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1 - 10 of 15 (0.37 seconds)Commissioner Of Income Tax, U.P.-Ii, ... vs Bazpur Co-Operative Sugar Factory ... on 6 May, 1988
The Court apparently felt that the event of return of the
amounts by way of conversion into share capital was
remote, if not impossible. In meeting the point urged by
the assessee that it was a deposit, the Court proceeded to
apply the primary purpose test. The primary purpose,
according to the learned Judges, was not to issue shares to
the members but it was meant to discharge various
liabilities of the society. Therefore, it was felt that it would
be a misnomer to call it members' money or a returnable
deposit. That is the ratio of the decision.
To what extent the principle laid down or the test
applied in the Bazpur case can be pressed into service in
the present case is the question which needs our close
attention. There are two distinguishing features which
become apparent on a reading of the bye-laws.
Shree Nirmal Commercial Ltd. vs Commissioner Of Income-Tax on 10 April, 1991
The High Court relied on the decision of the same High
Court in Shree Nirmal Commercial Ltd. Vs. C.I.T. [193
in ITR 694] in order to hold that the payment of interest
on the deposited amount is not inconsistent with the
amount being a revenue receipt. We are of the view that
the ratio of that decision cannot be pressed into service in
the present case. On a consideration of the Scheme and
Agreement under which non-refundable interest-bearing
deposit was collected by the assessee-company, it was
found as a matter of fact that "the deposit was the absolute
property of the Company and the provision for payment of
interest was only a device for showing the amount received
in the course of trade as deposit." In the instant case, the
plea of device, though raised faintly before the Tribunal, was
not accepted. It rejected the argument that the provision in
the bye-law 61-A providing for conversion of deposits into
share-capital was a make believe affair and that the High
Court in answer to question No.12 affirmed this finding.
To fortify the argument that the disputed amount is
not the income of the assessee, the learned Sr. Counsel
appearing for the assessees pointed out that the entire
amount of cane price was treated as agricultural income of
the member and was taxed accordingly under the
Maharashtra Agricultural Income Tax Act. So also, the
interest payable on the deposits was shown as the
member's income and the deposits were shown in the
wealth tax returns as the member's wealth. According to the
learned counsel, all this indicated as to how the deposited
amounts were being treated by the members apart from the
assessees. We are not inclined to delve into these aspects
which are being projected for the first time before us.
Though this stand was taken before the Tribunal and a
sample assessment order was filed, evidently the finding of
the Tribunal was not invited on this aspect.
The learned counsel for the Revenue tried to invoke
Section 41(1) to fortify his argument that the impugned
receipts constitute income in the hands of the assessee
Society. No such question was considered by the High Court
or even by the Tribunal specifically. In fact, the questions
formulated in the reference cases indicate that the decision
of the High Court was not invited on this point.
Hyderabad Karnataka Education Society vs Registrar Of Societies And Ors on 7 December, 1999
There is one more point to be adverted to. Compulsory
nature of the deposit has been stressed by the Revenue and
the High Court too as being obnoxious to the idea of a
deposit. It has been pointed out that the member had no
option but to agree for deduction on pre-ordained terms and
there could not be in law a contract creating deposit. This
contention, however, does not appeal to us. A person by
becoming the member of a Co-operative Society, volunteers
to abide by the bye-laws of the Society, the real object of
which is to provide for internal management of the Society
including rendering assistance to the members. There is an
authority for the proposition that the bye-laws of the Co-
operative Society constitute a contract between the Society
represented by its managing body and its constituents. This
legal position has been recognized in Hyderabad
Karnataka Education Society Vs. Registrar of Societies
and Others [(2000) 1 SCC 566] (vide paragraph 28).
Co-Operative Central Bank Ltd. & Ors vs Additional Industrial Tribunal, ... on 3 April, 1969
In
The Cooperative Central Bank Ltd. & Ors. Vs. The
Additional Industrial Tribunal, Andhra Pradesh
[(1969) 2 SCC 43], this Court held that the bye-laws of
the Society framed by virtue of the authority conferred by
the Co-operative Societies Act were on par with Articles of
Association of a Company, which, it is well settled, establish
a contract between the Company and its members and
between the members inter se (vide paragraph 14 in N.C.
Sanyal Vs. Calcutta Stock Exchange Association Ltd.
[(1971) 1 SCC 57]). That apart, the mere fact that the
contract has to be entered into in conformity with and
subject to restrictions imposed by law does not per se
impinge on the consensual element in the contract.
Naresh Chandra Sanyal vs Calcutta Stock Exchange Association ... on 25 September, 1970
In
The Cooperative Central Bank Ltd. & Ors. Vs. The
Additional Industrial Tribunal, Andhra Pradesh
[(1969) 2 SCC 43], this Court held that the bye-laws of
the Society framed by virtue of the authority conferred by
the Co-operative Societies Act were on par with Articles of
Association of a Company, which, it is well settled, establish
a contract between the Company and its members and
between the members inter se (vide paragraph 14 in N.C.
Sanyal Vs. Calcutta Stock Exchange Association Ltd.
[(1971) 1 SCC 57]). That apart, the mere fact that the
contract has to be entered into in conformity with and
subject to restrictions imposed by law does not per se
impinge on the consensual element in the contract.
Andhra Sugars Ltd. & Anr. Etc vs State Of Andhra Pradesh & Ors on 29 September, 1967
"Compulsion of law is not coercion" and despite such
compulsion, "in the eye of law, the agreement is freely
made", as pointed out in Andhra Sugars Ltd. Vs. State of
A.P. [AIR 1968 SC 599].
Commissioner Of Income Tax, (Central) ... vs Bijli Cotton Mills (P) Ltd., Hathras., ... on 7 November, 1978
It could still be contended, as has been contended by
learned senior counsel appearing for the assessees, that the
realizations made by the assessee towards Area
Development Fund are impressed with a specific legal
obligation to spend the monies for specified purposes which
are unrelated to the business of the sugar factory and
therefore such receipts cannot be treated as income of the
assessee. The analogy of collection of amounts towards
charity, as in the case of C.I.T. Vs. Bijlee Cotton Mills
[(1979) 1 SCC 496], has been invoked to substantiate the
argument. It is contended that the realizations towards Area
Development Fund would more or less stand on the same
footing as deposits. The controversy has not been
approached in the light of the above arguments. We do not
consider it appropriate to express our view for the first time,
especially when the determination thereof may depend on
the consideration of certain facts. We therefore leave this
point open for fresh determination by the Tribunal.