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Section 80P(2)(a)(i) of the Income-tax Act, 1961 - Deductions - Income of co-operative societies - Whether a co-operative society selling goods to its members on credit can be said to have been 'providing credit facilities to its members' so as to entitle it to claim exemption under section 80P(2)(a)(i) - Held, no Words and phrases - 'Providing credit facilities' occurring in section 80P(2)(a)(i) of the Income-tax Act, 1961 Facts The assessee was an apex co-operative society registered under the Co-operative Societies Act. Various primary consumers' co-operative societies were members of the assessee. In the course of its business the assessee had effected credit sales to its members. The credit sales were shown as receipts falling under section 80P(2)(a)( i) and hence claimed exemption in computing the assessable income. The ITO disallowed the assessee's claim. On appeal, the Tribunal also held that a co-operative society selling goods to its members on credit was not engaged in any business of providing credit facilities; it took the view that the expression 'providing credit facilities' in section 80P(2)(a)( i) took its colour from the preceding expression 'banking', and, thus, the assessee was not entitled to the exemption claimed since the activity carried on by the assessee was not one providing credit facility to its members. On reference: Held It is settled law that every word in a statute should be construed in the context in which it occurred, in order to discover its appropriate meaning. A word is known by the company it keeps. When two or more words which are susceptible of analogous meaning are coupled together, they should be understood in their cognate sense. Selling goods on credit might be one of the modes of carrying on the business. It could not be said to be one 'providing credit facilities to its members' as envisaged by section 80P(2)(a)(i). Considered in the context and collection of words, the words 'providing credit facilities to its members' occurring in section 80P(2)(a)(i) mean providing credit by way of loans and not selling goods on credit, because the expression 'providing credit facilities', in section 80P(2)(a)(i) takes its…

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