(Appeals by special leave from the judgment and order, dated October 14, 1982 of the Madras High Court in Tax Cases' Nos. 1234 and 1246 of 1977).

Income‑tax‑‑‑

‑‑‑‑Cooperative society‑‑‑Exemption‑‑‑Providing credit facilities to members‑‑‑Society purchasing auto‑rickshaws and selling them to members under hire purchase agreement‑‑‑Cannot be treated as providing credit facilities‑‑‑Not entitled to exemption‑‑‑Indian Income Tax Act, 1961, S.SOP(2)(a)(i).

The assessee, a cooperative society, was formed to promote the economic interests of its members by purchasing auto‑rickshaw vehicles and selling them on hire purchase terms to the members. The society purchased auto‑rickshaws in its own name from out of its own funds or from funds borrowed from banks. Thereafter, the auto‑rickshaws were sold to members who made applications therefor under hire‑purchase agreements, under which the members had to pay an overall consideration in instalments during a period of five years. If the member paid all the instalments the society was under an obligation to convey the vehicle outright to the member on a nominal consideration of Re. 1. The assessee claimed exemption under section 80P(2)(a)(i) of the Income Tax Act, 1961, on the ground that it was carrying on the business of providing credit facilities to its members. The Appellate Tribunal upheld the claim of the assessee. On a reference, the High Court held [see (1983) 143 ITR 981] that the assessee was not entitled to the exemption under section 80P(2)(a)(i) because the object of the society was really to purchase and sell the auto‑rickshaws, the payment by the members being effect in the form of the hire‑purchase agreement, which could not be considered to be offering a credit facility. The assessee preferred appeals to the Supreme Court. The Supreme Court dismissed the appeals.

CIT v. Madras Autorickshaw Drivers' Cooperative Society Ltd.

(1983) 143 ITR 981 affirmed.

Mrs. Janaki Ramachandran, Advocate for Appellant.

Dr. V. Gauri Shankar, Senior Advocate (S.N. Terdol, Advocate with him) for Respondent.

ORDER

Heard learned counsel for the appellant and read the judgment under appeal. While we sympathise with what the assessee is doing, we do not think that its activity can be said to provide "credit facilities" to its members. Therefore, the High Court has rightly held that the provisions of section 80P of the Income Tax Act, 1961, are not applicable. The appeals are dismissed.

No order as to costs.

M.B.A./1036/FCAppeals dismissed.