Commissioner Of Income-Tax v. Saraswati Kunj Co-Operative House Building Society

1. Learned counsel for the Revenue relies on the observations made by the hon'ble Supreme Court in Tuticorin Alkali Chemicals and Fertilizers Ltd. v. CIT, [1997] 227 ITR 172 in support of her submission that interest is always treated as income whether earned from fixed deposits or from savings bank account. In the present case, the assessee is a co-operative house building society established with the specific objective of purchasing agricultural land for development as plots which then are allotted only to its own members. The agreement between the Government of Haryana and the assessee stipulated, inter alia, that the society shall keep 30 per cent, of the amount realised by it from the plot holders from time to time in a deposit for being utilised by the society towards meeting the cost of internal development work in the colony. Thereafter a bilateral agreement between the assessee and the Government stipulates that the society shall not derive any profit out of the sale of the plots to its members and that it shall allot plots only to the members of the society. These facts have prevailed on the Commissioner of Income-tax (Appeals) as well as the Income-tax Appellate Tribunal to arrive at the conclusion that the utilization of moneys received from members and kept in savings bank account is directly linked with the activity of purchasing agricultural land, developing the same and converting it into residential plots after obtaining approval of the Government of Haryana and thereafter distributing it to the members. Thus the moneys kept in the savings bank account have an inextricable link with the acquisition of land, a fact which the Income-tax Appellate Tribunal records, was not denied by the Revenue.

2. The Commissioner of Income-tax (Appeals) as well as the Income-tax Appellate Tribunal have discussed Tuticorin Alkali Chemicals and Fertilizers Ltd. v. CIT, [1997] 227 ITR 172 (SC), as well as CIT v. Bokaro Steel Ltd., [1999] 236 ITR 315 (SC) and CIT v. Karnal Co-operative Sugar Mills Ltd., [2000] 243 ITR 2 (SC).

3. The observations made by this court in Krishan Kumar Aggarwal v. Assessing Officer, [2004] 266 ITR 380, therefore, become relevant, in as much as, since the question has been settled by the apex court, the question of application of such a decision in a particular set of facts would not constitute a substantial question of law.

Dismissed.