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TMI Blog2019 (6) TMI 1044X X X X Extracts X X X X X X X X Extracts X X X X ..... to as "the Act"). For assessment year 2009-10, the return of income was filed declaring a loss of Rs. 1,84,928/- after claiming deduction of Rs. 92,76,540/- u/s 10(26AAB) of the Act. In assessment year 2010-11, the return of income was filed declaring loss of Rs. 1,69,427/- after claiming deduction of Rs. 1,06,26,739/- u/s 10(26AAB) of the Act. In assessment year 2012-13, the return was filed declaring a loss of Rs. 2,23,586/- after claiming deduction of Rs. 6,04,06,259/- u/s 10(26AAB) of the Income Tax Act. 2.1 The assessee was required to explain the veracity of its claim u/s 10(26AAB) of the Act by the Assessing Officer in all the three years and the assessee submitted that the assessee is a Marketing Committee established under the Delhi Agricultural Produce Market (Regulation) Act, 1976 and entrusted with the duty of supervising, controlling and providing facilities to the traders operating in the Committee premises. It was further submitted that the assessee regulates the marketing of fish, poultry and eggs. It was explained that the raw material is brought in by the wholesalers and after refining the same i.e. after checking, cleaning, sorting/segregating, chopping, preserv ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... coming out of the earth after completing necessary activities on agricultural land i.e. ploughing, seeding, watering looking after/maintenance, harvesting etc. whereas the products being marketed and regulated by the assessee i.e. fish, poultry and eggs were not derived from any kind of agricultural operations. A reference was also made by the Ld. Sr. DR to the Union Finance Minister's speech on Finance Bill, 2008 wherein exemption u/s 10(26AAB) was given only to Agricultural Produce Market Committees or State Agricultural Marketing Boards but fish, poultry and egg marketing committees had not been specified. It was submitted that had it been the intention of the legislature to allow exemption to these kinds of committees, it would have been specifically mentioned. The Ld. Sr. DR submitted that the Ld. CIT (A) had misinterpreted the provisions and had allowed the assessee's claim in complete disregard to the fact and law. 4.0 In response, the Ld. Authorised Representative (AR) submitted that the assessee has been constituted under the Delhi Agricultural Produce Marketing (Regulation) Act, 1976 u/s 23 of the said Act on 31.08.2001. It was submitted that section 10(26AAB) of the In ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... by us is whether marketing of fish, poultry and eggs would fall within the definition of marketing of agricultural produce. Section 10(26AAB) of the Act which provides for deduction to agricultural produce marketing committees reads as under - "[(26AAB) any income of an agricultural produce market committee or board constituted under any law for the time being in force for the purpose of regulating the marketing of agricultural produce;]" 5.1 Explanatory note of the provision Finance Act, 2008 issued vide Circular dated 1/2009 reads as under: "7. Exemption of income of Agricultural Produce Marketing Committee or Board 7.1 Clause (26AAB) has been inserted in section 10 to provide for tax exemption with respect to the income of an Agricultural Produce Marketing Committee or Board which has been constituted under any law for the purpose of regulating the marketing of agricultural produce. 7.2 Applicability - This amendment has been made applicable with effect from 1st April, 2009 and shall accordingly apply for assessment year 2009-10 and subsequent assessment years." 5.2 Section 10(26AAB) provides exemption to Agricultural Produce Marketing Committee (APMC) or Board constit ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... for violating the provisions of this Act and to the rules regulations and bye-laws made there under; (f) maintain and merge the market, including the regulation of admissions to, and conditions for use of the market ; (g) regulate the marketing of notified agricultural produce in the market area and the market, and the weighment, delivery of and payment for, such agricultural produce; Explanation - for the purposes of clause (g) the word regulate' shall include - (i) making, carrying out, enforcing or cancelling of any contract of sale of a notified agricultural produce ; (ii) conducting or supervising of a transaction of sale or purchase of a notified agricultural produce in accordance with the procedure laid down under this Act, or rules, regulations and bye-laws made there under; (iii) specifying any place or spot where a notified agricultural produce shall stored or displayed for purpose of sale by open auction ; (iv) fixing the time for holding auction; and (v) cancelling an auction if it is not held in the presence of the employees of the marketing committee. (h) arrange for the collection - (i) of such notified agricultural produce in the market in w ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... to provide a place where the producer and the consumers can meet and trade freely. The committee is entitled to a fee for the service rendered. It is recovered from the commission agents who undertake the trading on behalf of the purchaser and the seller. The assessee has been appointed u/s 35 of the DAPM Act to facilitate trading in fish poultry, eggs etc. The composition of committee is approved by the Lt. Governor of Delhi & has been notified in the Delhi Gazette, NCTD No. 200 dated 31.08.2001. 5.5 It is seen that the Assessing Officer, while rejecting the claim of the assessee, has been guided by the fact that the assessee is dealing in fish, poultry eggs and not agricultural produce. As per the Assessing Officer, the assessee should be engaged in the marketing of anything produced from the use of land which should fall in the definition of word agriculture as defined in section 2(1A) of the Act. He has dealt with various case laws relating to the definition of agricultural income. He has also drawn reference to the speech of the Union Finance Minister that the exemption u/s 10(26AAB) is to be given to only APMC or State Agricultural Market Boards besides the exemption extend ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... production of honey and silk etc. It also includes the marketing of forest products which would otherwise not fall within the definition of 'agriculture'. The DAPM Act, therefore, has given very wide meaning to the word agricultural product. Apparently, Income Tax Act has also imported the word agricultural produce from the DAPM Act, 1998 to cover APMCs notified under it to provide the benefit to all APMCs provided in the DAPM Act or similar Acts in other states. It could not have been the intention of the Act to leave out some of the committees, notified under the DAPM especially when all the committees were rendering similar services in respect of various products. Therefore, in view of the expanded meaning given to the term 'agricultural produce' by the DAPM Act, it is our considered opinion that the word 'agricultural produce', used in connection with APMC connotes a very wide meaning bringing within its preview a large gamut of commodities besides agricultural products. Since the income accrues to the APMCs from pursuing these activities, the Income Tax Act, also perceives a wider meaning by referring to the DAPM. Therefore, if the term 'agricultural produce' is given a wider ..... 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