Law: Income Tax Act, 1961

Section: 80-P(2)(a)(iii)

(a) Income-tax----Cooperative Society---Special deduction---Society engaged in marketing agricultural produce of its members---Members need not be agriculturists--¬Can also be Cooperative Societies---Exemption not limited to primary Societies--- "Of its members", meaning of---Indian Income Tax Act, 1961, S.80-P(2)(a)(iii). For the purposes of section 80-P(2)(a)(iii) of the Income Tax Act, 1961, so long as agricultural produce handled by the assessee belonged to its members it is entitled to exemption in respect of the profits derived from the marketing of the same. Whether the members came by the produce because of their own agricultural activities or whether they acquired it by purchasing it from cultivators is of no consequence for the purpose of determining whether the assessee is entitled to the exemption. The only condition required for qualifying the assessees income for exemption is that the assessees business must be that of marketing, the marketing must be of agricultural produce and that agricultural produce must have belonged to the members of the assessee-society before they came up for marketing by it, whether on its own account or on account of the members themselves. Section 80-P does not in effect limit the scope of the exemption to agricultural produce raised by members alone but includes agricultural produce raised by others but belonging to cooperative societies. The contrast in the said provision is with reference to the marketing of agricultural produce of the members of the society against that purchased from, non-members. The expression "marketing" is an expression of wide import. It involves exchange functions such as buying and selling, physical functions such as storage, transportation, processing and other commercial activities such as standardisation, financing, marketing intelligence, etc. Such activities can be carried on by an apex society rather than a primary society. Section 80-P of the Income Tax Act, 1961, is introduced with a view to encouraging and promoting the growth of the cooperative sector in the economic life of the country and in pursuance of the declared policy of the Government. The correct way of reading the…

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