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TMI Blog1982 (5) TMI 101X X X X Extracts X X X X X X X X Extracts X X X X ..... rest of this order. The society filed its income-tax return on14-10-1977declaring an income of Rs. 7,310. After verifying the accounts of the society wherein the ITO have found out some defects he proposed to make an addition of Rs. 1,61,537 to the returned income and therefore he forwarded the draft order to the society on 7-6-1980. The ITO received the directions from the IAC,RohtakRange, Rohtak, in his letter No. JB/144B/155/1979-80/3396 dated1-9-1980. In pursuance of those directions and after giving one more opportunity to the society of being heard on 18-9-1980, the ITO computed the taxable income of the society at Rs. 1,65,800 under his assessment dated 19-9-1980 and completed the assessment under section 144B/143(3) of the Act. 4. During the course of the assessment proceedings the society claimed that an income of Rs. 1,61,537 is exempt from tax under section 80P(2)(a)(iv). The break-up of the figure claimed on exemption is arrived at as follows : Rs. The total sales of fertilisers made by the society during the accounting period relevant to the assessment year 1977-78 89,72,214 Saleof fertilisers to the members of the society 76,84,835 Saleof fertilisers to t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... minus Rs. 5,608 = Rs. 1,56,448. The learned Commissioner (Appeals) found in the impugned orders, that the scheme under which the fertilisers are being sold by the co-operative society underwent changes from time to time. The scheme which was in vogue was modified first from1-7-1970and latest from1-7-1974. It was observed that even under the scheme which came into effect from1-7-1970, the society started purchasing fertilisers from HAFED and selling it on its own and not on consignment basis. At least this was what be had held in his orders dated 2-8-1979 in the case of Kaithal Co-operative Marketing-cum-Processing Society Ltd. for the assessment year 1972-73 [Appeal No. 39A of 1978-79]. The learned Commissioner (Appeals) further found that the scheme underwent further amendment with effect from1-7-1974and he took into consideration the provisions of paragraph No. 6 of the new scheme introduced from1-7-1974and held that from the wording of the said paragraph it is unequivocally clear that HAFED was selling fertilisers to the co-operative society. Therefore, he accepted the contention advanced on behalf of the society and held that the income attributable to the sale of fertilisers ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... category of the words 'agricultural implements, seeds, livestock' which preceded the general words 'other articles intended for agricultural' occurring in section 80P(2)(a)(iv). Ejusdem generis rule of interpretation is to be applied for deriving the correct meaning of the section. The learned departmental representative also cited U. P. Co-operative Federation Ltd. v. CIT [1972] 84 ITR 317 (All.) at page 320 in support of his contention. 9. On the other hand, the learned counsel for the society, contends that the learned IAC while giving directions to the ITO did not consider the scheme in vogue from 1-7-1970 and 1-7-1974 and did not correctly appreciate the provisions of the scheme and, therefore, he came to the erroneous conclusion that the society was not carrying on business in fertilisers on its own. The learned Commissioner (Appeals) correctly appreciated the scheme and gave the necessary relief to the society for which it was rightly due. He further contended that he had no dispute with the suggested rule of construction sought to be placed on the wording of section 80P(2)(a)(iv) but he argued that the word 'fertilisers' does belong to the category of the words 'agricultu ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ety concerned and duly recommended by Assistant Registrar. III. Financial arrangements between the Federation and Railhead Agents. 6. The Federation will purchase fertilisers from the different sources. The fertilisers, so purchased would be sold to the Railhead Agents on cash (instead of the existing credit basis). The Railhead Agents would assess their financial requirements for the purchase of fertilisers." We have also perused the form of the agreement given as annexure '3' to the scheme which came into effect from1-7-1974. This form is to be entered into between a co-operative society which is a Railhead agent and HAFED. We have gone through the standard clauses which would be incorporated under the said agreement. Even under the first clause of the model agreement, it is stated that the fertilisers would be sold to Railhead agents on cash. Again clause No. 11 of the model agreement is as follows : "Railhead Agent shall be responsible for any losses, damages caused to fertilisers, during storage, transport or any other operation which take place after the stocks are despatched for the Railhead Agent." 11. In Punjab State Co-op. Supply Marketing Federation Ltd. v. ..... X X X X Extracts X X X X X X X X Extracts X X X X
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