2023 (2) TMI 1075 - HC - Income Tax

Deduction u/s 10(26AAB) - Income received by way of fee by assessee - agricultural income - expression agricultural produce would cover the subject products i.e., fish, poultry and eggs regulated by the respondent/assessee or not? - HELD THAT - Admittedly, the respondent/assessee earned a fee. The facts, as disclosed, are that the wholesalers of the produce bring their products, which include fish, poultry and eggs, to the designated spots where they are cleaned, sorted and sold to the traders. It is on this account that the fee is earned by the respondent/assessee. The fee that the respondent/assessee obtains helps the purpose for which it is constituted i.e., regulating the marketing of agricultural produce.Since agricultural produce is not defined in the 1961 Act, the Tribunal, as noted above, has taken recourse to Section 2 of the 1998 Act. The respondent/assessee has been constituted under the Delhi Agricultural Marketing (Regulation) Act 1976 and was appointed as regulator under the 1998 Act to facilitate trading in fish, poultry and eggs. The definition of agricultural produce, as contained in Section 2(1)(a) of the 1998 Act, read with schedule, as extracted above, is wide, which includes all kinds of produce, including fish, poultry, and eggs. Therefore, even otherwise, the fee earned by the respondent/assessee, as held by the Tribunal, would constitute income derived from regulating agricultural produce. Thus, according to us, the conclusion reached via the impugned order by the Tribunal is unimpeachable and does not need any interdiction by this court. The appeal is dismissed.

Summary

Issues:
1. Condonation of delay in re-filing the appeal.
2. Interpretation of Section 10(26AAB) of the Income Tax Act, 1961 regarding deduction of income received as fee by an Agricultural Produce Marketing Committee.

Condonation of Delay:
The appellant sought condonation of a 331-day delay in re-filing the appeal, which was granted by the court based on the reasons provided in the application.

Interpretation of Section 10(26AAB):
The appeal was against an order concerning the Assessment Year 2012-13, focusing on whether the income received as a fee by the respondent, an Agricultural Produce Marketing Committee, is eligible for deduction under Section 10(26AAB) of the Income Tax Act, 1961. The Tribunal analyzed the definition of "agricultural produce" under the Delhi Agricultural Produce Marketing (Regulation) Act, 1998, to determine if products like fish, poultry, and eggs fall within its scope.

The Tribunal observed that the Delhi Agricultural Produce Marketing Act has a broad definition of agricultural produce, encompassing various commodities beyond traditional agricultural products. It concluded that the income derived by the respondent from regulating products like fish, poultry, and eggs falls within the purview of Section 10(26AAB) due to the wide interpretation of "agricultural produce."

The appellant argued that only produce yielded through cultivation should qualify as agricultural produce, and since the respondent's income was not from traditional agricultural products, it should not be excluded from total income under Section 10(26AAB). However, the court clarified that the provision refers to "any income" of the Agricultural Produce Market Committee or Board related to regulating the marketing of agricultural produce, not specifically "agricultural income."

The court found that the respondent's fee, earned by facilitating the trading of fish, poultry, and eggs, aligns with the purpose of regulating agricultural produce. As the 1998 Act's definition of agricultural produce includes a wide range of products, the fee earned by the respondent qualifies as income derived from regulating agricultural produce, as per Section 10(26AAB).

In conclusion, the court upheld the Tribunal's decision, stating that the fee earned by the respondent constitutes income derived from regulating agricultural produce. The appeal was dismissed, and parties were directed to comply with the digitally signed copy of the order.