TMI Blog1982 (1) TMI 57X X X X Extracts X X X X X X X X Extracts X X X X ..... or its members consumption goods such as textiles, toilet articles and the like, on credit. The assessee claimed that the entire profits made in the co-operative stores were exempt under s. 80P(2)(a)(i) of the I.T. Act, 1961, on the ground that it was a society which provided credit facilities to its members. The ITO disallowed the claim on the ground that merely selling goods on credit to its members will not render the society as one carrying on a business which provided " credit facilities " to its members. This decision of the ITO was taken in appeal before the AAC. He differed from the ITO, and held that the assessee was entitled to the exemption under s. 80P(2)(a)(i) of the I.T. Act, 1961. The department appealed against this decision ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t on cash payment but prefers to collect the consideration after a time. In the literature of law relating to co-operative societies there is a well merited distinction between credit societies, on the one hand, and consumer societies, on the other, not to speak of societies engaged in various productive activities. When the section refers to a co-operative society engaged in providing credit facilities to its members it really refers to a credit society, whose primary object is the provision of loans or other credit facilities to its members. It does not include any society whose primary object is something other than the provision of loans or other credit facilities, such as a consumer co-operative society. This construction of the sect ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s members and not a society which sells goods on credit. " To a certain extent we agree with the contention of the learned counsel for the assessee that providing credit, facilities is a larger conception than a mere provision of loans. Indeed, the Allahabad High Court in CIT v. U.P. Co-operative Cane Union Federation Ltd. [1980] 122 ITR 913, held that a co-operative society which stood guarantee for the loans borrowed by its members for pumping sets must be regarded as a co-operative society providing credit facilities within the meaning of s. 80P(2)(a)(i) of the I.T. Act, 1961. But, however liberal the construction of the expression: " providing credit facilities " may be, it cannot, in our opinion, include the mere sale of goods on credi ..... X X X X Extracts X X X X X X X X Extracts X X X X
|
