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TMI Blog1985 (7) TMI 148X X X X Extracts X X X X X X X X Extracts X X X X ..... embers had no right over the commodity after it is sold to the assessee. After purchasing raw latex the assessee processed the same by centrifugal method and then sold the commodity at its own risk. Thus, at the time of either the processing stage or at the selling stage the members of the society have absolutely no right or claim over the commodity as the assessee has become the absolute owner having purchased the latex from the members. Thus, the ITO held that the assessee is not entitled to the deduction under section 80P(2)(a)(iii) as the assessee is not marketing any agricultural produce of its members. 2. The assessee appealed to the Commissioner (Appeals). He held that the assessee is engaged in the marketing of agricultural produce ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Commissioner (Appeals) was right in allowing the exemption. He placed reliance on the decisions in Addl. CIT v. Ryots Agricultural Produce Co-operative Marketing Society Ltd. [1978] 115 ITR 709 (Kar.) and CIT v. Gujarat State Warehousing Corpn. [1980] 124 ITR 282 (Guj.). 4. We have considered the rival submissions. Admittedly, the assessee purchased raw latex from its members. Thereafter, the assessee processed the same by centrifugal method and then sold the commodity. What the assessee has sold is only agricultural produce, i.e., latex. The processing of raw latex by centrifugal method is only to preserve the latex. In ITO v. Kannam Latex Industries (P.) Ltd. [1984] 9 ITD 293, the Cochin Bench of the Tribunal has held that in spite of t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Act, deleted from 1-4-1968, which is equivalent to section 80P(2)(a)(iii), inserted in its place from 1-4-1968. The language of both provisions are same. The Madhya Pradesh High Court held that to claim exemption under sub-clause (c) of clause (i) of section 81 the business of the society should be of marketing the agricultural produce of its members and not itself purchasing paddy and then selling rice on its own account. The above ratio clearly applies to the instant case. In the instant case the assessee purchased raw latex and sold the same after processing it by centrifugal method on its own account and not on behalf of the members. Thus, the assessee is not entitled to the exemption under section 80P(2)(a)(iii). The decision in Ryots ..... X X X X Extracts X X X X X X X X Extracts X X X X
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