (4) thereof, the Assessing Officer has to extend the benefits available, merely looking at the class of the society as per the certificate of registration issued under the Central or State Co-operative Societies Act and the Rules made thereunder. On such a claim for deduction under section 80P of the IT Act, the Assessing Officer has to conduct an enquiry into the factual situation as to the activities of the assessee society and arrive at a conclusion whether benefits can be extended or not in the light of the provisions under sub-section (4) of section 80P. 34. In Chirakkal [384 ITR 490] the Division Bench held that the appellant socie ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... estion referred to the Full Bench is answered as above. Registry shall list the appeals before appropriate Bench as per roster. 6. Being aggrieved by the Full Bench judgment, the Appellant assessees are now before us. 7. Shri Shyam Divan, learned Senior Advocate leading the charge on behalf of the assessees, has argued that the advent of section 80P(4) of the IT Act has not led to any change insofar as the Appellant assessees are concerned. He read to us in copious detail the provisions of section 80P, various provisions contained in the Banking Regulation Act, 1949 and the various provisions of the Kerala Act and rules made thereunder, together with the bye-laws of some of the assessees before us. His main argument, based upon the language of section 80P(1) and (2), is that section 80P is a beneficial provision which is meant to further the co-operative movement in India. For this purpose, certain income of a co-operative society, once it is registered under a State Act, becomes deductible from its gross total income. According to him, the moment a co-operative society that is registered as such is engaged in providing credit facilities to its members, the inquiry of an as ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... primary agricultural credit society is given by the Registrar under the Kerala Act, then short of such certificate being cancelled under the Kerala Act and rules thereunder, the assessing officer, who is an authority for purposes of collection of revenue, cannot possibly go into whether, in substance, the society continues to be a primary agricultural credit society. He relied upon various judgments of this Court to buttress his submissions. He also relied upon a circular, being Circular 14/2006 dated 28.12.2006 containing explanatory notes to the Finance Act, 2006, and the letter of the Central Board of Direct Taxation ( CBDT ) dated 09.05.2008, both of which made it clear that if a co-operative society cannot be said to be a co-operative bank, then the provisions of section 80P(4) would have no application. 8. Shri Diwan s second broad submission was that the Full Bench of the Kerala High Court completely misread this Court s judgment in Citizen Cooperative Society Ltd. (supra). He contended that if the judgment is seen closely, all the assessees contentions in law were answered in their favour. However, on facts, it was held that since the co-operative society in that case ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... assessing officer has to be satisfied that the assessee is engaged in activities as a primary agricultural credit society i.e. in giving loans for agricultural and allied purposes to its members. He read from some of the assessing officers orders the fact that loans given for agricultural purposes by the aforesaid societies were negligible, the main business being that of banking, as such loans were given for purposes other than agricultural credit. He also read copiously from the various Acts, rules and byelaws to buttress his submission that in actual fact, since the Appellants were no longer doing business as primary agricultural credit societies, they would be disentitled to any deduction under Section 80P after the advent of Section 80P(4). According to him, the classification of a cooperative society under the State Act, which is expressly referred to in Section 2(19) of the IT Act, is of primary importance, and once classified as a primary agricultural credit society, it is only if activities relatable to agriculture are carried out that eligibility for deduction would arise in the first place under section 80P(1) and (2). The whole object of section 80P would be defeate ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Deduction in respect of income of co-operative societies.-( 1) Where, in the case of an assessee being a co-operative society, the gross total income includes any income referred to in sub-section (2), there shall be deducted, in accordance with and subject to the provisions of this section, the sums specified in sub-section (2), in computing the total income of the assessee. (2) The sums referred to in sub-section (1) shall be the following, namely:- (a) in the case of a co-operative society engaged in- (i) carrying on the business of banking or providing credit facilities to its members, or (ii) a cottage industry, or (iii) the marketing of agricultural produce grown by its members, or (iv) the purchase of agricultural implements, seeds, livestock or other articles intended for agriculture for the purpose of supplying them to its members, or (v) the processing, without the aid of power, of the agricultural produce of its members, or (vi)the collective disposal of the labour of its members, or (vii) fishing or allied activities, that is to say, the catching, curing, processing, preserving, storing or marketing of fish or the purchase ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... h income; (f) in the case of a co-operative society, not being a housing society or an urban consumers society or a society carrying on transport business or a society engaged in the performance of any manufacturing operations with the aid of power, where the gross total income does not exceed twenty thousand rupees, the amount of any income by way of interest on securities or any income from house property chargeable under section 22. Explanation .-For the purposes of this section, an urban consumers co-operative society means a society for the benefit of the consumers within the limits of a municipal corporation, municipality, municipal committee, notified area committee, town area or cantonment. (3) In a case where the assessee is entitled also to the deduction under section 80HH or section 80HHA or section 80HHB or section 80HHC or section 80HHD or section 80-I or section 80-IA, the deduction under sub-section (1) of this section, in relation to the sums specified in clause (a) or clause (b) or clause (c) of sub-section (2), shall be allowed with reference to the income, if any, as referred to in those clauses included in the gross total income as reduced ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ive society, the primary object of which is to provide financial accommodation to its members and includes a co-operative land mortgage bank; (cciia) co-operative society means a society registered or deemed to have been registered under any Central Act for the time being in force relating to the multi-State co-operative societies, or any other Central or State law relating to cooperative societies for the time being in force; (cciii) director , in relation to a co-operative society, includes a member of any committee or body for the time being vested with the management of the affairs of that society; (cciiia) multi-State co-operative bank means a multi-State co-operative society which is a primary co-operative bank; (cciiib) multi-State co-operative society means a multi-State co-operative society registered as such under any Central Act for the time being in force relating to the multi State co-operative societies but does not include a national co-operative society and a federal co-operative; (cciv) primary agricultural credit society means a co-operative society,- (1) the primary object or principal business of which is to provide financi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... hereunder are concerned, the following provisions are relevant: Act 2. In this Act, unless the context otherwise requires,- (f) Co-operative Society or society means a Cooperative society registered or deemed to be registered under this Act; xxx xxx xxx (l) member means a person joining in the application for the registration of a Co-operative society or a person admitted to membership after such registration in accordance with this Act, the rules and the bye-laws and includes a nominal or associate member; xxx xxx xxx (m) nominal or associate member means a member who possess only such privilege and rights of a member who is subject only to such liabilities of a member as may be specified in the bye-laws; xxx xxx xxx (oaa) Primacy Agricultural Credit Society means a Service Co-operative Society, a Service Co-operative Bank, a Farmers Service Co-operative Bank and a Rural Bank, the principal object of which is to undertake agricultural credit activities and to provide loans and advances for agricultural purposes, the rate of interest on such loans and advances shall be the rate fixed by the Registrar and having its area of operatio ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the proposed society are in accordance with section 4; (c) that the area of operation of the proposed society and the area of operation of another society of similar type do not overlap; (d) that the proposed bye-laws are not contrary to the provisions of this Act and the rules; and (e) that the proposed society complies with the requirements of sound business, he may register the society and its bye-laws within a period of ninety days from the date of receipt of the application. (2) Where the Registrar refuses to register a society, he shall communicate the order of refusal together with the reasons therefore within seven days of such order to such of the applicants as may be prescribed. (3) An application for registration of a society shall be disposed of by the Registrar within ninety days from the date of receipt of the application. (4) Where an application for registration of a society is not disposed of within the time specified in sub-section (3), the applicant may make a representation,-- (a) before the Registrar, if the application for registration is made to a person on whom the powers of the Registrar is conferred under subsection (2) ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... as to the classification of a society, it shall be referred to the Registrar for decision and his decision thereon shall be final. (ii) If the Registrar alters the classification of a society from one class of society to another or from the sub class thereof to another, he shall issue to the society and the financing Bank a copy of his order and the society shall fall under that category with effect from the date of that order. 14. The bye-laws of some of the Societies before us were also referred to in the course of arguments. A sample set of the bye-laws of Mavilayi Service Co-operative Bank Ltd., in particular bye-law 5, which refers to the objects of the aforesaid Society, provides as follows: Byelaw 5. Objects. 1. The main aim of this Primary Agricultural Credit Society is to provide financial assistance in the form of loans to members for agricultural purposes, marketing of agricultural produce and promotion of agriculture. 2. Act as an agent for supply of seeds, fertilizers, pesticides, implements for agricultural purposes and an agent for procurement of agricultural produce. 3. Provide loans for necessities of priority sector. 4. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ative Banks, Govt and other institutions approved by Registrar. 25. To render services like collection of cheques, bills or drafts or deposit receipts. 26. To discount cheques, bills or drafts as per the conditions laid down by Registrar and to lend for a fixed period. 27.To create and implement welfare funds for members and employees. To collect and deposit normal subscription amount for members and employees and an amount allocated by General Body from annual profits each year to that fund. Approval of Registrar for implementing the rule is mandatory. 28.To provide Overdraft facility, vehicle loan, loan for purchase of home appliances or furniture or for construction of houses, repair of houses, or for purchase of property. Sub rule should be created and approval of Registrar is mandatory for these purposes. 29. To open branches within area of operation of bank with prior approval of Registrar for growth and expansion. 30. To provide safe deposit locker for customers. 31. To implement new facilities for the convenience of staff, customers and members. 32. To render agency services like supply of construction material, LPG, other petroleum p ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 81. Income of cooperative societies.- Income tax shall not be payable by a cooperative society - (i) in respect of the profits and gains of business carried on by it, if it is - (a) a society engaged in carrying on the business of banking or providing credit facilities to its members; or (b) a society engaged in a cottage industry; or (c) a society engaged in the marketing of the agricultural produce of its members; or (d) a society engaged in the purchase of agricultural implements, seeds, livestock or other articles intended for agriculture for the purpose of supplying them to its members; or (e) a society engaged in the processing without the aid of power of the agricultural produce of its members; or (f) a primary society engaged in supplying milk raised by its members to a federal milk cooperative society: Provided that, in the case of a cooperative society which is also engaged in activities other than those mentioned in this clause, nothing contained herein shall apply to that part of its profits and gains as is attributable to such activities and as exceeds fifteen thousand rupees; 17. The expression engaged in the marketing of t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e because of their own agricultural activities or whether they acquired it by purchasing it from cultivators was of no consequence for the purpose of determining whether the assessee was entitled to the exemption. The only condition required for qualifying the assessee's income for exemption was that the assessee's business must be that of marketing, the marketing must be of agricultural produce and that agricultural produce must have belonged to the members of the assessee-Society before they came up for marketing by it, whether on its own account or on account of the members themselves. Thus there is no scope to limit the exemption. The cooperative societies are engaged in marketing of an agricultural produce both of its members as well as of nonmembers. In the latter case, there is no difference between a cooperative society or any other business organisation and so will not be entitled to exemption. The exemption is intended to cover all cases where a cooperative society is engaged in marketing agricultural produce of its members. Section 80-P(2)(a)(iii) does not in effect limit the scope of the exemption to agricultural produce raised by members alone but includes agri ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... erein requires reconsideration as stated earlier by us. In the result, the order of the Kerala High Court following the decision of this Court in Assam Coop. Society is reversed. We hold that the society engaged in the marketing of agricultural produce of its members would mean not only such societies which deal with the produce raised by the members who are individuals or societies which are members thereof who may have purchased such goods from the agriculturists. Thus, we allow the civil appeal by setting aside the order made by the High Court and answering the question referred to us in the affirmative in favour of the assessee and against the Revenue. There shall be no order as to costs. 20. We now come to the judgment of this Court in Citizen Cooperative Society Ltd. (supra). This judgment was concerned with an assessee who was established initially as a mutually aided cooperative credit society, having been registered under section 5 of the Andhra Pradesh Mutually Aided Cooperative Societies Act, 1995. As operations of the assessee began to spread over States outside the State of Andhra Pradesh, the assessee got registered under the Multi-State Cooperative Societies ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... way of reading the different heads of exemption enumerated in the section would be to treat each as a separate and distinct head of exemption. Whenever a question arises as to whether any particular category of an income of a cooperative society is exempt from tax what has to be seen is whether income fell within any of the several heads of exemption. If it fell within any one head of exemption, it would be free from tax notwithstanding that the conditions of another head of exemption are not satisfied and such income is not free from tax under that head of exemption. 21. In CIT v. Punjab State Coop. Bank Ltd. [2008 SCC OnLine P H 2042], while dealing with an identical issue, the High Court of Punjab and Haryana held as follows: 8. The provisions of Section 80-P were introduced with a view to encouraging and promoting the growth of the cooperative sector in the economic life of the country and in pursuance of the declared policy of the Government. The different heads of exemption enumerated in the section are separate and distinct heads of exemption and are to be treated as such. Whenever a question arises as to whether any particular category of an income of a cooper ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the appellant does not amount to that of a cooperative bank. The appellant, therefore, would not come within the mischief of sub-section (4) of Section 80-P. 24. So far so good. However, it is significant to point out that the main reason for disentitling the appellant from getting the deduction provided under Section 80-P of the Act is not sub-section (4) thereof. What has been noticed by the assessing officer, after discussing in detail the activities of the appellant, is that the activities of the appellant are in violation of the provisions of MACSA under which it is formed. It is pointed out by the assessing officer that the assessee is catering to two distinct categories of people. The first category is that of resident members or ordinary members. There may not be any difficulty as far as this category is concerned. However, the assessee had carved out another category of nominal members . These are those members who are making deposits with the assessee for the purpose of obtaining loans, etc. and, in fact, they are not members in real sense. Most of the business of the appellant was with this second category of persons who have been giving deposits which are kept in f ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... utuality at all. 26. These are the findings of fact which have remained unshaken till the stage of the High Court. Once we keep the aforesaid aspects in mind, the conclusion is obvious, namely, the appellant cannot be treated as a cooperative society meant only for its members and providing credit facilities to its members. We are afraid such a society cannot claim the benefit of Section 80-P of the Act. 21. An analysis of this judgment would show that the question of law that was reflected in paragraph 5 of the judgment was answered in favour of the assessee. The following propositions may be culled out from the judgment: (I) That section 80P of the IT Act is a benevolent provision, which was enacted by Parliament in order to encourage and promote the growth of the co-operative sector generally in the economic life of the country and must, therefore, be read liberally and in favour of the assessee; (II) That once the assessee is entitled to avail of deduction, the entire amount of profits and gains of business that are attributable to any one or more activities mentioned in sub-section (2) of section 80P must be given by way of deduction; (III) That this Cou ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... (at page 657) 24. In State of Orissa v. Sudhanshu Sekhar Misra and Ors. (1968) 2 SCR 154 , this Court held: A decision is only an authority for what it actually decides. What is of the essence in a decision is its ratio and not every observation found therein nor what logically follows from the various observations made in it. On this topic this is what Earl of Halsbury L.C. said in Quinn v. Leathem [[1901] AC 495]: Now before discussing the case of Allen v. Flood, [1898] AC 1 and what was decided therein, there are two observations of a general character which I wish to make, and one is to repeat what I have very often said before, that every judgment must be read as applicable to the particular facts proved, or assumed to be proved, since the generality of the expressions which may be found there are not intended to be expositions of the whole law, but governed and qualified by the particular facts of the case in which such expressions are to be found. The other is that a case is only an authority for what it actually decides. I entirely deny that it can be quoted for a proposition that may seem to follow logically from it. Such a mode of reasoning assumes that ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ich the decision is based. The other two elements in the decision are not precedents. The judgment is not binding (except directly on the parties themselves), nor are the findings of facts. This means that even where the direct facts of an earlier case appear to be identical to those of the case before the court, the judge is not bound to draw the same inference as drawn in the earlier case. (at pages 1073-1074) 26. Applying the aforesaid decisions, it is clear that the ratio decidendi in Citizen Cooperative Society Ltd. (supra) would not depend upon the conclusion arrived at on facts in that case, the case being an authority for what it actually decides in law and not for what may seem to logically follow from it. Thus, the statement of the principles of law applicable to the legal problems disclosed by the facts alone is the binding ratio of the case, which as has been stated hereinabove, is contained in paragraphs 18 to 23 of the judgment. Paragraphs 24 to 26, being the judgment based on the combined effect of the statements of the principle of law applicable to the material facts of the case cannot be described as the ratio decidendi of the judgment. Nor can it be said ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... erned, then speaks of a co-operative society being engaged in carrying on the business of banking or providing credit facilities to its members. What is important qua sub-clause (2)(a)(i) is the fact that the co-operative society must be engaged in the providing credit facilities to its members. As has been rightly pointed out by the learned Additional Solicitor General, the expression engaged in , as has been held in Commissioner of Income Tax, Madras v. Ponni Sugars and Chemicals Ltd. (2008) 9 SCC 337 , would necessarily entail an examination of all the facts of the case. This Court in Ponni Sugars and Chemicals Ltd. (supra) held: 20. In order to earn exemption under Section 80-P(2) a cooperative society must prove that it had engaged itself in carrying on any of the several businesses referred to in subsection (2). In that connection, it is important to note that under sub-section (2), in the context of cooperative society, Parliament has stipulated that the society must be engaged in carrying on the business of banking or providing credit facilities to its members. Therefore, in each case, the Tribunal was required to examine the memorandum of association, the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... hat it is engaged in providing credit facilities to its members, the assessing officer must then scrutinize the same, and arrive at a conclusion as to whether this is, in fact, so. 33. Sixthly, what is important to note is that, as has been held in Kerala State Cooperative Marketing Federation Ltd. and Ors. (supra) the expression providing credit facilities to its members does not necessarily mean agricultural credit alone. Section 80P being a beneficial provision must be construed with the object of furthering the co-operative movement generally, and section 80P(2)(a)(i) must be contrasted with section 80P(2)(a)(iii) to (v), which expressly speaks of agriculture. It must also further be contrasted with sub-clause (b), which speaks only of a primary society engaged in supplying milk etc. thereby defining which kind of society is entitled to deduction, unlike the provisions contained in section 80P(2)(a)(i). Also, the proviso to section 80P(2), when it speaks of sub-clauses (vi) and (vii), further restricts the type of society which can avail of the deductions contained in those two sub-clauses, unlike any such restrictive language in Section 80P(2)(a)(i). Once it is clea ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... bank, are lending institutions and should pay tax on their profits. Primary Agricultural Credit Societies (PACS) and Primary Cooperative Agricultural and Rural Development Banks (PCARDB) stand on a special footing and will continue to be exempt from tax under section 80P of the Income Tax Act. However, I propose to exclude all other cooperative banks from the scope of that section. 37. Likewise, a Circular dated 28.12.2006, containing explanatory notes on provisions contained in the Finance Act, 2006, is also important, and reads as follows: Withdrawal of tax benefits available to certain cooperative banks xxx xxx xxx 22.2. The cooperative banks are functioning at par with other commercial banks, which do not enjoy any tax benefit. Therefore section 80P has been amended and a new subsection (4) has been inserted to provide that the provisions of the said section shall not apply in relation to any cooperative bank other than a primary agricultural credit society or a primary co-operative agricultural and rural development bank. The expressions co-operative bank , primary agricultural credit society and primary co-operative agricultural and rural development ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t, some primary agricultural credit societies applied for a banking licence to the RBI, as their bye-laws also contain as one of the objects of the Society the carrying on of the business of banking. This was turned down by the RBI in a letter dated 25.10.2013 as follows: Application for license Please refer to your application dated April 10, 2013 requesting for a banking license. On a scrutiny of the application, we observe that you are registered as a Primary Agricultural Credit Society (PACS). In this connection, we have advised RCS vide letter dated UBD (T) No. 401/10.00/16A/2013-14 dated October 18, 2013 that in terms of Section 3 of the Banking Regulation Act, 1949 (AACS), PACS are not entitled for obtaining a banking license. Hence, your society does not come under the purview of Reserve Bank of India. RCS will issue the necessary guidelines in this regard. 41. A number of judgments have held that a proviso cannot be used to cut down the language of the main enactment where such language is clear, or to exclude by implication what the main enactment clearly states. Thus, in CIT, Mysore v. Indo Mercantile Bank 1959 Supp. (2) SCR 256, this Court held ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... li v. Gujarat Revenue Tribunal (1991) 3 SCC 442 held: 6. It is a cardinal rule of interpretation that a proviso to a particular provision of a statute only embraces the field, which is covered by the main provision. It carves out an exception to the main provision to which it has been enacted by the proviso and to no other. The proper function of a proviso is to except and deal with a case which would otherwise fall within the general language of the main enactment, and its effect is to confine to that case. Where the language of the main enactment is explicit and unambiguous, the proviso can have no repercussion on the interpretation of the main enactment, so as to exclude from it, by implication what clearly falls within its express terms. The scope of the proviso, therefore, is to carve out an exception to the main enactment and it excludes something which otherwise would have been within the rule. It has to operate in the same field and if the language of the main enactment is clear, the proviso cannot be torn apart from the main enactment nor can it be used to nullify by implication what the enactment clearly says nor set at naught the real object of the main enactment, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... iso would fall within the main enactment. Ordinarily it is foreign to the proper function of a proviso to read it as providing something by way of an addendum or dealing with a subject which is foreign to the main enactment. This view has held the field till date. 44. More recently, in Union of India v. Dileep Kumar Singh (2015) 4 SCC 421 , this Court held as follows: 20. Equally, it is settled law that a proviso does not travel beyond the provision to which it is a proviso. Therefore, the golden rule is to read the whole section, inclusive of the proviso, in such manner that they mutually throw light on each other and result in a harmonious construction. This is laid down in Dwarka Prasad v. Dwarka Das Saraf [(1976) 1 SCC 128], as follows: 18. We may mention in fairness to counsel that the following, among other decisions, were cited at the Bar bearing on the uses of provisos in statutes: CIT v. IndoMercantile Bank Ltd. [AIR 1959 SC 713]; Ram Narain Sons Ltd. v. CST [AIR 1955 SC 765]; Thompson v. Dibdin [1912 AC 533], AC p. 541; R. v. Dibdin [1910 P 57 (CA)], and Tahsildar Singh v. State of U.P. [AIR 1959 SC 1012]. The law is trite. A proviso must be l ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... in case it is found that there are instances of loans being given to non-members, profits attributable to such loans obviously cannot be deducted. 46. It must also be mentioned here that unlike the Andhra Act that Citizen Cooperative Society Ltd. (supra) considered, nominal members are members as defined under the Kerala Act. This Court in U.P. Cooperative Cane Unions Federation Ltd., Lucknow v. Commissioner of Income Tax, Lucknow-I (1997) 11 SCC 287 referred to section 80P of the IT Act and then held: 8. The expression members is not defined in the Act. Since a cooperative society has to be established under the provisions of the law made by the State Legislature in that regard, the expression members in Section 80-P(2)(a)(i) must, therefore, be construed in the context of the provisions of the law enacted by the State Legislature under which the cooperative society claiming exemption has been formed. It is, therefore, necessary to construe the expression members in Section 80-P(2)(a)(i) of the Act in the light of the definition of that expression as contained in Section 2(n) of the Cooperative Societies Act. The said provision reads as under: 2. (n) ..... X X X X Extracts X X X X X X X X Extracts X X X X
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