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TMI Blog1976 (8) TMI 31X X X X Extracts X X X X X X X X Extracts X X X X ..... ts of the business carried on by it and that it should be exempted within the terms of the notification dated August 25, 1925, issued under section 60 of the Indian Income-tax Act, 1922 ? " The facts which gave rise to the above question are as follows : The assessee in this case is a co-operative society registered under the provisions of the Madras Co-operative Societies Act, 1932. The activities of the society as found by the Tribunal which has referred to the bye-laws of the society, are as follows : " The society was formed to acquire lands and to set up a housing colony. For this purpose it raised resources not only from its members, but also largely by way of loans from Government. The assessee acquired a large piece of land and ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... as displayed on the assets side of the balance-sheet, land of the value of more than Rs. 36 lakhs, completed buildings of the value of more than Rs. 89 lakhs and work-in-progress for building of the value of more than Rs. 25 lakhs. It also displayed on the assets side of the balance-sheet the stock of building materials and heavy equipment acquired for the purpose of the construction. The value of the amenities account as shown in the balance-sheet is more than Rs. 12 lakhs. Considering the entire conduct of the affairs of the society, we are of the opinion that the buildings were held by the society in the course of its business which consisted of acquiring land, erecting buildings, hiring them out and selling them. In the course of this b ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the order of the Appellate Assistant Commissioner, the department preferred an appeal to the Tribunal. The Tribunal, after considering the terms of the hire purchase agreements entered into between the allottees of houses and the society, came to the conclusion that till the last instalment of the hire purchase amount was paid by the allottee and a conveyance executed by the society in favour of the allottee, it is the society which continued to be the owner of the houses built by it. Notwithstanding this conclusion, the Tribunal held that the income which the society received was exempt as per the notification referred to above. Section 60 of the Indian Income-tax Act, 1922, so far as it is relevant states that the Central Government ma ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Income-tax Act. " The question for consideration is whether the income received by the society is exempt from income-tax under the provisions of this notification or not. It can be seen that the notification generally exempts the profits of any co-operative society other than the Sanikatta Salt Owners' Society in the Bombay Presidency for the time being registered under the Co-operative Societies Acts referred to above, though the said income has to be taken into account in determining the total income of the assessee for the purposes of the Income-tax Act. From the scope of this exemption, what are excepted are the enumerated categories of income mentioned in the Explanation. It is not in dispute that the only relevant excepted category ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... section 9 of the Indian Income-tax Act, 1922. Once the income in the present case does not fall under that head it is not disputed that the income will be exempt from tax under the terms of the notification referred to already. We may incidently point out that in view of the opening portion of the notification not referring to the profits and gains of a business, it is not even necessary to decide whether the income actually received by the co-operative society in the present case is income from business or not. All that is necessary for the purpose of deciding the eligibility for exemption in the present case under the terms of the notification is whether the income derived by the co-operative society can be said to be income from investme ..... X X X X Extracts X X X X X X X X Extracts X X X X
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