TaxTMI 
TaxTMI 
2005 (12) TMI 78
X X X X Extracts X X X X
X X X X Extracts X X X X
....the facts and in the circumstances of the case, the Tribunal is right in law in holding that the activities of borrowing money and lending money to the members of the petitioner is similar to the one that is carried on by bankers, which accepts deposits from the depositors and lends money to various borrowers? 3. Whether, on the facts and in the circumstances of the case, the Tribunal is right in holding that the judgment of the Madras High Court reported in State Bank of India Staff Co-operative Society Ltd. v. ITO [1998] 233 ITR 104, is applicable to the facts of the case? 4. Whether on the facts and in the circumstances of the case, the Tribunal is right in not considering the application of section 3, section 22 and section 56 of ....
X X X X Extracts X X X X
X X X X Extracts X X X X
....t petition before this court challenging the said notice and the same was dismissed on November 20, 1997. The High Court directed the appellant to prefer objection to the respondent's notice. Accordingly, the appellant filed its objection before the respondent herein raising several grounds that the interest-tax could not apply to it, it being the. co-operative society, and not carrying on the business of banking. Later, the appellant-assessee filed a Writ Appeal No. 581 of 1998 wherein a Division Bench of this court was pleased to observe that the respondent herein would decide the issues before him without reference to and without being influenced by the observations of this hon'ble single judge dated November 28, 1997, of this court, rep....
X X X X Extracts X X X X
X X X X Extracts X X X X
....the Income-tax Act and was not liable for levy of interest under the Interest-tax Act being a cooperative society not engaged in the business of banking; (ii) that the first appellate authority's conclusion that the processing for the assessment was not barred by limitation, was not tenable on the facts and in law; (iii) that the first appellate authority erred in assuming that there was an escapement of assessment in the petitioner's case; and (iv) that notwithstanding his statement that the assessment should have been under section 10 and not under section 8, his conclusion that it was an inadvertent error which does not vitiate the assessment, is untenable; (v) that the conclusions of both the assessing authority as well as t....
X X X X Extracts X X X X
X X X X Extracts X X X X
....y and commercially, a specific class of business, which the appellantsociety does not carry on. The crucial and material issue as to whether the appellant-society carried on the business of banking has not been considered and the Tribunal had unjustly assumed that the business of taking deposits and advancing loans is a business of banking. Further, it was stated that the Tribunal has not considered the application under section 3, section 22 and section 56 of the Banking Regulation Act, 1949, to the facts of the case with reference to the appellant co-operative society. Further, it was stated that from April 1, 1993, reference to co-operative society was excluded and even up to April 1, 1993 only a co-operative society engaged in the busin....
X X X X Extracts X X X X
X X X X Extracts X X X X
....which the provisions of the Banking Regulation Act, 1949, are made applicable. A co-operative society which lends money to its members or accepting deposits or raising loans from financial or banking institutions and advancing the same to its members, amounts to doing the business of banking. The fact that it is only a thrift society or its activities are limited to its members only, could not any way affect the issue, whether the appellant-society is a credit institution for the purpose of levy of interest tax. The bye-laws of the appellant society have been placed before us. Clause 2(b) of the objects clause reads as follows: "The objects of the society shall be : (a) generally to encourage thrift, self-help and co-operation among t....