TMI Blog1985 (4) TMI 141X X X X Extracts X X X X X X X X Extracts X X X X ..... ince the words 'primary society' occurring in this provision were not defined in the Act, even a federal society consisting of various primary societies as its members would also be eligible for this exemption. In the alternative, it was submitted that the appellant would be eligible for deduction under section 80P(2)(a)(iii) under which income arising from the marketing of the agricultural produce of the members of the society would be exempt. In this connection, the ITO's attention was invited to the fact, that, since the society was registered as an agricultural society under the Maharashtra Co-operative Societies Act, 1960, the commodity dealt in by the assessee, namely, 'milk', should be treated as agricultural produce of its members. The ITO negatived the claim for deduction under both the provisions. As regards the claim for deduction under section 80P(2)(b), the ITO noticed, that, though the words 'primary society' were not defined in the Act, all the commentaries on co-operative societies had defined a primary society as one functioning at the village level whereas, in the present case, the assessee was a federation of a number of primary societies. He also found, that, un ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e appellant-society as a federal society. He also noticed that according to sub-clause 20 of the objects clause, the objects of the federation was to supply milk of the primary societies to the Government milk society. He, therefore, did not agree that the federal society was an extension of the primary societies who were its members. He also noticed that the appellant was purchasing the milk of the various member societies and re-selling the same to the Government Milk Scheme. He noticed that the member societies were making separate profits on the milk sold to the federation and the federation in turn was making a profit by re-selling the same to the Government Milk Society. He, therefore, did not agree that the profit made by the federation at the second stage could be treated as the profit made by the member societies. He also noticed that the deduction under section 80P(2)(b) was applicable to the profits made by a primary society engaged in supplying milk raised by its members to a federal society and, since in the present case, the profit was not in respect of the primary societies but the same was in respect of the sales effected by a federal society, the provisions of sect ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... available. Our attention was invited to CIT v. Karjan Co-operative Cotton Sale, Ginning Pressing Society Ltd. [1981] 129 ITR 821 (Guj.). 6. The learned departmental representative submitted that the deduction under section 80P(2)(b) was definitely not available to the assessee inasmuch as, it was not a primary society engaged in supplying milk raised by its members to a federal milk co-operative society. As regards the alternative contention, he submitted, that the definition of agricultural produce under the Maharashtra Agricultural Produce Marketing Act had absolutely no application in the present context and at any rate, it had a limited application for the purposes of that enactment. According to him agricultural produce could only refer to produce derived from land by agriculture or by the performance of any of the processes referred to in section 2(1)(b)(ii) which defined agricultural income. He also referred to the decision of CIT v. Raja Benoy Kumar Sahas Roy [1957] 32 ITR 466 (SC). He, therefore, vehemently submitted that milk could never be considered to be an agricultural produce. He also submitted that the assessee was a federal society consisting of various prim ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... pulation is that, the income should be that of a primary society arising on the sale of milk of its members to the federal society. We, therefore, need not labour this point any further apart from mentioning that this clause has no application to the facts of this case. 10. Turning our attention to the alternative contention, we are unable to agree that agricultural produce would include milk within its ambit. Though the words 'agricultural produce' have not been defined in the Act, we have to understand it in the context of the use of the term as also with reference to the definition of agricultural income under section 2(1). Agricultural income has been defined under section 2(1) to mean rental revenue derived from land used for agricultural purposes in India and any income derived from such land by agriculture or the performance by a cultivator of any process referred to in section 2(1)(b)(ii) and also section 2(1)(b)(iii). On this analogy, agricultural produce could under no circumstances, include milk and milk products. The reference to Maharashtra Agricultural Produce Marketing Act is of little relevance in this context. At any rate, it has only a limited signification with ..... X X X X Extracts X X X X X X X X Extracts X X X X
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