JUDGMENT
K. Raviraja Pandian, J.
1. At the instance of the Revenue, the following questions of law were referred for the opinion of this court by the Tribunal for the assessment year 1986-87:
1. Whether, on the facts and in the circumstances of the case, the Appellate Tribunal was right in law in holding that the assessee is entitled to exemption under Section 80P(2)(a)(i) of the Income-tax Act in respect of interest received from the members of the society ?
2. Whether, on the facts and in the circumstances of the case, the Appellate Tribunal is right in law in holding that the incentive subsidy received by the assessee is a capital receipt and cannot be included in the total income ?
2. It is submitted by learned Counsel on either side that the first question referred to above is covered by the decision of this court dated September 26, 2001, made in Tax Case Nos. 845 to 847 of 1995 in favour of the assessee and against the Revenue. Learned senior Central Government standing counsel appearing for the Revenue sought to put forth some argument that the object of the assessee will not come within the purview of Section 80P(2)(a). When taking into consideration the object for which the assessee has been created, which is a sugar mill, and the object clause or/and the business activities of the assessee mill as stated at (x) of page No. 33 of the typed set of papers is also granting loans and advances to the members at such rates as may be prescribed by the Committee, we are of the view that the submission made by learned senior Central Government standing counsel does not hold water to take a different view.
3. In respect of the second question referred to above, there is unanimity among counsel that the issue is covered by the decision of this court in the case of CIT v. Ponni Sugars and Chemicals Ltd. [2003] 260 ITR 605 in favour of the assessee and against the Revenue.
4. Therefore, the questions of law referred to us are answered in the affirmative and in favour of the assessee and against the Revenue. No costs.