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Issues involved: The judgment addresses the following two issues: 1. Whether the business of a printing press run by a co-operative society constitutes a business of providing credit facilities to its members under section 81(i)(a) of the Income-tax Act, 1961? 2. Whether the co-operative society is entitled to exemption of Rs. 15,000 under section 81(ii) or under the proviso to section 81(i) of the Income-tax Act, 1961?
Issue 1 - Business of Printing Press: The co-operative society derived income from a printing press and sale of kolhus to its members. The Income-tax Appellate Tribunal initially accepted the claim that income from the printing press was exempt under section 81(i)(a) of the Act. However, the High Court disagreed, stating that selling goods on credit does not constitute providing credit facilities. The Court emphasized that the exemption under section 81(i)(a) is specifically for businesses engaged in providing credit facilities, such as banking activities. The Court concluded that the income from the printing press was not exempt under section 81(i)(a) of the Act. Issue 2 - Exemption under Section 81(ii): The Tribunal observed that even if the income was not exempt under section 81(i)(a), it would still be exempt under section 81(ii) as the income was less than Rs. 15,000. Section 81(ii) provides exemption for co-operative societies not engaged in businesses mentioned in section 81(i)(a) to (f), up to Rs. 15,000. The Court agreed with the Tribunal's interpretation, stating that since the society was not engaged in activities mentioned in section 81(i)(a) to (f), the exemption under section 81(ii) applied. The Court clarified that the reference to clause (d) in the question was inaccurate and should have been to clauses (a) to (f) of section 81(i). The Court affirmed that the society was entitled to exemption of Rs. 15,000 under section 81(ii) and not under the proviso to section 81(i) of the Income-tax Act, 1961. Conclusion: The High Court held that the income from the printing press business of the co-operative society was not exempt under section 81(i)(a) of the Act. Additionally, the Court determined that the society was entitled to exemption of Rs. 15,000 under section 81(ii) of the Income-tax Act, 1961. The Commissioner of Income-tax was awarded costs amounting to Rs. 200.
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