1987 (7) TMI 57

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....he question referred for our decision in I.T.R. No. 97 of 1982: " Whether, on the facts and in the circumstances of the case, the Appellate Tribunal is right in holding that the credit sales to the tune of Rs. 5,43,084 to the members of the assessee-society will not come under section 80P(2)(a)(i) of the Income-tax Act and hence the exemption claimed by the assessee is not sustainable in law ? " The credit sales for the year 1975-76 is to the tune of Rs. 4,55,885 and for the year 1978-79, it amounts to Rs. 3,93,396. The assessee (applicant) in these cases is an apex co-operative society, registered under the Kerala Co-operative Societies Act. Various primary consumers' co-operative societies are members of the assessee-society. In the co....

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....application was made before the Tribunal under section 256(1) of the Income-tax Act to refer the question of law, formulated hereinabove, for the decision of this court. Accordingly, for all the three years, the Appellate Tribunal has referred the above question for the decision of this court. We heard counsel for the applicant-assessee, Mr. Sasidharan, and also counsel for the Revenue, Mr. P. K. R. Menon. The arguments advanced before the Appellate Tribunal were repeated before us. Counsel laid stress on the language of section 80P(2)(a)(i) of the Act and contended that the two expressions " carried on the business of banking " and " providing credit facility to its members " should be understood distinctly and differently, and so underst....

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....s of banking ", the preceding clause in the same sub-section. It is conceded that the assessee effected credit sales to its members. We find it difficult to accept the arguments that the co-operative society selling goods to its members on credit is engaged in the business of providing credit facilities to its members. Selling goods on credit may be one of the modes of carrying on the business. It cannot be said to be one of " providing credit facilities to its members " as envisaged by section 80P(2)(a)(i) of the Income-tax Act. Considered in the context and collocation of words, we hold that the words " providing credit facilities to its members" occurring in section 80P(2)(a)(i) of the Act means providing credit by way, of loans and not....