TMI Blog1988 (3) TMI 45X X X X Extracts X X X X X X X X Extracts X X X X ..... nstituted `agricultural produce', so as to entitle the assessee to exemption in respect of the income from marketing eggs under section 80P(2)(iii)? From the statement of the case and other documents on record, we have been able to ascertain that the assessee, which is a co-operative society, carries on business in the distribution of consumable goods apart from rural banking business. One of the items of consumer goods dealt in by the assessee was eggs. In the previous years relevant to the income-tax assessment years 1977-78, 1978-79 and 1979-80, the sales of eggs were of Rs. 9,85,133 ; Rs. 6,95,355 and Rs. 6,48,937, respectively. It appears, the assessee's account did not indicate the extent of profit realised on the sale of eggs. The ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e society derived profit on the sale of eggs. It does not appear to be a case that the society receives eggs from agriculturists for the purpose of marketing and receives commission in respect of sale proceeds. It is clear from clause (iii) of section 80P(2) that only income derived by a co-operative society OD marketing of the agricultural produce of its members earns exemption. That is to say, the agricultural produce marketed by the society should belong, at all points of time, to the agriculturists. All that the co-operative society does is to market the produce and make over the collections to the agriculturists-members, earning a commission for effecting sales. If, in the instant case, the facts are that eggs continued to be the prope ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e " agricultural produce " or not. Apparently, the more crucial fact regarding the ownership of eggs was not gone into by the authorities below including the Tribunal. Unless the facts were investigated and a finding recorded that the assessee-society sold the goods belonging to its members and not belonging to itself, the question of exemption does not arise. It is possible that the entire sale proceeds realised by sale of eggs was adjusted against the loan amounts due from the members to the society in which case it cannot be said that the sale was by the society on its own. The fact that the sale proceeds were adjusted against the loans outstanding and due from the members would indicate that the eggs were marketed by the society on beha ..... X X X X Extracts X X X X X X X X Extracts X X X X
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