TaxTMI 
TaxTMI 
1985 (4) TMI 146
X X X X Extracts X X X X
X X X X Extracts X X X X
....this provision was not defined in the IT 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 s. 80P (2) (a) (iii) under which income arising from the marketing of the agricultural produce of the member of the society would be exempt. In this connection, the ITO's attention was invited to the fact, that, since the society was registered 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 of deduction under both the provisions. As regards the claim for deduction under s. 80P (2) (b), the ITO noticed that, thought the word "primary-society" was not defined in the IT 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 under s. 54 of the Maharashtra co-operative Societies Ac....
X X X X Extracts X X X X
X X X X Extracts X X X X
....the objects of the federation was to supply milk of the primary societies to the Govt. milk Society, Nagpur. 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 Govt. Milk Scheme, Nagpur. 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 reselling the same to the Govt. Milk Society, Nagpur. 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 s. 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 s. 80P (2) (b) would have absolutely no application to the case. Though the term "primary society" was n....
X X X X Extracts X X X X
X X X X Extracts X X X X
....) 185 : (1981) 129 ITR 821 (Gui). 6. The ld. Departmental Representative submitted, that the deduction under s. 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, be 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 has 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 s. 2 (b) (ii) which defined agricultural income. He also referred to the decision of CIT vs. Raja Beney Kumar Sahas Roy (1957) 32 ITR 466 (SC). He, therefore, vehemently submitted, that, milk could never be considered to be a agricultural produce. He also submitted, that, the assessee was a federal society consisting of various primary societies and it was engaged in collecting the milk not produced by the member societies but by the member of t....
X X X X Extracts X X X X
X X X X Extracts X X X X
.... 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 word "agricultural-produce" has 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 s. 2 (1). Agricultural income has been defined under s. 2 (1) to mean rental Revenue derived from hand used for agricultural purposes in India and any income derived form such land by agriculture or the performance by a cultivator of any process referred to in 2 (1) (b) (ii) and also 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 reference to a particular enactment. Even otherwise, we find, that since a separate provision has been made in the shape of 80P (2) (b) t....