Law:

Section:

Section 80P of the Income-tax Act, 1961 - Deductions - Income of co-operative societies - Whether profits earned by assessee-co-operative society by sale of agricultural produce owned by its members, though, not produced by them, were exempt under section 80P(2)(a)(iii) - Held, yes FACTS The members of the assessee-federation were district wholesale co-operative societies or other co-operative institutions which did not possess agricultural land of their own. The members of these district co-operative societies were, in turn, the primary co-operative societies with farmers being their members. According to ITO only agricultural commodities produced by the members themselves were entitled to exemption, and accordingly he disallowed the exemption claimed by the assessee-federation. It was upheld in appeal by the AAC. The Tribunal, however, took the contrary view, viz., that what was important was ownership of the members of the agricultural commodities in question and not their production and, therefore, the agricultural produce needed not be one actually produced by the members of the society. The profits earned by the assessee-federation by sale of agricultural produce were thus deleted from the total income of the assessee. On reference: HELD The Tribunal was right in law in exempting from income-tax the income from the purchase and sale of wheat, etc., under section 80P(2)(a )(iii). Note : The case was decided in favour of the assessee. CASE REVIEW CIT v. National Agriculture Co-operative Marketing Federation Ltd. [ITR No. 241 of 1975 decided on 15-4-1981] and CIT v. Karjan Co-operative Cotton Sale, Ginning and Pressing Society Ltd .[1981] 129 ITR 821 (Guj.) followed & relied upon. CIT v. Kisan Co-operative Rice Mills Ltd. [1976] 103 ITR 264 (MP), CIT v. Mahasamund Kissan Co-operative Rice Mill and Marketing Society Ltd. [1976] 103 ITR 499 (MP), Keshkal Co-ooperative Marketing Society Ltd. v. CIT [1987] 165 ITR 437 (MP) and Assam Co-operative Apex Marketing Soceity Ltd. v. Addl. CIT [1977] 110 ITR 33 (Gauhati) dissented. CASES REFERRED TO Addl. CIT v. Ryots Agricultural Produce Co-operative Marketing Society Ltd. [1978] 115 ITR 709 (Kar), CIT v. Gujarat…

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