TMI Blog1982 (10) TMI 28X X X X Extracts X X X X X X X X Extracts X X X X ..... g of the bye-law it is clear that the society has come into being for the purpose of purchasing autorickshaw vehicles and re-selling them to its members on hire purchase terms. The question is whether a society having as its object a business of this kind can be held to be a society carrying on the business of providing credit facilities. Statutory draftsmen are seldom given to euphemisms. Perhaps it is not permissible for them to employ figures of speech. For, otherwise, we should be inclined to imagine that providing credit facilities is only euphemism for lending money, euphemism which we may often hear in polite drawing room conversation. We do recognize that while money-lending is clearly included within the phrase " providing credit facilities ", there are obviously other modes of making credit facilities available which are sometimes referred to by the broad expression " financing operation The question, however, in this case is whether a business of buying and selling goods Per se can be regarded as providing credit facilities merely because purchasers are allowed some credit in the matter of payment of the price. There are two decisions of this court, one in CIT v. Coral ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ases autorickshaws in its own name from out of its own funds or from out of funds borrowed by it from the banks. After the autorickshaws become the property of the society, it proceeds to effect sales thereof on hire purchase terms to the members who have made applications in that regard. Under the terms of the hire purchase, the member concerned has got to pay an overall consideration in instalments spread over a period of five years. At the end of the five-year period, provided that the member has paid all the instalments without default and has also complied with other subsidiary conditions of the agreement such for instance as paying insurance on the vehicle, the society is under an obligation to effect an outright conveyance of the vehicle in favour of the member. The nominal consideration for this conveyance is fixed in the agreement at Re. 1. It is, however, clear, beyond doubt, that the overall consideration which proceeds from the member to the society for the acquisition of the ownership of the vehicle includes not only the final payment of Re. 1 but also the instalments which precede that payment. As we earlier observed, the society purchases autorickshaws in the first i ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... failure by the customer to abide by the conditions of hire purchase. The first kind of hire purchase agreement figured in the former of the decisions of the Supreme Court. The second kind of agreement which we may, for convenience sake, call " TVS type of hire purchase ", figured in the latter decision. The Supreme Court held in the earlier case that a hire purchase agreement in which the goods are purchased by the financier himself and re-sold under the agreement to the customer must be regarded as involving, in essence, transaction of sale by the financier to the customer. It is only in the latter decision, concerned with the TVS type of hire purchase agreement, that the Supreme Court expressed the view that notwithstanding the form of the hire purchase agreement it remained a mere instrumentality for financing the purchase of the goods by the customer from the dealer of the goods, the financier merely being inducted into the transaction for providing the necessary credit facilities. Keeping in mind this distinction between the two kinds of hire purchases agreements, we are satisfied that the present case can by no means be regarded as belonging to the TVS category of hire pur ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e society transacted its business with its members, the true nature of the society's business remains what it has been described in the bye-law to be. We have earlier quoted verbatim from the objects clause. To promote the economic interests of the members by purchasing autorickshaws and selling them on hire purchase terms to the members, is the object avowed in the bye-law. It must have been farthest from the minds of those who framed the bye-law in these terms to imply that the mere act of purchasing and re-selling vehicles on hire purchase terms could not involve transactions of sale as such but merely the financing of purchase of vehicles by the members from third parties. Even a secondary object in the bye-law which might demand construction on its own terms also negates any idea of the society undertaking any financing operations in the sense of providing credit facilities to the members. This bye-law declares that the subsidiary object of the society to be " to encourage thrift and self-help ". By " thrift ", we suppose, is meant the conservation of one's monetary or economic resources, what we ordinarily call as " saving " from one's income or from one's other receipts. Thr ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... assessee, namely, a co-operative society answering the description of a society engaged in carrying on the business of providing credit facilities to its members. If the society in question does not answer this description, it is not entitled to the relief. For invoking or applying this provision, it is not permissible to make break-up of the income of the society as so much derived from the provision of credit facilities and so much from other income, if the society itself, in its true nature and object, is not a society engaged in the business of providing credit facilities. The Tribunal in their order have come to the opposite conclusion on the basis of the following reasoning. According to the Tribunal providing credit facility does not mean only advancing moneys by way of loan. Even where a commodity is sold on credit, it may amount to providing " credit facility." While we agree with the first observation of the Tribunal, for reasons which we have set out at some length in the foregoing paragraphs, we cannot subscribe to the latter observation of the Tribunal. The question of law, which has to be answered by us in this case, has been formulated as under. "Whether, on th ..... X X X X Extracts X X X X X X X X Extracts X X X X
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