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TMI Blog1985 (4) TMI 146X X X X Extracts X X X X X X X X Extracts X X X X ..... the profits of he federal society under s. 80P (2) (b). It was submitted before the ITO that under this provision, exemption was available in respect of the profits and gains of a co-operative society, being a primary society engaged in the supply of milk raised by its members to a federal milk co-operative society and, since the word "primary-society" occurring in this provision was not defined in the IT Act, even a federal society consisting of various primary societies as its members would also be eligible for this exemption. In the alternative, it was submitted, that, the appellant would be eligible for deduction under s. 80P (2) (a) (iii) under which income arising from the marketing of the agricultural produce of the member of the so ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ultural produce. he also drew support for his conclusion in this behalf on the ground, that if milk was to be treated as agricultural produce. The exemption provided under s. 80P (2) (b) would become redundant. 3. Aggrieved with the same, an appeal was preferred to the AAC. The arguments before the AAC may be summarised as under. It was submitted before the AAC that, the appellant-society, no doubt a federal society, was formed with the object of marketing the products of its member societies which functioned at the village level. It was further submitted, that, the appellant society should be looked upon as an extension of its member societies and, since the surplus income of the society was distributed to the member societies as divid ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... selling the same to the Govt. Milk Society, Nagpur. he, therefore, did not agree, that, the profit made by the federation at the second stage could be treated as the profit made by the member societies. He also noticed, that the deduction under s. 80P (2) (b) was applicable to the profits made by a primary society engaged in supplying milk raised by its members to a federal society and, since in the present case, the profit was not in respect of the primary societies but the same was in respect of the sales effected by a federal society, the provisions of s. 80P (2) (b) would have absolutely no application to the case. Though the term "primary society" was not defined in the Act, the appellant by the very nature of its framework as well as ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... to the Maharashtra Agricultural produce marketing (Regulation) Act. 1963, in which, under the definitions cl. 2 (1) (a) agricultural produce meant all produce (whether processed or not) of agriculture, horticulture, animal husbandry, apiculture, pisciculture and forest specified in the Schedule. Our attention was also invited to the Schedule under item IX wherein, animal husbandry products have been listed to include butter ghee, milk among other things. On this basis, it was submitted, that, milk was an agricultural produce of the member societies and, since the assessee was marketing such agricultural produce of its members. the deduction under s. 80P (2) (a) (iii) was squarely available. Our attention was invited to CIT vs. Karjan Co-op. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... at was in turn collected by the federal society of which the primary societies were members. In other words, his submission was, that, the primary societies themselves did not produce the milk which was supplied to the federal society. 7. In reply, the ld. Representative for the assessee contended. that, it was not necessary, that the member societies should produce the milk. He submitted, that the word used in this connection was not "by" but "of" and, therefore, there was no statutory requirement, that, the agricultural produce should have been produced by the members themselves. 8. After a careful consideration of the submissions on either side. We are of the opinion, that, the appellant is not entitled to deduction either under s. 8 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... this clause has no application to the facts of this case. 10. Turning our attention to the alternative contention, we are unable to agree, that, agricultural produce would include milk within its ambit. Though the word "agricultural-produce" has not been defined in the Act, we have to understand it in the context of the use of the term as also with reference to the definition of agricultural income under s. 2 (1). Agricultural income has been defined under s. 2 (1) to mean rental Revenue derived from hand used for agricultural purposes in India and any income derived form such land by agriculture or the performance by a cultivator of any process referred to in 2 (1) (b) (ii) and also 2 (1) (b) (iii). On this analogy agricultural produce ..... X X X X Extracts X X X X X X X X Extracts X X X X
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