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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 ..... en in the affirmative.Appeal allowed. - - - - - Dated:- 2-8-1960 - Judge(s) : HIDAYATULLAH., J. C. SHAH., S. K. DAS JUDGMENT The judgment of the court was delivered by HIDAYATULLAH, J.--- This is an appeal against the judgment and order of the High Court of Punjab with the certificate of the court granted under section 66A(2) of the Indian Income-tax Act. The Hoshiarpur Central Co-operative Bank Ltd., Hoshiarpur, hereinafter referred to as " the bank, " is the appellant, and the Commissioner of Income-tax, Simla, is the respondent. For the assessment years 1948-49 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 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... reads as follows : " Incomes included in total income but exempt from both income-tax and super-tax : The following classes of income shall be exempt from the tax payable under the said Act, but shall be taken into account in determining the total income of an assessee for the purposes of the said Act : . . . . . (2) The profits of any co-operative society other than the Sanikatta Saltowners' Society in the Bombay Presidency for the time being registered under the Co-operative Societies Act, 1912 (II of 1912), the Bombay Co-operative Societies Act, 1925 (Bombay Act VII of 1925), 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 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... under section 10 of the Act. The short question thus is whether paragraph 2 is confined only to profits made by a co-operative society from transactions with its own members and does not cover profits made in business with outsiders. It may be pointed out that there are some cases to be found, in which it was held, before the notification was amended by the addition of the Explanation, that the second paragraph exempted profits made by a co-operative society in transaction with its members and not to profits made in any other way. The question is whether such a restricted meaning can be imputed to the very wide and general terms in which paragraph 2 is couched. The question is plainly one of construction of the notification. In suppo ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... and that the Co-operative Societies Act and the bye-laws of the bank reflect this character of the business undertakings. This intention underlying the Co-operative Societies Act and the bye-laws, it is urged, is the key to the interpretation of the notification, and it must, therefore, be limited to profits from business with members only. In support of this argument, reference is made to observations in Madras Central Urban Bank Ltd. v. Commissioner of Income-tax, Madras Provincial Co-operative Bank Ltd. v. Commissioner of Income-tax, and Commissioner of Income-tax v. Bengalee Urban Co-operative Credit Society Ltd., where it was pointed out that the notification covered only profits from business with members. The first two cases were of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ess and not income which arose, apart from business. It must not be overlooked that at the time when the notification was first issued and also when it was amended, it was not even contemplated that co-operative societies would be permitted to deal in commodities in short supply with a view to ensuring their equitable distribution among the consumers. It was, however, always open to the appropriate government to allow a society to extend its business operations to trading with persons other than its members subject to conditions and restrictions, vide section 31 of the Co-operative Societies Act. This has, in fact, been done here. Once there is this extension of the business of a co-operative society, the general words of the notifica ..... X X X X Extracts X X X X X X X X Extracts X X X X
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