Holding

A co‑operative society cannot amend its bye‑laws with retrospective effect; therefore the deductions must be assessed under the original bye‑law as revenue receipts and are taxable.

Summary

Bazpur Co-operative Sugar Factory Ltd., a co-operative society registered under the Co-operative Societies Act, 1912, deducted Rs.5,15,863 from the price payable to its members for sugarcane under bye‑law 50 and credited the amount to a Loss Equalisation and Capital Redemption Reserve Fund. The society later amended bye‑law 50, claiming retrospective effect, to treat such deductions as permanent liabilities (capital receipts) rather than revenue receipts. The Income‑Tax Officer and the Appellate Tribunal held the deductions to be capital receipts and not taxable, a view affirmed by the Allahabad High Court. The Commissioner of Income‑Tax appealed, contending that a co‑operative society lacks power to amend its bye‑laws retrospectively and that the deductions are part of the society’s trading operations, thus revenue receipts. The Supreme Court held that the society had no authority to give retrospective effect to the amendment, so the original bye‑law applied and the deductions must be treated as revenue receipts taxable in the assessment year. Consequently, the Court allowed the appeal, overturning the High Court’s decision.

Issues considered

Whether a co‑operative society registered under the Co‑operative Societies Act, 1912 can amend its bye‑laws with retrospective effect.
Whether the amendment of bye‑law 50 is operative for the accounting year preceding the amendment.
Whether the amounts deducted under bye‑law 50 constitute capital receipts (permanent liabilities) or revenue receipts.
Whether such receipts are liable to tax under the Income‑Tax Act.

Legislation cited

Co-operative Societies Act, 1912s. 2, s. 43, s. 6
United Provinces Co-operative Societies Rules, 1936s. Rule 10, s. Rule 11, s. Rule 8

Subjects

co-operative societybye‑law amendmentretrospective effectcapital receiptrevenue receiptincome taxtaxability of cooperative fundsstatutory interpretation

Judgment

COMMISSIONER OF INCOME TAX, U.P.-II, LUCKNOW
A
v.
BAZPUR CO-OPERATIVE SUGAR FACTORY LTD.,
BAZPUR, DISTRICT NAINITAL.

MAY 6, 1988
B
[R.S. PATHAK, C.J. AND M.H. KANIA, J.]

Whether a Co-operative Society registered under Co-operative -
c
Societies Act, 1912 has power to amend its bye-laws with retrospective
effect-Whether the amended bye-law is operative during period previ-
ous to accounting year-Whether deposits made by members of the
society by way of deductions contemplated under bye-law 50 of the
Society were in the nature of permanent liabilities and were capital
r
receipts not liable to be included in taxable income of assessee-Society or
whether the deductions were revenue receipts liable to tax.

D Civil Appeal No. 563 of 1975 filed in the Court was directed
against the Judgment of the High Court in an Income-tax Reference.

The respondent (assessee) was a registered co-operative Society,
carrying on business of manufacture and sale of sugar. The respondent
had established a fund called "Loss Equalisation and Capital Redemp-
E tion Reserve Fund" to which it added, during the relevant acconnting
year, a snm of Rs.5,15,863 by deduction from the price payable by the
respondent to its members for the supply of sugarcane received from
the members. The deductions were made nnder bye-law 50 of the Bye-
-
laws of the society, which was amended later. The Income-tax Officer in '
assessing the respondent for the relevant assessment year held that the ~
F sum above-mentioned represented a revenue receipt and was liable to
be included in the taxable income of the assessee. On appeal, the
Assistant Commissioner aff'mned the view of the Income-tax Officer,
holding that the case had to be decided on the basis of the bye-law as it
stood during the relevant acconnting year. The respondent-assessee
appealed to the Income-tax Appellate Tribunal, which held that the
G amended bye-law was operative even during the relevant previous year
in view of the retrospective amendment thereof and that in view of the
said amended bye-law 50 the deposits made by the members by way of
deductions from the price as contemplated in the bye-law 50 were in the
nature of permanent liabilities and hence they were capital receipts and
not liable to be included in the taxable income of the assessee. The
H Tribunal directed that the said amonnt of Rs. 5,15,863 be deducted
1034
~ C.I.T. v. BAZPUR SUGAR FACTORY 1035

from the taxable income of the assessee. At the instance of the appel-
A
lant, a reference was made to the High Court for the determination of
the question whether the Income-tax Appellate Tribunal was right in
holding that the amount of Rs.5,15,863 was not a revenue receipt liable
to tax. The High Court answered the question in the affirmative and in
•~ favour of the assessee. The Commissioner of Income-tax moved this
Court by this appeal against the decision of the High Court. B·

The appellant contended that the· amendment of the bye-law 50,
which was purported to be made with retrospective effect, could have.

i no retrospective effect in law. There was ito delegation of power to the
respondent society to make bye-laws with retrospective effect.

Allowing the appeal, the Court, c
HELD: The respondent society had no authority in law to amend
its bye-law 50 with retrospective effect. The amendment of bye-law 50
could not have any retrospective effect and the amounts deducted from
the amounts payable to members for the supply of sugarcane, would D
have to be dealt with as if they were deducted under the provisions of
bye-law 50 as it stood in the relevant accounting period. If the provi-
sions of the unamended bye-law were applied, it was clear that the
.>-· amounts deducted by the respondent from the price payable to its mem-
hers on account of supply of sugarcane were deducted in the course of
the .trading operations of the respondent and these deductions were a E

- part· of its trading operations. The receipts by way of these deduc-
tions must be regarded as revenue receiptS and were liable to he
included in the taxable income of the respondent. Those receipts
could not be regarded as deposits. The receipts -constituted by the
~ deductions were really trading receipts of the assessee society and
were liable to be included in !_ts taxable income. The High Courf was F
in error and the question referred must be answered in favour of the
revenm,, [1042A, G-H0044D-E)

Civil Appeal No. 564 of 1975 was filed against the judgment of the
High Court in an income-tax reference in which the question refer-
red for determination was whether a sum credited during ·the year G
).. of account to the loss equalisation and capital· redemption reserve
fund by deposits received from producer members of the society under
clause 50 of its l>ye-laws was in the nature of a revenue receipt assess-
able to tax.

Allowing the appeal, the Court, H

...
1036 SUPREME COURT REPORTS [1988] 3 S.C.R. -1
A HELD: In view of its decision in Civil Appeal No. 563 of 1975, the
Court answered the question referred in the affirmative aild in favour
of the revenue. [1045A)

Income-tax Officer, Alleppey v. M.C. Poonnoose and Ors.,
[1970] 1 S.C.R. 678; Hukam Chand etc. v. Union of India & others,
B [1973] 1 S.C.R. 896; Co-operative Central Bank Ltd. & Ors. v. Addi-
tional Industrial Tribunal, Andhra Pradesh & Ors., [1970] 1 S.C.R.
205; Dr. Indramani Pyarelal Gupta v. W.R. Nathu and others, [1963) 1
S.C.R. 721; Chowringhee Sales Bureau P. Ltd. v. Commissioner of -
c
Income-tax West Bengal, [1973) 87 I.T.R. 541 and Punjab Distilling
Industries Ltd. v. Commissioner of Income-tax Simla, 11959) 35 I.T.R.
519, referred to.

CIVIL APPELLATE JURISDICTION: Civil Appeal Nos. 563
r
& 564of1975.

From the Judgment and Orders dated 15.11.71and9.5.72 of the
D Allahabad Higb Court in I.T.R. No. 67 of 1969 and 724 of 1971.

B.B. Ahuja, Ms. A Subhashini and K.C. Dua for the Appellants.

S.C. Manchanda, Mrs. A.K. Verma and Joel Pares for the ~
Respondents.
E
The Judgment of the Court was delivered by

KANIA, J. This is an appeal against the judgment of a Division
Bench of the Allahabad Higb Court in Income-tax Reference No. 67
of 1969. The appeal has been filed at the.instance of the Commissioner -f'
F oflncome-tax, U.P ..

The relevant facts are as follows:-

The respondent ( assessee) is a Co-operative Society registered
under the Co-oprative Societies Act, 1912. It carries on the business
G of manufacture and sale of sugar and runs at a Mill situated at
Bazpur. The relevant assessment year is the assessment year 1961-62, ~
the corresponding to the accounting year 1st July, 1959 to 30th June,
1960, which was the relevant co-operative year. The assessee had
established a fund called "Loss Equalization and Capital Redemp-
tion Reserve Fund". On the opening day of the year of account,
H name)y, 1st July, 1959, a sum of Rs.1,30,196 stood to the credit of
C.l.T. v. BAZPUR SUGAR FACTORY !KANIA, J.f 1037

this fund. During the relevant accounting year, the respondent soci- A
ety added a sum of Rs.5,15.863 to this fund by deduction from the
price payable by the respondent to its members for the supply of
sugarcane received from its members. These deductions were made
under the provisions of bye-law 50 of the Bye-laws of the respondent
society, to which we shall presently come. Bye-law 50 under which B
the said amount was deducted from the price payable by the respon-
dent to its members for the supply of sugarcane at the relevant time
- ran as follows:-

"There shall be established a Loss Equalisation and Capital
Redemption Reserve Fund in the Society. Every producer
shareholder shall deposit every year a sum not less than 32
c
np and not more than 48 np per quintal of the sugarcane
supplied by him to the society as may be determined by the
Board. After adjusting the losses, if any, in the working
year the deposits shall be allowed to accumulate and
utilised for repayment of.the initial loan from the Industrial D.
Finance Corporation of India and thereafter for redeeming
Government share.

The balance of the said deposit after meeting losses
shall be used in being converted into share capital in
accordance with bye-law 44(xix) and each producer share E
holder shall be issued shares of the society of the corres-
- .
ponding value in lieu thereof." ·

During the accounting year, the respondent debited a sum of
k_. Rs.2,34,354 to the said fund by adjusting this amount against the loss
' brought forward from the previous year, with the result that at the F
close of the said year on 30th June, 1960, the account showed a credit
balance of Rs.4,11,705. A meeting of the Sub Committee of the
respondent society which was held on August 26, 1964 took the view
that bye-law 50 was not clear as to whether the fund in question was
perpetual or terminable and also that it was not clear as to how the
liability for the loss of the respondent society can be fastened on the G
~ said fund. The Sub Committee recommended an amendment of the
bye-law 50 and pursuant to this recommendation, at a general meeting

• of the respondent held on 30th June, 1965, bye-law 50 was amended to
run as follows:-

"There shall be established a Loss Equalisation and Capital H
1038 SUPREME COURT REPORTS [1988] 3 S.C.R.
1
Redemption Reserve Fund in the Society. Every producer
A share holder shall deposit every year a sum not less than 32
paise and not more than 48 paise per quintal of the
sugarcane supplied by him to the society as may be de-
termined by the Board, until the shares to be subscribed by
a member are fully paid up. The amounts standing to the
B credit of this fund presently or to be credited in future shall
\ be used for making the partly paid shares fully paid up. The
balance of the said account shall be refunded to the mem-
bers concerned soon after the present Joan from the Indust-
rial Finance Corporation of India is repaid, whereafter the
fund shall cease to exist.
c This amended bye-Jaw shall be deemed to have come into
force from 1st July, 1958."

It may be mentioned here that the respondent society came into
existence in 1958-59 and the original bye-Jaws came into force from 1st
D July, 1958. The Income-tax Officer in assessing the respondent for the
relevant assessment year held that the said sum of Rs.5,15,863 rep-
resented a revenue receipt and was liable to be included in the taxable
income of the assessee. On appeal the Appellate Assistant Commis-
.gioner affirmed the view of the Income-tax Officer holding that the
case has to be decided on the basis of the bye-law as it stood during the
E relevant accounting year. The respondent assessee went in appeal to
the Income-tax Appellate Tribunal which took the view that the
amended Clause 50 must be held to be operative even during the
relevant previous year in view of the retrospective amendment thereof
and that in view of the said amended bye-law 50 the deposits made by
--
the members by way of deductions from the price as contemplated in
F bye-law 50 were in the nature of permanent liabilities and hence they
were capital receipts and not liable to be included in the taxable
income of the respondent assessee. The tribunal allowed the appeal of
the assessee and directed that the said amount of Rs.5, 15 ,863 should
be deducted from the taxable income of the assessee as determined by
the Income-tax Officer. At the instance of the Commissioner a refer-
G ence was made to the Allahabad High Court and the question framed
for determination of the High Conrt was as follows:-

"Whether on the facts and in the circumstances of the case,
the Income-tax Appellate Tribunal was right in holding
that the amount of Rs.5,15,863 was not a revenue receipt
/'"
H liable to tax?"
C.l.T. v. BAZPUR SUGAR FACTORY !KANIA, J.J 1039

The Division Bench of the High Court which disposed of the said A
reference agreed with the view of the Tribunal that the bye-law 50 of
the bye-laws of the society was validly amended with retrospective
effect and that retrospective effect must be given to that bye-law. The
Division Beuch took the view that in view of the amended bye-law the
amount of Rs.5,15,863 was not an amount which the society could deal
with as its income or according to its will and hence the source of the B
receipt was diverted. The High Court answered the question referred
to it in affirmative and in favour of the assessee. The present appeal is
directed against the said decision of the High Court.

Before coming to the contentions urged by the respective
counsel, it will be useful to take note of the relevant statutory provi- C
sions and the relevant rules. The respondent society was registered
under the Co-operative Societies Act-of 1912. Qause (a) of Section
2 of the said Act of 1912 defines "bye-laws" as registered bye-laws for
the time being in force and includes a registered amendment of the
bye-laws. Section 6 deals with the conditions for the registration of a
co-operative society. Section 43 confers upon the State Government D
power to make rules for registered societies to carry out the purposes
of the said Act. The relevant portion of clause (c) of sub-Section (2) of
Section 43 runs as follows:

"In particular and without prejudice to the generality of
the foregoing power, such rules may prescribe the matters E
in respect of which a society may or shall make bye-laws,
and the procedure to be followed in making; altering and
abrogating bye-laws, and the conditions to be satisfied
prior t_o such making, alteration or abrogation."

Clause (e) of Section 43(2) runs as follows:- F

"In particular and without prejudice to the generality of
the foregoing power, such rules may regulate the manner in
which funds may be raised by means of shares or deben-
tures or otherwise;''
G
Pursuant to the powers conferred under Section 43 of the Co-
operative Societies Registration Act, 1912, the Government of U.P.
framed certain rules known as United Provinces Co-operative Socie-
ties Rules, 1936 for registered societies and these rules were in force at
the relevant time. The relevant portion of Rule 8 under heading "III-
Bye-laws" ran as follows:- H
1040 SUPREME COURT REPORTS [1988] 3 S.C.R.
i
A "A society shall, subject to the provisions of the Act and of
the rules, make bye-law in respect of the following matters,
namely:

(1) the name of the society;

B (2) its registered address;

(3) its aims and objects;

(4) the purposes for which its funds may be applied;"

C Rule 10 conferred power on a society to make bye-laws in respect
of any other matter incidental to the management of its business. Rule
11 which deals with the amendment of rules runs as follows:

"An amendment may be made in the bye-laws, i.e. a bye-
law may be altered or rescinded or a new bye-law added by
D a resolution passed by the votes of at least two-thirds of the
members present at a special meeting called for the pur-
pose.''

It was submitted by Mr. Ahuja, learned counsel for the appellant
(revenue) that the amendment of bye-law 50, although it was
E purported to be made with retrospective effect could, in fact, have no
retrospective effect in law. It was submitted by him that a co-operative
society governed by the Co-operative Societies Act, 1912 was not a
body constituted by the said Act nor a statutory body. The power to
•
make bye-laws was conferred upon the society by delegation under
rules which themselves were framed by the Government in exercise of
F power delegated to the Government by the legislature under Section
43 of the aforesaid Act of 1912. It was submitted by him that as there
was no delegation of any power on the respondent society to make
bye-laws with retrospective effect, it had no power to do so and the
amendment of bye-law 50 made by the society, although purporting to
be retrospective, could not be given any such effect. In support of this
G submission, Mr. Ahuja relied upon the decision of this Court in
Income-tax Officer, Alleppey v. M.C. Poonnoose & Ors., [1970] 1
S.C.R. p. 678 in which the Court held as follows:

"Where any rule or regulation is made by any person or
authority to whom such powers have been delegated by the
H legislature it may or may not be possible to make the same
C.I.T. v. BAZPUR SUGAR FACTORY !KANIA, J.J 1041

so as to give retrospective operation. It will depend on the A
language employed in the statutory provision which may in
express terms or by necessary implication empower the
authority concerned to make a· rule or regulation with

• retrospective effect. But where no such lenguage is to be
found it has been held by the courts that the person or
authority exercising subordinate legislative functions cannot B
make a rule, regulation or bye-law which can operate with
retrospective effect (see Subba Rao J., in Dr. Indramani
Pyarelal Gupta v. W.R. Nathu & Others, [1963]SCR 721-
the majority not having expressed any different opinion on
the point; Modi Food Products Ltd., v. Commissioner of
Sales Tax U.P., A.LR. 1956 All. 356; India Sugar Refiner- C
ies Ltd. v. State of Mysore, A.LR. 1960 Mys. 326 and Gen-
eral S. Shivedev Singh & Another v. The State of Punjab &
Others, [1959] P.L.R. 514.")

The aforesaid observations have been cited with approval by this
Court in Hukum Chand etc. v. Union of India & Others, [1973] 1 D
S.C.R. p. 896 where the Central Government was held to have acted
in excess of its powers iii so far as it gave retrospective effect to the
Explanation to Rule 49 framed under the Displaced Persons (Compen-
sation and Rehabilitation) Act, 1954, exercising the powers conferred
)..
by Section 40 of the Act. We may also refer here to the decision of this
Court in Co-operative Central Bank Ltd. & Ors. v. Additional Indust- E
rial Tribunal, Andhra Pradesh & Ors., 11970] 1 S.C.R. p. 205 where it
has been stated by this Court as follows:
......
"We are unable to accept the submission that the bye-laws

4-· of a co-operative society framed in pursuance of the provi-
sions of the Act can be held to be law or to have the force of F
law. It has no doubt been held that, if a statute gives power
to a Government or other authority to make rules, the rules
so framed have the force of statute and are to be deemed to
be incorporated as a part of the statute,. That principle,
however, does not apply to bye-laws of the nature that a
co-operative society is empowered by the Act to make. The G
}. bye-laws that are contemplated by the Act can be merely
those which govern the internal management, business or
administration of a society."
•i
'.
We may mention that the Act under which the bye-laws were
!-
framed was the Andhra Pradesh Co-operative Societies Act, 1964. H
•

1042 SUPREME COURT REPORTS [1988] 3 S.C.R.
i
A In the light of the decisions discussed earlier, it appears to us
that the respondent society had no authority in law to amend bye-law
50 with retrospective effect as it purported to do. We have already
pointed out the power of the society to amend its bye-laws arises from
the provisions of Rule 11 of the United Provinces Co-operative
Societies Rules, 1936, which rule has been made under the powers
,B conferred by Section 43 of the United Provinces Co-operative Socie-
ties Act, 1912. There is nothing expressly or impliedly in Rule 11
which confers any power on the society to amend its bye-laws with
retrospective effect and in the absence of any such power being confer-
red, either expressly or by implication, it cannot be said that the soci-
ety had any power to amend its bye-laws with retrospective effect. Mr.
Manchanda, learned counsel for the respondent-society placed strong
c reliance on the decision of this Court in Dr. Indramani Pyarelal Gupta
v. W.R. Nathu and Others, [1963] 1 S.C.R. p. 721 where it was held
that the substituted bye-law 52AA of the East India Cotton Associa-
tion made by the Central Government in exercise of the power confer-
red upon it under Section 12 of the Forward Contracts (Regulation)
D Act, 1952 and which, very shortly stated, conferred power on the
Forward Markets Commission, after notifying' with the Chairman of
the Board of the East India Cotton Association, to close hedge con-
tracts in the eventualities mentioned in the said rule was not invalid in
law or ultra vires the Constitution. On a proper construction, the
amended or substituted bye-law applied not only to contracts to be
E entered into futute but also to subsisting contracts. This Court pointed
~
'
I'!
f.

-
i~
_if'.
out that, in that case, the power to make bye-laws so as to affect the f.
rights in subsisting contracts followed as a necessary implication from
the terms of Section 11 of the Forward Contracts (Regulation) Act,
1952. In the case before us, however, there is nothing in Section 43 of
the U.P. Co-operative Societies Act, 1912 or Rule 11 of the United
F Provinces Co-operative Societies Rules, 1936 to indicate that there is ~ i
any p~wer, express or by implied, in a co-operative society registered
under that Act to make bye-laws with retrospective effect in respect of
its business.

In view of the above discussion, in our view, the amendment of
G bye-law 50 of the respondent society cannot have any retrospective
effect and the amounts deducted from the amounts payable to mem- -I,
bers for the supply of sugarcane. will have to be dealt with as if they
were deducted under the provisions of bye-law 50 as it stood in the
relevant accounting period.

H If the provisions of the unamended bye-law are to be applied, it
C.l.T. v. BAZPUR SUGAR FACTORY [KANIA, J.] 1043

is clear that these amouuts which were deducted by the respondent A
from the price payable to its members on account of supply of
sugarcane were deducted by the respondent from the price payable to
its members on account of supply of sugarcane were deducted iu the
course of the trading operations of the respondent and these deduc-
tions were a part of its trading operations. The receipts by way of these
deductions must, therefore, be regarded as revenue receipts and are B
liable to be iucluded in the taxable income of the respondent. It is

- urged by Mr. Manchanda, that these receipts have been described in
the bye-law 50 as deposits, but we fail to see how they can really be
regarded as deposits. It was held by this Court in Chowringhee Sales
BureauP. Ltd. v. Commissionero[Income-tax, West Bengal, [1973)87
I. T.R. p. 541 that it is the true nature and quality of the receipt and not
the head under which it is entered in the account books as would prove
c
decisive. If a receipt is a trading receipt, the fact that it is not so shown
in the account books of the assessee would not prevent the assessing
authority from treating it as a tradiug receipt. The same principle can
be derived from the decision of this Court in Punjab Distilling In-
dustries Ltd. v. Commissioner of Income-tax, Simla, [1959) 35 l.T.R. D
p. 519. In that case, the assessee carried on business as a distiller of
country liquor and sold the produce of its distiller to licensed wholesal-
ers. Under a scheme devised by the Government, the distiller (asses-
see) was entitled to charge the wholesaler a price for the bottles in
which the liquor was supplied, at rates fixed by the Government,
which he was bound to repay when the bottles were returned. In E
addition to the price fixed under the Government scheme, the assessee
took from the wholesalers certain further amounts, described as secur-
ity deposits without the Government's sanction and entirely as a condi-
tion imposed by the assessee itself for the sale of its liquor. The
moneys described as security deposits were also returned as and when
the bottles were returned but in this case the entire sum taken in one F
transaction was refunded when 90 per cent of the bottles covered by it
were returned. The price of the bottles received by the assessee was
entered by it in its general trading account while the additional sum
was _entered in the general ledger under the heading "empty bottles
return security deposit account." The question was whether the asses-
see could be assessed to tax on the balance of the amounts of these G
additional sums left after the refunds made out of the same. It was held
that the additional amount described as security deposit by the asses-
see was really an extra price for the bottles and was a part of the
consideration for the sale of liquor; it did not make any difference that
the additional amount was entered in a separate ledger termed "empty
bottles return deposit account". It was held that these additional H

,,...,
1044 SUPREME COURT REPORTS [1988] 3 S.C.R. 1
A amounts, which remained after the refunds were made, were trading
receipts of the assessee and liable to tax. Applying these principles to
the present case, in our opinion, it makes no difference that in the
bye-law, these amounts have been referred to as deposits and the
account in which these receipts were entered has been called "Loss
Equalisation and Capital Redemption Reserve Fund". The essence of
B
a deposit is that there must be a liability to return it to the party by
whom or on whose behalf is made on the fulfillment of certain condi-
tions. Under the amended bye-law, the amounts deducted from the
price and credited to the said fund were first liable to be used in
ad justing the losses of the respondent society in the working year;
-
thereafter in the repayment of initial loan from the Industrial Finance
c Corporation of India and then for redeeming the Government share
and only in the event of any balance being left, it was liable to be
converted to share capital. The primary purpose for which the deposits
were liable to be used were not to issue shares to the members from
whose amounts the deductions were made but for the discharging
Iiabilties of the respondent-society. In these circumstances, the
D receipts constituted by these deductions were really trading receipts of
the assessee society and are liable to be included in its taxable income.
In our view, the learned judges of the High Court were, with respect,
in error in answering the question referred in the negative. In our
opinion, the question referred must be answered in affirrnative and in
~ '
favour of the revenue. 1-~
E

In the result, the appeal succeeds and is ailowed with costs. The
respondent shall also pay to the appeilant the costs incurred in
Income-tax Reference No. 67 of 1979.
-
F CIVIL APPEAL No. 564 OF 1975
~
This is an appeal against the judgment of a Division Bench of the
Allahabad High Court in Income-tax Reference No. 724 of 1971. The
question referred to us for determination is as foIIows:-
·G
"Whether on the facts and in the circumstances of the case,
the sum of Rs.6, 11,846 credited during the year of account
to the loss equalisation and capital redemption reserve
fund by deposits received from producer members of the
society under Gause 50 of its bye-laws is of revenue nature
H assessable to tax"?
C.I.T. v. BAZPUR SUGAR FACTORY !KANIA, J.) 1045

In view of our decision, the appeal must be allowed and the A
question referred answered in the affirmative and in favour of the
revenue. The appeal is allowed. No order as to costs.

S.L. Appeal allowed.

-

;111 j

•
.-
_,
~'

•~