TMI Blog1997 (1) TMI 7X X X X Extracts X X X X X X X X Extracts X X X X ..... the Allahabad High Court (see [1980] 122 ITR 913) whereby the following question which was referred to it for opinion by the Income-tax Appellate Tribunal (hereinafter referred to as "the Tribunal") has been answered against the assessee and in favour of the Revenue: "Whether, on the facts and in the circumstances of the case, the assessee was entitled to exemption under section 80P(2)(a)(i) of the Income-tax Act, 1961, for income from press and income from supply of pumping sets ?" These appeals relate to the assessment years 1971-72 and 1972-73. The U. P. Co-operative Cane Union Federation Ltd. (hereinafter referred to as "the Federation"), is a co-operative society registered under the U. P. Cooperative Societies Act, 1965 (hereina ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... om tax on the said amount under section 80P(2)(a)(i) and (iv) of the Income-tax Act, 1961 (hereinafter referred to as the "the Act"). In respect of the assessment year 1972-73, the amount received as five per cent. service charges was Rs. 23,374 for which similar exemption was claimed. The said claim of the Federation was rejected by the Income-tax Officer and the said order was affirmed in appeal, by the Appellate Assistant Commissioner. But, on further appeal, the Tribunal has upheld the claim of the Federation for exemption under section 80P(2)(a)(i) on the view that the individual cane growers can be regarded as members of the Federation and that the Federation was providing credit facility to its members. The Tribunal was, however, of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... liance on the observations of this court in CIT v. South Arcot District Co-operative Marketing Society Ltd. [1989] 176 ITR 117, wherein in the context of the provisions of section 80P(2)(e) of the Act, it has been observed that having regard to the object with which the provision has been enacted, it is apparent that a liberal construction should be given to the language of the provision. On behalf of the Revenue, Dr. Gauri Shankar has submitted that the High Court has rightly construed the expression "members" in section 80P(2)(a)(i) in the light of the definition of the said expression contained in section 2(n) of the Co-operative Societies Act and that since the cane growers were not members of the Federation, the High Court has rightl ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... is Act, the rules and the bye-laws for the time being in force but a reference to 'members' anywhere in this Act in connection with the possession or exercise of any right or power or the existence or discharge of any liability or duty shall not include reference to any class of members who by reason of the provisions of this Act do not possess such rights or power or have no such liability or duty." It is not disputed that as per the said provision the members of the Federation were the cane union co-operative societies only. The individual cane growers who were members of the cane growers unions were not members of the Federation. In this context, it may be mentioned that in clause (b) of sub-section (2) of section 80P, reference has be ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... )(c), as it stood prior to its substitution by section 80P. The said provision was in pari materia to section 80P(2)(a)(iii) as it exists now. The appellant in that case was an apex co-operative marketing society and its members were the various co-operative societies. The question was whether the words "agricultural produce of its members" would cover the agricultural produce of the growers who were not the members of the apex society but were the members of the co-operative societies which were members of the apex society. It was held that the said expression would not cover the agricultural produce of the growers. It has been observed: "A reading of clause (i) of section 81 shows that the idea and intention behind the said clause was t ..... X X X X Extracts X X X X X X X X Extracts X X X X
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