9911796707
TMI Blog1997 (2) TMI 572X X X X Extracts X X X X X X X X Extracts X X X X ..... years 1980-81 and 1981-82 to the extent of ₹ 1,22,567 and ₹ 89,927, respectively. These assessment orders were later set aside by the Commissioner under order dated 17-7-1985 invoking powers under section 263 of the Act and the assessing authority was directed to re-compute the income in accordance with law after determining the correct amount of exemption allowable to the assessee. The Assessing Officer passed fresh assessment orders on 10-10-1985 in respect of the assessment years 1980-81 and 1981-82 rejecting the claim of the assessee for exemption under section 80P(2)(a)( iv). For the assessment year 1982-83 also, the assessing authority rejected the claim, as mentioned above, and passed assessment order on 12-2-1985. On appeal, the Commissioner (Appeals) confirmed the orders of the assessing authority. 2. The assessee filed appeals before the Tribunal as IT Appeal Nos. 2, 3 and 4 of 1989, respectively. In the meantime, the assessee had challenged the order passed by the Commissioner in exercise of his power under section 263 for the assessment years 1980-81 and 1981-82 before the Tribunal as IT Appeal Nos. 570 and 571 of 1985. These appeals were allowed by the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... y and to the extent of ₹ 10,83,136 to B class members of the society and the assessee claimed that it was entitled to deduction under section 80P(2)(a)( iv) in respect of sales to the A class members as well as the E class members. The assessing authority took the view that the assessee is not entitled to claim deduction. There was no sale to its A class members, viz., the primary societies, since the bills are issued in the name of individual users who are members of the primary societies. It also took the view that the E class members have only the status of customers of the society and they cannot be treated as members of the society. Therefore, the assessee cannot claim any deduction under section 80P(2)(a)( iv). 6. On appeal, the Commissioner (Appeals) affirmed the findings of the assessing authority. But, on further appeal, the Tribunal found that the assessee is entitled to exemption under section 80P(2)(a)( iv) to the full extent of its claim. In coming to the above conclusion, the Tribunal relied on a decision of this Court in CIT v. Kerala State Co-operative Marketing Federation Ltd. [1992] 193 ITR 624. The question that has to be considered in this ref ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... his clause, nothing contained therein shall apply to that part of its profits and gains as is attributable to such activities and as exceeds fifteen thousand rupees. Even though the Tribunal has allowed the entire deduction claimed by the assessee in respect of its sales to its class A as well as class E members, there was no separate consideration regarding the nature of the sale to class E members who are direct individual members of the assessee- society. Since the revenue has not raised a question in this reference regarding the non-consideration of this specific question, we do not propose to go into the issue whether the assessee is entitled to claim deduction in respect of its sale to class E members. Therefore, in this reference we are concerned only with the claim of the assessee in respect of its sale to class A members. 7. Admittedly class A members of the assessee-society are primary societies. It is contended by the learned standing counsel for the revenue that since the sale by the assessee-society is to other primary societies and not to its individual members, the assessee cannot claim deduction under section 80P(2)(a)(iv ) in the light of the dec ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... with this object and if so understood, the words mean the agricultural produce produced by the members. If it is not so understood, even a co-operative society comprising traders dealing in agricultural produce would also become entitled to exemption which could never have been the intention of Parliament. The agricultural produce produced by the agriculturist can legitimately be called agricultural produce in his hands but in the hands of traders, it would be appropriate to call it agricultural commodities, it would not be his agricultural produce. Accordingly, it must be held in this case that since the agricultural produce marketed by the assessee was not the agricultural produce produced by its members, namely, the primary co-operative society, the assessee cannot claim the benefit of the said exemption. . . . (p. 342) The contention of the revenue is that since the sale in this case was effected to the primary co-operative societies and not to agriculturist members, no deduction can be claimed by the assessee. In the light of the observation made by the Supreme Court as quoted above, according to the revenue, marketing of the agricultural produce also should be directly to ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... are to be understood consistent with the above objective. But from the last sentence of the quoted portion it can be taken that if the primary society which is a member of the assessee-society itself was carrying on agricultural operation, marketing of its produce would entitle the assessee-society to claim the benefit. Apart from the above, the wordings of clause (c) and clause (a) of section 81(i) are different from clause (d). The only condition to be satisfied under clause (d) is that the society shall be engaged in the purchase of agricultural implements, etc., intended for agriculture for the purpose of supplying them to its members. Similar is the difference in the wordings of clauses (iii) and ( v) of section 80P(2)(a) from clause (iv). It is clear from the facts of the case that the assessee-society satisfies the conditions under clause (iv). The assessee is engaged in purchase of agricultural implements intended for agriculture purpose and it is supplying them to its members, namely, A class member societies. 11. We, therefore, find that the situation available in this case is entirely different from the facts of the case of Assam Co-operative Apex Marketing Society ..... X X X X Extracts X X X X X X X X Extracts X X X X
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