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TMI Blog1960 (8) TMI 2X X X X Extracts X X X X X X X X Extracts X X X X ..... 49 and 1949-50, the Income-tax Officer included in the assessment of the bank certain income which had accrued to the bank as profits from trading in controlled commodities like sugar, cloth, kerosene, etc., which the bank was allowed to deal in, with the approval of the Registrar of Co-operative Societies conveyed in a letter dated September 28, 1954. The bank claimed exemption under a notification issued under section 60 of the Income-tax Act, but the contention was not accepted. On appeal, the Appellate Assistant Commissioner reversed the decision, which, on further appeal, was reversed by the Appellate Tribunal, Delhi Branch. The Appellate Tribunal, however, raised and referred the following question to the High Court under section 66(1 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... or the Madras Co-operative Societies Act, 1932 (Madras Act VI of 1932), or the dividends or other payments received by the members of any such society out of such profits. Explanation.--- For this purpose the profits of a co-operative, society shall not be deemed to include any income, profits or gains from--- (1) Investment in (a) securities of the nature referred to in section 8 of the Indian Income-tax Act, or (b) property of the nature referred to in section 9 of that Act, (2) dividends, or (3) the ' other sources ' referred to in section 12 of the Indian Income-tax Act." The Income-tax Officer held that the profits made by the bank were not the profits in a co-operative venture but from trading with outsiders, and that, ther ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ted to the very wide and general terms in which paragraph 2 is couched. The question is plainly one of construction of the notification. In support of the case of the Department, the learned Attorney-General relies on two arguments. He first refers to the opening words of the second paragraph of the notification, viz., " The profits of any co-operative society." These words, it is argued, refer to profits made by a co-operative society in its business as a pure co-operative society, or, in other words, in business with its own members within the four corners of the Co-operative Societies Act, 1912, and the bye-laws made under that Act. No doubt, a co-operative society primarily exists for business with members and not for business with ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Credit Society Ltd., where it was pointed out that the notification covered only profits from business with members. The first two cases were of interest derived from moneys invested in government securities to comply with orders of government to the societies to keep 40 per cent. of the total liabilities always ready at hand, and it was said that the profits were not from business with members. In the last of the three cases, it was pointed out that the exemption was grounded on the principle that " a person cannot make a loss or profits out of himself ", and, strictly speaking, only such profits as were made in business with members were exempt. The position since these cases were decided has been materially altered by the addition of ..... X X X X Extracts X X X X X X X X Extracts X X X X
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