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TMI Blog1973 (9) TMI 18X X X X Extracts X X X X X X X X Extracts X X X X ..... the needs of the members of the society before the goods as ginned and pressed cotton are marketed on behalf of its members. For rendering these services of ginning and pressing to the members before selling the goods, the society used to charge the members a certain amount of ginning and pressing charges as well as commission for the sale of the finished product. In the course of assessment a dispute arose before the Income-tax Officer in respect of receipts from the ginning and pressing activities. It was claimed on behalf of the assessee that they were all exempt as the claim would come within section 81(i)(c) of the Income-tax Act (as it existed then). The Income-tax Officer, however, was of the opinion that the activity of ginning and pressing would not come within any of the exemption clauses of section 81(i)(c) and since the society had been carrying out the process of ginning and pressing with the aid of power, the receipts therefrom were liable to be taxed. The Appellate Assistant Commissioner also confirmed the orders of the Income-tax Officer. The society took the matter in further appeal to the Tribunal and claimed exemption f or the said receipts under section 81(i)(c ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... .. (c) a society engaged in the marketing of the agricultural produce of its members; or..... (e) a society engaged in the processing without the aid of power of the agricultural produce of its members ; or..... Provided that, in the case of a co-operative society which is also engaged in activities other than those mentioned in this clause, nothing contained herein shall apply to that part of its profits and gains as is attributable to such activities and as exceeds fifteen thousand rupees..." On a plain reading of clause (i) of section 81 it appears to us that if a co-operative society is engaged in the marketing of agricultural produce of its members, its profits and gains of business consisting of marketing activities would not be liable to tax subject to the exception contained in the proviso to section 81(i). The proviso in fact enjoins that if a co-operative society engages itself in activities other than those mentioned in clauses (a) to (f) of section 81(i), it will not be entitled to claim exemption for that part of its profits and gains exceeding Rs. 15,000 as is attributable to such activities. In other words, if the activity of a co-operative society is not one as ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ing from the business activities as may fall within clauses (a) to (f) of section 81(i). But, if beyond these activities there are other activities which do not come within any of the clauses (a) to (f) of section 81(i) under the proviso the receipts from such activities are liable to be taxed. Mr. Patel in support of his contention relied on the decision of the Allahabad High Court in U.P. Co-operative Bank Ltd. v. Commissioner of Income-tax . The question before the court in that case was whether the assessee being a co-operative bank can claim exemption from tax of income from interest on securities exceeding Rs. 20,000 under section 14(3)(i) of the Indian Income-tax Act, 1922, though it may not be entitled to claim exemption for the said receipts under section 14(3)(iv) of the 1922 Act, In the context of this question, the court observed : "Clauses (i) to (iv) of section 14(3) enumerate the exempted sources of income of a banking co-operative society. All the four sources are exempted ; if an income is derived from one of the sources it is exempted even though it cannot be said to have been derived from another of the sources. The securities in the instant case have been held ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... th the true effect and scope of sub-section (iv) of section 81. Bhagwati C.J. (as he then was) speaking for the court, observed after setting out section 81, as under : There are five different heads of exemption enumerated in the section. Each is a distinct and independent head of exemption. Whenever a question arises whether a particular category of income of a co-operative society is exempt from tax, it will have to be seen whether such income falls within any of the several heads of exemption : if it falls within any one head of exemption, it would be free from tax notwithstanding that the conditions of another head of exemption are not satisfied and such income is, therefore, not free from tax under that head of exemption : vide U.P. Co-operative Bank Ltd. v. Commissioner of Income-tax . The ambit and coverage of clause (iv) of section 81 must, therefore, depend on the true interpretation of the language used by the legislature in that clause assisted only by such external aids of construction as are permissible according to well recognised principles of interpretation. " We do not think that this case takes the case of the assessee any further. Mr. Patel, therefore, next c ..... X X X X Extracts X X X X X X X X Extracts X X X X
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