TMI Blog1978 (9) TMI 19X X X X Extracts X X X X X X X X Extracts X X X X ..... see after repelling its contention that the same was exempt under s. 80P(2)(a)(i) of the I.T. Act, 1961. The assessee's appeal to the AAC proved unsuccessful. On further appeal, the Tribunal accepted the contention of the assessee and held that the aforesaid income was exempt from tax under s. 80P(2)(a)(i) of the Act. At the instance of the Commissioner, the Tribunal has referred the following question of law for our opinion : " Whether, on the facts and in the circumstances of the case, the assessee was entitled to exemption under s. 80P(2)(a)(i) of the Income-tax Act, 1961, for income from press and income from supply of pumping sets ? " Section 80P, in so far as is relevant, provides : " (1) Where in the case of an assessee bein ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... M/s. Southern Engg. Works under an agreement with the Federation dated March 5, 1970. The pumping sets have been supplied against 75% loan granted by the banking institution to the growers. The applications were processed by the Federation and the Federation stood guarantee for the payment to the suppliers." After going through cls. 13 to 17 of the aforesaid agreement, the Tribunal further observed : " If these clauses are taken into consideration, it is absolutely clear that the Federation took the responsibility for the payment of the invoice price within 7 days from the date of the invoice. The Federation also is responsible for the payment. The Federation has undertaken the liability for making available the loans to the farmers ei ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... owers, nor the cane-growers were its members. In the case of Addl. CIT v. U. P. Co-operative cane Union [1978] 114 ITR 70 (All), this court read s. 81(i)(a) and observed (pp. 72, 73) : " In our opinion the income which is exempt from tax is income arising from a business of providing credit facilities and not merely of selling goods on credit. A person who sells goods on credit cannot be said to be carrying on the business of providing credit facilities. His business will be the business of purchase and sale of goods which he supplies. Banking business is a wide term and includes many activities like discounting bills, hundis, cheques, accepting deposits and advancing loans, etc. Thus, it includes the providing of credit facility. A perso ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ciety had lent its services for guaranteeing payment of the price of pumping sets supplied by M/s. Southern Engineering Works to the cane-growers. It is true that the service charges were paid by the supplier and not by the cane-growers, but that does not make any difference. What really matters is whether the service charges were paid for service rendered to the cane-growers. That is actually so, as may be gathered from cl. 13 of the agreement dated March 15, 1970, which reads : " In consideration of the services rendered by the Federation for providing facilities to the farmers for the purchase of Vargin engine pump-sets, M/s. Southern Engg. Works, Kolhapur, agrees to pay the service charges to the Federation at the rate of 5% to be ca ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... iety and, as such, they : could reasonably be held to be the members of the assessee-society, being the parent-society. The question before the Supreme Court was, whether a shareholder could challenge the State action touching the company of which he was a shareholder, under art. 19 of the Constitution. It was held that he could do so, if his right to carry on business through the agency of the company was taken away or abridged by such action. Thus, the principles relied on by the learned counsel was laid down in a wholly different context. At any rate, there is hardly any room for the application of the general rules to the present controversy. We say so, because in our opinion the words " co-operative society " and " members " have, in l ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... (1) No person shall be a member of a co-operative society except the following, namely : (a) an individual who, except as provided in sub-section (4) of section 18, section 80 and sub-section (2) of section 81, is of the age of majority according to the law to which he is subject and who is of sound mind and is not disqualified from contracting by any law to which he is subject ; (b) any other co-operative society ; (c) the State Government ; (d) the Central Government; (e) the State Warehousing Corporation established or deemed to be established under the Warehousing Corporations Act, 1962 (Act LVIII of 1962) ; (f) a body corporate not covered by any other clause and approved by the Registrar, for ordinary or nominal mem ..... X X X X Extracts X X X X X X X X Extracts X X X X
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