JUDGMENT Gulati, J.
1. The assessee is a co-operative society registered under the Co-operative Societies Act, 1912. It derives income from interest on securities, interest on deposits and income from business of running a printing press and business of purchase and sale of kolhus to its members. For the assessment year 1964-65 the Income-tax Officer computed the net income from printing press at Rs. 16,779 and from sale of kolhus at Rs. 14,926. On appeal the income from printing press was reduced to Rs. 14,381 but the assessee's plea that it was exempt from tax under Section 81(i)(a) of the Income-tax Act, 1961, was not accepted. On second appeal the Income-tax Appellate Tribunal accepted the assessee's claim that income from printing press was exempt under Section 81(i)(a) of the Act. The Tribunal further held that in any case the income being less than Rs. 15,000 was, exempt under Section 81(ii). The Commissioner of Income-tax is aggrieved and at his instance the Tribunal has made this reference for the opinion of this court on the following two questions :
"(1) Whether, on the facts and in the circumstances of the case, the Tribunal was legally correct in holding that the business of printing press run by the assessee constituted a business of providing credit facilities to its members within the meaning of Section 81(i)(a) of the Income-tax Act, 1961 ?
(2) Whether, on the facts and in the circumstances of the case, the Tribunal was legally correct in holding that the assessee is entitled to exemption of Rs. 15,000 under Section 81(ii) and not under proviso to Section 81(i), even though it is a co-operative society which is also engaged in activities other than those referred to in Sub-clause (d) of Clause (i) of Section 81 of the Income-tax Act, 1961 ?"
2. Section 81 deals with the assessment of income of co-operative societies and, so far as material for our purposes, reads :
"81. Income of co-operative societies.--Income-tax shall not be payable by a co-operative society-
(i) in respect of the profits and gains of business carried on by it, if it is-
(a) a society engaged in carrying on the business of banking or providing credit facilities to its members; or
(b) a society engaged in a cottage industry ; or
(c) a society engaged in the marketing of the agricultural produce of its members; or
(d) a society engaged in the purchase of agricultural implements, seeds, livestock or other articles intended for agriculture for the purpose pf supplying them to its members ; or
(e) a society engaged in the processing without the aid of power of the agricultural produce of its members; or
(f) a primary society engaged in supplying milk raised by its members to a federal milk co-operative society :
Provided that, in the case of a co-operative society which is also engaged in activities other than those mentioned in this clause, nothing contained herein shall apply to that part of its profits and gains as is attributable to such activities and as exceeds fifteen thousand rupees ;
(ii) in respect of so much of the profits and gains of business carried on by it as does not exceed fifteen thousand rupees, if it is a co-operative society other than a co-operative society referred to in Clause (i);...... "
3. The Tribunal has found that the assessee runs a printing press in order to supply to its members printed registers and forms. These articles are supplied to the members on credit. According to the Tribunal the supply to the members of printed stationery on credit amounts to providing credit facilities to its members inasmuch as credit facilities can be provided not merely by advancing loans but also by supplying goods on credit and, as such, the income from printing press is exempt under Clause (a) of Section 81(i). We are unable to agree with this view. Clause (a) of Section 81(i) contemplates exemption from income-tax of the income of a society engaged in the carrying on a business of banking or providing credit facilities to its members. In our opinion, the income which is exempt from tax is income arising from a business of providing credit facilities and not merely of selling goods on credit. A person who sells goods on credit cannot be said to be carrying on the business of providing credit facilities. His business will be the business of purchase and sale of goods which he supplies. Banking business is a wide term and includes many activities like discounting bills, hundis, cheques, accepting deposits and advancing loans, etc. Thus, it includes the providing of credit facility. A person or a society may not be a banker in that wide sense yet he may be providing credit facilities which is a part of a banking business. The expression "providing credit facility" thus takes its colour from the activity of banking. In order that a banking or providing of credit facility may constitute a business, it is necessary that these activities must be the chief source of income, A person who advances loans or supplies goods on credit in connection with and in the course of some other business of manufacture or purchase or sale of goods, etc., cannot be said to be carrying on the business of banking or providing credit facilities. In order that a person may be engaged in the business of providing credit facilities, it must be shown that the providing of credit facility is his business in the sense that the interest earned by him is the main source of his income. A trader may also earn interest, from his customers to whom goods are supplied on credit but that is incidental to the main business he carries on. The intention of the legislature was to grant exemption to the income of co-operative societies engaged in the businesses enumerated in Clauses (a) to (f) of Section 81(i). These are the only kinds of businesses which are exempt. To hold that a co-operative society which sells goods on credit to its members is engaged in the business of providing credit facilities would amount to extending the exemption to businesses other than those mentioned in Clauses (a) to (f) of the Act. A society may engage itself in business of every conceivable kind not covered by Clauses (a) to (f) and yet claim exemption by saying that it sells goods or merchandise on credit. This could never be the intention of the legislature. Selling goods on credit is only a mode of carrying on of a business. It does not become a business of providing credit facility. The assessee-society may be said to be providing credit facilities to its members by selling stationery on credit but it cannot be said to be carrying on the business of providing credit facility. Its business is to run the printing press. We accordingly hold that the income of the assessee-society from printing press business was not exempt from tax under Section 81(i)(a) of the Act.
4. Turning now to the second question, we find that the Tribunal having held that the income was exempt under Section 81(i)(a) went on to observe that in any case the point was of academic interest only because the income as finally determined by the Appellate Assistant Commissioner of Income-tax being less than Rs. 15,000 was exempt under Section 81(ii). Now, Section 81(ii) deals with co-operative societies which are not engaged in businesses mentioned in Clauses (a) to (f) of Section 81(i) and provides that in the case of such societies the income shall not be exempt from tax beyond a sum of Rs. 1 5,000, This means that the income of a co-operative society engaged in activities other than those mentioned in Clauses (a) to (f) of Section 81(i) is exempt up to Rs. 15,000. Now, the society before us is not engaged in a business covered by Clause (a) of Section 81(i) nor under Clause (d) inasmuch as the income from the sale and supply of kolhus has been held by the Tribunal not to be a business of supply of agricultural implements. Thus, the society is not engaged in any of the activities mentioned in Clauses (a) to (f) of Section 81(i) and, as such, Clause (ii) of Section 81 will be attracted. The Tribunal, no doubt, has held that the business of printing press was covered by Clause (a) of Section 81(i) but on that finding Clause (ii) was not applicable but the proviso to Section 81(i) was applicable. Under the proviso, in the case of a co-operative society which is also engaged in activities other than those mentioned in Clause (i), its profit attributable to such other activities are exempt up to Rs. 1 5,000. There is thus no material difference between the proviso to Section 81(i) and Clause (ii) of Section 81. In either case, the society was entitled to exemption up to Rs. 15,000. As mentioned above, on the findings recorded by us, Clause (a) of Section 81(i) is not applicable. The case is, therefore, covered by Clause (ii) of Section 81 and the Tribunal was right in relying upon Clause (ii). Reference to Clause (d), however, in the question appears to be inaccurate. The reference should be to Clauses (a) to (f) of Section 81(i). The second question is, therefore, re-framed in the following words:
" Whether, on the facts and in the circumstances of the case, the Tribunal was legally correct in holding that the assessee is entitled to exemption of Rs. 15,000 under Section 81(ii) and not under the proviso to Section 81(i) of the Income-tax Act, 1961 ?"
and the same is answered in the affirmative.
5. The Commissioner of Income-tax is entitled to costs which we assess at Rs. 200.