1985 (4) TMI 146 - AT - Income Tax

Summary

Issues:
- Claim for exemption under s. 80P (2) (a) (iii) or in the alternative under s. 80P (2) (b)

Analysis:

The appellant, a Federal Society engaged in supplying milk to the Government Milk Scheme, claimed exemption under s. 80P (2) (b) or alternatively under s. 80P (2) (a) (iii). The Income Tax Officer (ITO) denied the claim under both provisions, stating that the society did not meet the requirements. The ITO held that the appellant, being a federation of primary societies, did not qualify as a primary society under s. 80P (2) (b). Additionally, the ITO argued that milk could not be considered agricultural produce under s. 80P (2) (a) (iii), as it did not meet the definition of agricultural produce. The Appellate Assistant Commissioner (AAC) upheld the ITO's decision, emphasizing that the appellant was not a primary society and that milk did not fall under the definition of agricultural produce. The appellant then appealed to the Appellate Tribunal.

In the appeal before the Tribunal, the appellant reiterated its arguments, focusing on the claim for exemption under s. 80P (2) (a) (iii). The appellant contended that milk should be considered agricultural produce based on the Maharashtra Agricultural Produce Marketing Act and cited relevant case law to support its position. The Departmental Representative argued against the appellant's claims, asserting that milk could not be classified as agricultural produce and that the appellant did not meet the requirements of s. 80P (2) (b).

After considering the submissions from both sides, the Tribunal concluded that the appellant was not entitled to deduction under either s. 80P (2) (a) (iii) or s. 80P (2) (b). The Tribunal found that the appellant, as a federation of primary societies, did not qualify as a primary society under s. 80P (2) (b). Furthermore, the Tribunal agreed that milk could not be considered agricultural produce under s. 80P (2) (a) (iii) based on the definition of agricultural income. The Tribunal also noted that even if milk were considered agricultural produce, the appellant did not meet the requirement of marketing the produce of its members directly. Therefore, the Tribunal upheld the AAC's decision and dismissed the appellant's appeal, confirming the denial of exemptions under both provisions.