2008 (4) TMI 348

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....er to be eligible for the exemption, should be confined to the members of the co-operative society and since the banking business was carried on in relation to both members and non-members of the assessee society, the income earned therefrom was not eligible for the exemption. In fact, the AO took the view that since the aforesaid statutory provision referred to members of the assessee society while giving exemption to the income earned from providing credit facilities, the same qualification should also be read into the business of banking and inasmuch as the said business was carried on both with the members and non-members the income was not eligible for the exemption. In the alternative, he held that the assessee cannot be considered to....

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....    Rs. 24,83,575.00 Cash credit      Rs. 12,77,499.00 ODD                 Rs. 12,995.00                ------------------ Total          Rs. 2,98,37,794.30                ------------------ The AO treated the entire interest income of Rs. 2,98,37,794 as income earned from non-members. He computed the expenses for earning the income on proportionate basis by applying a formula which is set out in para 7.1 of the assessment ....

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....siness of banking or providing credit facilities to its members." It may be seen from the above that the condition that the activity should be restricted to the members of the society can be read into only the business of providing credit facilities, whereas the business of banking can be carried out with both members and non-members. The disjunctive "or" makes the position clear and it is not possible to interpret the condition as attaching to the business of banking also. A perusal of the entire section shows that wherever the legislature wanted to place the condition that the activity should be confined to the members of the co-operative society, it has expressly done so. Since the legislature has not expressly mandated that the busin....

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.... banking business. A copy of the licence dt. 21st Jan., 1997 issued by the RBI (Urban Banks Department) is at p. 60 of the paper book which says that the assessee is granted a licence to commence and carry on banking business as understood by the Banking Regulation Act, 1949, subject to the condition that the area of operation of the bank shall be confined to the Noida township and the urban agglomeration of Ghaziabad District and also that the assessee shall display a copy of the licence in the registered office of the bank. Sec. 5(b) of the Banking Regulation Act defines banking activity as accepting for the purpose of lending or investment of deposits of money from the public, repayable on demand or otherwise and withdrawal by cheque, dr....