Co-operative society exemption does not cover authorised trading profits outside the society's normal business objects.

Exemption under the relevant notification applied only to profits arising from the society's own co-operative business, not to income from a separate trading activity merely because it was permitted by Government. Income-tax treatment depended on whether the receipts were business profits of the co-operative society as such; dealings outside the society's normal co-operative objects fell outside the intended scope of the notification. The trading profits from sugar, oil and standard cloth were therefore not exempt and were taxable.

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Issues: Whether profits earned by a co-operative bank from trading in sugar, oil and standard cloth under Government permission were exempt from income-tax as profits of a co-operative society within the relevant notification.

Analysis: The exemption applied only to profits arising from the society's own co-operative business and not to income derived from a separate line of trading merely because it was permitted by Government. Income-tax treatment depended on whether the receipts were business profits of the co-operative society as such. Profits from dealings outside the society's normal co-operative objects, even if authorised, were not within the intended scope of the notification.

Conclusion: The trading profits were not exempt and were taxable.

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