Co-operative society profit exemption extends to authorised trading with non-members when the notification uses broad, unqualified language.

The exemption notification under section 60 of the Indian Income-tax Act, 1922, was construed broadly to cover the profits of a co-operative society without limiting the source of those profits to transactions with members. The Court held that authorised trading in controlled commodities with non-members also fell within the exemption because the notification's language was general and the Explanation only excluded specified categories such as investment income, dividends, and income from other sources. The society's permitted extension of business to outsiders did not take its trading profits outside the exemption, so those profits remained exempt.

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Issues: Whether the profits earned by a co-operative bank from trading in controlled commodities with persons other than its members, but with official approval, were exempt under the notification issued under section 60 of the Indian Income-tax Act, 1922.

Analysis: The notification exempted the profits of any co-operative society in broad terms, and the Explanation only excluded specified categories of income such as investments, dividends, and income from other sources. The Court held that the words "the profits of any co-operative society" were wide enough to include profits from business carried on with outsiders, and there was no basis for confining the exemption to transactions with members only. The addition of the Explanation clarified the ambit of the exemption and did not warrant reading into the notification a restrictive intention inconsistent with its language. Since the society had been permitted to extend its business to trading in commodities with non-members, the resulting business profits fell within the exemption.

Conclusion: The profits were exempt under the notification and the question was answered in favour of the assessee.

Ratio Decidendi: An exemption notification using general language must be construed according to its terms, and if it exempts the profits of a co-operative society without limiting the source of business to members, profits from authorised business with non-members are covered unless expressly excluded.

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