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1 - 9 of 9 (0.25 seconds)Section 81 in The Income Tax Act, 1961 [Entire Act]
Section 256 in The Income Tax Act, 1961 [Entire Act]
Union Of India And Ors vs M/S. Wood Papers Ltd. And Anr on 24 April, 1990
11. It is the cardinal principle of interpretation of statutes that while interpreting the taxing statutes they shall be construed strictly either because of legislative intention or on economic justification of inequitable burden or progressive approach of fiscal provisions intended to augment
the State Revenue. The Apex Court in Union of India v. Wood Papers Limited, , held as follows:
Commissioner Of Income Tax, Lucknow vs U.P. Cooperative Federation Ltd on 10 February, 1989
8. According to the facts in that case, the society was assessed for the income over the printing press and service charges for the supply of pumping sets by M/s. Southern Engineering, repelling its plea for exemption. The applications for purchasing the pump sets were processed by the Society and it stood as guarantor for the payment. The Society took the responsibility for the payment of the invoice price within seven days from the date of the invoice and it is also responsible for the payment. It has undertaken the liability for making available the loans to the fanners either from its own resources or from the financing institutions. Thus, the society has provided credit facilities to the cane-growers who purchased pumping sets. The final payment was guaranteed by the society. The Southern Engineering Works in consideration of the services rendered by the society agreed to pay service charges to the Federation at the rate of 5% to be calculated on the price of the pump-sets. Under the circumstances, it was held that the expression "providing credit facilities" would comprehend the business of lending services on profit for guaranteeing payments, inasmuch as guaranteeing payments is as much a part of banking business for affording credit facility as advancing loans. However, the Bench was of the view that the cane-growers who purchased the pump sets were not the members of the society and ultimately held that the income from service charges was not exempted from taxing.
The Grasim Industries Ltd. & Anr. vs State Of Madhya Pradesh & Anr. on 16 November, 1999
The above excerpt has been extracted with approval by the Apex Court in its latest
judgment in Grasim Industries Limited v. State of Madhya Pradesh, .
Commissioner Of Income-Tax vs Kottayam Co-Operative Bank Ltd. on 9 April, 1974
It is obvious even from the excerpts extracted supra that the twin requirements to be satisfied are (1) providing credit facility must be one of the activities of the society and (2) the income derived there from as a profit or gain shall be one of the main sources of income. Returning to the facts of the instant case, issuing the requisite certificate while forwarding the
loan applications and recommending the sanction of the loans de hors guaranteeing the payment and earning profits or gains thereby, under the facts and circumstances of this case cannot be said to be an activity of the society. Even if the expression "engaged in the business of providing credit facilities to its members" is stretched so as to construe that it comprehends the business of providing credit facilities through the State Bank of India, Anakapalle Branch also, as is done by the Allahabad High Court referred to supra that act in isolation de hors the other act of guaranteeing the payments and undertaking the responsibility of repayment thereby making it as a source of income cannot reasonably be construed as one of the activities of the assessee. The judgment of the Allahabad High Court therefore has no application to the facts of this case. Reliance has also been placed by the learned Counsel upon the judgment of the Kcrala High Court in Commissioner of Income-Tax, Kerala v. Kottayam Co-operativer Bank Limited, (1974) 1996 ITR 181. That was a case where the assesse- Co-operative Society was doing banking business and as a part of its business activity it was also conducting chit funds from about the year 1959. The income derived from the conduct of the chit funds was not subjected to tax till the assessment year 1969-70. For the assessment year 1969-70 it was subjected to tax by the 1TO. In the eventual reference to the High Court it was held that the chit fund was primarily intended to operate as a scheme for advancing loans from the common fund to the subscribers, their turn for getting such loans being determined either by auction or by drawing lots and therefore by conducting the chit funds the assessee was providing credit facilities to its members and the income earned by the assessee from the said business entitled to deduction. Since the society has directly involved in a chit fund business there can be no gain saying that it is part of its activity. That
decision, therefore, has no application to the facts of the instant case.
Andhra Pradesh Co-Operative Central ... vs Commissioner Of Income-Tax on 24 September, 1971
9. The learned Counsel appearing for the Revenue relied upon, on the other hand, the judgment of this Court in A. P. Co-operative Central Land Mortgage Bank Limited v. Commissioner of Income Tax, A.P., . According to the facts in that case the assessee society earned income by way of interest on securities. The Income-Tax Officer deducted the tax at source for that income, while negativing the claim of the assessee for refund of the same on the ground that it was entitled to an exemption from tax under Section 81(a)(i) or under Section 81(v) of the Act. In the eventual reference ultimately this Court held, having due regard to the bye-laws of the society and its objects, that in order to earn exemption contemplated under Section 81(i)(a) the Society must prove that it has engaged itself in carrying on the business of banking or providing credit facilities to its members and that the profits and gains sought to be exempted are earned or made in the business carried on by it. Where the Co-operative Society has earned any profits or gains not pertaining to its business but by mere investment in Government securities, or in any other manner, such categories of income are not exempt from Income Tax under Section 81(i)(a). This Court has further held as follows:
Additional Commissioner Of Income-Tax vs U.P. Co-Operative Cane Union on 10 April, 1975
The Allahabad High Court placed reliance upon its earlier judgement rendered by another Bench in Additional CIT v. U.P. Co-operative Cane Union, (1978) 1141 ITR 70 (All). The relevant observations of the Bench in its earlier judgement have been quoted with approval thus:
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