TRICHINOPOLY TENNORE HINDU PERMANENT FUND, LTD A LIMITED COMPANY WITH ITS HEADQUARTERS Vs. COMMISSIONER OF INCOME-TAX

JUDGEMENT

(1.) The real question involved in this reference is whether the Trichinopoly Tennore Hindu Permanent Fund, Ltd., a company registered under the Indian Companies Act, is a banking concern or a mutual benefit society. The question was raised on a former occasion, namely, in respect of the income-tax year 1925-26. The income-tax authorities then treated the company as an ordinary banking concern and taxed it on that basis. At the instance of the company the question was referred by the Commissioner of Income-tax to this Court which decided that the income-tax authorities had taken the correct view. The Commissioner of Income-tax, Madras V/s. The Trichinopoly Tennore Hindu Permanent Fund, Ltd. After this decision had been given, the company took steps to alter its memorandum and articles of association. In the original memorandum the objects of the company were stated to be: (a) to enable persons to save money; (b) to enable persons to secure loans at favourable rates of interest on sufficient securities; and (c) to do all such other things as are incidental or conducive to the attainment of the above objects.

(2.) For the word "persons" the word "members" was substituted. The company had made considerable profits out of lending money to non-members and this was the reason for the decision that the company was a banking concern and not a mutual benefit society.

(3.) The nominal capital was originally Rs. 2,99,970 made up as follows: (1) 1800 fully paid-up permanent shares of Rs. 50 each amounting to Rs. 90,000. (2) 2333 term shares of Rs. 90 each payable in 45 monthly instalments of Rs. 2 amounting to Rs. 2,09,970.