1935 (9) TMI 12

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....0. The amount of each share is payable in monthly instalments of Re. 1. The share account of each shareholder is closed on the expiry of 45 months from the last date of the month in which he was admitted by his being paid Rs. 50 and then he ceases to be a shareholder. The difference between the amount subscribed by him and the amount paid to him at the end of the 45th month, viz., Rs. 5, called "guaranteed interest." The Fund accepts deposits from its shareholders on which interest is allowed to them. The Directors are authorised temporarily to borrow from time to time, if necessary, sums to carry on its transactions. The collections of the Fund are used to be lent to the shareholders at specified rates of interest on the security of the sh....

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.... exactly like the present one was decided in Secretary, Board of Revenue v. Mylapore Hindu Permanent Fund Ltd., in which it was held that a fund like this was a mutual benefit society and therefore the receipts from the shareholders were not income liable to assessment under the Act. The Income tax Officer did not follow this decision as before he completed the assessment this Court decided the case of the Madura Hindu Permanent Fund. That decision was interpreted by him to mean that profits earned by the Fund by lending money may be taxed. He therefore held that the decision in Secretary, Board of Revenue v. Mylapore Hindu Permanent Fund, Ltd., was no longer applicable and assessed the Fund on the total income including the profits of Rs. ....

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....tal borrowed for the purpose of the funds business within the meaning of Section 10(ii)(3) of the Income tax Act, that its payment was not in any way dependent on the earning of the profits and that the fund was entitled to claim deduction in respect of that sum distributed by it as guaranteed interest. The question now referred to us did not arise for decision in that case. In the Sivaganga Minakshi Nidhi Case this Court pointed out that that case was one like Secretary, Board of Revenue v. Mylapore Hindu Permanent Fund, Ltd. It is contended by the learned counsel for the Commissioner that on the facts this case would fall exactly within the scope of the decision in Secretary, Board of Revenue v. Mylapore Hindu Permanent Fund Ltd. What ....