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TMI Blog1929 (1) TMI 2X X X X Extracts X X X X X X X X Extracts X X X X ..... -tax payable in respect of the profits of the society. The question is whether this interest is part of the profits of the society. The notification Ex. A exempts the profits of any Co-operative Society...registered under the Cooperative Societies Act 1912, or the dividends or other payments received by the members of any such Society on account of profits. ( 2. ) The notification has been interpreted to include interest on securities which according to the Commissioner is consistently termed income. Profits according to him does not include interest on securities and hence the latter is taxable. THE contention for the bank is that it is bound by the Government orders to keep 40 per cent of its total liability under call deposits ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... hedule. For instance, Schedule (c) concerns tax charged in respect of profits arising from interest, annuities, dividends and shares of annuities payable out of public revenue; Schedule (d) tax charged in respect of profits or gains to any person residing in the United Kingdom, (1) from any kind of property whatsoever, (2) from any trade or profession etc.; so that, really the only question that arises on this reference is, whether the investment is part of the bank's trade or not. En other words, whether it falls under l-(3) of their bye-laws to carry on general business of banking not repugnant to the provisions of the Cooperative Societies Act . Turning to the Indian Act, it will be observed that this complication of schedules is abs ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... er combining with his business that of a banker. ( 4. ) But as Lord Shand further points out: If this had been the case of a banking company carrying on the business of a bank that would not be a case falling within the fourth case, which is the case applying to investments. Scottish Investment Trust Co. V/s. Forbes Tax Cases 231, is also a decision of the Court of Exchequer, Scotland. That was a case of an investment company and, therefore, investment was an essential feature of the business and, therefore, the net gain made by the company by realizing investments at higher prices than were paid for by them were to be reckoned among the profits and gains for the purpose of assessment. Norwich Union Fire Insurance V/s. Magees Tax Case ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... was to extend the business, so the making of them was part of the business. These extracts from the judgment of Hamilton, J., seem to me sufficient to at once distinguish this from the case before us. In 1913 Appeal Cases 610 this very case went to the House of Lords after having been affirmed by the Court of Appeal in (1912) 2 K.B. 41. Their Lordships dismissed the appeal holding that the income of the foreign investments formed part of the profits or gains of the company's business and was properly taxed under case 1, Schedule D, See Lord Loreburn at p. 619 who adopts Buckley, L. J's expression that the investments were the fruit derived from a fund employed and risked in a business coming within the statutory description. It h ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... en if he sells it in a shop, justifies an assessment under Schedule D as well as or in substitution for Schedule B. ( 5. ) It therefore seems to me from the best consideration that I can give to the matter that this investment of these fluid assets of the bank cannot be held to be part of the business of the bank in accordance with the decisions quoted from the Scotch and English cases which seem to me to be all distinguishable and to be clearly assignable to an operation in furtherance of the particular business of the firm or company concerned. The obligation on the hank to keep 40 percent. of its total liabilities in a fluid form is in consequence of an administrative order of Government and does not oblige them, although it may permi ..... X X X X Extracts X X X X X X X X Extracts X X X X
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