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TMI Blog1983 (4) TMI 43X X X X Extracts X X X X X X X X Extracts X X X X ..... nt year 1974-75, is exempt under section 80P(2)(a)(iv) of the Income-tax Act, 1961 ? " " Whether, on the facts and in the circumstances of the case, the Appellate Tribunal was right in holding that the profit on sale of fertilisers amounting to Rs. 64,70,671 for the assessment year 1975-76, is exempt under section 80P(2)(a)(iv) of the Income-tax Act, 1961 ? " The assessee in this case is the Tamil Nadu Co-operative Marketing Federation Ltd. and it was assessed under the provisions of e I.T. Act in the status of an association of persons. For the assessment years 1974-75 and 1975-76, the assessee claimed exemption of the profits realised on sale of fertilisers under s. 80P(2)(a)(iv) of the I.T. Act on the sums of Rs. 42,34,291 and Rs. 64,7 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... on that ground also the assessee was not entitled to exemption. The Tribunal, however, rejected both the contentions urged for the Department and held that the sale of fertilisers to member-societies resulting in profits would be covered by s. 80P and there was no need that it should be sold directly to the agriculturists. The Tribunal held that the proportionate part of the profits referable to the sale of fertilisers to outsiders could be excluded from exemption and, for which purpose, the matter was restored to the ITO for enquiry. As regards the process said to have been carried on by the assessee, the Tribunal found that the assessee was merely mixing up the ingredients which did not amount to processing and as such the assessee could ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e to the ITO on that question, it is unnecessary to consider the question whether the sales to either non-agriculturists or to third parties will have the benefit of the exemption or not. Thus, we have now two questions for consideration, namely, (1) whether the benefit of exemption under s. 80P(2) will apply only to primary co-operative societies as contended by the Revenue or even a federation of co-operative societies could claim the benefit of the exemption, and (2) whether the exemption could be restricted to profits by sale of fertilisers to agriculturists alone. To appreciate the contentions put forward by the learned counsel for the Revenue, it is necessary to deal with the scope and object of s. 80P. Section 80 P deals with deduct ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ry co-operative societies. The language of sub-s. (1) enables any co-operative society to claim the benefit of deduction if the conditions specified in sub-s. (2) are satisfied. No distinction is made between a primary co-operative society and the federation of co-operative societies which is normally called the apex society Having regard to the language of s. 80P, it is not possible to agree with the learned counsel for the Revenue that the expression " co-operative society " occurring in s. 80P should be read as referring only to a primary society engaged in the purchase of agricultural implements, etc., for the purpose of supplying them to its members. Though an attempt was made before the Tribunal that fertilisers will not come within c ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... made by the learned counsel for the Revenue is that the expression " members " occurring in sub-s. (2)(iv) refers only to members of the primary societies who are agriculturists. According to the learned counsel, s. 80P is intended to benefit the agriculturists so that they may get the required agricultural implements, seeds, livestock or other articles at a concessional rate or cheaper rate and, therefore, cl. (iv) of sub-s. (2) can apply only when the sales of fertilisers are effected to actual agriculturists. Here again, we do not see how the expression "members " can be restricted to either a member of a primary society or to an agriculturist alone. Sub-section (2)(iv), in our view, contemplates the purchase of agricultural implements, ..... X X X X Extracts X X X X X X X X Extracts X X X X
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