9911796707
TMI Blog1996 (1) TMI 177X X X X Extracts X X X X X X X X Extracts X X X X ..... re heard together and are being disposed of by this consolidated order. 2. The solitary and common issue raised in these 4 appeals relates to the deduction in respect of the interest income of the assessee u/s 80P(2)(a)(i) of the Income-tax Act. 3. The facts relevant to all the 4 years are common. The assessee a co-operative society registered under the Maharashtra State Co-operative Societies Act has been carrying on its business of processing of grey cloth from years earlier to the assessment year 1984-85. It also provided credit facility to its members. Initially, the society was doing the business of processing of grey cloth only. Later on, by an amendment in the bye-laws of the society the following object was incorporated : " 3( ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ied upon the same decision of the Allahabad High Court reported in U.P. Co-operative Cane Union's case. The assessee's appeal against the order of Assessing Officer for the assessment year 1984-85 on this issue has failed. Hence the assessee is before us for all the 4 years. 4. It was submitted before us by the learned counsel for the assessee that the assessee's activity was twofold. The first activity consisted of processing of grey cloth. The second consisted of providing credit facilities to the members who brought grey cloth for processing. The credit facility was extended on the hypothecation of grey cloth. According to the learned counsel, the activity of providing credit facilities was not incidental to the other activity and was ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... only incidental to its main activity of processing of grey cloth, such activity cannot fall within sub-clause (i) of clause (a) of sub-section (2) of section 80P. It is only when an assessee carries on the business of banking and as a part of that business provides credit facilities to its members that the assessee can claim such deduction. Reliance for this purpose was placed upon the decision of the Allahabad High Court in the case of U.P. Co-operative Cane Union and of the Kerala High Court in Kerala Co-operative Consumers' Federation Ltd. v. CIT [1988]170 ITR 455. The learned departmental representative further made reference to the commentary of Sampath Iyengar, 8th Edn. at page 3422. 6. We have considered the facts and circumstance ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ssistance to the assessee's case. In the case before the Madras High Court reported in Pondicherry Co-operative Housing Society Ltd.'s case, the activity of the assessee consisted in providing credit facilities for building houses. That activity was not incidental or ancillary to any other main activity. The decision of the Supreme Court in South Arcot Dist. Co-operative Marketing Society Ltd.'s case, in our opinion, lays down a principal which is contrary to the contention of the assessee before us. In that case, the main activity of the assessee was to provide godown facilities. In these circumstances, the ancillary activities were held to be part and parcel of the main activity and, therefore, it was held that the income arising out of a ..... X X X X Extracts X X X X X X X X Extracts X X X X
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